TMI Tax Updates - e-Newsletter
June 14, 2024

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws FEMA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. A fresh SCN should be issued to revise the demand raised in the SCN

   By: Bimal jain

2. Understanding Royalty Payments and Imported Goods: A Comprehensive Guide

   By: raghunandhaanan rvi

3. Requirement of GST Registration for landowners in respect of Land given on Development

   By: Shilpi Jain and Divya Vundipalli

4. Constitutional validity of Section 16(2)(c) and 16(4) upheld and due date for availment of ITC has been changed retrospectively from September to 30th November from FY 2017-18 onwards

   By: Bimal jain

5. 3 Reasons why taxpayers should prepare from now - An Article on GST Tribunals (GSTAT)

   By: Vivek Jalan

6. ELIGIBILITY REQUIREMENTS FOR INITIAL PUBLIC OFFER ON MAIN BOARD

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. APEDA facilitates first Consignment of MD 2 Pineapples from India to UAE

Notifications

Income Tax

1. 51/2024 - dated 12-6-2024 - IT

Exemption u/s 10(46) in relation to specified income of notified person - Kerala Co-operative Deposit Guarantee Fund Board.

Money Laundering

2. S.O. 2252(E) - dated 12-6-2024 - PMLA

Verification of identity by reporting entity.

Circulars / Instructions / Orders

DGFT

1. Policy Circular No. 05/2024-25 - dated 13-6-2024

Clarification regarding subsequent re-import of unsold jewellery, exported under Para 4.79 & 4.92 of the Handbook of procedure, 2023.

2. 11/2024-25 - dated 12-6-2024

Inclusion of agency in Appendix 2G of Appendices and Aayat Niryat Forms of Foreign Trade Policy, 2023 in terms of Para 2.52 (c) of HBP 2023.

Highlights / Catch Notes

GST

• Validity of order u/s 73(9) regarding Input Tax Credit error on import of goods. Petitioners get another chance to explain.

  Case-Laws - HC : The High Court addressed an issue u/s 73 (9) of the WBGST & CGST Act, 2017 regarding an error in reporting Input Tax Credit on Import of Goods. The court found a bonafide error by the petitioners and noted the consultant's departure without informing them. The court set aside the order issued on 29th August 2023 and remanded the matter to the proper officer for reconsideration. The petition was disposed of by way of remand, providing the petitioners with an opportunity to explain the situation to the proper officer.
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• Taxpayer's delay in filing GST registration revocation application condoned. If all requirements met, revocation will be considered.

  Case-Laws - HC : The High Court addressed a case involving a delay in filing an application for Revocation of cancellation of GST registration. The court considered the invocation of the proviso to Rule 23 of the Odisha Goods and Services Tax Rules (OGST Rules). The Petitioner fulfilled all requirements by paying taxes, interest, late fees, and penalties. The court condoned the delay in invoking the proviso and directed that upon the Petitioner depositing all dues and meeting formalities, the application for revocation would be considered as per the law. The petition was disposed of accordingly.
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• Taxpayer entitled to refund of Input Tax Credit. Portal issue prevented timely filing. Allowed to submit manual application within 2 weeks.

  Case-Laws - HC : The High Court considered a case regarding refund of Input Tax Credit. The petitioner's refund application was rejected due to lack of supporting documents. The petitioner argued that due to portal closure, they couldn't rectify the deficiencies or file a fresh application. The court emphasized that procedural rules should facilitate justice, not deny legitimate claims. The court allowed the petitioner to manually submit a refund application within two weeks, addressing the deficiencies mentioned in the deficiency memo.
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• Violation of natural justice challenged in assessment orders due to discrepancies in tax returns. Orders quashed, case remitted for fresh assessment.

  Case-Laws - HC : The High Court addressed a challenge to assessment orders due to a mismatch in returns filed by the petitioner in GSTR 01 and GSTR 3B. The court found a violation of natural justice principles. The petitioner's attempt to absolve liability incurred by their deceased mother was rejected u/s 93 of the TNGST Act, 2017. The court quashed the impugned orders as they were issued post the mother's demise, remanding the case for fresh orders. The petitioner must deposit 10% of disputed tax for the remand process. The petition was allowed for remand.
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• Appeal dismissed due to 53-day delay, not 152 days as stated. Appellate authority can condone delay beyond 120 days.

  Case-Laws - HC : The High Court considered the maintainability of an appeal u/s the GST Act. The appeal was dismissed due to a 152-day delay in filing. The court clarified that the appellate authority can condone delays beyond 120 days. The original order was dated 08.02.2022, and the appeal was filed on 21.07.2022, resulting in a 53-day delay after deducting the statutory 90-day period. The court found the appellate authority's determination of a 152-day delay as erroneous. The court held that the delay should have been condoned and remanded the matter to the appellate authority for fresh consideration. The petition was disposed of by way of remand.
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• Writ-petition challenging GST circulars remanded back to court of single bench for decision.

  Case-Laws - HC : The High Court considered the maintainability of a writ petition u/s Article 226 challenging a circular under the Central Goods & Services Tax Act. It held that the appellate authority lacks jurisdiction to declare a provision ultravires, a power reserved for Constitutional Courts. The impugned order was set aside, and the writ petition remanded to the Single Bench for deciding the vires of the circular after hearing the parties. The petition was disposed of by way of remand.
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• Petitioner's GST registration cancelled for not filing returns. Court sets aside cancellation, with conditions.

  Case-Laws - HC : The High Court addressed the cancellation of the petitioner's GST registration due to non-filing of returns for 6 months. The court noted no tax evasion but dismissal of appeal on limitation grounds. Recognizing the adverse impact on revenue, the court set aside the registration cancellation order from May 27, 2020. The petitioner must file all pending returns, pay taxes, interest, fines, and penalties. The court disposed of the petition, emphasizing a pragmatic approach by authorities to allow the petitioner to continue business operations.
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Income Tax

• Appellate Tribunal Orders Grant of 80G Registration to Bar Association; Criticizes Provisional Denial.

  Case-Laws - AT : The Appellate Tribunal considered the issue of registration u/s 80G(5)(iii). The provisional registration was questioned due to a delay in applying for regular registration. The Tribunal found the activities of the Bar Association to be charitable and consistent, despite the delay in applying. The Tribunal criticized the incorrect procedure of granting provisional registration and subsequent denial of regular registration. The Tribunal deemed the application for regular registration to be within the extended time limit set by the Board. The Tribunal directed the Exemption Commissioner to grant registration u/s 80G(5)(iii) to the assessee, as the activities remained unchanged. The earlier registration u/s 80G(5)(vi) was cancelled due to a change in law. The Tribunal allowed the appeal of the assessee.
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• Tribunal Rules in Favor of Assessee: No Short Tax Deduction Due to Genuine TDS Certificates with Different TANs.

  Case-Laws - AT : The case involved a dispute over short collection of TDS due to lower TDS certificates with different TANs issued by deductees. The Central Processing Centre (CPC) raised a demand for tax and interest, but the CIT(A) emphasized the duty of the assessee to inform suppliers about the new TAN and request revised certificates. The Tribunal held that the assessee, as the person responsible for TDS, complied with certificates issued u/s. 197 by deducting tax at source as per rates specified. The genuineness of the certificates was not in question. The procedure for obtaining lower rate deduction certificates under Rule 28(AA) was noted, emphasizing that certificates are valid for the named person responsible for deduction. The Tribunal, citing legal provisions and precedent, ruled in favor of the assessee, concluding no short deduction of tax occurred, and deleted the demand for tax and interest.
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• Reopening of tax assessment based on book profits under s. 115JB not valid. Tax liability on book profits exceeds total income.

  Case-Laws - AT : The Appellate Tribunal considered a case involving re-opening u/s 147/148 to adjust book profits and assess escaped income. It was held that the adjustments made by the assessee in determining normal provisions did not constitute a failure to disclose facts, thus the escapement of book profits was not sustainable. The assessee argued that the tax liability on book profits exceeded that on income under normal provisions. Citing relevant case law, it was found that the reassessment was not sustainable. The Tribunal quashed the reassessment notice and declared the order null and void due to lack of jurisdiction u/s 147, rendering discussions on additions and disallowances unnecessary. The assessee's appeal was allowed.
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• Tribunal Upholds CIT's Re-evaluation Order Due to AO's Insufficient Inquiry on Plant Investment Deduction Under Sec 32AC.

  Case-Laws - AT : The case involves a challenge u/s 263 regarding deduction u/s 32AC for investment in new plant or machinery. The Principal CIT ordered a de novo readjudication due to lack of inquiry by the AO. The Appellate Tribunal found no follow-up inquiry by the AO, indicating non-application of mind. The appellant's argument on plant acquisition timing should have been raised before the AO, not at later stages. The CIT rightly set aside the matter for reconsideration due to incorrect application of law and presumption of facts by the AO. The Tribunal dismissed the assessee's appeal, emphasizing the need for proper determination of facts before applying the law. The appellant's interpretation of acquisition and installation was deemed legally questionable.
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• Interest expenditure must be connected to interest income for deduction. Lack of evidence on TDS & payment disallows claim.

  Case-Laws - AT : The ITAT held that deduction of interest u/s 57 against interest income must be substantiated by the assessee. Interest expenditure must be incurred for earning interest income. In this case, interest on delayed sale payment is not connected to interest expenditure on loans for business purchases. Interest income is under 'income from other sources,' while interest expenditure is linked to 'capital gain.' Lack of evidence on TDS deduction or actual payment renders the claim inadmissible. The CIT(A)'s decision was upheld, dismissing all grounds raised by the assessee.
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• Penalty for not filing tax return on time was cancelled as no tax was evaded. Assessee's appeal allowed.

  Case-Laws - AT : The Appellate Tribunal considered a case involving a penalty order u/s 271(1)(c) of the Income-tax Act. The assessee did not file the return of income u/s 139(1) but filed it after a notice u/s 148. The Tribunal held that as the self-assessment tax paid before the notice exceeded the tax on the income assessed, there was no tax sought to be evaded. Therefore, the penalty of Rs. 2,10,000 was unjustified and deleted. The Tribunal did not address other arguments raised by the assessee as the main ground for penalty imposition was not valid. The appeal of the assessee was allowed.
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• Tribunal Remands Trust's 80G Registration Case for Fair Hearing After ITBA Portal Issue Affects Notice Delivery.

  Case-Laws - AT : The Appellate Tribunal addressed the rejection of the application for registration u/s 80G(5) due to non-receipt of order by the assessee-trust. The Tribunal noted that the assessee had submitted necessary details and documents during the application process. It was found that the show cause notice was not served on the assessee due to a technical issue with the ITBA Portal. The Tribunal emphasized that the rejection lacked a fair opportunity for the assessee to respond. Referring to a recent CBDT Circular extending the application deadline, the Tribunal remanded the case to the CIT(E) for a reconsideration on merit, with a directive to provide a fair hearing. The Tribunal advised the assessee to be diligent in compliance, considering the electronic filing system. The appeal was allowed for statistical purposes.
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• Land sale & property purchase not same! Possession not equal to ownership. No deed, no deduction. Conditions not met, appeal dismissed.

  Case-Laws - AT : The ITAT held that an agreement to purchase cannot be considered a purchase deed u/s 54F for LTCG deduction. Citing Suraj Lamp case, it clarified SA/GPA/WILL transactions are not transfers. Possession alone does not establish title. As the sale deed was not executed, the exemption u/s 54F was denied as conditions were unmet. The CIT(A) and AO's decision was upheld, emphasizing the need for registered documents to fulfill statutory requirements for claiming exemptions. The appeal was dismissed due to non-compliance with legal provisions.
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• After withdrawal of application u/s 80G, assessee couldn't reapply due to portal issue. Tribunal allows fresh application.

  Case-Laws - AT : The ITAT held that the rejection of the application u/s 80G was due to withdrawal, preventing the assessee from reapplying. The CIT(E) allowed existing registration to continue. Department failed to prove the assessee's submission on portal issue wrong. Approval was granted on a fresh Form 10AC. The appeal is disposed, allowing the assessee to submit a fresh application manually if technical issues persist. CIT(E) to process the application in compliance with the law.
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• Petitioner used shell entity for accommodation entries, failed to provide evidence, writ petition dismissed.

  Case-Laws - HC : The High Court considered the reopening of assessment u/s 147 due to accommodation entries from M/s Metal Impex, a shell entity for high-value transactions. Respondents relied on bank statements linking petitioner to Metal Impex for accommodation entries, leading to suspicion of escaped income. Petitioner requested Suspicious Transaction Report but did not deny transactions or provide relevant material. Court found no grounds for interference u/s Article 226 and dismissed the writ petition.
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• Cash payments u/s 40A restricted for business expenses. Exemptions for special cases. Assessee must prove cash payment necessity. WP Dismissed.

