Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 28, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
TMI Short Notes
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Interest on belated deposit of admitted tax in instalment u/s 80 read with Rule 158 - the Commissioner is not conferred with power to allow such instalment in respect of amount due as per self-assessment return(s) furnished. Section 80 empowers the Commissioner to grant permission only to the taxable person to make payment of any amount due on instalment basis, on an application filed electronically in Form GST DRC-20 as prescribed under Rule 158. - Demand of interest confirmed - HC
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Exemption form GST - Nashik Cambridge Pre-School - supply of Pre-school education service to its students against fee - supply of some goods to its Pre-school students, without any consideration - supply of some goods to its Pre-School students for some consideration - supply of transportation service to tits Pre-school students without any consideration - Benefit of NIL rate of tax / GST is available to the school - AAR
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Levy of GST - Revenue Sharing invoices raised by one party on to another party - it is observed that Auriga Research Private Limited, who have filed the application, is not a supplier. Thus the instant application is not admissible and liable for rejection in terms of Section 98(2) of the CGST Act 2017. - AAR
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Seeking grant of bail - misuse of ID password of UDIN and OTP - Allegation against the Chartered Accountant - preparation of forged certificates for bogus/nonexistent companies to claim a GST refund - in light of the above discussion and considering the seriousness and nature of the offence allegedly committed by the applicant/accused, this Court is not inclined to grant concession of bail to applicant/accused - DSC
Income Tax
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Refund the amount adjusted in excess of 20% of the disputed demand - action of the respondents and the Revenue Authorities is violative of Article 265 of the Constitution of India. - need to pass strictures against the offices - In the case in hand, this Court further deems it appropriate to impose a cost upon the respondents which is quantified to Rs.50,000/- which the respondent-department shall pay itself or if it so chooses, the same may be recovered equally from respondents No.1 & 2 and be deposited with the Rajasthan State Legal Services Authority, Jaipur and assessee in half and half within two months of passing of this order. - HC
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Validity of reopening of assessment u/s 147 - it cannot be stated that the petitioner was not aware of the reasons for reopening of the assessment. The petitioner has replied to the proceedings initiated under Section 148 of the Income Tax Act, 1961. The petitioner has not asked for a speaking order - Having given up the right to ask for a speaking order, the petitioner cannot now turn around and question the Impugned Order by stating that it has been passed over-looking the safeguard prescribed in the case of GKN Drive Shafts (India) Limited. Further, case also does not warrant a speaking order in terms of the aforesaid decision of the Court. - HC
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Revision u/s 263 - The argument of the petitioner that the assessment order was not prejudicial to the interest of revenue and therefore the proceeding under Section 263 was liable to be quashed cannot be countenanced. A proceeding under Section 263 of the Income Tax Act, 1961 cannot be scuttled. Further, the petitioner participated in the proceeding initiated under Section 263 of the Income Tax Act, 1961. Therefore, it is not open to the petitioner to turn around to state that the proceeding was without jurisdiction. - HC
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Reopening of assessment u/s 147 - Transfer Pricing Reference u/s 92CA - Revenue does not dispute that both the source of income and the subject investment are mentioned in the books of accounts, and the Revenue also does not contend that the petitioner did not have the necessary resources to make such investment. Importantly, the Revenue does not contend that the payment of premium by the petitioner to MMG's shareholders for purchase of the shares will not be reflected in the MMG's financials. The petitioner's objections in this regard are rejected only on the ground that the explanation could be considered at the time of reassessment. - Both the notice and order quashed - HC
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Reopening of assessment u/s 147 - Accommodation entries receipt - Without scrupulous compliance of jurisdictional parameters, the Assessing Officer was obviously not competent to invoke the provision of Section 147 of the Act which are drastic in nature. The assumption of jurisdiction under Section 147 is thus clearly without sanction of law and void ab initio. The consequent reassessment order is thus clearly bad in law. - AT
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MAT computation u/s 115JB - Adjustment of resultant gains / losses of the amalgamation - Accumulated loss - cancellation of shares - Share Capital was reduced with a corresponding reduction in the existing accumulated losses and the transaction was a mere Book-entry and nothing more. The assessee wrote-off the amount of Rs.1682.91 Lacs in the Profit & Loss Account and added back the same while computing the income under normal provisions. However, while computing Book-Profits u/s 115JB, the assessee does not add back the same on the ground that it is actual loss - the loss is not actual loss but the same is specifically to be added to Book Profits as per Explanation (1)(d) of Section 115JB(2) of the Act. - AT
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TDS u/s 195 - withholding of tax - GBAs/BDAs are not paid for rendering any managerial, technical or consultancy services but only for promoting sale on behalf of the assessee and therefore such payments are business income of the payees which squarely falls within the scope of the Article 7 of the respective DTAAs relating to ‘business profits’. It is an undisputed fact that the GBAs/ BDAs located overseas are non-residents and do not have PE in India. Hence, the payments to GBAs/ BDAs being the business profit of the GBAs/ BDAs are not taxable in India in the absence of PE. The assessee is therefore not liable to withhold any tax on such payments. - AT
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Addition of agricultural income as unexplained income - No agriculture activities can be said to be done. Further, in the form No. 7/12, there is no details of farming being done by the assessee and the nature of the crops, and the quantification of the land, has not been mentioned. - Additions confirmed - However, AO directed to make a disallowance to the extent of 25% of the expenditure on account of earning of agriculture income and pass an order accordingly - AT
Customs
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Validity of Issuance of summons - The learned Courts below did not consider that at the stage of Section 200 of Cr. P.C., the exemption can only be given to a public servant who has filed a case in his official capacity, but such exemption is not available with the other witnesses. In the present case, it was the duty of respondent no.2 to prove its case against the petitioners and show sufficient evidence on record, however, the respondent no. 1 in the present case did not examine even the panch witnesses to prove its case. Therefore, the Court below has summoned the petitioner without any material on record for prima facie satisfaction. - HC
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Issuance of summons directly to the Managing Director of the petitioner Company without providing the alternative of it being issued to an authorized representative - This writ petition is disposed off by directing the departmental authorities issuing the summons under Section 108 of the Act of 1962 not to issue summons directly to the Managing Director of the petitioner Company and on the other hand to issue it to an authorized representative of the Company in terms of the provisions of the Circular - HC
IBC
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Law of Limitation - Insolvency Proceedings - Apex Court's Ruling
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CIRP - Recovery of electricity dues - Liability of successful Auction Purchaser in the liquidation proceeding of the Corporate Debtor - The submission of the Appellant that they are entitled to recover the entire pre-CIRP and post-CIRP dues from the Successful Auction Purchaser i.e. Respondent No. 1 cannot be accepted. - The Appellant is entitle to claim its electricity dues both pre-CIRP and post-CIRP in accordance with Section 53 of the Code - AT
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Initiation of CIRP - Period of Limitation - Exclusion of certain period - NCLT rejected the application - The Adjudicating Authority has committed error in rejecting the Application filed under Section 9 by the Appellant as barred by time. A perusal of the order of the Adjudicating Authority indicates that only two grounds were considered by the Adjudicating Authority, that is, Application having barred by time and pre-existing dispute as raised by the Corporate Debtor - matter is remitted to the Adjudicating Authority to pass an order of admission on Section 9 Application after giving an opportunity to the parties to enter into settlement. - AT
Service Tax
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Construction for the purpose of Commerce and Industry or not - Hut Bazaar - The issue of collection of nominal fee with respect to the stalls for facilitating the farmers is not an activity of commerce. It is held that Commissioner (Appeals) though had been thoroughly meticulous about the entire demand proposed in the show cause notice but has been wrong while considering the construction of ‘Hut Bazaar’ as an activity of commerce and industry. - AT
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Refund claim filed by legal heir of the proprietress - seeking refund tof amount paid by the proprietary concern after the expiry of proprietress, in respect of the amount due in terms of VCES - refund claim has been made in respect of the amounts deposited in terms of the VCES, and as per Section 109 of the Finance Act, 2019 no refund of the amounts paid under the said scheme will be refunded under any circumstances. - AT
Central Excise
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Constitutional validity of amendment in the Area Based exemption - Denial of benefit of exemption - exclusion of a particular khasra in the Excise Notification - It is apparent from the prayer clause of the writ petition that the petitioner says that exclusion of a particular khasra in the Excise Notification No. 50/2003-CE dated 10.06.2003 is merely procedural, still, it touches upon the policy of the State Government and, hence, should not be rightly interfered by the Court exercising review jurisdiction under Article 226 of the Constitution of India. - HC
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Validity of revival notices - original show cause notices were issued to the petitioners between the years 2007 and 2012 - revival of these proceedings after a gross inordinate and unexplained delay is clearly unjustified. Furthermore, non-intimation of the decision to transfer the original show cause notices to the Call Book to the petitioners herein, has resulted into grave prejudice being caused to them because on account of the delay in revival of the notices, the opportunity of contesting the assessment proceedings has been severely impaired. - HC
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Valuation of excisable goods - genuine factory gate price - No documents have been produced before us by the Revenue to substantiate their claim that goods were not sold to anyone except individuals, company employees, PSUs and Jaipur and Bikaner Trading Co. No evidence has been adduced by the Revenue to show either that the prices shown in the ledgers are not genuine prices or that all these buyers are of special classes of buyers. Therefore, the argument of the Revenue that there was no genuine factory gate price is not borne out by facts. - AT
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Validity of SCN - Whether the corrigendum/addendum to the show-cause notice is valid in law? - The addendum supplements the allegations in the original show-cause notice and states that out of the original demand of inadmissible credit, remaining amount is also inadmissible on the allegation that the CENVAT credit was fraudulently availed on bogus invoices issued by non-existing/fraudulent suppliers. Therefore, there is no legal infirmity in the issuance of addendum in this regard. - AT
Case Laws:
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GST
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2022 (5) TMI 1296
Levy of GST - royalty payable to the Government on mining of minerals - petitioner denies his liability of G.S.T. on royalty - HELD THAT:- Similar issue decided in the case of M/S SILVERLINE AUTOMOBILES VERSUS STATE OF UP AND 3 OTHERS [ 2022 (3) TMI 1048 - ALLAHABAD HIGH COURT ] where it was held that Since in similar matters, interim orders have been passed by this Court in the light of interim orders passed by Hon'ble Supreme Court, therefore, the petitioner is also entitled for interim relief. Considering the facts and circumstances of the case, the petitioner is also entitled to interim order in terms of the aforequoted interim order passed in the case of M/S Silverline Automobiles - application allowed.
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2022 (5) TMI 1295
Detention of seized goods alongwith the vehicle - prayer has been made for release of the said vehicle stating that the petitioner is suffering losses and is unable to make his both ends meet - HELD THAT:- There are no reason to oppose any move by the petitioner if the provisions of law permit release of the vehicle before or after its confiscation by payment of an appropriate fine which has been determined or may be determined and imposed upon the vehicle in question. In case, any such application is filed, the appropriate authority would consider the same strictly in accordance with the provisions of Section 130 of the CGST within a period of two weeks from today. Application disposed off.
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2022 (5) TMI 1294
Violation of principles of natural justice - fair opportunity of hearing not provided - ex-parte order - excess claim of Input Tax Credit - HELD THAT:- This Court, notwithstanding the statutory remedy, is not precluded from interfering where, ex facie , we form an opinion that the order is bad in law. This we say so, for two reasons- (a) violation of principles of natural justice, i.e. Fair opportunity of hearing. No sufficient time was afforded to the petitioner to represent his case; (b) order passed ex parte in nature, does not assign any reasons sufficient even decipherable from the record, as to how the officer could determine the amount due and payable by the assessee. The order, ex parte in nature, passed in violation of the principles of natural justice, entails civil consequences. We also find the authorities not to have adjudicated the matter on the attending facts and circumstances. Petition disposed off.
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2022 (5) TMI 1293
Interest on belated deposit of admitted tax in instalment u/s 80 read with Rule 158 - Request to make payment in Installments - self-assessed returns furnished in terms of section 39 read with section 59 of CGST/OGST Act - HELD THAT:- When the levy of interest emanates as a statutory consequence and such liability is a direct consequence of non-payment of tax, such a levy is different from the levy of interest which is dependent on the discretion of the assessing officer. The default arising out of non-payment of tax on an admitted liability in the case of self-assessment attracts automatic levy of interest, whereas the default in filing incomplete and incorrect return attracts best judgment assessment in which the levy of interest is based on the adjudication by the assessing officer. In equity, interest may be recovered in certain cases where a particular relationship exists between the creditor and the debtor. Interest is also payable where there has been misconduct or improper delay in payment, or in the case of money obtained or retained by fraud. It may also be allowed where the defendant ought to have done something which would have entitled the plaintiff to interest at common law, or has wrongfully prevented the plaintiff from doing something which would have so entitled him. However, payment of tax is not under a contract between the taxpayer and the State. There is plain repugnance between contract and taxation. Taxation is the very antithesis of contract. In the present case the admitted tax on self-assessment being not deposited within the period stipulated, the petitioner is liable to compensate the State Government by way of interest which is provided for under the statute. Plain reading of the provisions of Section 80 admits of no ambiguity that the Commissioner of CT GST is empowered to allow the payment of any amount due under the Act in monthly instalments not exceeding twenty-four subject to payment of interest under Section 50 and also subject to such condition and limitation under Rule 158. One of the conditions is reflected in the said provision itself, i.e., the instalment cannot be allowed in the circumstance when the liability to be discharged is on account of self-assessed returns. Therefore, necessary corollary would be that the Commissioner of CT GST is empowered to invoke Section 80 for allowing taxpayer to discharge liability in instalment when demand is raised under the statute - The term instalments in general parlance would mean equated periodical payments (money due) spread over an agreed period of time. This provision happens to be a beneficial piece of law to the tax payers to pay the demand in instalments along with interest. Nonetheless, as stated earlier, the amount should not be the amount due as per the liability as self-assessed in any return. Therefore, the amount which is payable pertains to a demand notice can be deferred or paid in instalments. It is admitted fact on record that the petitioner has deposited an amount of tax admitted in self-assessed returns beyond the time stipulated under Section 39 and hence the CT GST Officer, Bhubaneswar-II Circle, Bhubaneswar had raised demand of interest to the tune of Rs.68,15,506/- vide GST DRC-07 for the period April 2019 to December 2019 - Since interest is a part of tax and such tax being belated payment in respect of self-assessment, Section 80 of the OGST Act clearly excludes grant of instalment under the present fact-situation. However, the Commissioner is not conferred with power to allow such instalment in respect of amount due as per self-assessment return(s) furnished. Section 80 empowers the Commissioner to grant permission only to the taxable person to make payment of any amount due on instalment basis, on an application filed electronically in Form GST DRC-20 as prescribed under Rule 158. The Commissioner of CT GST is justified in rejecting the prayer of the petitioner to deposit the interest levied on account of belated deposit of admitted tax as per self-assessed returns furnished in terms of Section 39 read with Section 59 of the CGST/OGST Act in instalment under Section 80 read with Rule 158 - Petition dismissed.