  Case-Laws - HC : HC held that u/s 40A, cash payments are restricted to prevent false income claims. Exemptions allowed for special circumstances where bank transactions are impossible. Assessee must prove cash payment necessity and no income escape. Cloth business failed to show exigency for cash payments on last day of assessment year. Lack of evidence on payments and income declaration led to dismissal of WP. Onus on assessee to prove compliance with cash payment restrictions.
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• Application for registration u/s 12A/12AB rejected due to clerical error in e-filing. Tribunal allows correction.

  Case-Laws - AT : The Appellate Tribunal addressed the rejection of registration application u/s 12A/12AB due to a clerical error in selecting the appropriate section in the e-filing portal. The Tribunal found the error to be inadvertent and allowed correction in the application. The Tribunal directed the authority to consider the application under the correct sub-clause of section 12A(1) and to assess the case on merit. The delay in filing the application for approval u/s 80G(5) was also addressed, citing a recent CBDT circular extending the deadline. The Tribunal granted the assessee the benefit of the extended period for filing the application. The appeal was allowed for statistical purposes.
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• Notice issued on wrong address violates natural justice principles. Appellant entitled to fair hearing.

  Case-Laws - AT : The Appellate Tribunal addressed the issue of notice being sent to the wrong address, leading to an ex-parte order by the CIT(A) due to improper service. The CIT(A) failed to send notice to the correct email address as required by CBDT Notification No. 139. Courts have recognized that expecting taxpayers to constantly monitor the tax department's portal is impractical. Recent case law emphasized the need for proper communication of notices in accordance with the law. The principles of natural justice mandate that taxpayers be given a fair opportunity to respond. The Tribunal remanded the case to the CIT(A) for a fresh decision after ensuring the appellant is granted a fair hearing and opportunity to present their case.
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• Assessee received Rs. 37,12,500 dividend, distributed Rs. 30 Lakh to shareholders. Allowed deduction u/s 80M.

  Case-Laws - AT : The Appellate Tribunal considered a case involving deduction u/s 80M. The assessee received Rs. 37,12,500 dividend from a domestic company and distributed Rs. 30 Lakh to its shareholder. Section 80M(1) allows deduction equal to distributed dividend before the due date. The assessee paid dividend to shareholders before due date u/s 139(1) and filed return on time. Thus, the assessee rightfully claimed deduction u/s 80M of Rs. 30 Lakh. The Tribunal allowed the appeal.
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• Assessment reopened for bogus purchases, but no valid reason found. No addition can be made without proper explanation. Appeal allowed.

  Case-Laws - AT : The Appellate Tribunal held that the assessment u/s 147 was invalid as no addition was made for the issue recorded in the reasons u/s 148(2). The AO's addition u/s 69C for bogus purchases was deemed wrong as the assessee had disclosed total purchases with explained sources. The Tribunal quashed the assessment u/s 143(3) u/s 147 as without jurisdiction. The appeal of the assessee was allowed.
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• Tribunal Overrules Rejection of Lower Tax Rate Claim, Emphasizes Substantive Benefits Over Procedural Delays.

  Case-Laws - AT : The Appellate Tribunal addressed the rejection of the assessee's claim for a lower tax rate u/s 115BAA due to non-filing of Form 10IC on time. The CIT(A) dismissed the appeal, emphasizing strict compliance with beneficial provisions. However, the Tribunal noted the timely declaration of intent in the tax audit report, indicating the assessee's bona fide belief in the concessional tax regime. Referring to the Zenith Processing Mills case, the Tribunal held that procedural requirements like Form 10IC can be fulfilled during assessment proceedings. Emphasizing substantive benefits over procedural lapses, the Tribunal cited the G.M. Knitting Industries case, stating that timing of claim submission is directory. The Tribunal highlighted CBDT Circulars extending filing deadlines as recognition of procedural challenges. Denying the benefit solely for a filing delay would be unjust, given the assessee's eligibility for the lower tax rate.
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• Penalty of Rs. 150,000 for not filing audit report on time set aside as no prior approval obtained. Appeal allowed.

  Case-Laws - AT : The ITAT, an Appellate Tribunal, considered the issue of levy of penalty u/s 271B for failure to submit audit report u/s 44AB on time. The Tribunal noted that the penalty order did not mention prior approval of the Joint Commissioner, as required. Citing SAGAR DUTTA case, it held that the absence of such approval renders the order incompetent and a nullity. The Tribunal set aside the penalty orders totaling Rs. 150,000, stating they were passed without requisite approval. The appeal by the assessee was allowed, with the option for the revenue to approach the Tribunal if prior approval was later proven.
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• Appellate Tribunal Deletes Section 68 Addition: No Evidence of Bogus LTCG from Share Sales; AO's Claims Unfounded.

  Case-Laws - AT : The Appellate Tribunal considered the issue of addition u/s 68 for alleged bogus LTCG from sale of shares. The Tribunal noted that the transactions were conducted on a regulated stock exchange platform with STT levied and funds routed through normal banking channels. The Tribunal found no evidence from SEBI indicating the shares were tainted. The AO's suspicion of share price manipulation was baseless as the assessee was a long-term investor with no direct involvement in any such activities. The AO's reliance on investigation findings without direct evidence was deemed insufficient. The non-compliance with procedural requirements u/s 142(3) was noted, as the AO did not allow cross-examination, violating statutory provisions. The CIT(A)'s dismissal based on preponderance of probability theory was rejected, and the addition u/s 68 for LTCG was deleted for both assessment years.
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• Interest expenses disallowed u/s 40A(2) for unrelated parties. Rate of 11% not justified. Disallowance deleted. Loans genuine, addition u/s 68 rejected.

  Case-Laws - AT : The Appellate Tribunal addressed multiple issues in the case. Firstly, it ruled that disallowance u/s 40A(2)(b) can only be made in relation to "related parties," not unrelated ones. The disallowance of interest expenses to unrelated parties was deemed incorrect. Secondly, the Tribunal found that the assessing officer's adoption of 11% as the "fair market value" of interest lacked proper justification and comparable cases. Thirdly, the addition u/s 68 for unsecured loans lacked thorough inquiry by the assessing officer, and the documentary evidence provided by the assessee was considered adequate. The Tribunal decided in favor of the assessee on all these grounds.
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• Claim for deduction u/s 54 allowed as possession date considered purchase date.

  Case-Laws - AT : The Appellate Tribunal considered a case involving a claim for deduction u/s 54 for LTCG. The claim was initially denied as the new asset was not purchased or constructed within the specified time frames u/s 54. The assessee argued that although the asset was booked earlier, possession was received within the prescribed period. Citing a Bombay High Court case, it was held that the date of possession should be considered the date of actual purchase for claiming exemption u/s 54F. Referring to a similar case, it was reiterated that possession date is crucial. The Tribunal ruled in favor of the assessee, allowing the exemption as possession was obtained within the required timeframe from the agreement to sell the original asset.
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• Appeal dismissed for filing in the name of deceased without legal heir mention. AO must refile with proper info.

  Case-Laws - AT : The ITAT, an Appellate Tribunal, addressed an appeal filed in the name of a deceased person without proper mention of the legal heir. The appeal was dismissed due to the irregularities in filing in the deceased person's name and the absence of the legal heir's details. The AO failed to include the legal heir's name in form no.36 and did not submit the complete order of the CIT (A). The appeal was dismissed without discussing the merits, with the option for the AO to file a revised appeal with proper documentation and reasons for the delay.
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• Appellate Tribunal Confirms Brand Ambassador, Advertising, and Service Center Expenses as Deductible u/s 37.

  Case-Laws - AT : The Appellate Tribunal addressed several issues: 1. Disallowance of Brand Ambassador Expenses - AO disallowed 75% as capital expenditure, but CIT(A) found it to be revenue in nature u/s 37. 2. Disallowance of Advertisement and Sales Promotion expenses - Tribunal disagreed with AO, stating expenses were for sales enhancement and profit, qualifying for deduction u/s 37. 3. Disallowance of Service Centre expenses - Tribunal upheld provision for warranty as industry practice, citing precedent for deduction u/s 37. Revenue's grounds were rejected in all three instances.
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• Validity of proceedings u/s 153C questioned - AO didn't find incriminating evidence. Revenue to initiate proceedings u/s 148. Assessee's appeal allowed.

  Case-Laws - AT : The Appellate Tribunal (ITAT) considered the validity of proceedings u/s 153C, focusing on whether the satisfaction note recorded by the AO of the searched person was present. The AO stated that the additions to the assessee's income were not based on incriminating material and did not hold up. Additionally, the AO planned to initiate proceedings u/s 148 following the prescribed procedure u/s 148A. As the Revenue acknowledged the lack of incriminating material and initiated proceedings u/s 148, the appeals challenging the additions u/s 153C were upheld, resulting in the assessee's appeal being allowed.
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• Unexplained investment in factory construction added based on private valuer's report quashed. AO can refer to valuer during search/survey.

  Case-Laws - AT : The ITAT considered whether an assessing officer can refer to a registered valuer u/s 55A based on physical appearance during search/survey without rejecting books of account. Sections 16A of Wealth-tax Act and 142A empower AO to refer to Valuation Officer for asset valuation. Valuation Officer must consider evidence provided by taxpayer and make judgment. AO can use Valuation Officer's report in assessment. Addition based solely on private valuer's report without incriminating material was challenged. CIT(A) cited precedent that addition cannot be made solely on valuation report without corroborative evidence. Revenue's argument dismissed, challenging addition.
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Customs

• Imported roasted areca nuts deemed fit for human consumption as per FSSAI reports. High Court orders release of consignments.

  Case-Laws - HC : The High Court addressed the issue of classifying imported roasted areca nuts and the validity of FSSAI reports on their suitability for human consumption. FSSAI conducted tests confirming conformity to food safety standards. The petitioner sought release of goods before seizure, with no response from respondents. The Court noted the power of adjudication officers to provisionally release goods but asserted its jurisdiction. Factual findings favored the petitioner, leading to a directive for release of consignments upon meeting specified conditions. The petition was disposed of accordingly.
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• TED: Court rules in favor of petitioner for refund of excise duty on deemed exports. Deemed exports entitled to same benefits as physical exports.

  Case-Laws - HC : The High Court considered a case regarding the refund of terminal benefits of excise duty for deemed exports u/s Sl.No.511 of N/N.12/2012-cus. The petitioner, a successful bidder for a construction project, argued that deemed exports are entitled to the same benefits as physical exports. The court found that the petitioner was entitled to the Terminal Excise Duty (TED) as per the contract terms, supported by relevant documents. The court held that the petitioner's claim cannot be rejected solely on the grounds that the goods supplied do not qualify as deemed exports. The court quashed the impugned order, ruling in favor of the petitioner.
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FEMA

• Compounding Application Returned Amid Money Laundering Investigation Under FEMA Rules, Highlighting Timely Decision Requirement.

  Case-Laws - HC : The High Court considered an application for compounding contravention under FEMA. The petitioner filed Form FC-TRS belatedly, leading to investigations and complaints. The Court noted that Rule 8(2) of the Compounding Proceeding Rules requires the Compounding Authority to pass an order within 180 days and afford all concerned parties an opportunity to be heard. The Court found that investigations on money laundering charges were ongoing, preventing compounding proceedings. Rule 4(1) empowers the first respondent to compound contraventions, except those related to suspected money laundering. A proviso added to Rule 8(2) prohibits compounding contraventions suspected of terror financing or affecting national sovereignty, remitting such cases to the Adjudicating Authority. The compounding application was returned due to the proviso, which does not allow compounding of contraventions suspected of money laundering.
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Indian Laws

• Co-op banks & MPID Act: Fraud in loan distribution. Co-op banks not excluded from MPID Act. RBI supervision not enough. Different laws, different purposes.

  Case-Laws - HC : The High Court considered the applicability of the MPID Act to Co-operative Banks as "Financial Establishments" u/s 2(d) of the MPID Act in a case involving fraud in loan distribution. The court held that co-operative banks, even if governed by the BR Act, are not excluded from the MPID Act's scope. While such banks are supervised by the RBI, the BR Act does not define or punish offenses like those under IPC sections 409, 420, 467, 468, and 471. The court emphasized that the MPID Act's purpose is not fulfilled solely by bringing co-operative banks under the BR Act. The court dismissed the Criminal Writ Petition.
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• Court rules bidder with lower bid wins tender. GST not included in bids. Judicial review limited. Petition dismissed.

  Case-Laws - HC : HC considered bid acceptance in a tender for manpower supply based on pricing and GST inclusion. Bidder 1&2 quoted 1.18, while bidder 2 bid 1.03, indicating lower bid. NIT specified GST payable separately. Judicial review in tender matters limited, court can't add terms not in NIT. Petition lacked merit, dismissed.
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Service Tax

• Appellate Tribunal Confirms Reimbursable Amounts Exclusion in Service Charges; Dismisses Department's Appeal.