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2022 (5) TMI 1292
Exemption form GST - Nashik Cambridge Pre-School - supply of Pre-school education service to its students against fee - supply of some goods to its Pre-school students, without any consideration - supply of some goods to its Pre-School students for some consideration - supply of transportation service to tits Pre-school students without any consideration - supply of transportation service to its Pre-school students for some consideration - supply of transportation service to its faculty and staff for some consideration - supply of canteen service to its faculty and staff for some consideration - Applicability of Serial No. 66 of the Notification No. 12/2017-CT (Rate) dated 28/06/2017. HELD THAT:- In the subject case, the applicant provides services by way of Pre-School education and as per 2(y) (i) above, the applicant i.e. Nashik Cambridge Pre-School can be considered as an Educational Institution - Since, Nashik Cambridge Pre-School can be considered as an Educational Institution , services provided by them to its students, faculty and staff attracts NIL rate of GST in view of Sr. No. 66. It is therefore held that, the services provided by Nashik Cambridge Pre-School to its students, faculty and staff attracts is covered under Sr. No. 66 of Notification No. 12/2017-CT, dated 28th June, 2017. Furthermore, Nashik Cambridge Pre-school is also entitled for Nil rate of tax as per Serial No. 66 of the Notification no. 12/2017-CT (Rate) dated 28/06/2017, on the supply of Pre-school education service to its students against fee; on the supply of transportation service to its Pre-school students without any consideration; on the supply of transportation service to its Pre-school students for some consideration ; on the supply of transportation service to its faculty and staff for some consideration and on the supply of canteen service to its faculty and staff for some consideration. Whether Nashik Cambridge Pre-school is entitled for Nil rate of tax is per Serial No. 66 of the Notification No. 12/2017-CT (Rate) dated 28/06/2017, on the supply of some goods to its Pre-school students, without any consideration? - HELD THAT:- It appears that the applicant will be supplying goods such as: books, stationery, drawing material, sports goods, foods items, milk, beverages to its students without any considerations, as the cost thereof will be covered in the fee charge - it is seen that, the cost of such goods, are included in the education fees charged by the applicant which would imply that the applicant will be supplying the said goods as part of a composite supply comprising of principal supply in the form of educational services and Since, the necessary books, stationery, drawing material, sports goods, foods items, milk, beverages are supplied to its students as a part of such composite supply wherein the principal supply of service is exempted under Serial No. 66 of the Notification No. 12/2017-CT (Rate) dated 28.06.2017, Nashik Cambridge Pre-school is entitled for Nil rate of tax is per Serial No. 66 of the Notification No. 12/2017-CT (Rate) dated 28/06/2017, on the supply of the mentioned goods to its Pre-school students, without any consideration. Whether Nashik Cambridge Pre-school is entitled for Nil rate of tax is per Serial No. 66 of the Notification No. 12/2017-CT (Rate) dated 28/06/2017, on the supply of some goods to its Pre-School students for some consideration? - HELD THAT:- The very fact that the applicant has mentioned that some of the goods mentioned above are also sold by the applicant for some consideration would imply that the said sale of goods are not a part of any composite supply. Therefore, as a standalone supply of goods the impugned activity cannot be covered under Serial No. 66 of the Notification No. 12/2017-CT (Rate) dated 28/06/2017, which is applicable only in respect of supply of service.
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2022 (5) TMI 1291
Levy of GST - Revenue Sharing invoices raised by one party on to another party - the outward supply of services is exempt or not - HELD THAT:- Any person registered or desirous of obtaining registration under CGST Act 2017 can seek advance ruling only in relation to the supply of goods or services or both being undertaken or proposed to be undertaken. In the instant case, it is observed that Auriga Research Private Limited, who have filed the application, is not a supplier. Thus the instant application is not admissible and liable for rejection in terms of Section 98(2) of the CGST Act 2017. The application is hereby rejected as inadmissible , in terms of Section 98(2) of the CGST Act 2017.
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2022 (5) TMI 1290
Seeking grant of bail - misuse of ID password of UDIN and OTP - Allegation against the Chartered Accountant - preparation of forged certificates for bogus/nonexistent companies to claim a GST refund - offence under Section 132 (1)(i) read with 132(1)(b)(c)(e)(f) CGST Act 2017 - HELD THAT:- This Court is of the considered view that the allegations levelled against the applicant/accused Sunil Mehlawat are that he shared his ID password of UDIN and OTP with his friend i.e. the co-accused namely Gaurav Dhir and on 16.05.2022, co-accused Garuav Dhir informed him that he had generated some UDIN (as mentioned in the instant application) for CA certificate for filing certain refund claims pertaining to firms which were later on found to be fraud/fake. Hence, applicant/accused Sunil Mehlawat is involved in causing a loss to Government Exchequer to the tune of Rs.7,60,89,626/- and thus has committed offence under Section 132 (1)(i) read with 132(1)(b)(c)(e)(f) CGST Act 2017 and he has actively participated in the preparation of forged certificates for bogus/non-existent companies to claim a GST refund and thereby causing loss to the public exchequer. Considering the gravity and the nature of the allegations levelled against the applicant/accused and the fact that the investigation of the case is at nascent stage and further considering the fact that now a days economic offences are rampant and should be dealt with due firmness - in light of the above discussion and considering the seriousness and nature of the offence allegedly committed by the applicant/accused, this Court is not inclined to grant concession of bail to applicant/accused Sunil Mehlawat. Application dismissed.
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Income Tax
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2022 (5) TMI 1289
Refund the amount adjusted in excess of 20% of the disputed demand - action of the respondents and the Revenue Authorities is violative of Article 265 of the Constitution of India. - need to pass strictures against the offices - HELD THAT:- As the action of recovery on the part of the respondents was de-hors the statutory provisions specified u/s 220(6), 245 and was without jurisdiction in terms of Sections 222 and 223 of the IT Act. The respondents have also failed to honour the series of judgments, referred to above which for them are merely pieces of papers. They have completely given go-bye to the principles of judicial discipline, majesty of law and even their action is contrary to their own circulars. This high-handed action of the respondents is against Article 14, 19 and 265 of the Constitution of India. In spite of categorical directions of the Apex Court in Kamlakshi Finance Corporation Ltd. [ 1991 (9) TMI 72 - SUPREME COURT] This Court considers that in the present case, the respondents have totally ignored the provisions of law, the judicial pronouncements of higher forum and the action of the respondents in not considering the appeal in time and even till date, is against the principles of natural justice, the requirement of law, fair play and therefore, the action of the respondents and the Revenue Authorities is violative of Article 265 of the Constitution of India. Accordingly, on perusal of the case in hand, apart from allowing the writ petition, this court further deems it appropriate to issue strictures to the effect that appropriate departmental action be initiated against the officers and authority concerned of the respodnent-Revenue who are involved in non-consideration of appeal of the petitioner in time as well as for not obeying and considering the judgments of the Apex Court, referred to above as well as the provisions of Section 220(6), 245 and the circulars of the department. The Chief Commissioner of Income Tax, Rajasthan, Jaipur, Udaipur, etc. is directed to apprise about pendency situation and statistics to the Rajasthan State Legal Services Authority, Jaipur so that in the interest of justice, the same can be considered and appropriate correspondences can be made with the higher/appropriate authorities in the larger public interest as illegal recoveries, levy of interest is imposed for the reasons beyond their control. In the case in hand, this Court further deems it appropriate to impose a cost upon the respondents which is quantified to Rs.50,000/- which the respondent-department shall pay itself or if it so chooses, the same may be recovered equally from respondents No.1 2 and be deposited with the Rajasthan State Legal Services Authority, Jaipur and assessee in half and half within two months of passing of this order.
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2022 (5) TMI 1288
Reopening of assessment u/s 147 - scope of amended procedure u/s 148A - disallowing the loss so computed and reducing the same from the business loss of the assessee entitled to be carried forward under Section 72 for set off in future - HELD THAT:- This Court finds that the Petitioner has not brought on record anything to prove that the impugned notice issued shall be governed by the amended procedure under Section 148A of the Act. This Court is also of the view that Petitioner is basically challenging the impugned order on merits. The Supreme Court in Commissioner of Income Tax and Ors. Vs. Chhabil Das Agarwal [ 2013 (8) TMI 458 - SUPREME COURT] has held that as the Income Tax Act, 1961 provides complete machinery for assessment/reassessment of tax, assessee is not permitted to abandon that machinery and invoke jurisdiction of High Court under Article 226. This Court is further of the view that the present case does not fall under the exceptional grounds on which a writ petition is maintainable at the interim stage in tax matters.
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2022 (5) TMI 1287
Compounding of offences under Section 279 - judicial element/function of compounding of offences - HELD THAT:- This Court is of the view that the power of compounding of offences is a quasi-judicial power, as it definitely entails a judicial element/function and the discretion in compounding is not unfettered. Consequently, this Court is of the view that the petitioner is entitled to the benefit of extension of limitation as directed by the Supreme Court in Cognizance for Extension of Limitation Suo Motu Writ Petition . [ 2020 (5) TMI 418 - SC ORDER] Accordingly, the order passed by the respondents-Revenue is set aside and the CCIT (TDS), Delhi-2 is directed to consider afresh the petitioner s application for compounding of offences under Section 279 of the Act on merits and communicate to the petitioner a reasoned decision thereon within eight weeks.
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2022 (5) TMI 1286
Validity of reopening of assessment u/s 147 - requirement of speaking order after raising the objections - Change of opinion - Information about reasons to believe - as submitted without giving any reasons and without disposing the objection of the petitioner for reopening of the assessment impugned order has been passed - HELD THAT:- The petitioner has participated in the proceedings pursuant to a notice issued under Section 148 of the Income Tax Act, 1961 knowing fully well the reasons why the notice was issued for reopening of the assessment. The petitioner in their representation/reply dated 29.10.2019 has traced out the entire history and the circumstances under which the land which originally belonged to Piramal Finance Services Limited (PFSL) was transferred to Harita Finance Limited (HFL) which later named as TVS Finance and Services Limited and that a sale agreement was signed and the possession of the land was handed over to the said company. The representation/reply also states that thereafter the land was capitalized in the books of accounts of the TVS Finance and Services Limited (formerly Harita Finance Limited) and that the land was valued at Rs.102.50 Crores - By 30.03.2020, it was stated that the difference between the sale consideration (Rs.102.50 Crores) and the outstanding loan amount against the lands were settled (Rs.14.70 Crores) and was offered to tax under the head capital gains by TVS Finance and Services Limited (TVSFC) in the Assessment Year 2009 to 2010. The petitioner has further stated that though the land was transferred to TVS credit Services Limited, the same was transferred to the petitioner s vendor namely TVS Motor Services Limited at cost by TVS Finance Services Limited with TVS Credit Service Limited being confirming a party by an agreement to sale dated 20.01.2010. Thus, it cannot be stated that the petitioner was not aware of the reasons for reopening of the assessment. The petitioner has replied to the proceedings initiated under Section 148 of the Income Tax Act, 1961. The petitioner has not asked for a speaking order. After the objections, the petitioner was overruled by the respondents vide Impugned Assessment Order, the petitioner has now come forward with the present case to make it seems as if decision in the case of GKN Drive Shafts (India) Limited [ 2002 (11) TMI 7 - SUPREME COURT] has not been followed. Whether the income had escaped assessment or not can be now determined only in an appellate proceedings against the Impugned Assessment Orders passed under Section 147 read with Section 144B of the Income Tax Act, 1961. Having given up the right to ask for a speaking order, the petitioner cannot now turn around and question the Impugned Order by stating that it has been passed over-looking the safeguard prescribed in the case of GKN Drive Shafts (India) Limited. Further, case also does not warrant a speaking order in terms of the aforesaid decision of the Court. We do not find any merits in the present writ petition. Therefore, this writ petition is liable to be dismissed and accordingly dismissed.
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2022 (5) TMI 1285
Revision u/s 263 - Services provided by the petitioner should not be treated as a consultancy services and taxed under section 9(1)(vii) - AO has determined the PF of the assessee in India but has not thoroughly examined the applicability of 115JB - case of the petitioner was selected for scrutiny under CASS and a notice under section 143(2) was issued to the petitioner - HELD THAT:- A reading of the Explanation, makes it clear the power of the Principal Commissioner or Commissioner under sub-section extends to such matters as had not been considered and decided in an appeal. The appeal has not been considered and decided. Thus, there is no embargo under Section 263 of the Income Tax Act, 1961 for the 1st respondent to pass order. The scope of appeal before the Appellate Commissioner is confined to tax ability of receipts towards technical services only. The Assistant Commissioner has not been considered the issue from the point of view Section 115 JC of the Income Tax Act, 1961. Whether the facts on merits warrants invocation of Section 11JB of the Income Tax Act, 1961 or not would render the proceedings without jurisdiction. Invocation of Section 263 of the Income Tax Act, 1961 by the first respondent on 15.03.2021 vide notice bearing Reference No.CIT/IT/CHE/113/2020-21 which has culminated in the impugned order dated 30.03.2021 cannot be said to be without jurisdiction merely because the intimation of DIN to the order passed under Section 263 was one day after the order was passed. Para No.5 of the CBDT Circular No.19/2019 dated 14.08.2019 makes it clear that communication issued manually can be regularised within 15 days of the issuance. As the scope of judicial review under Article 226 of the Constitution of India is limited, I am refraining for discussing on merits of the case. Suffice to state that the proceeding initiated by the 1st respondent was not without jurisdiction. The argument of the petitioner that the assessment order was not prejudicial to the interest of revenue and therefore the proceeding under Section 263 was liable to be quashed cannot be countenanced. A proceeding under Section 263 of the Income Tax Act, 1961 cannot be scuttled. Further, the petitioner participated in the proceeding initiated under Section 263 of the Income Tax Act, 1961. Therefore, it is not open to the petitioner to turn around to state that the proceeding was without jurisdiction. Thus find any merits in the present writ petition. This writ petition is therefore liable to be dismissed with liberty to the petitioner to work out the Appellate remedy before the Appellate Tribunal under Section 254.
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2022 (5) TMI 1284
Reopening of assessment u/s 147 - Transfer Pricing Reference u/s 92CA - Non disclosure of loan extended to its Associated Enterprise [MMG] and there is difference in the petitioner's investment in purchasing MMG's shares as per the respective financials of the petitioner and MMG - HELD THAT:- The first respondent has initiated proceedings for reopening of the assessment for the Assessment Year 2012-13 insofar as the petitioner's loan transaction with MMG on twin grounds; The first respondent has reasoned that the petitioner has not disclosed advance to the Associated Enterprise (MMG) in the Auditors Certificate in Form No.3CEB and because the advance amount is not specifically mentioned in this certificate, the AO could not refer the petitioner's loan transaction with MMG to the TPO. The first respondent has also opined that if there is a TPO reference and re- adjudication, the disallowance towards interest will have to be reassessed. As undisputed that the petitioner has enclosed Auditor's Certificate in Form No. 3CEB in the prescribed format furnishing the details of the transaction as required i.e., the nature of transaction, the rate of interest, interest computed and the method adopted in determining Arm's Length Price. There is no allegation that the petitioner has omitted or not disclosed any particular detail as required in this Form. As undisputed that the petitioner's loan transaction with MMG was examined in the proceedings under Section 143(2) of the I-T Act. The petitioner with the issuance of the notice under Section 143(2) is called upon to justify the advance to MMG, and after considering the petitioner's justification with reference to the disallowance of notional interest during the previous assessment years, the AO has disallowed interest in the premise that the petitioner has utilized loan bearing advances to lend loan to its associated enterprise, MMG. This circumstance clearly demonstrates that the value of the petitioner's advance to MMG was available with the AO and has received consideration. It cannot be opined that the petitioner had either omitted or failed to disclose the advance/loan transaction with MMG. As such, it must be concluded that the Revenue has failed to establish one of the necessary conditions viz., that the petitioner has either omitted or failed to disclose fully or truly material circumstances. In that event the first respondent could not have assumed jurisdiction for reassessment and issued the impugned notice dated 29.01.2018 (Annexure-E). Revenue does not dispute that both the source of income and the subject investment are mentioned in the books of accounts, and the Revenue also does not contend that the petitioner did not have the necessary resources to make such investment. Importantly, the Revenue does not contend that the payment of premium by the petitioner to MMG's shareholders for purchase of the shares will not be reflected in the MMG's financials. The petitioner's objections in this regard are rejected only on the ground that the explanation could be considered at the time of reassessment. This Court must opine that the question framed for consideration must be answered in favour of the petitioner concluding that the Revenue has failed to establish that the petitioner has either omitted or failed to disclose material circumstances or that there is reason even for a subjective belief that any income has escaped tax - WP allowed.
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2022 (5) TMI 1283
Addition on account of under valuation of stock - valuation of the product sold by the assessee which was sarees - admission of the Director of the assessee in this regard made twice in a gap of about one month - survey operation under Section 133A - ITAT deleted the addition - HELD THAT:- The issue as to whether the said statement could have been made the sole basis for revision of assessment or to conclude that there was under valuation of the stock elaborately discussed by the CIT(A). CIT(A) also took note of the decision in the case of CIT Vs. Khader Khan Son [ 2007 (7) TMI 182 - MADRAS HIGH COURT] which was affirmed as reported in [ 2013 (6) TMI 305 - SC ORDER] it has been held that the Department should not insist on making any disclosure and further such disclosure made in the course of survey should not be relied upon and the assessment should be based on the papers found and impounded during the course of survey. After noting the said decision, the CIT(A) has, in our view, thoroughly examined the factual position including the reply given by the assessee to the remand report called for from the assessing officer. Ultimately, the appeal was allowed in favour of the assessee by order dated 11th July, 2014. Tribunal on its part re-examined the particulars and took note of the stand taken by the assessee during the assessment proceedings as well as before the CIT(A) and the factual findings recorded by the CIT(A) and dismissed the appeal filed by the impugned order. Thus, we find that the entire issue is fully factual and the first appellate authority as well as the tribunal have appreciated and re-appreciated the findings on record and granted relief to the assessee. Thus, we find that there is no question of law much less the substantial question of law arising for consideration in this appeal.
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2022 (5) TMI 1282
Assessment u/s 153C - Period of limitation - Validity of assessment order framed u/s 143(3) - HELD THAT:- As carefully perused the orders of the authorities below. We are of the considered view that in the case of a person other than a Searched Person , provisions of section 153C of the Act are applicable and in such a case, the date of search or date of requisition, as referred to in Section 153A of the Act is substituted by the date of handing over of documents by the Assessing Officer of the Searched Person to the Assessing Officer of the Other Person . Since the date of recording satisfaction is 02.12.2016 which falls in the previous F.Y. 2016-17 relevant to Assessment Year 2017-18, the immediately preceding six years are Assessment Years 2011-12 to 2016-17. Thus, the year under appeal clearly falls in the block of six years covered by section 153C of the Act. Thus, the assessment for Assessment Year 2015-16 could have been made only u/s 153C of the Act after compliance of provisions of that section. We draw support from the decisions of the Hon'ble High Court of Delhi in the case of RRJ Securities Ltd [ 2015 (11) TMI 19 - DELHI HIGH COURT] and ARN Infrastructure India Ltd [ 2017 (4) TMI 1194 - DELHI HIGH COURT] Assessment order dated 31.12.2016 is framed u/s 143(3) of the Act for the impugned Assessment Year 2015-16. In our considered view, this year falls within the period of six years when counted from the date of recording satisfaction note u/s 153C of the Act which is the deemed date of search. The Act has been amended recently by the Finance Act, 2017 with prospective effect i.e. Assessment Year 2018-19. Therefore, we hold that the assessment order framed u/s 143(3) of the Act on the facts of the case is invalid. We, accordingly, hold the assessment order as bad in law. Decided in favour of assessee.
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2022 (5) TMI 1281
Revision u/s 263 - CIT-A revising the assessment order framed u/s.143(3) r.w.s. 147 - nature of land sold by assessee that being agricultural land or not? - HELD THAT:- Admittedly, the assessee has carried out agricultural activity which is assessee s family traditional vocation. It is clear that in the sale deed the properties clearly defined as agricultural land in the schedule of property. Even the AO during original assessment proceedings noticed the chitta and adangal i.e., records for the relevant Fasli year and same was accepted by the AO during assessment proceedings. The assessee has cultivated this land and grown paddy from 2001 to 2004 and for this produced a copy of the adangal record for S.No.255 256 issued by the Tehsildar office, Solinganallur Taluk, Kancheepuram Dist. The assessee s land is agricultural land and he has cultivated till 2004 but sold this land in 2005. Even otherwise the AO has considered all these documents and formed an opinion that the land sold is agricultural land. Now, the PCIT want to review the order on same set of facts, which according to us is not permissible under law. The AO has taken one view and that is the only permissible view in view of the above given facts that the land sold by assessee is agricultural land and we find no error in the assessment order or prejudicial in the assessment order to the Revenue. Hence, we reverse the revision order passed by PCIT and uphold the assessment order - Appeal of assessee allowed.
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2022 (5) TMI 1280
Reopening of assessment u/s 147 - Accommodation entries receipt - HELD THAT:- We find sufficient basis for plea of the assessee that even the conditions of 1st proviso to Section 147 is not complied with. It is not shown as to how the assessee has failed to disclose material facts fully and truly in the original statement . The assessee is not expected to disclose something which he is not privy to. In the absence of any food grain bills received by the assessee from the suppliers named in the statement, we are unable to understand the basis for alleging any failure on the part of the assessee as perceived in the reasons recorded. In these peculiar facts, we are of the firm opinion that neither the strict condition of main provision of Section 147 is fulfilled nor the additional conditions embedded in 1s t proviso has been complied with. The twin conditions of format ion of belief towards escapement of income and such escapement attributable to failure on the part of the assessee are solely missing in the instant case. Without scrupulous compliance of jurisdictional parameters, the Assessing Officer was obviously not competent to invoke the provision of Section 147 of the Act which are drastic in nature. The assumption of jurisdiction under Section 147 is thus clearly without sanction of law and void ab initio. The consequent reassessment order is thus clearly bad in law. In this view of the matter, the reassessment order framed in consequence of invalid notice issued under Sect ion 148 is requires to be quashed. Having held the impugned re-assessment order framed without fulfilling prerequisites of Section 147 of the Act to be bad in law, we do not consider it expedient to deal with the challenges raised by the assessee on merits of additions
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2022 (5) TMI 1279
Penalty u/s 271G - non furnishing of segmental transaction has hampered the TPO from benchmarking various transactions - HELD THAT:- From the facts of the case, it is evident that the Assessee has furnished the necessary details for determination of the arm s length price though (ALP) was unable to provide segment-wise profit loss account of the AE segment and the non AE segment since the Assessee did not maintain separate books of account for AE non AE segments. As it is noticed that the co-ordinate bench of this Tribunal in Deputy Commissioner of Income Tax 10(1)(2), Mumbai vs Kama Schachter Jewellery (P) Ltd [ 2021 (2) TMI 1132 - ITAT MUMBAI] has decided this issue with identical facts relating to furnishing of segmental data of Profit Loss Account of AE and non AE segment has deleted the penalty levied under section 271G. - Decided against revenue.
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2022 (5) TMI 1278
Penalty proceedings u/s 271(1)(c) - unverifiable selling expenses, Disallowance of EPF ESIC after due date added u/s 2(24)(x) read with section 36(1)(va), Deemed dividend u/s 2(22)(e), Bogus creditors, Surrender on account of unverifiable creditors - HELD THAT:- As perused the orders passed by the authorities below, specifically the impugned order wherein the Commissioner has observed that the Assessee has not offered any explanation for rebutting the presumption of concealment and even also failed to mention any worthwhile new facts and evidence in order to show the transactions, even if not confirmed by the parties with whom the Assessee has dealt with, were genuine/real. Therefore, virtually in this case no explanation has been offered in the penalty proceedings. Hence, the penalty has been rightly levied u/s 271(1)(c) of the Act. Before us as well, the Assessee has failed to place on record any material to contradict the findings of the ld. Commissioner. Even otherwise we do not find any reason or material to controvert the findings given by the Commissioner in upholding the levy of penalty imposed by the Assessing officer and therefore in the absence of any cogent reason and/or material, we are constrained to dismiss the appeal of the Assessee and to uphold the impugned order - Decided against assessee.
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2022 (5) TMI 1277
Disallowance u/s. 80IC - assessee has set up a manufacturing unit for cell phone battery, chargers and other accessories and carried out manufacturing process and fulfils the conditions prescribed u/s. 80IC - AO disallowed claim as articles manufactured by the assessee fall in the 13th Schedule, but not covered in the 14th schedule. Secondly, the assessee is only assembling mobile phone battery etc. and cannot be called as a manufacturer - HELD THAT:- As decided in own case [ 2018 (11) TMI 1328 - ITAT DELHI] assessee has set up a manufacturing unit for cell phone battery, chargers and other accessories and carried out manufacturing process and fulfils the conditions prescribed u/s. 80IC - Decided against revenue.
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2022 (5) TMI 1276
Deemed dividend u/s.2(22)(e) - CIT(A) deleting the addition made by AO of treating the loan received from Rajshree Automotive Pvt. Ltd., as deemed dividend - HELD THAT:- As the issue is covered in regard to deemed dividend assessed by AO u/s.2(22)(e) of the Act, as the same land was under consideration by Tribunal in immediate preceding year i.e., assessment year 2013-14 [ 2019 (9) TMI 1646 - ITAT CHENNAI] hence taking a consistent view and taking the issue as covered in favour of assessee, we confirm the order of CIT(A) and dismiss this issue of Revenue s appeal. Disallowance u/s 14A r.w.r. 8D - HELD THAT:- We noted that the Tribunal in immediate preceding year [ 2019 (9) TMI 1646 - ITAT CHENNAI] deleted the addition in regard to disallowance under Rule 8D(2)(ii) but sustained the disallowance under Rule 8D(2)(iii) to the extent of Rs.32,213/-. Even now, the ld.counsel for the assessee agreed that the order of CIT(A) to the extent of same investment made of Rs.64,42,600/- can be considered for making disallowance u/s.8D(2)(iii) and hence, the order of CIT(A) can be reversed. In view of the above, we are of the view that this issue is covered by Tribunal s order in earlier year against the assessee and hence, we reverse the order of CIT(A) to the extent of disallowance of Rs.32,213/- deleted by CIT(A) under Rule 8D(2)(iii). This issue of Revenue s appeal is allowed.