  Case-Laws - AT : The CESTAT, an Appellate Tribunal, ruled on a valuation issue regarding the inclusion of reimbursable amounts in addition to charges collected for a service. The appellant had specific agreements with clients classifying charges as pure agency services. The adjudicating authority certified the charges as pure agents based on a Chartered Accountants Certificate. The department failed to provide evidence against the reimbursement being for pure agency services. The Chartered Accountants Certificate confirmed the reimbursement as collected by the appellant as pure agents. The review raised concerns about cross-verification of the certificate with primary documents. The Tribunal found no reason to doubt the certificate's genuineness and upheld the dropped demand. The appeal was dismissed, affirming the adjudicating authority's decision.
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• CESTAT ruled refund of service tax not allowed without challenging self-assessment. Refund based on assessment made.

  Case-Laws - AT : The case involves a challenge to a refund claim for service tax u/s unjust enrichment principles. CESTAT held that refund can only be granted based on the assessment made, not outside it. Refund proceedings are akin to execution proceedings and cannot alter assessments. Appellant's voluntary tax payment without challenging assessment made it final. Without challenging assessment, refund claim is not maintainable. Refund proceedings based on a decision where appellant wasn't a party and without challenging assessment are to be rejected. No need to consider Section 11B of Excise Act. Appeal dismissed.
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Central Excise

• High Court ruled in favor of refunding rebate amount with interest. Cash refund required, not credit. Payment due within 4 weeks.

  Case-Laws - HC : The High Court addressed the issue of refunding rebate amount with interest u/s 11BB of the Central Excise Act, 1944 and the applicability of Section 142(3) of the CGST Act, 2017. It held that Section 142(3) mandates payment in cash, not credit in CENVAT account. The court directed the refunding authority to pay the duty refundable in cash with interest, except as per Section 11B(2) of the Central Excise Act, 1944. The order requires payment within four weeks. The petition was disposed of accordingly.
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• Court Dismisses Petition to Excuse 891-Day Delay in Filing Appeal Due to Lack of Sufficient Cause and Diligence.

  Case-Laws - HC : The High Court considered a Civil Miscellaneous Petition seeking condonation of a delay of 891 days in filing an appeal. Emphasizing the legal maxim "interest reipublicae ut sit finis litium," the Court noted that rules of limitation aim to preserve legal remedies within a legislatively fixed period. Lack of bona fide motive, inaction, and negligence are crucial factors in delay condonation. Referring to a Supreme Court case, the Court highlighted that merely establishing sufficient cause does not automatically entitle a party to condone delay. The term "sufficient cause" was interpreted to require absence of negligence or lack of bona fide intent. Ultimately, the Court found no adequate reason to justify the lengthy delay and dismissed the condonation application.
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VAT

• Slump sale not taxable under MVAT Act. Reviewing authority exceeded jurisdiction. Impugned order illegal.

  Case-Laws - HC : The High Court considered whether a slump sale under the BTA would be taxable as a sale of goods u/s the MVAT Act. The reviewing authority exceeded its jurisdiction by dissecting the BTA and copying reasoning from a service tax demand notice. The intangible assets in Schedule 3.3 of the BTA could not be considered as sale of goods, and taxing them was a flawed approach. The reviewing authority misinterpreted the BTA and the MVAT Act, leading to an illegal order. The Court held that the slump sale did not amount to sale of goods u/s the MVAT Act, and set aside the impugned order. The petition was allowed.
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Case Laws:

• GST

• 2024 (6) TMI 556
  Order issued u/s 73 (9) of the WBGST CGST Act, 2017 - error in reporting Input Tax Credit on Import of Goods - seeking reconsideration by the proper officer - HELD THAT:- Admittedly, in this case there appears to be a bonafide error on the part of the petitioners which aspect has not been considered by the proper officer. However, without going into such issue and taking note of the fact that the consultant engaged by the petitioners had left the job without properly informing the petitioners as regards the proceedings, a further opportunity ought to be provided to the petitioners to bring on record the aforesaid fact and properly explain the aforesaid contention before the proper officer. The order dated 29th August 2023 issued under Section 73 (9) of the said Act is set aside and the matter is remanded back to the proper officer. The petition is disposed off by way of remand.

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• 2024 (6) TMI 555
  Cancellation of the GST registration of the petitioner - failure to file returns for a continuous period of 6 months - HELD THAT:- Admittedly, the registration of the petitioner had been cancelled on the ground of non-filing of returns. It is not the case of the respondents that the petitioner had been adopting dubious process to evade tax. Although, the appeal has been preferred the same has, however, been dismissed on the ground of limitation. Taking note of the fact that the suspension/revocation of license would be counterproductive and works against the interest of the revenue since, the petitioner in such a case would not be able to carry on his business in the sense that no invoice can be raised by the petitioner and ultimately would impact recovery of tax, the respondents should take a pragmatic view in the matter and permit the petitioner to carry on his business. The order 27th May 2020 cancelling the registration of the petitioner is set aside subject to the condition that the petitioner files his returns for the entire period of default and pays requisite amount of tax, interest, fine and penalty. Petition disposed off.

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• 2024 (6) TMI 554
  Delay in filing application for Revocation of cancellation of GST registration - Invocation of proviso to Rule 23 of the Odisha Goods and Services Tax Rules (OGST Rules) - Petitioner complies with all the requirements of paying the taxes, interest, late fee, penalty etc. due - HELD THAT:- The delay in Petitioner s invoking the proviso to Rule 23 of the Odisha Goods and Services Tax Rules (OGST Rules) is condoned and it is directed that subject to the Petitioner depositing all the taxes, interest, late fee, penalty etc. due and complying with other formalities, the Petitioner s application for revocation will be considered in accordance with law. The petition is disposed off.

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• 2024 (6) TMI 553
  Delay in filing application for Revocation of cancellation of GST registration - Invocation of proviso to Rule 23 of the Odisha Goods and Services Tax Rules (OGST Rules) - Petitioner complies with all the requirements of paying the taxes, interest, late fee, penalty etc. due - HELD THAT:- The delay in Petitioner s invoking the proviso to Rule 23 of the Odisha Goods and Services Tax Rules (OGST Rules) is condoned and it is directed that subject to the Petitioner depositing all the taxes, interest, late fee, penalty etc. due and complying with other formalities, the Petitioner s application for revocation will be considered in accordance with law. The petition is disposed off.

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• 2024 (6) TMI 552
  Interpretation of statute - Sections 129 and 130 of the Goods and Service Tax Act, 2017 - HELD THAT:- Issue Notice returnable on 19.6.2024. By way of ad-interim relief, the respondent authorities shall release the good and conveyance on deposit of Rs. 1,26,312/- by the petitioner toward the tax and penalty and the petitioner shall also furnish the bond for the value of the goods for Rs. 3,50,869/- before the respondent authorities.

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• 2024 (6) TMI 551
  Refund of Input Tax Credit - HELD THAT:- On the petitioner s application for refund, a deficiency memo dated 31.12.2019 (Ex.P9) was issued with the remarks that no supporting documents were attached. The Taxpayer was advised to file a fresh refund application rectifying the deficiencies. The petitioner s case is that since the portal was closed, fresh application could not be filed on portal and the deficiencies pointed out could also not be removed and the respondent authorities would not accept manual filing. The rules of procedure are handmade of justice. They are for effective and timely redressal of the grievance. They are not for destroying the rights or to defeat the legitimate claims. If the petitioner could not do the needful on portal in time for the reasons disclosed, he cannot be denied of his right for consideration of the claim for refund under the statute. The writ petition is disposed off finally by providing that the petitioner shall be at liberty to file an application for refund completing the requisite documents making good the deficiency as pointed in the deficiency memo, manually, within a period of two (02) weeks along with the copy of this order before the Competent Authority.

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• 2024 (6) TMI 550
  Violation of principles of natural justice - Challenge to assessment orders - mismatch between the regular returns filed by the petitioner in GSTR 01 and the returns filed in GSTR 3B - Section 93 of the TNGST Act, 2017 - HELD THAT:- It is not open for the petitioner to state that the petitioner can wash away the liability incurred by the petitioner s mother, particularly, in the light of Section 93 of the TNGST Act, 2017. However, the facts remain that the impugned orders have been passed after the petitioner s mother died on 13.05.2023 and thus, the respondent was unaware of the same and proceeded to pass impugned orders for the respective assessment years. The petitioner may have the cause to substantiate it on merits. The impugned orders are quashed and the case is remitted back to the respondents to pass fresh orders, subject to the petitioner depositing 10% of disputed tax to the respondent - Petition allowed by way of remand.

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• 2024 (6) TMI 549
  Maintainability of appeal - appeal filed by the petitioner was dismissed on the ground of delay of 152 days in filing the Appeal - HELD THAT:- It has been categorically held that the appellate authority under the GST Act has power under law to condone the delay beyond 120 days. In the present case, it is noted that the order in original was dated 08.02.2022 and the Appeal was filed on 21.07.2022. Hence after the deducting the statutory period of 90 days in filing the Appeal, there was a delay of 53 days. Hence the finding of the Appellate Authority to the extent that there was a delay of 152 days in filing the Appeal was erroneous. Hence, in view of the settled position of law, the appellate authority ought to have condoned the delay in the statutory period while considering the petitioner s appeal. The matter is remanded back to the appellate authority for fresh consideration - Petition disposed off by way of remand.

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• 2024 (6) TMI 548
  Violation of principles of natural justice - the reply of the petitioner does not appeared to have been received by the respondent - HELD THAT:- The petitioner s reply dated 18.12.2023, including proof of uploading thereof on 20.12.2023, is on record. On examining the impugned order, such order does not refer to or deal with the petitioner s reply. The petitioner was also not provided a personal hearing. Therefore, in order to provide an opportunity to the petitioner to place all relevant documents on record so as to justify the ITC claim, the impugned order calls for interference. Hence, the impugned order is quashed and the matter is remanded to the assessing officer for re-consideration. Petition is disposed off by way of remand.

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• 2024 (6) TMI 547
  Cancellation of the GST registration - petitioner was unable to file returns on account of the GST portal being inaccessible - HELD THAT:- The petitioner is directed to file returns for the period prior to the cancellation of registration, if not filed, together with tax dues along with interest thereon and the fee fixed for belated filing of returns within a period of forty five days from the date of receipt of a copy of this order. The petition is disposed off.

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• 2024 (6) TMI 546
  Maintainability of writ-petition under Article 226 of the Constitution of India - availability of alternative remedy provided under Central Goods Services Tax Act, 2017 - Petitioner challenged the vires of paragraph 6 of Circular No. 31/05/2018- GST dated 09.02.2018, as amended vide CBI C Circular No. 169/01/2022-GST dated 12.03.2022, having offended with the provisions contained in Sections 73 and 74 of the CGST Act 2017. - HELD THAT:- Section 107 of the said Act confers power of an appeal against any decision or order passed under this Act or the State Goods Services Tax Act or the Union Territory Acts, Services Acts by the adjudicating authority which does not confer any power or jurisdiction upon such appellate authority to declare any provision of the statute or the statutory circular to be ultravires to the parent Act or the Constitution. Such power is vested upon the Constitutional Court and, therefore, it is a paramount duty of the High Court to decide the said issue and should not have relegated the parties before the statutory authority which is denuded of such powers. The impugned order is hereby set aside - the writ-petition is remanded to the Single Bench to decide the primary relief where the vires of the circulars have been challenged after affording an opportunity of hearing to the respective parties - petition disposed off by way of remand.

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• Income Tax

• 2024 (6) TMI 557
  Jurisdiction of Income Tax Authorities - Issuance of Notice by Non-Jurisdictional Officer - Validity of notice u/s 143(2) 142(1) not issued by ITO concerned - HELD THAT:- Undisputedly the income returned by the assessee during the year was Rs. 2,70,140/- and the assessee is in metro city of Kolkata. Therefore the notice u/s 143(2) 142(1) of the Act was to be issued by ITO concerned and ACIT, Circle-47, Kolkata as has been done in this case. We note that even the assessment was framed by ACIT, Circle-40, Kolkata which is in clear contravention of in violation of Instruction No. 1/2011 [F. No. 187/12/2010-IT(A-I)], dated 31.01.2011 and therefore the assessment has been framed without jurisdiction. We have perused the decision of M/s Rupasi Bangla Agro Industries Pvt. Ltd. [ 2023 (12) TMI 930 - ITAT KOLKATA] and observe that the coordinate bench has decided the issue of notice u/s 143(2) of the Act in favour of the assessee after distinguishing the decision of Kalinga Institute of Industrial Technology [ 2023 (6) TMI 1076 - SC ORDER] which was relied by the Ld. D.R. to defend his arguments that the notice u/s 143(2) of the Act if issued by wrong AO then the assessee is at liberty to take objection to raise the issue within one month of the issuance of the notice in the assessment proceedings. The Coordinate Bench held that the facts of the case of Kalinga Institute of Industrial Technology (supra) are distinguishable and not applicable. Thus issuance of notice u/s 143(2) of the Act by the Assessing Officer not having jurisdiction over the assessee renders the assessment proceedings as a nullity. Appeals of the assessee are allowed.

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• 2024 (6) TMI 545
  Dismissal of appeal and miscellaneous application by ITAT for non-prosecution - statutory obligation of the Appellate Tribunal to consider appeals on merits - HELD THAT:- We find that another Division Bench of this Court, in Uzhuva Service Co-operative Bank Ltd.[ 2020 (9) TMI 1311 - KERALA HIGH COURT] in an almost identical situation, found that the Income Tax Appellate Tribunal acting under Section 254 of the IT Act, 1961, cannot dismiss an appeal preferred by an assessee for non-prosecution. The court found that in terms of the provisions of Section 254 of the IT Act, the Appellate Tribunal was statutorily obliged to consider all appeals on merits and the dismissal for non-prosecution, without considering the merits of the appeal, was not legally sustainable. We further notice that in the said case also, the assessee had filed an application for the restoration of the appeal beyond the statutory period prescribed under the Income Tax (Appellate Tribunal) Rules. The situation, therefore, was not different from what arises in the instant case. Thus, taking note of the said precedent of this Court and finding it to be in confirmity with the statutory provisions under the IT Act and Rules, we allow this writ appeal by setting aside the impugned judgment of the learned Single Judge, and P6 orders of the Income Tax Appellate Tribunal that were impugned in the writ petition, and direct the Appellate Tribunal to restore the appeal on its file and pass orders on merits after hearing the appellant, within an outer time limit of six months from the date of receipt of a copy of this judgment.

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• 2024 (6) TMI 544
  Condonation of delay for the Return filed for Assessment Year[AY] 2020-21 as otherwise conferred in terms of Section 119(2) - CBDT refusing to condone the delay - petitioner cited challenges arising from the COVID-19 pandemic as the reason for the delay - HELD THAT:- While it is true that Financial Year [ FY ] 2019-20 and the filing of Returns in respect of that FY could be said to have been impacted by the outbreak of the pandemic, the respondents take into consideration the undisputed fact that the time for filing of such Returns was extended upto 15 February 2021. The respondent appears to have essentially borne in consideration the fact that although the financials for the year were duly finalized and signed on 31 July 2020, the Return of Income was ultimately filed only on 30 March 2021. More importantly, the recital of facts which appear under 7(iii) clearly demolish any assertion of financial constraints that may have befallen the assessee. No justification to interfere with the ultimate view that legislature has provided time limits for certain obligations under the Act and these time limits have to be observed to be able to claim those deductions, allowance and avoid interest and penalty. This cannot be termed as hardship but it is compliance requirements imposed by law in the interest of proper regulation of the Act. If these time limits were to be relaxed in a particular case on mere fact that a default occurred due to some inadvertence then there will be no sanctity of limitation prescribed by the legislature. Therefore, power of condonation u/s 119(2) can be exercised to deal with the extraordinary circumstances only which would have led to delay in statutory compliance and the same cannot be exercised routinely. No justification to interfere with the order impugned. The writ petition fails as no justification to interfere with the CBDT s decision.

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• 2024 (6) TMI 543
  Reopening of assessment u/s 147 - petitioner had taken accommodation entries from M/s Metal Impex, which was deemed a shell entity conducting high-value transactions for accommodation entries - HELD THAT:- The respondents appear to have taken into consideration certain bank statements pertaining to M/s Metal Impex, Prop. Sh. Naveen Tayal [ Metal Impex ] with which the petitioner undisputedly had some dealings. It was alleged by the respondents that the aforesaid transactions were merely accommodation entries and on the basis whereof they proceeded to form the tentative opinion that income appeared to have escaped assessment. While responding to the aforesaid notice, all that the petitioner did was to call upon the respondents to produce the Suspicious Transaction Report [ STR ] or any other material on the basis of which those details may have been collated. In the reply there was neither a denial of the transactions having been entered into with M/s Metal Impex nor did the petitioner deem it appropriate to produce the GST invoices and other material which have been placed for our consideration along with the writ petition. Writ petitioner has failed to make out a case which may warrant interference under Article 226 of the Constitution. The writ petition stand dismissed.

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• 2024 (6) TMI 542
  Addition u/s 40A - cash payments in cash as the same had to be made on the last date of the assessment year and it was a Sunday and Bank holiday - HELD THAT:- Restriction is imposed on the amount of transaction that a person can make in cash for business expenditure because any attempt by the assessee to show his income falsely as expenditure in business is thwarted and that the transaction made is traceable. Under such circumstances exemptions are made to cater to special exigencies where it is not possible for the transaction to be made through Bank and a person is forced to pay money by way of cash. The onus of proving that such a circumstance existed and indeed payment has been done in cash and the income has not escaped assessment is on the assessee In the instant case, the assessee is in the business of cloth. He has not produced any believable document before the AO to show that there was an exigency and he had to necessarily make payments on 31st March, 2013 itself to the persons as contended by him and he has also failed to show that he could not have made payment by way of cheque. He has also not produced any believable document to show that the said persons have infact received the said consideration and have declared the same in their income. Except the oral submission to that effect, no document has been produced. WP Dismissed.

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• 2024 (6) TMI 541
  Addition based on electronic data obtained during a search operation u/s 132 - one seized document was obtained in the form of printout from WhatsApp messages in the mobile in one of the employees - HELD THAT:- There is no dispute on the fact that the Revenue authorities have not filed the certificate u/s 65B of the Indian Evidence Act. However as per the decision of the Hon ble Madras High Court ( 2024 (2) TMI 1283 - MADRAS HIGH COURT] as cited by the Ld. DR held under Para No.77 (iii) of the order that, the Digital Evidence Investigation Manual has been issued by the CBDT by virtue of powers available u/s 119 of the I.T. Act and hence, the Income Tax Authorities and all the other persons employed in the execution of this Act are bound to observe and follow such orders, Instructions and directions issued by CBDT . The Hon ble High Court also held that if the procedure as specified under the CBDT Manual have not been followed while relying on the electronic record, the said record must be supported by corroborative evidence. As abundantly clear from the decision of the Hon ble Madras High Court (Supra) that in the absence of such E-certificate, (65B Certificate) the electronic data must be supported by corroborative evidences. The sale deed on which the Ld. DR is relying as corroborative evidence does not confirm that whether any interest was to be payable or paid to the assessee. There is no reference of paying of on money or cash amount or interest by the assessee in the said sale deed. Hence, under such circumstances, the sale deed cannot be taken as corroborative evidence. Hence, in our considered opinion, the Revenue Authorities has made the addition without obtaining any E-certificate and without any corroborative evidence with regard to the electronic data. Hence, we delete the addition made by the Revenue authorities, thereby allowing the appeal of the assessee.

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• 2024 (6) TMI 540
  Reopening of assessment u/s 147 - addition u/s 69C in respect of bogus purchases - HELD THAT:- One such argument advanced in respect of non-making of addition in the assessment framed qua the issue which was the subject matter of the reasons recorded u/s 148(2) and the addition was made on different count altogether. The undisputed facts are that the case of the assessee was reopened u/s 147 r/w 148 of the Act after recording reasons u/s 148(2) that the assessee has taken accommodation entries from shell entities namely M/s Chakradhari Industries Ltd. during the year. No addition has been made for issue recorded in the reasons u/s 148(2) and therefore, no other addition can be made by the AO in the assessment so framed. On this score, we are inclined to hold that the assessment framed by the AO is invalid and cannot be sustained. Similarly we note that the AO has addition u/s 69C of the Act in respect of bogus purchases however the provisions of section 69C are applicable only to unexplained expenditure where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the AO, satisfactory, the amount covered by such expenditure or part thereof, may be deemed to be the income of the assessee for such financial year. But this is not the case before us, the assessee has duly disclosed the total purchases of books of account and the payments made to M/s Chakradhari Industries Ltd. were also out of books of account with explained sources. Therefore the source of expenditure was also fully explained and even on this count, the addition made by AO is wrong and cannot be sustained. In view of the above facts and circumstances, we are inclined to set aside the order of Ld. CIT(A) and quash the assessment framed by the AO u/s 143(3) read with Section 147 as without jurisdiction - Appeal of the assessee is allowed.

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• 2024 (6) TMI 539
  Grant of registration u/s 80G(5)(iii) - Validity of provisional registration and subsequent denial of regular registration - registration denied as assessee has commenced its activities and application for regular registration has been moved beyond six months of the commencement of activities, therefore, this application is not maintainable - HELD THAT:- The assessee has already been granted registration under the old regime as noticed by us. The copy of such certificate is available on record. It is a Bar Association existing since 1924, though it has applied for grant of registration under section 12A and 80G quite late but its activities have been gone into by the authority and those activities were found to be charitable in nature. There is no change in those activities, therefore, there cannot be any doubt about the activities of the assessee for grant of regular registration under section 80G(5)(iii). The procedure adopted by the ld. CIT(Exemption) was incorrect to grant provisional certificate to the assessee at the first stage and then, for denying the regular certificate under section 80G(5)(iii) of the Income Tax Act. The application moved by the assessee under Form No. 10AB, Rule 17A was not time barred because the time limit considered by the ld. CIT(Exemption) in paragraph no. 11 of the impugned order as 30th September, 2022 is concerned, it has been extended from time to time. Therefore, this application is deemed to be well in time by keeping in mind the latest Circular issued by the Board. As observed earlier, the activities of the Society are similar. There is no change on such activities. Registration under section 80G(5)(vi) was granted in perpetuate vide order dated 13th March, 2019. This registration was cancelled because of change of law by the Parliament. Otherwise, there is no change in the activity of the Bar Association. Thus we deem it appropriate to allow this application and direct the ld. CIT(Exemption) to grant registration to the assessee under section 80G(5)(iii) - Appeal of the assessee is allowed.

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• 2024 (6) TMI 538
  Rejection of the assessee s claim for taxation at a lower rate u/s 115BAA due to non-filing of Form 10IC within the prescribed time - Assessee submitted that the delay in filing Form 10-IC should be condoned in accordance with the provisions of section 119(2)(b) - CIT(A) dismissed the appeal stating that the beneficial provisions should be strictly and literally complied with and, therefore, a strict interpretation should be adopted. HELD THAT:- In the present case, the intention to opt for the lower tax rate was unambiguously declared in the tax audit report (Form 3CD) which was filed on 30-9-2022 i.e. before due date specified under section 139(1) of the Act, indicating the assessee s bona fide belief and commitment to the concessional tax regime. Therefore, there is a marked distinction between the facts of the Wipro Ltd. case (supra) and the instant facts. As in the case of Zenith Processing Mills [ 1995 (9) TMI 37 - GUJARAT HIGH COURT] held that provision of section 80J(6A) of the Act to extent it requires furnishing of auditor`s report in prescribed form along with return, is directory in nature and not mandatory. As held that the assessee can be permitted to produce such a report at later stage when question of disallowance arises during course of assessment proceedings. In the instant case, the Ld.A.O. as well as the Ld.CIT(A) has denied benefit of concessional tax rate u/s 115BAA of the Act on account of an inadvertent error on the part of the assessee in not e-filing Form 10IC before due date prescribed. We are, therefore, of the view that there is sufficient compliance if the Form 10IC has been filed during the course of assessment proceeding, since there is no material objective to be achieved by the assessee in not e-filing the same, once the intent was very well declared in Form 3CD. Considering the principle of beneficial interpretation, the procedural requirements should not override substantive benefits. The Courts have taken a lenient view on procedural lapses when substantive benefits are involved. SC ruling in the case of CIT v. G.M. Knitting Industries (P.) Ltd. [ 2015 (11) TMI 397 - SC ORDER] emphasized that the making of a claim of deduction is mandatory, but timing is directory. Even if the claim is made during the assessment proceedings, such a claim is to be allowed. Delay in filing Form 10-IC, though a procedural requirement, should not invalidate the assessee s substantive right to the benefit of section 115BAA of the Act. CBDT s Circulars extending the due dates for filing such forms in earlier years indicate a recognition of such procedural difficulties. These Circulars indicate a degree of administrative flexibility and a recognition that procedural lapses should not necessarily lead to the denial of substantive benefits. Moreover, denying the benefit based solely on this lapse would be against the principles of equity and justice, especially when there is no dispute regarding the assessee s eligibility for the lower tax rate.