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2022 (5) TMI 1275
MAT computation u/s 115JB - Adjustment of resultant gains / losses of the amalgamation - write off of investments consequent to reduction in capital of the subsidiary, in computing book profits under provisions of section 115JB of the Act - Whether section 115JB is a self-contained code and hence only specified adjustments can be added or excluded from book profits? - HELD THAT:- FFL got merged with the assessee w.e.f. 01.04.2008 and the amalgamation was accounted for by the assessee on Pooling of interest method. According to this method, the assets and liabilities are recorded at Book Value. The resultant gains / losses of the amalgamation have been adjusted through Capital Reserves / General Reserves Surplus and the same have not been routed through Profit Loss Account. This would show that the transactions were capital in nature. M/s FFL was having 100% subsidiary in the name of Forbes Technosys Ltd. (FTL) wherein it held 210 Lacs equity shares of Rs.10/- each. As a result of amalgamation, the shares of FTL were held by the assessee and FTL became direct subsidiary of the assessee. The Book Value of the investments was Rs.2061.17 Lacs. Subsequently a special resolution was passed by the equity shareholders of FTL on 05.01.2010 approving the reduction of paid-up share capital by cancelling the equity shares against debit balance of Rs.1710.28 Lacs standing in the Profit Loss Account as on 31.03.2009. It could be seen that there was existing accumulated losses to the extent of Rs.1710.28 Lacs as on 31.03.2009 which were sought to be wiped-off by cancellation of shares. Accordingly, 1,71,02,800 shares of Rs.10/- each got cancelled and extinguished leaving remaining equity shares numbering 38,97,200 with the assessee Share Capital was reduced with a corresponding reduction in the existing accumulated losses and the transaction was a mere Book-entry and nothing more. The assessee wrote-off the amount of Rs.1682.91 Lacs in the Profit Loss Account and added back the same while computing the income under normal provisions. However, while computing Book-Profits u/s 115JB, the assessee does not add back the same on the ground that it is actual loss We concur with the findings in the impugned order that the assessee s ownership in FTL remains the same i.e., 100% before and after the cancellation of shares and nothing moves from the coffers of the assessee company on this transaction. Therefore, the write-off would be nothing but a notional loss of subsidiary company. The decision of Special Bench Mumbai Tribunal in Bennett Coleman Co. Ltd. [ 2011 (9) TMI 1 - ITAT MUMBAI] clearly support this proposition wherein it was held that loss on reduction of equity capital could at best be a notional loss. The shareholders percentage of shareholding before and after the reduction of share capital remained the same and the loss was notional loss. Upon reduction of capital, nothing moves from the coffers of the company. Accordingly, the loss was held to be notional loss. In the present case, the loss is not actual loss but the same is specifically to be added to Book Profits as per Explanation (1)(d) of Section 115JB(2) of the Act. We find that Mumbai Tribunal in Shivalik Venture Private Ltd [ 2015 (8) TMI 979 - ITAT MUMBAI] held that the profit arising on transfer of capital asset by assessee to its wholly owned subsidiary company is liable to be excluded from the net profit. It was held by the bench that for the purpose of Section 115JB, net profit shown in profit and loss account should be understood as net profit arrived at after giving effect of notes, if any, given in Notes to Accounts. Accordingly, if an item of receipt which does not fall under definition of 'income' at all, the same would fall outside purview of computation provisions of Act and therefore, would not be includible in book profit' u/s 115JB. Applying the analogy, a reverse conclusion could be drawn that such losses were not to be deducted while computing Book-Profits u/s 115JB. Appeal dismissed.
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2022 (5) TMI 1274
TDS u/s 195 - withholding of tax - Income accrued to India - PE in India - payments were made to the consultant which are covered under section 9(1)(vii) - as per AO payments made by the assessee to GBAs were in the nature of fees for technical services ( FTS ) and do not fall within the scope of Article 7 of DTAA and that make available clause is applicable to the assessee - AR submitted that the payments made to GBAs are in the nature of commission for sales promotion services rendered by them on which no tax is required to be deducted at source as the same constitutes business income of the payees which is not taxable in India in the absence of PE of the payees in India - whether services rendered by GBAs were in the nature of business support services and not in the nature of managerial or technical or consultancy services? - HELD THAT:- As nature of business carried out by the assessee, arrangement with the GBAs/ BDAs, nature and scope of services rendered by these GBAs/BDAs discussed above it is obvious that the services rendered by these parties is purely for promotion of sales (of services) and soliciting new clients. The scope of service and the nature of services rendered by these parties have been very illustratively defined in the MSAs with these parties and cannot be subject to any kind of different interpretation. While arriving at his conclusion, AO/ CIT(A) failed to appreciate the exact nature of services rendered by GBAs/ BDAs. Just by naming these parties as consultant in the MSAs who are actually engaged in carrying out activities for sale promotion and in lieu thereof getting commission cannot be the basis of concluding that the sums paid to these parties are in the nature of FTS and therefore liable to be taxed in India having accrued in India. In our view the entire payments to the GBAs/ BDAs in all the three assessment years under consideration are not FTS for the reasons that no specialised technical services are rendered to the assessee and that the assessee did not have any personal interaction with these service providers and that these service providers acted within the scope defined in the MSA. GBAs/BDAs are not paid for rendering any managerial, technical or consultancy services but only for promoting sale on behalf of the assessee and therefore such payments are business income of the payees which squarely falls within the scope of the Article 7 of the respective DTAAs relating to business profits . It is an undisputed fact that the GBAs/ BDAs located overseas are non-residents and do not have PE in India. Hence, the payments to GBAs/ BDAs being the business profit of the GBAs/ BDAs are not taxable in India in the absence of PE. The assessee is therefore not liable to withhold any tax on such payments. There is plethora of judicial precedents wherein it has been held that commission payments to non-resident agents/ service providers for services like sales promotion, marketing, publicity, procuring sales order etc. are not FTS but business profit in the hands of the service provider to which Article 7 of the DTAA is applicable. Payments made to the GBAs/ BDAs are not FTS but business profits not taxable in the hands of GBAs/BDAs in India in the absence of PE by virtue of the Article 7 of the DTAA, no tax is required to be deducted at source on such payments. In the case of GE India Technology Centre Pvt. Ltd. [ 2010 (9) TMI 7 - SUPREME COURT] held that obligation under section 195(1) to withhold tax arrives only if the payment is chargeable to tax in the hands of non-resident recipient. Therefore, merely because a person has not deducted tax at source from a remittance abroad, it cannot be inferred that the person making a remittance has committed a failure in discharging his tax withholding obligations because such obligations come into existence only when recipient has a tax liability in India. Thus, the payments made to the GBAs/ BDAs are not subject to any withholding tax, such payments being not chargeable to tax in India. Appeal of assessee allowed.
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2022 (5) TMI 1273
Rectification of mistake u/s 154 - whether the assessee is eligible for deduction u/s 80P? - interest income received by the assessee society was not from co-operative society but from a co-operative bank, and therefore, not entitled to deduction u/s 80P(2)(d) - HELD THAT:- The powers of the Assessing Authority while processing a return u/s 143(1) is very limited. AO could make only prima facie adjustments which are apparent from the return filed. Only mistakes in law, arithmetic mistakes, incorrect claims apparent on the records, excess loss or disallowances apparent which are not disallowed etc, can be adjusted. The issue whether the assessee is eligible for deduction u/s 80P of the I.T.Act is not a matter that can come within the ambit of prima facie adjustment authorised u/s 143(1) of the I.T.Act. The CIT(A) in the impugned orders have mentioned that the issue of deduction u/s 80P of the I.T.Act is highly debatable, however, he has not gone to the extent of holding that the prima facie adjustment in 143(1) disallowing deduction u/s 80P of the I.T.Act was not permissible. The disallowance of the claim u/s 80P in the intimation is not in accordance with law and hence a mistake apparent on the records. When the CPC made a prima facie adjustment in the intimation disallowing partially the claim u/s 80P of the I.T.Act, the assessee was well within its rights to file a rectification petition before the Assessing Authority to rectify this mistake rather than straight away file an appeal before the CIT(A) as the primary facie adjustment was a mistake of law. The CIT(A) should have appreciated that, an order refusing to rectify a mistake is an appealable order u/s 246 of the I.T.Act and the hence the Commissioner (Appeals) has erred in dismissing the appeal on the grounds that the appeal should have been filed against the intimation and not the order u/s 154 of the I.T.Act. Also we are of the view that the interest received by a cooperative society from any other co-operative society is exempt from tax without any condition as per the provisions of section 80P(2)(d). Admittedly, the assessee during the relevant assessment years had only interest from The Kannur District Co-operative Bank Ltd. As decided in Kallara Service Co-operative Bank Ltd, Kottayam and others [ 2019 (10) TMI 1520 - KERALA HIGH COURT] interest received by a co-operative society from a cooperative bank on deposits held with such co-operative bank is interest received by a co-operative society from another co-operative society and hence would be covered by the exemption provided in section 80P(2)(d) of the I.T.Act - thus we hold that the assessee is entitled to deduction u/s 80P(2)(d) of the I.T.Act in respect of interest income received from Kannur District Co-operative Bank Ltd. for assessment years 2013-2014 to 2015-2016. Decided in favour of assessee.
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2022 (5) TMI 1272
Disallowance of education and secondary and higher secondary cess u/s. 40(a)(ii) - HELD THAT:- D.R. appearing for the Revenue has fairly conceded that this issue is being squarely covered by CBDT Circular No. 91/58/66 ITJ(19) dated May 18, 1967 operative w.e.f. 1962-63 wherein it is categorically held that when the matter came up before the Select Committee, it was decided to omit the word cess from the clause. The effect of the omission of the word cess is that only taxes paid are to be disallowed in the assessments for the years 1962-63 onwards . Following the above submission of the Ld. D.R. Ground No. 1 is hereby dismissed. Deduction under Section 80IA being profit from power generating unit - Claim rejected as not been made in the original return filed by the assessee, but only in the revised return filed by the assessee, therefore, invoking Section 80AC of the Act, the AO denied the benefit to the assessee - HELD THAT:- CIT(A) has observed that the claim of deduction under Section 80IA was allowed by the AO for the subsequent A.Y. 2013-14 and copy of the said assessment order was placed before the Ld. CIT(A), wherein the AO has not disputed the deduction of claim under Section 80IA of the Act. Even assuming the major claim has been made only during the revised return of income that issue is also answered in favour of the assessee by the Coordinate Bench of this Tribunal in the case of Parameshwar Cold Storage Pvt. Ltd. [ 2009 (7) TMI 878 - ITAT, AHMEDABAD] In the above circumstances we have no hesitation in confirming the order passed by the Ld. CIT(A) and the ground raised by the Revenue is hereby rejected. Disallowance of claim of deduction under Section 80JJA - AO hold that the claim of deduction under Section 80JJA was not made in the original return of income, but only in the revised return of income, therefore, denying the benefit of the deduction - CIT-A allowed the claim - HELD THAT:- A.R. appearing for the assessee supported the order of the CIT(A) and also submitted that the Revised return were been filed within the prescribed time limit and also before completion of the regular assessment. Therefore, the assessee is eligible for deduction under 80JJA. We do not find any infirmity in the order passed by the Ld. CIT(A) and this issues also like the 80IA claim made by the assessee in the revised return, which will be squarely applicable to this deduction made under Section 80JJA. Thus, we reject the ground raised by the Revenue and hence, dismissed. Addition of interest income tax refund - AO hold that the assessee received interest during the Financial Year, however, the same was not offered as income by the assessee - HELD THAT:- D.R. appearing for the Revenue fairly accepted that the CIT(A) has not deleted the interest amount, however, directions are being given to verify the refund status of the assessee. We do not find any infirmity in the direction given by the Ld. CIT(A). Thus, the ground no. 4 raised by the Revenue is hereby dismissed. Disallowance of interest expenses as per computation u/s 14A r.w.r. 8D - suo moto addition made by assessee - HELD THAT:- We do not labour our self in adjudicating the issue, since the same has been settled by Hon ble Supreme Court of India in the case of Maxop Investment Ltd [ 2018 (3) TMI 805 - SUPREME COURT] and PCIT vs. State Bank of Patiala,[ 2018 (11) TMI 1565 - SC ORDER] This ground raised by the Revenue is hereby dismissed.
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2022 (5) TMI 1271
Delayed remittance of employees contribution to PF ESI u/s.36(1)(va) - scope of amendment brought u/s.36(1)(va) - HELD THAT:- We find that an identical issue had been considered by the co-ordinate Bench of ITAT Chennai in the case of M/s.Adyar Ananda Bhavan Sweets India Ltd., [ 2021 (12) TMI 558 - ITAT CHENNAI] and by considering the amendment to the provisions of Sec.36(1)(va) of the Act, by the Finance Act, 2021, held that amendment brought u/s.36(1)(va) of the Act, is applicable from assessment year 2020-21 onwards and thus, payments made to employees contribution to PF ESI beyond due date specified under the respective Act, but within due date for filing of return of income u/s.139(1) of the Act, is an allowable deduction u/s.36(1)(va). Thus we are of the considered view that payments made to employees contribution to PF ESI beyond due date specified under the respective Acts, but within due date for filing of return of income u/s.139(1) of the Act, is an allowable deduction u/s.36(1)(va) of the Act and thus, we direct the Assessing Officer to examine the case of the assessee with reference to date of payment and in case, the Assessing Officer finds that the assessee has remitted the employees contribution to PF ESI on or before due date for filing return of income u/s.139(1) of the Act, then the Assessing Officer is directed to delete the additions made u/s.36(1)(va) of the Act - Decided in favour of assessee.