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• 2024 (6) TMI 537
  Levy of penalty u/s 271B - failure to submit audit report u/s. 44AB on the stipulated date of filing the audit report - HELD THAT:- From the perusal of the penalty order it is evident that it was not mentioned in the penalty order that was passed with the prior approval of the Joint Commissioner. DR is unable to show that the prior approval was obtained before passing the penalty order. As decided in SAGAR DUTTA [ 2014 (2) TMI 1075 - CALCUTTA HIGH COURT] as it is obligation of the Income Tax Officer to indicate in his order that he passed the order after obtaining requisite approval. Since the order passed by the Income Tax Officer does not contain the requisite recital, it has to be held that no such approval was obtained. The order itself is incompetent. An incompetent order is a nullity and the point as regards nullity can be taken at any stage. It can even be taken at the stage of execution. Even if the orders imposing penalty were not set aside by us, which we propose to do, the order could not have been executed. We have given a thoughtful consideration to the submission of the AR, we are of the considered opinion that the penalty order of Rs. 150000/- was passed without prior approval of the Joint Commissioner which is liable to be set aside. We therefore, set aside both the penalty orders. If the revenue finds that prior approval was obtained from the Joint commissioner in that case revenue will be at liberty to approach the Tribunal. Appeal filed by the assessee is allowed.

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• 2024 (6) TMI 536
  Addition u/s 68 - bogus LTCG - ingenuine transaction of sale of shares - as submitted transaction through stock exchange cannot give strength to the fabricated devises - as argued shares were undertaken on the stock exchange platform through the SEBI registered broker on which STT was levied and the consideration was routed through normal banking channel. HELD THAT:- It is worth noting that impugned share sale transactions undertaken by the assessee are on the online digital trading platform of stock exchange of BSE which is a regulated market under the aggies of a regulator viz. SEBI. There is nothing on record from the market regulator SEBI for the relevant period which establishes the tainted status of the scrips involved in the present case, so as to hold the share sale transactions as bogus/accommodation entry as alleged by the ld. AO. Also, the operations and modus operandi of this regulated market does not in any way provide for any mechanism by which assessee can bring forth the identity of the buyers of his shares and their creditworthiness. Sale proceeds are received through the stock market process into the pre-identified bank account of the seller i.e., the assessee which cannot be tainted as unexplained or unaccounted or undisclosed money for the addition made u/s. 68 by the ld. Assessing Officer. From the perusal of the statement of assessee recorded by the AO during the course of assessment for Assessment Year 2013-14 as reproduced in the impugned order demonstrates that he is a long-term investor, investing since year 2006 and is aware of his DMAT account, brokers through whom transactions were undertaken, shares in which he had invested and stock market operations. AO has not brought on record any material to show that assessee was part of any group which was involved in the manipulation of share prices. Suspicion by the AO on the purchase and sale of shares is baseless. AO while drawing the adverse conclusion noted about the cash trail in the accounts of entry providers. He based his conclusion on the finding of investigations done by the Investigation Wing rather than bringing on record any direct and cogent material to establish existence of such a cash trail where the assessee has transacted in cash. In this respect, CIT(A) has supported the AO by stating that AO cannot be expected to produce such evidences and has merely harped on general proposition of having circumstantial evidence leading to inference or presumption. In this respect in the absence of any corroborative material brought on record by the authorities below, we hold against drawing such inference or presumption. Non Compliance with procedural requirements u/s 142(3) of the Act - As in the first appellate order, Ld. CIT(A)while dismissing the appeal observed that ld. AO by not allowing the assessee to cross examination the brokers, operators and exit providers whose statements were relied upon by the ld. Assessing Officer, does not vitiate the assessment. Negating the request made by the assessee, Ld. CIT(A) confirmed the addition. The approach adopted by ld. CIT(A) while dismissing the appeal and stating that assessment order passed by the AO does not get vitiated merely because AO did not allow cross examination, is not in compliance with the provisions of section 142(3) of the Act which is a statutory mandatory procedural requirement for making a valid assessment. We note that the required compliance with section 142(3) has not been met. CIT(A) dealt with extensive literature on the concept of preponderance of probability and other doctrines to dismiss the appeal of the assessee. According to us, the theory of preponderance of probability is applied to weigh the evidence of either side and draw a conclusion in favour of a party which has more favourable factor in his side. The conclusions have to be drawn on the basis of certain admitted facts and materials and not on the basis of presumption of fact that might go against the assessee. Once nothing has been proved against the assessee with the aid of any direct material, nothing can be implicated against the assessee on the presumption or suspicion, howsoever, strong it might appear to be true. We delete the addition made u/s 68 towards proceeds of sale of listed shares which gave rise to Long Term Capital Gain on the said sale claimed exempt by the assessee u/s 10(38), in both the assessment years. Accordingly, grounds taken by the assessee in this respect are allowed.

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• 2024 (6) TMI 535
  Disallowance of interest expenses u/s. 40A(2) - Interest paid to 20 unrelated parties - disallowance was made by AO after adopting rate of interest of 11% as Fair Market Value of interest based on the rate of interest charged by the assessee from M/s. Mariya Ship Breaking Pvt. Ltd. - HELD THAT:- The primary condition as is that the disallowance can be made only in respect of excessive amount paid to related parties . In this case, as per the contents of the Tax Audit Report only three parties have been reported as related parties viz M/s. Mariya Ship Breaking Pvt. Ltd., M/s. Payal Singhal and Shree Subhadra Steel P. Ltd. Nothing has been brought on record to show/demonstrate the balance parties in respect to whom the provisions of Section 40A(2)(b) of the Act have been invoked are related parties within the meaning of Section 40A(2)(b) of the Act. Therefore, in our considered view, disallowance u/s. 40A(2)(b) of the Act can be made only in respect of relates parties and the said provision cannot be invoked in order to make disallowance in respect to unrelated parties. Therefore, disallowance made u/s. 40A(2)(b) in respect to unrelated parties is liable to be deleted. Whether the assessing officer has correctly adopted the rate of 11% as fair market value of interest based on interest rate charged by the assessee from M/s. Mariya Ship Breaking Pvt. Ltd? - As in the instant facts, the Tax Authorities have failed to bring on record any comparable cases as to the fair market value of similar services (i.e. the prevalent rate of interest). As we observe that the AO and CIT(A) have not given any specific finding as to how the aforesaid interest rate paid by the assessee was excessive and unreasonable specially in the light of the facts that the funds obtained by the assessee were without any security, there was no immediate obligation to repay the funds in the near future and such loans were taken without any security. In addition, we note that the assessee had also filed application under Rule 46A, in which the assessee had filed additional evidences in the form of Benchmarking Prime Lending Rate of SBI and Personal loan rates of SBI. However, it is observed that the assessing officer has not given any adverse remark in the remand report. Accordingly, we are of the considered view that the impugned disallowance is not liable to be sustained. Decided in favour of assessee. Addition u/s 68 - unsecured loans obtained - assessee submitted a detailed documentary evidences with respect to funds received from the parties - HELD THAT:- As evident that the assessing officer did not make any efforts to further inquire into the genuineness of the parties from whom the amounts had been obtained. CIT(A) while passing the order did not refer to the additional evidences furnished by the assessee, during the course of appellate proceedings and neither any reference to the observations made by the assessing officer in the remand report, while dismissing the appeal of the assessee on this issue. CIT(A) has not given any adverse remark to the documentary evidences placed on record by the assessee with respect to the addition made by the assessing officer u/s 68 of the Act. Accordingly, as assessee has furnished adequate documentary evidences in support of its case and the department has not pointed out any specific infirmity in the supporting evidences filed by the assessee, this ground of the assessee s appeal is allowed.

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• 2024 (6) TMI 534
  LTCG - deduction claimed u/s 54 - relevant date for grant of deduction - claim denied as new asset was neither purchased within one year before the date of transfer of the original asset nor constructed within three years from the date of transfer of the original asset as required u/s 54 - It is the contention of the assessee that even though the new asset had been booked and the agreement to purchase was entered on 21.07.2014, the said asset was under construction and the occupancy certificate was received by the developer/builder only on 16.09.2015. The possession was given to the assessee on 16.11.2015 and both these dates fall within the prescribed period as above. HELD THAT:- Hon ble Bombay High Court in the case of CIT v/s Smt. Beena K. Jain [ 1993 (11) TMI 7 - BOMBAY HIGH COURT] has dealt with this issue as upheld the ITAT s order by holding that the relevant date of purchase for computation of deduction u/s 54 was the date when the assessee obtained possession of the flat. Looking at the totality of the transaction, it is clear that on the date of agreement to purchase i.e. 21.06.2014, there was no asset in existence which could be called a residential house. As the occupancy certificate was received by the Developer on 16.09.2015 and subsequently the possession was given to the assessee on 15.11.2015, the date of possession of the property should be regarded as date of actual purchase for the purpose of claiming exemption u/s 54F of the Act On this specific issue, the Ld. AR has also relied on the decision of Ayushi Patni [ 2019 (1) TMI 1130 - ITAT PUNE] wherein as held as un-rebutted fact that at the time of execution of agreement, the residential property was not in existence. Therefore, taking into consideration facts of the case, the date of possession of flat is the date of actual purchase for the purpose of claiming exemption u/s 54F Thus it is held that the relevant date for grant of deduction u/s 54 in this case would be the date of possession i.e. 16.11.2015, which is well within the period of two years from the date of agreement to sell the original asset i.e. 22.07.2015. As such, the claim of the assessee for exemption u/s 54 of the Act is allowed. Decided in favour of assessee.

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• 2024 (6) TMI 533
  Appeal filed in the name of a dead person - irregularities in filing in the name of the deceased person without proper mention of the legal heir - HELD THAT:- There is no mention of legal heir Mr. Shirish Ranjeet kumar Jain in form no.36 filed by the AO. The authorization memo submitted before us also clearly shows that name of the assessee is of a dead person. Naturally, the appeal cannot be filed in the name of a dead person. There is another reason for dismissal of the appeal is that AO has not filed the complete order of the CIT (A) as stated above. This appeal of the AO deserves to be dismissed however we give liberty that if the learned Assessing Officer still wishes to file an appeal he must file the appeal in revised form no.36 along with the reasons for delay in filing of the appeal. Appeal of AO is dismissed without discussing the issue on merit as it is filed against the deceased assessee without mentioning anything about legal heir and also in incomplete manner.

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• 2024 (6) TMI 532
  Addition u/s 69A - un-explained money Found during a search action - search action at the premises of the assessee gold jewellery totaling to 100 grams, silver jewellery of 20 grams, silver coins of 30 grams and cash amount were found - HELD THAT:- Assessee not only filed the balance sheet and cash book before the AO but also submitted before the Commissioner in order to demonstrate the balance of Rs. 4,00,792/- recorded in the regular books of account. The assessee further in his written submissions has also disclosed the source of Rs. 4,82,275/- having been accumulated/received from relatives on various occasions as well as by the family members of the assessee which the assessee has recorded in his books of account. Commissioner not only failed to consider the balance sheet and cash book submitted by the assessee but in fact held contrary that the assessee has not been able to furnish any documentary evidence qua his claims regarding the cash found and therefore on this count itself, the impugned order is liable to be set aside. We otherwise also do not find any reason or material on record contrary to the claim of the assessee and to affirm the addition. Hence, considering the peculiar facts and circumstances specific to the effects that the assessee has been able to demonstrate the source of amount we are inclined to delete the addition as made by the AO under section 69A of the Act and affirmed by the Commissioner - Appeal filed by the assessee stands allowed.

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• 2024 (6) TMI 531
  Rejection of the application for registration u/s 80G(5) - assessee has not received physical copy of order or soft copy on registered e-mail in rejecting the application of assessee-trust for registration - show cause notice for initiating proceeding u/s 12A(1)(ac)(iii) of the Act was only reflected on e-portal of the department and was not served upon the assessee HELD THAT:- We find that at the time of filing application for registration in Form 10AB as per Rule 17A, the assessee furnished required details. In addition to, the assessee also filed copy of trust deed, the registration certificate with Charity Commissioner, old registration certificate under Section 12A, audit report and details of activities on 27/03/2023, as per acknowledgment placed on record. Thus, prima facie, the assessee has furnished certain details to substantiate the object and activities. However, the facts remained the same that the ld. CIT(E) rejected the application by taking view that despite issuing show cause notice dated 03/08/2023, the assessee neither filed any submission nor sought any adjournment. We find that the alleged notice dated 03/08/2023 was not served upon the assessee due to technical glitch as seen in the screen shot of ITBA Portal wherein e-mail address of assessee is not reflected. We find that the application of assessee was rejected without giving fair and reasonable opportunity. We further find that the CBDT in a recent Circular No. 7/2024 has extended time period for filing application in Form 10AB for seeking approval under Section 80G(5) of the Act up to 30/06/2024, therefore, the assessee is also allowed benefit of such relaxation. Hence, the grounds of appeal raised by assessee is restored back to the file of ld. CIT(E) to consider the case of assessee on merit and examine the object and activities of the assessee and pass order in accordance with law. Needless to direct that before passing the order, the ld. CIT(E) shall grant a fair and reasonable opportunity of hearing to the assessee. The assessee is also directed to be more vigilant in making compliance in time and not raised a technical issue of non-service of physical notice as the assessee may be very well aware that in a new regime, the application is filed electronically, the show cause notice as well as the compliance is mandatorily be made only through ITBA Portal. Gounds of appeal are allowed for statistical purpose.

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• 2024 (6) TMI 530
  Penalty order u/s 271(1)(c) - assessee did not file the return of income u/s 139(1) of the Income-tax Act, 1961, but the return was filed after issue of notice u/s 148, the income declared by the assessee is not voluntary - HELD THAT:- Amount of tax sought to be evaded shall be determined by taking into consideration the amount of tax on the total income assessed as reduced by the amount of advance tax, tax deducted at source, tax collected at source and self-assessment tax paid before the issue of notice u/s 148. The case of the assessee is covered by this clause (c) of Explanation 4 to Section 271(1)(c) and, hence, when the AO has determined the total tax on the income assessed at Rs. 2,08,142/- whereas the self-assessment tax paid by the assessee before the notice u/s 148 was issued is Rs.2,16,470/-, then balance would be nil and ,consequently, there would be nil amount of tax sought to be evaded for the purpose of levy of penalty u/s 271(1)(c). Accordingly, when the amount of tax to be evaded is nil in the case of the assessee, then question of levy of levy of penalty u/s 271(1)(c) does not arise and hence, the penalty levied by the AO u/s 271(1)(c) of Rs. 2,10,000/- is not justified and the same is deleted. Though assessee has advanced various contentions against the levy of penalty, however, the penalty found to be not justified and liable to be deleted, on the ground of no amount of tax sought to be evaded, then other pleas raised by assessee becomes academic in nature and we do not propose to decide each and every argument advanced by the assessee. Appeal of the assessee is allowed.

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• 2024 (6) TMI 529
  Determining short collection of TDS - lower TDS certificates issued by the TDS officers of the deductees contained TAN different from TDS returns filed under TAN - While processing the TDS returns in Form No. 26Q, the Central Processing Centre (CPC), Bengaluru had ignored the lower TDS certificates and the demand for short deduction of tax and interest was raised - CIT(A) noted that assessee was duty bound to intimate all its suppliers about the other TAN obtained subsequently and request them to resubmit their lower deduction tax certificate from their respective jurisdictional AO(TDS) quoting the new TAN of the assessee - as argued merely because assessee company has got separate TAN for two locations will not render the certificates issued u/s. 197 as redundant, since such certificates are issued to the Principle Officer of the company as the person responsible for deduction of tax. HELD THAT:- From the sub-section (2) of Section 197, it is noted that person responsible for paying the income is entrusted with the responsibility to deduct income tax at the rates specified in the certificate or deduct no tax as the case may be until such certificate is cancelled by the AO. The term person responsible for paying is defined in Section 204. Assessee being a company is the person who is responsible for TDS at the rates prescribed in the certificates issued by the respective AO(TDS) of the suppliers of the assessee which were issued in terms of provision of Section 197. It is fact on record that assessee had deducted tax at source at the rates prescribed in the certificates for each of the suppliers and had complied with the necessary requirements of their deposit and filing of returns. The genuineness of issuance of certificate u/s. 197 has not been doubted. Accordingly, there is no justification to hold that the assessee is in default, merely on the ground that the certificates have not been issued on the subsequent TAN obtained by it, though all the necessary compliances had been made by the assessee by using the other TAN, from the date from which it was obtained. It is also worthwhile to take note of the procedure for obtaining certificate for deduction at lower rate prescribed in Rule 28(AA) of the Income tax Rules, 1962 ( The Rules ). Sub-Rule 4 of the said Rule contemplates that certificate issued in terms of section 197 is valid only with regard to person responsible for deducting the tax and specified therein. Sub-Rule 5 of the same rule contemplates that the certificate shall be valid only with regard to the person responsible for deducting the tax and named therein under advice to the person who made an application for issue of such certificate. Thus in the present case, the certificates are in the name of the assessee company directing it to deduct TDS at lower rates. Merely because, assessee has separate TANs will not render the said certificates issued in terms of Section 197(2) as redundant resulting in tainting the assessee as assessee in default. Thus as per applicable provisions u/s.197 and 204 of the Act and Rule 28AA of the Rules as well as judicial precedent of Parle Biscuits Ltd.[ 2013 (2) TMI 152 - PUNJAB HARYANA HIGH COURT] we hold that there is no short deduction of tax at source and therefore the demand so raised both towards tax and interest is deleted - Appeal of the assessee is allowed.

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• 2024 (6) TMI 528
  Eligibility of a trust for claiming exemption u/s 10(23C)(iiiad) - As per CIT(A) assessee trust is not existing solely for the purpose of education - HELD THAT:- Trust is certainly not existing solely for the purpose of education and lower authorities are justified in rejecting assessee s claim of exemption u/s 10(23C)(iiiad). Therefore, we upheld the impugned orders and dismiss both the appeals of appellant.

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• 2024 (6) TMI 527
  Rejection of application for registration u/s 12A/12AB - clerical error committed in selecting appropriate head in drop down list provided in e-filing portal while furnishing Form 10AB electronically - HELD THAT:- There is no dispute that the assessee applied for registration under Section 12A/12AB of the Act under Form 10AB on 28.09.2023 - CIT(E) while considering the application of assessee noted that the application filed by assessee is not maintainable and accordingly, a show cause notice dated 02/11/2023 was issued for seeking clarification. The assessee responded to the show cause notice of CIT(E) vide their reply dated 15.12.2023. The contents of show cause notice and the reply thereof is not recorded by CIT(E) in his order. We find that the assessee vide their reply dated 15/12/2023 prayed to consider the application in appropriate sub-clause of section 12A(1). CIT(E) held that he has no power to change/ amend or rectify Form-10AB. We find that it was an inadvertent mistake and the assessee has already explained the facts and prayed for correction before the ld. CIT(E). In our view the mistake in filing entry was not fetal and could be considered in appropriate sub-clause or clause of section 12A(1). Otherwise, the assessee has provided all the details and information in Form-10AB, while applying for registration under section 12A/12AB. Being first appellate authority, the plea of assessee for correction in Form-10AB is accepted and the order of CIT(E) is set-aside. The registry official of CIT(E) maintaining record of ITBA portal about the registration of trust under section 12A/12AB is directed either to correct such mistake or allow the assessee to rectify or amend the relevant clause/ sub-clause of section 12A(1). Considering the fact that the application of assessee was not considered on merit, therefore, we deem it appropriate to direct the CIT(E) to treat the application of assessee u/s 12A(1)(ac)(iii) in place of Section 12A(1)(ac)(iv) of the Act and to consider the case on merit and pass the order in accordance with law. Grounds of appeal raised by the assessee are allowed for statistical purposes only. Delay in filing application for approval u/s 80G(5) - We find that the CBDT in its recent Circular No. 7/2024 dated 25/04/2024 has extended the time limit for filing Form 10AB for approval u/s 80G(5) till 30/06/2024. It is further clarified in the aforesaid Circular that where any trust, institution or fund has already made an application in Form 10AB under the said provisions on or before issuance of this circular, where the Principal Commissioner or Commissioner has not passed an order before issuance of this circular, the pending application in Form 10AB may be treated as valid application or where the Principal Commissioner or Commissioner has passed an order rejecting such application on or before issuance of this circular, solely on account of fact that application was furnished after due date or that application has been furnished under wrong code, it may furnish a fresh application in form 10AB within extended period i.e. up to 30/06/2024. Considering the benefit allowed by the CBDT in its Circular No. 7/2024, therefore, the assesse is also eligible for benefit of similar extended period.

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• 2024 (6) TMI 526
  Rejection of Application for Registration u/s 12A/12AB - HELD THAT:- We find that at the time of filing application for registration in Form 10AB as per Rule 17A, assessee furnished required details. In addition to, the assessee also filed copy of trust deed, the registration certificate with Charity Commissioner, old registration certificate u/s 12A, audit report and details of activities on 30/03/2023, as per acknowledgment placed on record. Thus, prima facie, the assessee has furnished certain details to substantiate the object and activities. However, the facts remained the same that the CIT(E) rejected the application by taking view that despite issuing show cause notice dated 23/09/2023, the assessee neither filed any submission nor sought any adjournment. Considering the fact that the substantial right of assessee are involved in the present appeal and the assessee has prima facie furnished certain requisite details, therefore, in our view, the assessee deserve one more opportunity for considering their case on merit and examine the object and activities of the assessee and pass order in accordance with law. The assessee is also directed to be more vigilant in making compliance in time and not raise a technical issue of non-service of physical notice as the assessee may be very well aware that in a new regime, the application is filed electronically, the show cause notice as well as the compliance is mandatorily be made only through ITBA Portal.

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• 2024 (6) TMI 525
  Re-opening u/s 147/148 - MAT liability as per book profits computed u/s 115JB of the Act would not get disturbed on correct application of law and tax on such book profits also exceeds the total income determined as per normal provisions - case has been reopened to adjust the book profits as well as to assess escaped income under normal provisions - HELD THAT:- One cannot say that when the adjustment on account of such provision for repairs have been made by the assessee while determining the income as per normal provisions of the Act, there was a failure on the part of the assessee to disclose facts in not making such corresponding adjustments while determining the book profit. The disclosures were also made in Financial Statement. The condition of 1st proviso is thus clearly not satisfied in the instant case. Hence, the escapement qua book profits are not sustainable in law. As a sequel to such plea, the assessee thus submits that in the absence of escapement qua book profits, the escapement alleged under normal provisions are of no consequence since despite the purported escapement qua normal provision may led to enhancement of taxable income under normal provision, the tax liability thereon would be lower than the book profits assessable in law. On facts thus, the assessee argues that tax liability on book profits under s. 115JB amounting to Rs. 31,04,38,156/- [ without provision for repair which adjustment is impermissible in reassessment proceedings] exceeds the tax liability on Rs. 13,67,21,152 [ income assessed earlier under s. 143(3) plus the income allegedly escaped under normal provision]. On such facts, it is the plea of the assessee that its case is covered by the judgment rendered in the case of Motto Tiles P. Ltd.[ 2016 (6) TMI 381 - GUJARAT HIGH COURT] . As in the case of India Gelatine and chemicals Ltd. [ 2015 (2) TMI 808 - GUJARAT HIGH COURT] observed that even if the entire amount which is proposed to be added by the AO is sustained, there would be no addition to the tax liability of the assessee and the petitioner would be still governed by the provisions of S. 115JB of the Act and would be assessed on same book profit. In such circumstances, reopening of assessment was not found sustainable. The Hon ble Gujarat High court in the case of Motto Tiles P. Ltd. [ 2016 (6) TMI 381 - GUJARAT HIGH COURT] has reiterated the ratio yet again. The claim of the assessee that the tax liability on book profit is higher than the income assessable under normal provisions including escapement alleged qua normal provisions, has not been disputed by the revenue. Governed by the view expressed in the decisions noted above, we find merit in the plea raised by the assessee towards lack of jurisdiction on first principles. The re-assessment notice is accordingly quashed. The re- assessment order is declared null and void. As the assessee succeeds on absence of jurisdiction usurped u/s 147 of the Act, which strikes to the root of the matter, the merits of additions and disallowances carried out merges in void at the threshold. Hence, we do not seek to delineate on the merit of additions and disallowances as challenged on behalf of the assessee and Revenue in their respective appeals. Appeal of the assessee is allowed.