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2022 (5) TMI 1270
Nature of land sold - Capital asset or agricultural land - assessee reiterated that the land sold in village Bhaniyara is situated beyond 8 km of VMC limit and accordingly does not qualify as a capital asset under section 2(14) - AO invoked section 50C - competent authority to measure distance between the land sold and the municipal limits. - HELD THAT:- We are of the considered view, that since there is no prescribed authority to decide upon the distance between the village land and the limit of the closest municipal Corporation, therefore, we are unable to accept the assessee s argument that the report of Executive Engineer, Vadodara (R and B) division cannot be relied upon for determining the distance between the impugned land at village Bhaniyara and the nearest local municipal Corporation. However, at the same time, before reliance is placed on any document/ report by the Ld. CIT(A) which is proposed to be used against the assessee while holding that the village land is not an agricultural land, he is bound to give the opportunity to the assessee to rebut the evidence being used against him. Also, the Ld. CIT(A) should also consider the evidence placed by the assessee on record i.e. report of Talati cum Mantri regarding certificate of distance of impugned land from VMS and give his observations as to why the report placed by the assessee in support of his contention cannot be relied upon or whether there is any factual inaccuracy in such report. It may be important to point out, that for the impugned assessment year, it has been clarified by the CBDT vide Circular No.17/2015 [f.no.279/misc./140/2015- itj] dated 6-10-2015 that that the distance between the municipal limit (VMC in this case) and the agricultural land is to be measured having regard to the shortest road distance . In light of the above observations, we think it fit in the interest of justice to restore the matter to the file of Ld. CIT(A) to take a decision afresh, on facts, in light of direction issued vide CBDT Circular No.17/2015 [f.no.279/misc./140/2015-itj] dated 6-10-2015 ( Measurement Of Distance For Purpose Of Section 2(14)(iii)(b) For Period Prior To Assessment Year 2014-15) and after taking into consideration the certificates placed on record by the assessee in support of the proof of distance between the land situated at village Bhaniyara and VMC (report of Talati cum Mantri and any other certificate the assessee may wish to place reliance upon) and also if the Ld. CIT(A) wishes to place reliance on any certificate issued by any competent authority, the assessee may be provided the opportunity to examine the same/ rebut the same. Accordingly, on this issue, the matter is being restored to the file of the Ld. CIT(A) with the above directions. Assessee s appeal is allowed for statistical purposes. Addition under section 44AD - cash deposit in the assessee s bank account held with Cosmos Bank - AO made addition of 12% under section 44AD - assessee submitted that the above receipts were on account of contract receipts for construction of temple and the assessee has offered 8% of such receipts as his income u/s 44AD - HELD THAT:- We note that on similar set of facts, Ld. CIT(A) in appeal for immediately succeeding year that is assessment year 2013-14, has allowed the assessee s appeal. Since, the appeal of the assessee in respect of ground number 1 mentioned above is being restored to the file of Ld. CIT(A) for his consideration, keeping in view the principles of consistency, wherein the courts have held that when the facts circumstances continue to remain the same, then there should not be any variation in the treatment from earlier year, in the interest of justice, we are restoring this matter to Ld. CIT(A) to grant relief if there are no change in facts as compared to facts for assessment year 2013-14. Accordingly, ground number 2 of the assessee is appeal is allowed. Disallowing 10% of total agricultural expenditure claimed - assessee had claimed almost 60% of agricultural receipts as agricultural expenses - HELD THAT:- When asked to produce the relevant supporting bills/voucher or any other supporting documents to evidence the agricultural expenses, the same were not produced before the Ld. Assessing Officer, who in absence of any supporting documents disallowed 20% thereof. In appeal, the Ld. CIT(A), restricted disallowance to 10% of the expenses. We note that while the assessee has given a summary list of details of agricultural expenditure viz. electricity and diesel expenses, fertilizer and pesticide expenses, ploughing and labour charges, seeds purchased, depreciation, however, the assessee has not produced any supporting bills/vouchers/documents in support of his claim of incurring the expenditure before any of the authorities. Accordingly, in our view, the Ld. CIT(A) has not erred in facts and in law in restricting the disallowance to 10% of agricultural expenses in absence of any bills/vouchers/supporting evidence produced in support of proof of claim of expenditure. In the result, ground number 2 of the assessee s appeal is dismissed.
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2022 (5) TMI 1267
Revision u/s 263 - admissibility of deduction under section 54F of the Act has been claimed for purchase of four residential house properties - whether the Assessing Officer has conducted sufficient enquiry to examine the correctness of claim of deduction under section 54F? - HELD THAT:- In the light of the provisions of section 263 of the Act and a settled position of law, powers u/s 263 of the Act can be exercised by the Pr. Commissioner/Commissioner on satisfaction of twin conditions, i.e., the assessment order should be erroneous and also prejudicial to the interest of the Revenue. By 'erroneous' is meant contrary to law. Thus, this power cannot be exercised unless the Commissioner is able to establish that the order of the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. Thus, where there are two possible views and the Assessing Officer has taken one of the possible views, no action to exercise powers of revision can arise, nor can revisional power be exercised for directing a fuller enquiry to find out if the view taken is erroneous. This power of revision can be exercised only where no enquiry, as required under the law, is done. It is not open to enquire in case of inadequate inquiry. We find that the Hon'ble Delhi High Court in the case of CIT vs. Anil Kumar [ 2010 (2) TMI 75 - DELHI HIGH COURT] held that where it was discernible from record that the A.O has applied his mind to the issue in question, the ld. CIT cannot invoke section 263 of the Act merely because he has different opinion. On going through the show-cause notice, we find that the ld. PCIT has alleged that with regard to the claim of deduction under section 54F Assessing Officer failed to examine into the matter and passed the assessment order without proper verification of the facts. This observation that the Assessing Officer failed to examine the matter, in our view is devoid of any merit. Ld. PCIT should have appreciated that on multiple occasions, the Assessing Officer has issued notice to the assessee for furnishing the details and on each occasions replies have been filed by the assessee. Complete details of the documents of purchase of flats have been given. It is an undisputed fact that proper and detailed enquiry has been conducted by the Assessing Officer and when a reasonable enquiry has been conducted by the Assessing Officer (which even ld. PCIT has observed in the impugned order) and a permissible view has been taken by the ld. Assessing Officer, then there remains no scope for the ld. PCIT to invoke the jurisdiction under section 263 of the Act. It is also well settled that a permissible view taken by the ld. Assessing Officer may not be beneficial to revenue. Thus we are of the view that since the issue raised in the show-cause notice has already been examined by the ld. Assessing Officer in detail by conducting adequate enquiry calling for material evidence and other documents supporting the claim of deduction under section 54F of the Act, proper application of mind and taken a plausible view in light of the settled judicial precedence as referred by the ld. counsel for the assessee, there remains no scope for the ld. PCIT to invoke the jurisdiction under section 263 of the Act. We, therefore, quash the impugned proceedings carried out under section 263 of the Act and hold that assessment order under section 143(3) of the Act dated 13.12.2018 is neither erroneous nor prejudicial to the revenue and thus deserves to be restored. Thus the grounds of appeal filed by the assessee are allowed.
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2022 (5) TMI 1266
Reopening of assessment u/s 147 - unexplained investment u/s.69 - Eligibility of reasons to believe - reopening within a period of 4 years - HELD THAT:- As per the mandate of law, even where a concluded assessment is sought to be reopened by the A.O within a period of 4 years from the end of the relevant assessment year, it is must that the A.O has fresh material or information with him, that had led to the formation of belief on his part that the income of the assessee chargeable to tax has escaped assessment. Our aforesaid view is fortified by the judgments of NYK Lime (India) Ltd. [ 2012 (2) TMI 283 - BOMBAY HIGH COURT] and Purity Tech Textile Pvt. Ltd. [ 2010 (2) TMI 26 - BOMBAY HIGH COURT] We, thus, in the backdrop of our aforesaid observations not being able to persuade ourselves to subscribe to the order passed by the CIT(Appeals) who had upheld the jurisdiction assumed by the A.O u/s. 147 of the Act, set-aside his order and quash the assessment framed by him u/s. 143(3)/147 of the Act dated Nil for want of jurisdiction. - Appeal of assessee is allowed.
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2022 (5) TMI 1265
Disallowance of additional depreciation - proof of manufacturing of an article or thing - as per AO activity of power generation cannot be considered as manufacturing of an article or thing, so as to be entitled for additional depreciation - HELD THAT:- Hon ble Supreme Court in the ease of CST Vs. M.P. Electricity Board, [ 1968 (11) TMI 85 - SUPREME COURT] and in the case of State of AP Ors. Vs. National Thermal Power Corpn. Ltd. and Ors. [ 2002 (4) TMI 694 - SUPREME COURT] has held that electricity is capable of abstraction, transmission, transfer, delivery, possession, consumption and use like any other movable property and thus qualifies to be goods . In view of the said decisions of the apex court, the coordinate bench of ITAT Delhi In appellant s own case for the immediately preceding year [ 2012 (5) TMI 127 - ITAT DELHI] has also allowed the appellant s claim of additional depreciation - Decided in favour of assessee. Taxability of Income Tax Recoverable from State Electricity Boards (SEBs) - amount ascertained at the time of filing of return of income or at the amount recorded in the books of accounts - HELD THAT:- The impugned addition made by the AO, with the view that, without incorporating the amount of tax liability in its Profit Loss account, reduction of the taxable profit has been rightly allowed by the ld. CIT(A). Addition on account of Pre-Commissioning Sales - Revenue challenged the action of the Ld. CIT(A) in allowing capitalization of pre-commissioning expenses, after being netted off with pre-commissioning sales and deleting the addition made by the AO on account of pre-commissioning sales - HELD THAT:- Since, it has been consistently ruled in favour of the assessee by the Co-ordinate bench of Tribunal and Ld. CIT(A) since A.Y. 2003-04, and also accepted by the AO for all the subsequent years, we hereby decline to interfere with the order of the ld. CIT(A) on this issue. Addition u/s 14A - HELD THAT:- Since, the facts of the assessee s case are similar to the facts involved in the case of DCIT, Circle-14(1), New Delhi Vs. Power Grid Corporation of India Ltd. [ 2011 (10) TMI 724 - ITAT DELHI] . So, respectfully following the aforesaid referred to order dated 31.10.2011, we do not see any merit in this ground of the departmental appeal. In the result, the appeal of the department is dismissed. Addition on account of downward revision of Sales - HELD THAT:- CIT(A) on similar issue for A.Y. 2007-08 and A.Y. 2008-09 has deleted the addition made by the AO on account of downward revision of sales. Notably, even the department has accepted this position as no addition in this respect has ever been made in any year post A.Y. 2008-09. Deduction u/s 80IA set off of losses - HELD THAT:- We find that the issue under consideration already stands settled in favor of the appellant by various judicial precedents upto the level of the apex court. Hence the appeal of the assessee on this ground is allowed. Disallowance in respect of Road, Rail connectivity - HELD THAT:- CIT(A) sustained the impugned addition holding that the Assessing Officer has very specifically observed that appellant has not furnished any details so as to establish its claim that expenditure was incurred as per business expediency of the appellant. Since, the purpose of expenditure and the allowability thereof has not been disputed by the revenue, we find that the addition has been made owing to non-furnishing of the details only. Hence, in the interest of justice, we direct the AO to examine the details with regard to the expenditure of Rs.8.89 Cr. The assessee shall submit all the required details to the AO to substantive the claim. Appeal of the assessee on this ground is allowed for statistical purpose. Amortization of premium paid on purchase of securities - HELD THAT:- CBDT Circular No. 17 of 2008 dated 26.11.2008 (though issued for assessment of banks) provides for amortization of premium paid on purchase of securities, as the same is in line with the RBI guidelines, governing the assesses being banks. Having regard to the above said Circular and distinguishing the decision of the apex court in the case of Vijava Bank [ 1990 (9) TMI 5 - SUPREME COURT] several coordinate benches of the Hon ble Tribunal have allowed deduction claimed on account of amortization of premium on purchase of securities, as in the facts of the appellant under consideration. - Decided in favour of assessee.
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2022 (5) TMI 1264
Addition of agricultural income as unexplained income - Case was selected for scrutiny assessment and notices under section 143(2) and 142(1) were issued - HELD THAT:- No details have been received from the traders to whom sale of agriculture produce is stated to be sold. The assessee also not furnished any proof of purchase of seeds, fertilizer payments etc. Bills produced for sales only stated that payment were deducted on account of off-loading and labour charges for goods sold. It is not possible to have agriculture produce without incurring such expenses. So the claim of the assessee is misleading in the absence of any details of procurement of seeds, fertilisers, water facilities, labour charges, and therefore, no agriculture activities can be said to be done. Further, in the form No. 7/12, there is no details of farming being done by the assessee and the nature of the crops, and the quantification of the land, has not been mentioned. Therefore, the addition made by the AO on account of unexplained agriculture income is confirmed. We find that both authorities are not correct in holding that entire income as admitted by the assessee for having not proved, details of expenditure incurred to be treated as an unexplained income of the assessee. As pleaded by the Ld. AO for assessee's own case for the Asstt.Year 2015-16 on assessee's admission, the same agriculture income at 10% was agreed to be disallowed by the assessee against returned agricultural income of Rs. 21,68,400/-. The same was accepted by the AO, and passed assessment under section 143(3) of the Act on 22.12.2017. Taking into consideration various opportunities given to the assessee, and the fact that the assessee had not explained the expenses incurred in earning the agriculture income of Rs. 37,11,028/-, it is appropriate to make a disallowance at 25% of the expenses incurred for earning this agriculture income seems to be reasonable and meet the ends of justice - Appeal of the assessee is partly allowed
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2022 (5) TMI 1263
Disallowance of deduction u/s 36 (1) (viii) in respect of special reserve created @ 20% of the profits derived from eligible business of providing long-term finance for development of housing - disallowance was made because of the view expressed by the revenue that assessee he has not provided long-term finance to development of housing projects, but provided only to construct or purchase of residential house - HELD THAT:- Axiomatically it means that assessee does provide housing finance for construction of residential purposes. What needs to be established is that the finances provided by assessee is for eligible business as defined under clause (b) to the explanation to section 36 (1) (viii) of the act. Order query being raised by the bench both sides agreed for the issue to be remanded in order to verify the same in accordance with the document/evidence is filed by assessee. In the interest of justice we direct the Ld.AO to verify the details filed by assessee in accordance with the relevant provisions of the claim. On satisfaction of the necessary conditions, the deduction deserves to be granted to assessee. Assessee is directed to file all requisite information/details in support of its claim. Addition of interest received on loans and advances - HELD THAT:- It is not the case of revenue that the interest is actually received. Admittedly, assessee has shown it as a non-performing asset though it has accrued but not actually received. Respectfully following the above you we direct the Ld.AO to delete the addition made in the hands of assessee. Assessee appeal allowed.