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• 2024 (6) TMI 524
  Revision u/s 263 - Deduction u/s.32AC - Investment in new plant or machinery - As alleged there has been no inquiry by the AO in the matter - Pr. CIT restored the matter for de novo readjudication - HELD THAT:- There was no follow-up inquiry in the matter inasmuch as the reply is admittedly the only reply explaining the said difference by the assessee. There is accordingly no finding by the AO on either aspect of the matter, only which would exhibit due application of mind in the matter; the non-inquiry, rather, exhibiting just the opposite. Appellant would during hearing argue that only where the plant and machinery stands installed could it be regarded as acquired , and which explains the assessee s exclusion of the addition of plant and machinery during the financial year 2012-13, i.e., under the installation as on 31.03.2013, as an addition for that year and, per contra, regarding it as acquired during the current year, i.e., on its installation. Whatever be the merits of the argument, which has both factual and legal aspects to it, the same ought to have been, on inquiry, made before the AO, and not before either the revisionary authority or before us in further appeal. It s furnishing before us, inasmuch as it addresses the fundamental issue arising in the instant case, itself defeats the assessee s case, proving non-application of mind, i.e., that of the Revenue. There has been thus no enquiry on the pertinent issues by the AO during the assessment proceedings, much less responded to, on which the AO is therefore required to apply his mind, either accepting or rejecting the assessee s claim upon due verification and enquiry, i.e., as deemed proper under the given facts and circumstances, including the law in the matter, passing a speaking order. CIT, accordingly, set aside the matter for a de novo consideration. He has, further, in our view, rightly not expressed any view in the matter - His stating that there has been an incorrect application of law by the AO is in our view consequential to his finding of an incorrect presumption of facts by the AO as well as non-application of mind, inasmuch as the law could only be applied on proper determination of facts. Further, the same therefore could have been avoided. Subject to these observations, we do not find much merit in the assessee s case challenging revision, even as we emphasize it to be an open set aside. A preliminary rule of interpretation is that due weight and meaning is to given to each word, while, going by the assessee s reading, acquisition encompasses installation, rendering the word installation superfluous. That apart, the provision, as per s. 32AC(2), specifying time limitation w.r.t. the date of installation, treats the two as different incidents, only on the completion of both of which are the qualifying conditions for the claim satisfied. The assessee admits to the two being separate incidents; it s argument yet is of the former subsuming the latter. The question that therefore arises, is, firstly, if the argument is legally maintainable and, two, even so, whether it is so, or the other way round, i.e., the latter subsuming the former. Needless to add, the assessee is, in the set aside proceedings, at liberty to assume any other argument on the merits as well, and not confined to that before us. Assessee s appeal is dismissed.

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• 2024 (6) TMI 523
  Deduction of the interest claimed u/s 57 against the interest income received by the assessee - interest expenditure incurred on loans appearing in the capital account of proprietary concern against the interest income received on delayed payment of sale consideration of said proprietary concern - AO rejected the contention of the assessee for the two reasons, the interest expenditure claimed was not for the purpose of earning the interest income and secondly, the assessee did not substantiate actual payment or credit by way of TDS details - HELD THAT:- The expenditure incurred for realizing interest receipt is only allowed as deduction under the provisions of the Act, therefore, for claiming deduction, the onus was on the assessee to substantiate whether the interest expenditure has been incurred for the purpose of earning the said interest income. In the case interest income has been earned on delayed payment of the sale consideration of the proprietorship concern, whereas the interest expenditure has been incurred on the loans which were taken by the proprietorship concern for its business purchases which later on transferred to the capital account of the assessee. Therefore, the interest expenditure is connected with the proprietorship concern which has been sold. Such interest expenditure is not connected in any manner with the interest which has been earned on the late payment of sale consideration by the purchaser company. The receipt of the sale consideration by the assessee in five years was as per the terms of contract between two parties and such interest income being revenue in nature has been correctly charged under the head income from other sources . But the interest expenditure however being connected with the sale of proprietorship concern, which is liable for tax under the head capital gain and thus the expenditure incurred for investment in the proprietorship concern is related to cost of the said proprietary concern to the assessee. Thus on this ground only the claim of the assessee is not allowable. Further, we find that assessee has failed to substantiate any deduction of the tax at source on such interest credited or actual payment of the interest to the parties. In absence of any documentary evidence to support that interest was either credited in the respective account of those unsecured loans donors or paid by the assessee, the claim of the deduction is also not eligible for allowance in view of lack of the evidences. No infirmity in the order of the Ld. CIT(A) on the issue in dispute and we accordingly uphold the same. All the grounds raised by the assessee are accordingly dismissed.

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• 2024 (6) TMI 522
  LTCG - deduction u/s 54F - agreement to purchase cannot be construed as purchase deed within the meaning of provision of section 54F - HELD THAT:- The assessee has sold the land and purchased the property as stated by the ld. AR vide agreement to sale - assessee is in possession of the said residential flat which has been purchased by the assessee. The title of the land has been disputed but the construction of 72 flats has not been disputed as per records. The decision of Suraj Lamp Industries Pvt. Ltd. [ 2011 (10) TMI 8 - SUPREME COURT] held that it is well-settled legal position that SA/GPA/WILL transactions are not `transfers or `sales and that such transactions cannot be treated as completed transfers or conveyances. They can continue to be treated as existing agreement of sale, but nothing prevents affected parties from getting registered Deeds of Conveyance to complete their title. If they are entered before this specific purpose day, they may be relied upon to apply for regularization of allotments/leases by Development Authorities u/s 53A of the Transfer of Property Act. Thus, in the present case, though the possession is in the hands of the assessee, the very basis of the title is challenged between the parties from whom the assessee has not completed the sale deed which was non-executed at the threshold. Thus, the observation made in case of Suraj Lamp Industries Pvt. Ltd. (supra) will not be helpful in assessee s case. The observation made by the CIT(A) as well as the Assessing Officer is right in the context that the assessee failed to get the documents registered for purchase of residential house being flat, and hence the condition laid down in Section 54F remained unfulfilled. The exemption u/s 54F of the Act will be granted only if all the conditions given under the said provisions are followed/fulfilled by the assessee who claims the exemptions; but in the present case, the same has not been fulfilled. Hence, the appeal of the assessee is dismissed.

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• 2024 (6) TMI 521
  Issue of notice on wrong and invalid address - Violation of natural justice principles - ex-parte order passed by the CIT(A) due to lack of proper service of notice - CIT(A) has neither issued notice on the email address given in the profile information or alternate email address - HELD THAT:- Admittedly, CIT(A) has issued notice on the email address of the former CA given in the Income Tax Return (ITR). As undisputed fact on record that the CIT(A) has neither issued notice on the email address given in the profile information or alternate email address given. As per clause 11 of the CBDT Notification No. 139 dated 28.12.2021, the ld. CIT(A) is required to communicate the notice through the email id available in Form 35 of the appeal memo. In our view, the issue of notice by the ld. CIT(A) on the email address other than the email address given in Form 35 of the appeal, tantamount to issue of notice on wrong and invalid address and as such no service of notice. In our view, rejection of appeals without valid service of notice either by postal address or electric communication and further without discussing merits of the case would be held to be in gross violation of principles of natural justice. This issue of ex-parte order passed by the ld. CIT(A) due to lack of proper service of notice has been settled by various courts, acknowledging that it is impractical for the assessee to consistently monitor the e-portal of the Income Tax Department. Recently, in the case Munjal BCU Centre of Innovation and Entrepreneurship, Ludhiana v. CIT(E), Chandigarh [ 2024 (3) TMI 479 - PUNJAB HARYANA HIGH COURT] observed that the Income Tax Department must communicate notices in accordance with the provisions of law and tax-payers are not accepted to keep the department e-portal open in all the times. As further observed that before any action is taken by the department, the communication of notice must be in terms of provisions of law. The provisions do not mention that communication to be presumed by placing notice on the e-portal. A pragmatic view has to be adapted always in these circumstances and individual or company is not accepted to keep the e-portal to the department open in all the times to have the knowledge of what the department supposed to be doing with regard to the submissions of Forms etc. The principles of natural justice are inherent in the Income Tax Provisions and same are required to be necessarily followed. As evident that the appellant has not been given sufficient opportunity to put up pleas/submissions with regard to the compliance of the notices issued by the CIT(A) as he was not served, any of the notices. In our view, the assessee would be entitled to be granted sufficient opportunity of being heard to file his reply and the ld. CIT(A) of course be entitled to examine the same and pass afresh order thereafter. In view of natural justice, we consider it deem fit to remand back to the matter to the file of the CIT(A) to adjudicate the appeal afresh after granting sufficient opportunity of being heard and considering the submissions made by the appellant assessee.

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• 2024 (6) TMI 520
  Rejection of Application u/s 80G - after withdrawal of the above said application, portal of the Department did not allow to assessee to apply once again for the relief under the said provision - HELD THAT:- A perusal of the impugned order would reveal that while dismissing the application, as per request for withdrawal on behalf of the assessee, it was observed that registration, if any, granted to the institution- the assessee, in Form 10AC, will continue to exist till expiry of the time period mentioned thereon unless cancelled separately. This shows that the CIT(E) showed magnanimity in dealing with the matter. In the course of arguments, nothing has been brought on record on behalf of the Department that the submission of the assessee about non filing of fresh application on the portal of the Department is wrong or without any basis or justification. When the application under clause (iii) of first proviso to sub-section (5) of Section 80G of the Act was got dismissed as having been withdrawn, that the portal of the Department has not allowed the assessee to upload afresh application under the said provision of law, approval has already been granted to the assessee on 14.2.2024 by CIT(E) on fresh Form AC, and circular No.7 reproduced above, this appeal is hereby disposed off, while observing that the assessee shall be entitled to present afresh application under clause (iii) of first proviso to sub-section (5) of Section 80G of the Act before the ld. CIT(E), Jaipur, in accordance with law, even manually, in case technical glitch continues to disallow filing thereof. Once the same is entertained,CIT(E) to dispose of the application in accordance with law.

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• 2024 (6) TMI 519
  Rejection of application of the Appellant Trust u/s 12AB r.w.s. 12A(1)(ac)(iii) terming the activities undertaken by the trust as not genuine - HELD THAT:- CIT(E) was not satisfied with the proof of activities furnished by the assessee and noted that there are no proper walls, cover to protect the animals, residents of caretakers of animals, place where the fodder can be stored, etc. CIT(E) also observed that the assessee has not furnished any documentary evidence regarding the location of the cowshed, name of place, village, etc. CIT(E) also noted that the bills/vouchers submitted by the assessee are from Bharuch (Gujarat), however the assessee has its address at Thane. Accordingly, the application filed by the assessee in Form No. 10AB under section 12A(1)(ac)(iii) of the Act was rejected and the provisional registration granted on 22/03/2022 under section 12AB r.w.s. 12A(1)(ac)(vi) of the Act was also cancelled. Therefore, it is evident that the learned CIT(E) was not satisfied with the details/evidence furnished by the assessee. However, it is also evident that the assessee was not granted any other opportunity to meet the objections of the learned CIT(E). We deem it appropriate to restore the application filed by the assessee to the file of the learned CIT(E) for de novo adjudication with a direction to the assessee to substantiate the objects with activities carried on by it and necessary supporting of expenditure incurred on the objects of the trust. The learned CIT(E) may consider those details and after giving an opportunity of hearing to the assessee dispose of the application afresh in accordance with the law. Accordingly, the impugned order passed by the learned CIT(E) is set aside and the grounds raised by the assessee are allowed for statistical purposes. Rejection of application u/s 80G(5)(iii) and cancellation of provisional registration u/s 80G(5)(iv) - As undisputed that the provisional approval granted to the assessee vide order dated 23/03/2022 was valid till the assessment year 2024-25. Provisional approval was granted subject to certain conditions, however, the impugned order is completely silent as to the violation of any such condition. No merit in the cancellation of provisional approval granted to the assessee under clause (iv) of the first proviso to section 80G(5) - application filed by the assessee in Form No.10AB on 27/01/2013 is within the time limit permissible under clause (iii) of the first proviso to section 80G(5). Since the learned CIT(E) rejected the application filed by the assessee only on this technical ground and has not analysed the application on merits as per the requirements of section 80G(5) therefore we deem it appropriate to restore the application to the file of the learned CIT(E) for de novo consideration in accordance with the law, after granting a reasonable opportunity of being heard to the assessee. Grounds raised by the assessee are allowed for statistical purposes.

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• 2024 (6) TMI 518
  Deduction u/s 80M - documents filed that the assessee had received dividend from another domestic company and distributing the dividend to its shareholder - HELD THAT:- Documents filed that the assessee had received dividend of Rs. 37,12,500/- from another domestic company and distributing the dividend amounting to Rs. 30 Lakh to its shareholder. The second part of Section 80M(1) of the Act states that in the year in which the dividend was received, the assessee company would be allowed a deduction of an amount equal to and not exceeding the amount of dividend distributed on or before the due date. In the present case, dividend was paid to the shareholders of the assessee before due date u/s 139(1) of the Act vide cheques dated 31.03.2021 and the due date for filing return of income for the relevant assessment year was 15.02.2022. In this view, assessee is rightly within law to claim deduction u/s 80M of the Act of Rs. 30 Lakh. Appeal filed by the assessee is allowed.