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2022 (5) TMI 1262
MAT computation u/s 115JB - Inclusion/exclusion of income relating to SEZ/STPI while computing book profit - HELD THAT:- We are of the view that, there is merit in the contention of the Ld.AR that, irrespective of the fact that, amendment has been made in clause (f) of Explanation (1) to section 115JB(2) of the Act, to apply the provisions of MAT in respect of units which are entitled to deduction under section 10A or 10B, the units which are in SEZ will continue to get benefits from the applicability of provisions of MAT in view of sub-section(6) of the Act. We note that section 115JB (6) does not refer section 10A or section 10AA, but, it states that, provisions of section 115JB will not apply to the income accrued or arisen on or after 1.4.2005 from any business carried on in an unit located in SEZ. Hence, we are of the view that, the unit in SEZ will be covered by sub-section(6) to section 115JB of the Act, irrespective of the fact that, those units were claiming deduction u/s.10A of the Act. We also observe that benefit given to SEZ unit from the applicability of provisions of section 115JB has been withdrawn by the Finance Act, 2011 by inserting a proviso to section 115JB(6) The year under consideration is A.Y: 2005-06 and therefore this benefit is available to assessee. We therefore hold that, authorities below were not justified to include the book profit in respect of SEZ/STPI unit of the assessee, while computing book profit u/s.115JB of the Act for year under consideration. Therefore, we reverse the orders of authorities below by holding that income relating to SEZ/STPI unit is to be excluded while computing book profit u/s.115JB of the Act for assessment year 2005-06. - Decided in favour of assessee.
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2022 (5) TMI 1261
Reopening of assessment u/s 147 - Bogus transaction of shares - HELD THAT:- Assessee has engaged into the bogus penny stock transaction through bogus entry operator controlled by Mukesh Choksi. The authorities below have properly analysed the facts and have taken correct view of the matter. Nothing was brought before me to rebut the aforesaid findings on merits. Accordingly we uphold the order of learned CIT(A) - Decided against assessee.
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2022 (5) TMI 1260
Delayed employees contribution to ESI/Provident Fund - sum deposited by the assessee after the specified date prescribed under laws providing ESI/Provident Fund but before due date of filing of return of Income Tax prescribed u/s 139(1) - adjustments and intimation u/s 143(1) - HELD THAT:- It is well settled that any adjustments u/s 143(1) of Income Tax Act by way of intimation u/s 143(1) of Income Tax Act, on debatable and controversial issues, is beyond the scope of Section 143(1) of Income Tax Act. In this regard, we respectfully mention the order of Hon ble Jurisdictional High Court in the case of ACIT vs. Haryana Telecom Pvt. Ltd. [ 2009 (5) TMI 607 - ITAT DELHI] Revenue should have given due consideration to the fact that the issue was highly debatable and controversial. As already discussed earlier, adjustments u/s 143(1) of Income Tax Act by way of intimation u/s 143(1) of Income Tax Act, on debatable and controversial issues, is beyond the scope of section 143(1) of Income Tax Act. Revenue was clearly in error, in making the aforesaid adjustments u/s 143(1) of Income Tax Act on 25.11.2019 on a debatable and controversial issue. We would like to make respectful mention of order of Jabalpur Bench of ITAT in the case of Nikhil Mohine[ 2021 (11) TMI 927 - ITAT JABALPUR] in which similar view has been taken. Further, it is also well settled that retrospective amendment cannot be invoked to make addition by way of adjustment and intimation u/s 143(1) of Income Tax Act. This view was taken by the Hon ble Supreme Court in the case of CIT vs. Hindustan Electro Graphites Ltd. [ 2000 (3) TMI 2 - SUPREME COURT] in which the view of Hon ble Kolkata High Court in the case of Modern Fibotex India Ltd. Anr.[ 1994 (3) TMI 17 - CALCUTTA HIGH COURT] was approved. Same view was taken by the Hon ble Madhya Pradesh High Court in the case of CIT vs. Satish Traders [ 2000 (9) TMI 51 - MADHYA PRADESH HIGH COURT] We are of the view that the aforesaid additions by way of adjustment and intimation u/s 143(1) of Income Tax Act, were beyond the scope of Section 143(1) of Income Tax Act; and further, that the Ld. CIT(A) erred in law in confirming the aforesaid addition on a debatable and controversial issue - Decided in favour of assessee.
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Customs
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2022 (5) TMI 1259
Issuance of summons - whether from the facts and circumstances, it could be inferred that the Court below has passed the impugned order summoning the petitioners without taking into consideration the material as well as the provisions of the statute - HELD THAT:- As per Section 135(1)(a) of the Act, prosecution can be initiated if the market price of the goods exceeds Rs.1 Crore. It is an admitted fact that in the order dated 4th August 2011 passed by the Commissioner of Customs (Preventive), collective value of all the goods was taken to be Rs.77,16,288/- and it is further admitted that no appeal was preferred against the said order, which therefore, attained finality. It may be observed that in the present case there is nothing to show that the petitioners made any false declaration or prepared false documents and, therefore, he is not liable to be prosecuted under Section 132 of the Act. In this case, moreover the complaint is barred by limitation inasmuch as per the provisions of Section 132 of the Act, which existed at the relevant time the punishment which could have been imposed for violating Section 132 of the Act could have extended for a period for a period of six months or with fine or with both and limitation in this case as provided under Section 468 of Cr.P.C. is only 1 year. The learned Courts below did not consider that at the stage of Section 200 of Cr. P.C., the exemption can only be given to a public servant who has filed a case in his official capacity, but such exemption is not available with the other witnesses. In the present case, it was the duty of respondent no.2 to prove its case against the petitioners and show sufficient evidence on record, however, the respondent no. 1 in the present case did not examine even the panch witnesses to prove its case. Therefore, the Court below has summoned the petitioner without any material on record for prima facie satisfaction. The impugned order, passed in the instant case, is bad in law. Petition allowed.
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2022 (5) TMI 1258
Issuance of summons directly to the Managing Director of the petitioner Company without providing the alternative of it being issued to an authorized representative - HELD THAT:- In the instant case, no material is available that there is a reasoned view formed by the Department that the petitioner assessee is not cooperating or that the presence of the Managing Director specific is required for the investigation for any reason. This writ petition is disposed off by directing the departmental authorities issuing the summons under Section 108 of the Act of 1962 not to issue summons directly to the Managing Director of the petitioner Company and on the other hand to issue it to an authorized representative of the Company in terms of the provisions of the Circular dated 10.10.1989 - petition disposed off.
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Corporate Laws
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2022 (5) TMI 1257
Sanction of Scheme of Amalgamation - Section 230(6) read with Section 232(3) of the Companies Act, 2013 - HELD THAT:- Various directions with regard to holding, convening and dispensing with various meetings issued - direction 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 (5) TMI 1269
CIRP - Recovery of electricity dues - Whether the Respondent No.1, the Successful Auction Purchaser in the liquidation proceeding of the Corporate Debtor, is liable to pay electricity dues due on the Corporate Debtor both pre-CIRP and during the CIRP? - HELD THAT:- The IBC provides for detailed procedure and provisions for dealing with the claims of the creditors which are against the Corporate Debtor who is facing insolvency/ liquidation. Under Section 35 of the Code, the Liquidator is obliged to verify the claims of all the creditors. Section 36 deals with liquidation estate. Under Section 38, Liquidator has to receive/ collate the claims of creditor within 30 days from the date of commencement of the liquidation process. In the present case, the Appellant themselves has filed their claim before the Liquidator. In the reply filed by the Liquidator, details of the claim submitted by the Appellant has been given. When in the IBC proceedings, the Appellant has lodged his claim before the Liquidator pertaining to pre-CIRP dues, the same has to be dealt with as per the provisions of the Code. Pre-CIPR dues of the Appellant have been treated as operational debt and the same required to be paid as per Section 53 of the Code - the Appellant is entitled to receive pre-CIRP dues as per provisions of section 53. Hence, the Appellant cannot be heard in contending that he should realize the said amount from the Successful Auction Purchaser. The claim of the Appellant to realize the pre-CIRP dues from Successful Auction Purchaser is clearly in conflict of the statutory scheme as laid down in the Code. The submission of the Appellant that they are entitled to recover the entire pre-CIRP and post-CIRP dues from the Successful Auction Purchaser i.e. Respondent No. 1 cannot be accepted. The Adjudicating Authority did not commit any error in issuing the directions as contained in the order dated 05.10.2021. The Appellant is entitle to claim its electricity dues both pre-CIRP and post-CIRP in accordance with Section 53 of the Code - Appeal disposed off.
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2022 (5) TMI 1268
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- It is noted that as per the arrangement between the operational creditor and the corporate debtor dated 20.03.2015, operational creditor has provided mobile telecom services to the customers of corporate debtor while such customers travel in U.K. For this purpose, operational creditor provided mobile sim cards to the corporate debtor which the corporate debtor sold to its customers in India. It is also noted that certain financial targets were to be achieved over a two-year period of the contract. This application complies with the basic requirements of Section 8/9 of IBC, 2016 and rules and regulations made thereunder. The crux of the matter is that whether there exists a dispute between the parties prior to delivery of notice of demand U/s. 8 of IBC. If it is so, the other question which arises for our consideration is whether undisputed amount of outstanding liability is more than the threshold limit as prescribed U/s. 4 of IBC, 2016. As far as first aspect is concerned, there have been a number of communications between the operational creditor and corporate debtor which make it apparent that there are certain strong differences between the two. Thus, it becomes imperative to find out what is the undisputed amount of liability. There are no hesitation in holding that at two stages, definite liability to pay has been acknowledged and accepted by the corporate debtor. The said liability in both the situations is more than the threshold limit. Hence, having regard to various judicial decisions rendered by the Hon'ble NCLAT that in case of dispute, if the undisputed liability is more than the threshold limit, the application could be admitted. Petition admitted - moratorium declared.
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2022 (5) TMI 1256
Interpretation of Statute - IBBI (Liquidation Process), Regulations, Schedule I, Clause 12 as amended on 25th July, 2019. Schedule I of the IBBI (Liquidation Process), Regulations contains heading Mode of Sale which is in reference to Regulation 33 of the IBBI (Liquidation Process) Regulations, 2016 - Confirmation of Auction Sale - seeking direction to Liquidator to issue fresh e-Auction Sale Notice - HELD THAT:- In the present case, the Auction in which the Appellant were declared highest bidders were closed on 26th February, 2021 and e-Auction Notice was issued for the said Auction on 23rd January, 2021. Even the earlier e-Auction Notice which were issued by the Liquidator, for the first time on 19th November, 2019 i.e. subsequent to the amended Regulations dated 25th July, 2019. In the Schedule I, Clause 12, there is no indication that period of 15 days or 90 days which is provided by un-amended and amended regulation has any nexus with the date of the Order of the Liquidation Regulation 33 under which this Schedule is framed deals with Mode of Sale . The Mode of Sale as provided in Regulation 33 triggers in after several steps taken by the Liquidator after the Order of the Liquidation is passed. The Circular dated 06th May, 2022 refers to Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2019. It is clear that by the said Amendment Regulation, explanations have been added in Regulations 2A, 21A, 31A and 44 by the Amendment Regulation, 2022 neither there is any explanation nor there is any indication with regard to Schedule I, Clause 12. Schedule I, Clause 12 was on a different subject with regard to which neither there is any indication in the Circular dated 26th August, 2019 nor there is any explanation in the Circular dated 06th May, 2022. There is no reference to Schedule I in the IBBI (Liquidation Process) (Amendment) Regulations, 2022 dated 28th April, 2022 also - There is no doubt that Amendment Regulation dated 25th July, 2019 amending Schedule I, Clause 12 is only prospective and shall not have effect on Auctions which were held prior to the amendment. The Circular dated 26th August, 2019 issued by the Board had neither any indication nor it can be said to have no any application with regard to the amendments brought into the Schedule I, Clause 12 by Notification dated 25th July, 2019, hence the time period of 90 days which was introduced in the Amendment dated 25th July, 2019 can be availed by the Auction Purchasers which Auction took place subsequent to the amendment dated 25th July, 2019. The Order of the Adjudicating Authority rejecting the application filed by the Liquidator seeking confirmation of the e-Auction Sale dated 26th February, 2021 is erroneous and unsustainable - Appeals are allowed.
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2022 (5) TMI 1255
Initiation of CIRP - Period of Limitation - Exclusion of certain period - NCLT rejected the application - period during which winding up petition filed by the Appellant in the High Court of Delhi remained pending, deserves to be excluded under Section 14 of the Limitation Act, 1963 - exclusion for period during which winding up Petition remained pending in High Court of Delhi - HELD THAT:- Winding up petition stood dismissed, since the real entity, that is, Times Internet Ltd., with whom the Times Business Solutions Ltd. was merged from 26.09.2014 was neither noticed nor impleaded in winding up petition. No statutory notice having been sent to the Times Internet Ltd., the winding up petition was dismissed. Thus, the winding up petition stood dismissed due to defect of procedure as noticed in paragraph 6 of the judgment of the High Court of Delhi. Present is not a case where High Court of Delhi had no jurisdiction to entertain the winding up petition, but whether the proceedings were not entertained due to defect of jurisdiction and other causes of like nature is the issue to be answered. Hon ble Supreme Court in ROSHANLAL KUTHALIA ORS VERSUS RB. MOHAN SINGH OBEROI [ 1974 (10) TMI 98 - SUPREME COURT] while interpreting Section 14 held that any circumstance legal or factual, which inhibits entertainment or consideration by the court of the dispute on the merits, comes within the scope of the section and liberal touch must inform the interpretation of the Limitation Act. The period during which the winding up petition filed by the Appellant was pending before the High Court needs to be excluded within the meaning of Section 14, sub-section (2). It is noticed that all details regarding winding up petition and the order of the High Court of Delhi passed in winding up petition dated 13.03.2019 were brought on record in the Section 9 Application. Thus, ample foundation has been laid down for exclusion of time under Section 14(2) of the Limitation Act. Whether, even if, the Appellant is entitled for exclusion for period during which winding up Petition remained pending in High Court of Delhi, the delay in filing Section 9 Application thereafter, can be condoned under Section 5 of the Limitation Act, 1963? - HELD THAT:- Although in the Section 9 Application date for filing of the winding up petition has been mentioned as 14.07.2016 as noted above, but in the affidavit dated 28.01.2022, the date of filing of winding up petition has been mentioned as 03.08.2016. Thus, even if, we take 03.08.2016 as the date of filing the winding up petition, which got dismissed on 03.03.2019 and remained pending for period of two years, seven months and 10 days, the said period deserves to be excluded from the period of limitation, under which Section 9 Application was to be field by the Appellant. It is also relevant to notice that the High Court while dismissing the winding up petition on 13.03.2019 granted liberty to the petitioners (Appellant herein) to take steps as per law against the actual entity. It was in exercise of the said liberty that subsequent Section 9 Application has been filed by the Appellant. Thus, while considering the exercise of discretion for condonation of delay under Section 5, the above facts also have to be taken into consideration, under which liberty was granted to the Appellant to proceed against the real entity, that is, Times Internet Ltd. The affidavit dated 28.01.2022 filed in this Appeal makes out sufficient cause for condonation of 79 days delay in filing Section 9 Application by the Appellant, after giving the benefit of exclusion of period during which winding up petition of the Appellant remained pending. The present is a fit case to exercise discretion given under Section 5 of the Limitation Act to condone the short delay in filing Section 9 Application. The Adjudicating Authority has committed error in rejecting the Application filed under Section 9 by the Appellant as barred by time. A perusal of the order of the Adjudicating Authority indicates that only two grounds were considered by the Adjudicating Authority, that is, Application having barred by time and pre-existing dispute as raised by the Corporate Debtor - matter is remitted to the Adjudicating Authority to pass an order of admission on Section 9 Application after giving an opportunity to the parties to enter into settlement. Appeal allowed by way of remand.
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2022 (5) TMI 1254
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- An amount of Rs. 3,89,265/- were due against the respondent which was not paid. Although, the contention has been raised by the Ld. Counsel for the respondent that different amounts has been mentioned at different conjuncture but as discussed, it is clear that the principle amount of Rs. 1,78,992/- were due whereas, an amount of Rs. 2,10,273/- were due as interest. Therefore, the said amount has not been paid by the respondent. Despite the fact that the demand notice was raised by the applicant on 03.12.2019. Hence the applicant succeeded in proving the fact that the above said amount was due against the C.R. Strips which were sold by the applicant to the respondent and the said amount was not paid qua. It has been repeatedly held that the Scheme of the code is to ensure that when a default takes place, in the sense that a debt becomes due and is not paid, the insolvency resolution process begins. Resultantly, since there is no dispute raised by the Corporate Debtor, in fact the corporate debtor has clearly admitted that a default has occurred. This Tribunal is of the affirm view that there was default on the part of the respondent in pursuance of invoices raised on behalf of the applicant, accordingly, the present application stands admitted in terms of Section 9(5) of the Code and CIRP is hereby ordered to be initiated against the respondent Corporate Debtor, forthwith - petition admitted - Moratorium declared.
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2022 (5) TMI 1253
Seeking dissolution of Company - section 59(7) of the Insolvency and Bankruptcy Code, 2016 (Code) read with Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 (IBBI Regulations) - HELD THAT:- In view of the steps taken and the satisfaction accorded by the liquidator by way of the present application, there is no legal impediment in allowing the prayer of the applicant. Accordingly, as per the section 59(8) of the IBC, 2016, the Prayer of Liquidator to dissolve the Company U/s. 59(7) of IBC is allowed and the said company is hereby dissolved and is voluntarily wound up with effect from the date of the present order. Application allowed.
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2022 (5) TMI 1252
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Proper service of notice - HELD THAT:- The demand notice was received as per the tracking report mentioned at Annexure P-2 of the main petition. In view of the same, it is held that the demand notice has been duly served. Whether the operational debt was disputed by the corporate debtor? - HELD THAT:- It is pleaded by the petitioner that no notice has been received to the demand notice dated 09.01.2020 from the corporate debtor. It is also pleaded that there is no dispute of unpaid operational debt pending between the parties in any court of law or any other authority. The same has been inferred from the affidavit in terms of Section 9(3)(b) of I B Code, 2016. The affidavit is attached to the main petition. It implies that there is no pre-existing dispute in relation to the debt claimed as per Part IV of Form 5. Whether this application is filed within limitation? - HELD THAT:- The period of limitation would begin from the date of default mentioned in Part IV, Form V i.e. 12.10.2019. This application was initially filed on 22.12.2020 and thereafter re-filed on 05.01.2021 vide Diary No. 1931. Therefore, this Adjudicating Authority finds that this application was filed within limitation. It is noted that the corporate debtor has failed to make payment of the aforesaid amount due as mentioned in the statutory notice till date. Thus, the conditions under Section 9 of the Code stand satisfied. It is evident from the abovementioned facts that the liability of the corporate debtor is undisputed and admitted when Ld, counsel for respondent-corporate debtor stated that due to the financial crunch corporate debtor is unable to pay back the debt. Accordingly, the petitioner proved the debt and the default, which is above the threshold limit. It is seen that the petition preferred by the petitioner is complete in all respect. The material on record clearly goes to show that the respondent committed default in payment of the claimed operational debt even after demand made by the petitioner - in the present petition, all the aforesaid requirements have been satisfied - petition admitted - moratorium declared.
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Service Tax
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2022 (5) TMI 1251
Revival of abated proceedings - matter travelled before the Settlement Commission, but due to lack of Coram, the Settlement Commission, could not decide the case within the time frame prescribed under Sub-section (6) of Section 32F and stood abated - HELD THAT:- The Settlement Commission, could not have adjudicate upon the issue referred to or sought to be referred to by the petitioner, by an order dated 5th March, 2020, passed by this Court, admittedly, it stood abated and consequent to which, the impugned order of 2nd March, 2022, has been passed, whereby, it had been observed, that as per the implications of Section 83 of the Finance Act, 1994, and as an effect of abatement under Section 32F (6), the proceedings are to be relegated back to be decided by the Adjudicating Authority. The Adjudicating Authority, who has been conferred with the power to decide the case, exercises its power and procedure of adjudication under Section 11-A of the Act, which itself is a self inbuilt mechanism, where a case of the petitioner has to be decided as per the procedure contemplated under Section 11-A. This Court is of the view that there cannot be a revival of an abated proceeding, which had been abated by operation of law, by giving a judicial verdict to revive abated proceedings, before the Settlement Commission. Though there are various apprehensions expressed by the petitioner, but it is too premature stage to consider any consequential action, which may be punitive in nature to be taken, or which could be a ground for the petitioner to carve out an exception for him to permit him to avail his recourses before the Settlement Commission by overriding the effect of the abatement, as a consequence of the legal implications of Sub- section (6) of Section 32F - Petition dismissed.
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2022 (5) TMI 1250
Construction for the purpose of Commerce and Industry or not - Hut Bazaar as was constructed by the appellant for Nagar Palika Parishad, Dhamtari - Whether Hut Bazaar was intended as Nagar Palika Parishad, Dhamtari to be used for any commercial gains instead that of the welfare use thereof? - HELD THAT:- Clause No. 14 (d) of the Mega Exemption Notification further clarifies that any infrastructure provided for the agricultural produce, the services of construction thereof shall be exempted from the tax liability. The department has not produced any document to show that the stalls of Hut Bazaar were rented out or auctioned to the farmers. Though the show cause notices alleges the amount proposed to be recovered as a liability towards an amount received after auction of Hut Bazaar but there is no single document to support those allegations. The Adjudicating Authority below has denied the money collected by the Government Authorities to whom the services have been provided by the appellant, to be an amount of auction. It is rather mentioned by Commissioner (Appeals) in the order under challenge that the Bazaar Shulk / the nominal fee was lifted w.e.f. 01.04.2018. The issue of collection of nominal fee with respect to the stalls for facilitating the farmers is not an activity of commerce. It is held that Commissioner (Appeals) though had been thoroughly meticulous about the entire demand proposed in the show cause notice but has been wrong while considering the construction of Hut Bazaar as an activity of commerce and industry. Appeal allowed.
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2022 (5) TMI 1249
Refund claim filed by legal heir of the proprietress - seeking refund tof amount paid by the proprietary concern after the expiry of proprietress, in respect of the amount due in terms of VCES introduced by the Chapter VI: Service Tax Voluntary Compliance Encouragement Scheme, 2013 vide Section 104 to 114 of the Finance Act, 2013 - HELD THAT:- The decision of SHABINA ABRAHAM AND OTHERS VERSUS COLLECTOR OF CENTRAL EXCISE CUSTOMS [ 2015 (7) TMI 1036 - SUPREME COURT] was rendered taking note of the absence of machinery provisions for continuance of proceedings under Section 11A, etc after the expiry of the proprietor. Same is not the case as no such proceeding is there but refund claim has been made in respect of the amounts deposited in terms of the VCES, and as per Section 109 of the Finance Act, 2019 no refund of the amounts paid under the said scheme will be refunded under any circumstances. Appeal dismissed.
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Central Excise
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2022 (5) TMI 1248
Constitutional validity of amendment in the Area Based exemption - Denial of benefit of exemption - exclusion of a particular khasra in the Excise Notification - Benefit of N/N. 50/2003 CE dated 10.06.2003 - waiver of pre-deposit - HELD THAT:- It is apparent from the record that the Court has proceeded to take a view that, even if there is a mistake in not including certain khasra numbers, the Court would be encroaching on the policy matters, if it was to be persuaded to issue a direction to include specified khasra numbers. It is apparent from the prayer clause of the writ petition that the petitioner says that exclusion of a particular khasra in the Excise Notification No. 50/2003-CE dated 10.06.2003 is merely procedural, still, it touches upon the policy of the State Government and, hence, should not be rightly interfered by the Court exercising review jurisdiction under Article 226 of the Constitution of India. The writ petition stands dismissed.
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2022 (5) TMI 1247
Condonation of delay in filing appeal - Amount billed gross shown in ST-3 return arising suppression of material facts - extended period of limitation - HELD THAT:- The respondent/assessee is a cooperative society and was issued with show cause notice alleging contravention of the provisions of Sections 66, 67 and 68 of the Finance Act, 1994 read with Rules 5 and 6 of the Service Tax Rules, 1994 on the ground that they have failed to pay service tax on the amount indicated on the value of the taxable services under the category of Man Power Recruitment or Supply Agency Service classifiable under sub Section 105(k) of Section 65 of the Finance Act. The show cause notice was not issued solely at the instance of the department but the department was directed to issue the notice on account of audit objection which has been raised consequentially. The show cause notice was otherwise barred by limitation but for invoking the extended period of limitation. Further, the assessee contended that the Adjudicating Authority has adjudicated the balance-sheet figures in order to raise the disputed demand wherein it has adopted the figure of total service plus service charge for raising the demand and not with the basic value of service rendered. The assessee relied upon various decisions of the Hon ble Supreme Court in support of their contention which have been noted by the learned Tribunal in paragraph 5 of the impugned order. Furthermore, the assessee contended that the disputed period is from 2006-07 to December, 2008 and the assessee having not been put on any notice earlier alleging any suppression, the question of invoking the extended period of limitation would not arise. The Tribunal heard the revenue on the above submissions made by the assessee. The Tribunal on facts held that the extended period of limitation is not available to the Revenue and the demand is required to be limited to the normal period only. With the findings, the matter has been remanded to the Adjudicating Authority to re-determine the duty liability in terms of the directions issued by the Tribunal - there is no question of law much less substantial question of law arising for consideration in this appeal. The appeal is dismissed.
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2022 (5) TMI 1246
Validity of revival notices - revival notices challenged on the ground that after issuance of original show cause notices, no intimation whatsoever was given to them regarding the status thereof or that the same had been consigned to the Call Book - HELD THAT:- It is an admitted position that the original show cause notices were issued to the petitioners between the years 2007 and 2012. There is no denial on part of the respondents that the decision to send assessment proceedings sought to be taken under these show cause notices to the Call Book was never communicated to the petitioners. The revival notices were issued out of the blue in the years 2020 and 2021. Immediately on receiving the revival notices, the petitioners forwarded letters to the respondent Assistant Commissioner, CGST seeking reasons for sending the cases to the Call Book and for revival of the show cause notices after such inordinate delay. Request letters were also forwarded by the petitioners to provide link for VC so as to advance the arguments. It is undisputed that neither any reply was given to the petitioners despite their pertinent request nor was any link of hearing through VC was provided despite pertinent demand being made. Apparently, thus, the respondent authorities were playing a game of hide and seek with the petitioners. The respondents have failed to satisfy the court that as a matter of fact any conscious, considered decision was ever taken to transfer the original show cause notices to the Call Book and if so, with prior approval of the Commissioner in terms of the instructions issued vide Circular dated 14.12.1995. Further, the cases were never reviewed as is essential by effect of these circulars. Hence, revival of these proceedings after a gross inordinate and unexplained delay is clearly unjustified. Furthermore, non-intimation of the decision to transfer the original show cause notices to the Call Book to the petitioners herein, has resulted into grave prejudice being caused to them because on account of the delay in revival of the notices, the opportunity of contesting the assessment proceedings has been severely impaired. Thus, allowing continuance of the assessment proceedings against the petitioners as a consequence of the impugned show cause notices and the revival notices would be absolutely unjustified. There is no material on the record of the case to satisfy the court that the original show cause notices were actually transferred to the Call Book and if so, by following the due process as prescribed by the mandatory Circulars. The impugned show cause notices, the revival notices issued to the petitioners, as detailed, and the consequential orders, if any, deserve to be and are hereby quashed - Petition allowed.
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2022 (5) TMI 1245
CENVAT Credit - inputs/input services - capital goods - outward goods transport service performed beyond place of removal - HELD THAT:- Perusing the entire records, it is observed that delivery of goods in the present case from the manufacturer s/appellant s premises is on the FOR basis. The copy of insurance policy is sufficient to hold that till the goods are delivered by the manufacturer to its customers place, the title therein remains vested with the manufacturer/the appellant. The same fact has been certified as correct even by the Statutory Auditors of the appellant in the form of the Chartered Accountants Certificate. There is no document on record produced by the department to falsify both these documents. The property in the goods continued to remain with the appellant/the manufacturer till those goods were delivered at the door step of the appellant. Hence, point of sale in the given circumstances is apparently the door step of the consumer - in appellant s own case in M/S PENSOL INDUSTRIES LIMITED VERSUS COMMISSIONER, CGST CENTRAL EXCISE [ 2019 (5) TMI 1618 - CESTAT NEW DELHI] this Tribunal has already held the outward freight in case of sale on FOR basis to be an amount paid towards an eligible import service. Appeal allowed - decided in favor of appellant.
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2022 (5) TMI 1244
Valuation of excisable goods - genuine factory gate price can be considered as normal price under Section 4(1)(a) of the Act or not? - is the price only in respect of any particular buyer or particular class of buyers as per proviso (i) to Section 4(1)(a) or not? - applicability of section 4(1)(a) of the Act to all buyers, has the value been correctly determined as per Section 4(1)(b) with respect to allowing all the eligible abatements from the depot price - extended period of limitation - penalty. HELD THAT:-Section 4(1) of the Act as applicable during the relevant period does not levy excise duty on the price but on the value and such value shall be a deemed value. If there is a normal price as per Section 4(1)(a), it shall be the deemed value, else it shall be the value determined as per 4(1)(b). Thus, as long as there is price under section 4(1)(a), it will be the value for determining the excise duty and not any other price or transaction value. The proportion of the goods sold under 4(1)(a) to the total sales is irrelevant. For instance, even if only 1% of the goods are sold as per the value under section 4(1) (a), such price shall be deemed to be the value for all clearances by the assessee. A shrewd assessee can sell a small quantity of the goods at a relatively lower price to independent buyers at the factory gate fulfilling all the conditions required under section 4(1)(a) and the rest through other methods. Once the 4(1)(a) price is available, other sale prices do not matter. According to the Revenue the Commissioner has wrongly recorded that there is a factory gate price, while according to the assessee, there was a price under section 4(1)(a). Further, according to the Revenue, during the material time, the appellant sold goods from the factory gate only to four categories of persons viz., individuals, company employees, Jaipur and Bikaner Trading Company and Public Sector Undertakings. Of these, only seconds/rejects were sold to individuals and company employees and therefore, their price cannot be treated as normal wholesale value in the course of wholesale trade - The sale to Bikaner and Jaipur Trading Company was a negotiated contract price, who, therefore, constitutes a class of buyer by itself. This price cannot also be considered as a normal value. Similarly, Government undertakings and public sector undertakings can also be considered as a class of buyers and the price at which the goods were sold to them cannot be taken as normal price for all sales. No documents have been produced before us by the Revenue to substantiate their claim that goods were not sold to anyone except individuals, company employees, PSUs and Jaipur and Bikaner Trading Co. No evidence has been adduced by the Revenue to show either that the prices shown in the ledgers are not genuine prices or that all these buyers are of special classes of buyers. Therefore, the argument of the Revenue that there was no genuine factory gate price is not borne out by facts. There is no error in the impugned order insofar the recording that there was a genuine factory gate price is concerned. Thus there is a genuine factory gate price which can be considered as normal price under Section 4(1)(a) of the Act. Also, there is no evidence to support the claim of the Revenue that the factory gate price was only in respect of the four categories of buyers. On the contrary, the ledgers of factory gate sales for the five years produced by us show that the goods were sold to a large number of buyers including individuals. There was a genuine factory gate price under section 4(1)(a) and such price was not confined to any particular class or classes of buyers as evident from the ledgers produced by the assessee and lack of any contrary evidence on behalf of the Revenue. The mere fact that some statements were made before the officers by the employees and functionaries of the assessee will not advance the case of the Revenue when such statements are contrary to the evidence available on records. Whether the Commissioner was correct in confirming the demand after holding that there was a genuine factory gate price for the goods? - HELD THAT:- As per Section 4 of the Act, as applicable during the relevant periods, value is deemed to be the normal price, i.e., the price under section 4(1)(a). The actual price at which the goods are sold in different invoices and to different buyers is irrelevant. It is also irrelevant as to what percentage of goods were sold at the factory gate price. Once the factory gate price was available under section 4(1)(a), it shall be the value. The confirmation of demand based on the prices at which the goods were sold from the depots cannot be sustained. Consequently, the imposition of penalty also cannot be sustained. Extended period of limitation - HELD THAT:- There are no elements necessary to invoke extended period of limitation of five years viz., fraud, collusion, wilful misstatement or suppression of facts or violation of provisions of the Act or Rules with an intent to evade payment of duty, since the assessee filed the price declarations as per its understanding. The mere fact that the Revenue has taken a different view about the value cannot be a ground to invoke extended period of limitation. Appeal dismissed - decided against Revenue.
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2022 (5) TMI 1243
Payment of duty availing the benefit of Concessional rate of duty instead of full exemption - Reversal of Cenvat Credit - payment of Central Excise duty on the final product by the appellant during the disputed period was objected to by the Department on the ground that the appellant should have self-assessed at NIL rate of duty under Sl. No.90 of notification dated 01.03.2006, as amended - HELD THAT:- Section 5A of the Central Excise Act, 1944 recognizes two categorizes of exemption notification. The first category being that of an absolute exemption, where there was no condition attached to the exemption entry and the other one is a conditional exemption, which was subject to fulfilment of the conditions attached to the exemption entry - In the present case, the exemption entry at Sl. No.90 of Notification No. 4/2006-Central Excise was attached with two conditions for availing of the benefit of duty exemption and therefore, it was a conditional exemption and not an absolute exemption, as contemplated by Section 5A(1A) ibid. Since, the appellant had opted for payment of duty on clearance of the finished products and availed cenvat credit of Central Excise duty, such option exercised by the appellant cannot be questioned by the department inasmuch as there was no stipulation contained in the subject notification that only condition No. 90 appended thereto had to be followed and not otherwise. The appellant had correctly assessed the duty liability as provided under Sl. No. 93 contained in notification dated 01.03.1998, as amended. Thus, there was no contravention of the Cenvat statute in availment and utilization of the Cenvat credit. Further, it is not the case of Revenue that the duty amount collected by the appellant was not deposited with the Government Exchequer. Hence, under such circumstances, the provisions of Section 11D ibid cannot be invoked for recovery of the duty amount in question. Appeal allowed - decided in favor of appellant.
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2022 (5) TMI 1242
CENVAT Credit - availment of Credit of duty paid under yarn and fabrics before sending the same to job worker of the processor following the procedure containing Rule 4(5)(a) of CENVAT Credit Rule 2004 - eligibility for credit even after revocation of Rule 12B of Central Excise Rules with effect from 9.7.2004 - credit denied on the ground that the appellant had no facility to manufacture the dyed and printed fabrics and hence they are not the manufacturers - bogus invoices - period 09.07.2004 to 30.06.2005 - Invocation of extended period of limitation. Whether the appellants are eligible to CENVAT Credit even after revocation of Rule 12B of Central Excise Rules with effect from 9.7.2004? - HELD THAT:- The issue of applicability of CENVAT Credit to the appellants is no longer res integra. Tribunal in the case of MAHARASHTRA DYEING PRINTING WORKS VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI [ 2011 (3) TMI 1228 - CESTAT, MUMBAI] where it was held that It is not clear in this case whether such goods, duty was paid on the goods invoiced to appellant, on which credit was availed were in fact received by the trader prior to 09/07/2004. If the trader issues an invoice of 18/08/2004; it has to be presumed that the Excise registration certificate issued to him was valid. If that be so, the issue needs to be considered from this angle also. Availment of CENVAT credit was held to be correct on the principle of revenue neutrality by Tribunal in the case of COMMISSIONER OF C. EX., PUNE-I VERSUS KEETEX [ 2007 (10) TMI 243 - CESTAT, MUMBAI] . There are no hesitation whatsoever in holding that irrespective of the registration or otherwise, under Rule 12B, the appellants are entitled to CENVAT Credit on inputs used by them. Whether the corrigendum/addendum dated 17.9.2007 to the show-cause notice is valid in law? - HELD THAT:- It is not the appellant's claim that the original show-cause notice and the addendum were on separate issues. The original show-cause notice dated 9.8.2005 seeks to demand the inadmissible credit of Rs. 2,88,89,873/- availed by the appellants after the rescinding of Rule 12B. The addendum 17.9.2007 supplements the allegations in the original show-cause notice and states that out of the original demand of inadmissible credit of Rs. 2,88,89,873/-, Rs. 1,21,61,218/- is also inadmissible on the allegation that the CENVAT credit was fraudulently availed on bogus invoices issued by non-existing/fraudulent suppliers. Therefore, there is no legal infirmity in the issuance of addendum in this regard. Whether the appellant i.e., M/s. Venus International have availed credit on the basis of bogus invoices and if so, whether they have rendered themselves to pay CENVAT credit thus availed? - HELD THAT:- It was incumbent upon the appellants to satisfy themselves about the name, address and existence of the suppliers. We find that even going by the appellants own contentions, some of the suppliers are not traceable. It would be very na ve to believe that the appellants are not concerned with the whereabouts of their suppliers. The fact that in most of the cases, cheques were encashed by third parties unconcerned with the suppliers, supports the contention of the department. Therefore, we find that the appellants have engaged themselves in a fraudulent activity inasmuch as availing credit on the basis of bogus invoices and again claiming the same as rebate on the exported goods. Fraud committed vitiates every activity of the appellants - the credit of Rs. 1,21,61,218/- was fraudulently availed by the appellants and the same requires to be reversed/paid by them along with applicable interest and penalty. Suppression or mis-declaration or mis-statement with an intent to evade payment of duty - HELD THAT:- Revenue has contended that the addendum dated 17.09.2007 issued on the basis of further investigation, proved that the appellants availed fraudulent Cenvat credit; the issue in the show cause notice and addendum was same i.e. disallowance of Cenvat credit; No additional demand has been issued by addendum; investigation proved that the appellant continued to work in the status/capacity of manufacturer under erstwhile Rule 12B only with an intention to avail fraudulent Cenvat credit and to claim fraudulent rebate; As fraud was involved in the matter, the show cause notice correctly invoked proviso to Section 11; the addendum also was issued well within the time of 5 years - M/s. Venus International are liable to pay fraudulently availed CENVAT credit of Rs. 1,21,61,218/- along with interest and equal penalty under Rule 13 of the Cenvat credit of the Cenvat Credit Rules, 2002/Rule of the Cenvat credit Rules, 2004 read with Section 11AC of Central Excise Act-1944. Whether penalties are imposable on different appellants? - HELD THAT:- A penalty of Rs. 20,00,000/- has been imposed on Mr. Prakash Jokhani and Bimal Jokhani. However, the learned adjudicating authority has not clearly delineated the role of Shri Prakash Jokhani separately viz-a-viz. Bimal Jokhani. In fact, Adjudicating Authority finds that Shri Prakash Jokhani cooperated with the investigation, whereas Shri Bimal Jokhani has not responded to summons and has not joined the investigation. Therefore, imposing similar penalty on both of them defies logic. Looking into the role played by Shri Prakash Jokhani, we are inclined to reduce the penalty from Rs. 20,00,000/- to Rs. 5,00,000/-. Appeal allowed in part.
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2022 (5) TMI 1241
CENVAT Credit - input services - credit denied on the ground that input services were not received at the factory of Appellant but at External Warehouse having separate First Stage Dealer registration certificate - period from October, 2013 to October, 2014 - HELD THAT:- Basing on the decision in VAKO SEALS PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI-V [ 2015 (7) TMI 544 - CESTAT MUMBAI] had allowed the appeal filed by the present appellant before him for the period from November, 2014 to November, 2016, where it was held that It is kept in mind that service is not tangible unlike inputs or capital goods. Scope of service is not limited within the four corner of factory, even if same services are received by the appellant at any place directly or indirectly related to manufacture of activity or related to business activity of the assessee irrespective whether it is provided within the factory or out side the factory, credit is admissible. Therefore in my considered view so long as rental premises in the present case is used for manufacturing activity of factory unit, credit is admissible. Appeal allowed - decided in favor of appellant.
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2022 (5) TMI 1240
Availing CENVAT credit while availing the benefit of exemption N/N. 30/04-CE denied - major input i.e. yarn used for manufacture of exempted and duty paid goods - manufacture of Terry Towels - suppression of material facts or not - invocation of extended period of limitation - HELD THAT:- The issue is squarely covered by the decision of this Tribunal in the case of M/S MANGAL TEXTILE PVT. LTD. VERSUS CCE AHMEDABAD-I [ 2010 (12) TMI 318 - CESTAT, AHMEDABAD] where it was held that appellant having reversed the major part of the credit and having offered to reverse the balance credit, entitled to benefit of Notification No.30/94. There are no hesitation in allowing the appeal filed by the appellant in this case also - appeal allowed - decided in favor of appellant.
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