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• 2024 (6) TMI 517
  Validity of assessment u/s 153A/153C without recording any satisfaction - no valid approval process undertaken u/s 153D - HELD THAT:- The first thing is that admittedly, this seizure was on 30.08.2014 and if same is considered as date of requisition for the purpose of Section 132A, the financial year relevant to it will be 2014-15, falling with assessment year 2015-16. Thus, in view of the provisions of section 153 r.w. clauses A and B, the assessment proceedings for the assessment year under consideration i.e., AY 2015-16 being search year were abated assessments and could not be completed u/s 153A or even 153C. In any case, the assessment could not have been completed u/s 153C as the assessee is the alleged person searched himself and for that reasons the assessment was initiated by issuance of notice u/s 153A. Admittedly revenue does not rely any satisfaction note to assess the assessee u/s 153C as other person. The argument of the ld. DR that section 153C may have been mentioned inadvertently have been rebutted duly by ld. AR by bringing forth copies of order sheets of the assessment proceedings. The noting dated 23/09/2016 shows that notice was issued u/s 153A. Then the noting of 26/12/2016 shows draft assessment was forwarded to competent authority for approval. As mentioned above the approval dated 29/12/2016 was for assessment u/s 143(3)/153C of the Act. Then on 29.12.2016 while passing the impugned order, the ld. AO specifically mentions in the order sheet that the assessment has been completed u/s 143(3)/153C of the Act. The legislative intent of Section 153D is to introduce a higher degree of scrutiny and approval for assessment orders following search or survey operations. Same cannot be considered merely a procedural step but a substantive mandate of law. In the case of PCIT vs. Anuj Bansal [ 2023 (7) TMI 1214 - DELHI HIGH COURT] reaffirms the importance of a thorough and well-reasoned approval process under Section 153D of the Act. The aforesaid discussion firmly established that the approval granted by the ld. Addl. CIT, Range-1, Muzaffarnagar u/s 153D, on 29.02.2016, was without application of mind and can be very much construed to be given in mechanical way. In fact the assessment order opens by narrating a fact that case of assessee was selected for scrutiny. There seems to have been no endeavor to appreciate as to under what provisions of law the AO intended to initiate the assessment, proceed or conclude the assessment. CIT(A) has not cared to discuss a word on the averment of assessee that assessment could not have been u/s 153C of the Act. Thus, we are of firm view that additional grounds raised deserve to be sustained.

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• 2024 (6) TMI 516
  Disallowance of Brand Ambassador Expenses - AO had disallowed 75% of the expenditure incurred on brand ambassadors, considering it as capital expenditure towards intangible assets, i.e., brand building - HELD THAT:- CIT(A) has recorded finding of fact, with which we agree that the expenditure incurred is not creating any enduring benefit of an asset but is rather helping the assessee in augmenting its sales and resultantly its profit. This finding of fact could not be controverted by the Ld. CIT(DR) by bringing on record any adverse material. We are of the view that the impugned expenditure is of revenue nature, incurred wholly and exclusively for the purpose of assessee business and is allowable deduction u/s 37 of the Act. We therefore decline to interfere with the order of the Ld. CIT(A) on the point and rejecte ground No. 1 of the Revenue. Disallowance on account of Advertisement and Sales Promotion expenses - HELD THAT:- As we are not inclined to agree with the view of the Ld. AO that the impugned expenditure will give enduring benefits to the assessee and hence is not of revenue character. We endorse the finding of the Ld. CIT(A) that the expenditure on account of corporate advertisement is to essentially maintain the corporate image and not create a corporate image. These were incurred for enhancing sales, earning profit and facilitating operation of the assessee s business. This is amply demonstrated by the enormous increase in sales during the year as compared to the preceding year. In Pepsico India Holdings (P.) Ltd. [ 2012 (6) TMI 256 - DELHI HIGH COURT] held that the expenditure incurred on neon signs and a glow signs qualifies for deduction u/s 37(1) of the Act. No contrary decision has been brought to our notice. We therefore concur with the findings of the Ld. CIT(A) and consequently reject ground No. 2 of the Revenue. Disallowance on account of Service Centre expenses - case of the assessee has been that warranty is an integral part of the sales price of the value of product - HELD THAT:- As provision for warranty is made in the year in which the goods are sold on the basis of past experience. The moment there is a sale, automatically an obligation of warranty arises. This is a normal industry practice. There is no denial from the Revenue s side of the assessee s plea. The Ld. CIT(A) has relied on the decision of ITAT Delhi in M/s Rohde and Schwarz (P) Ltd. [ 2019 (11) TMI 586 - ITAT DELHI] in which Rotork Controls India (P.) Ltd. [ 2009 (5) TMI 16 - SUPREME COURT] has been cited and followed wherein it is held that provision for warranty is entitled to deduction u/s 37 of the Act. We therefore, have no reason whatsoever to differ with the findings of the Ld. CIT(A). Accordingly, ground No. 3 of the Revenue is also rejected.

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• 2024 (6) TMI 515
  Validity of proceedings u/s 153C - satisfaction note recorded by the AO of the searched person or not? - HELD THAT:- AO specifically mentions that the additions made to the income of the assessee was not specifically based on any incriminating material and the same did not sustain. The AO has also proposed to initiate proceedings u/s 148 after duly following the procedure prescribed u/s 148A of the Act as inserted by Finance Act, 2021. Since, the Revenue itself has embarked upon the process of initiation of proceedings u/s 148 after accepting that the assessment made u/s 153C of the Act was not based on any incriminating material, the appeals of the assessee assailing the additions made u/s 153C are liable to be allowed. Appeal of assessee allowed.

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• 2024 (6) TMI 514
  Deemed income u/s 69A - cash deposits treated as unexplained - assessee failed to discharge the onus during the assessment proceedings as mentioned in the assessment order and the assessee has not submitted any convincing argument during the appellate proceedings - assessee claimed during the assessment proceedings that she made advances to various persons interest free loans and that borrowers repaid the loan amounts and the same were deposited in the bank account of the assessee - HELD THAT:- When a person gives loans to other persons and the amounts are high whether it is interest free or with interest, the creditor certainly keeps records when the loans were given. But here, no such evidences were furnished by the assessee. No acknowledgment regarding the receipt of loans by the borrowers were obtained by the assessee when loans were given to various persons. It is after the initiation of assessment proceedings affidavits from the borrowers are furnished during the assessment proceedings. Therefore, the claim of the assessee that she had given interest free loans to various persons and they have repaid that loan amounts are not tenable. Accordingly, the observations of the ld. AO and of the ld. CIT(A) on the issue of repayment of the interest free loans ought to be upheld and we decide this issue of recovery of interest free loans to the assessee is against the assessee. Assessee sold a house property on vide deed executed on 30-11-2011 in favour of one P. Balaji for a consideration of Rs. 18,00,000/- . It is our considered opinion that the ld. CIT(A) ought to accept the claim of the assessee that the assessee sold a house property for a consideration of Rs. 18,00,000/- vide registered instrument and there is reasonable possibility that the said sale consideration amount may had deposited in the bank account by the assessee. Therefore, there is credible evidence that the assessee sold a house property for a consideration of Rs. 18,00,000/- under a registered sale deed, the assessee has proved her claim that Rs. 18,00,000/- was deposited in the bank account by the assessee. Accordingly, we delete the addition of Rs. 18,00,000/- to the total income of the assessee. Claim of the assessee that she sold jewellery for Rs. 5,25,000/- and that amount was also deposited in the bank account is not tenable as no evidence regarding the selling of jewellery was furnished before the lower authorities. No claim without any supporting evidence thereon can be accepted. Accordingly, we reject the claim of the assessee that she sold jeweler for an amount of Rs. 5,00,000/- and deposited that amount by her into her bank account. Thus, we decide this issue of selling of jewellery against the assessee. To sum up, out of total addition the assessee succeeded in proving cash deposit of Rs. 18,00,000/- to her bank account from the selling of her house property. Accordingly, we delete addition partly and remaining amount of cash deposits assessee failed to furnish acceptable evidence. Hence ground partly allowed.

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• 2024 (6) TMI 513
  Unexplained investment for construction of factory premises - Addition Based on Private Valuer s Report - valuation of construction was taken into account as per the report prepared by Registered Valuer during the search proceedings in presence of the Authorized Person/Representative of the assessee - whether the assessing officer can at the time of search / survey based on the physical appearance and without rejecting the books of account make a reference to the registered valuer or not? - HELD THAT:- When any reference is made by the Assessing Officer to the valuation officer us 55A, then the provisions of following sections of Wealth-tax Act, 1957, shall apply with the necessary modifications. Provisions of sub-sections (2), (3), (4), (5) and (6) of section 16A of the Wealth-tax Act, 1957. Section 16A of Wealth- tax Act, 1957, is similar to section 55A of Income-tax Act. Section 16A of Wealth-tax Act, 1957, contains the provisions relating to making a reference to the valuation officer for making assessment under the Wealth-tax Act. Apart from the provisions of section 55A, section 142A also empowers the Tax Authorities to make a reference to a Valuation Officer. The provisions of section 142A empowers the AO for the purposes of assessment or reassessment, make a reference to a Valuation Officer to estimate the value, including fair market value, of any asset, property or investment. Valuation Officer has the same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957. AO may make a reference to the Valuation Officer as above whether or not he is satisfied about the correctness or completeness of the accounts of the taxpayer. The Valuation Officer, on a reference made by the Assessing Officer, shall, for the purpose of estimating the value of the asset, property or investment, have all the powers that he has u/s 38A of the Wealth-tax Act, 1957. Valuation Officer shall, estimate the value of the asset, property or investment after taking into account such evidence as the taxpayer may produce and any other evidence in his possession gathered, after giving an opportunity of being heard to the taxpayer. Valuation Officer may estimate the value of the asset, property or investment to the best of his judgment. AO may, on receipt of the report from the Valuation Officer, and after giving the taxpayer an opportunity of being heard, take into account such report in making the assessment or re-assessment. But here we note that the addition has been made by the ld. AO without any supporting evidence or material found during the search operation and the addition was made only based on the private ( registered ) valuer for which the reference was made by the DDIT at the time of search and that report was obtained on the very next date of search. CIT(A) has considered the judgement of the CIT Vs. Nishi Mehra [ 2015 (3) TMI 156 - DELHI HIGH COURT] where in it was held that no addition can be made only on the basis of valuation report in the absence of any incriminating material or corroborative material to point out the under valuation of the property. DR did not bring any contrary judgment except relying the judgment of the Dhakeswari Cotton Mills Ltd. Vs. CIT [ 1954 (10) TMI 12 - SUPREME COURT] for which the ld. AR has filed a distinguishing note submitting that that decision is pari materia on difference facts. In the light of the discussion so recorded we see no merits in the arguments raised by the revenue considering the facts circumstances discussed here in above the ground no. 1 2 challenging the addition stands dismissed.

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• Customs

• 2024 (6) TMI 512
  Classification of imported goods - roasted areca nuts - Validity of FSSAI reports - whether such areca nuts are fit for human consumption? - HELD THAT:- Through its accredited laboratory, the FSSAI carried out tests of samples drawn from each consignment in the presence of representatives of both the respective petitioner and the respondents, and confirmed that the sample is of roasted areca nuts and that such sample conforms to standards specified in Regulation 2.3.55 of the the Food Safety and Standards (Food Products Standards and Food Additives) Regulations, 2011 and Regulations 2.1.1, 2.2.1, 2.3.1 and 2.5.1 of the Food Safety and Standards (Contaminants, Toxins and Residues) Regulations, 2011. The respective petitioner has placed copies of communications and representations seeking release of the goods. Such requests and representations were made even before the goods were subject to seizure. As on date, those representations have not been responded to by the respondents. While the adjudication officer is empowered to provisionally release goods, on application, subject to the execution of a bond and the provision of security, if deemed appropriate, the existence of such power does not operate as an embargo against the exercise of jurisdiction by this Court in appropriate cases. The factual issue as to whether the goods are areca nuts and whether they are fit for human consumption was also decided in favour of the respective petitioner by the FSSAI. The respondents are directed to release the consignments subject to fulfilment of conditions imposed - petition disposed off.

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• 2024 (6) TMI 511
  Refund of terminal benefits of excise duty - deemed exports - Sl.No.511 of N/N.12/2012- cus dated 17.03.2022 - The petitioner was the successful bidder for the tender floated by the third respondent for the work of construction of Tsunami bund and retaining wall for 500 Mwe Prototype Fast Breeder Reactor (hereinafter referred to as PFBR ) project at Kalpakkam. - HELD THAT:- The term deemed export is a creation of Export Import Policy and not defined under Central Excise Law. The benefits available to physical exports are also available to the deemed exports and the deemed exports are treated on par with physical export. In fact, in the physical export, the exporters is entitled to get refund of the excise duty paid on the raw materials. Likewise, under the deemed exports, by the Export Import Policy, TED is allowed. Therefore, the claim of the petitioner cannot be rejected on the ground that the goods supplied by the petitioner cannot be deemed exports. On perusal of the counter filed by the third respondent revealed that as per the terms of contract, the petitioner is entitled for the TED and the third respondent required to forward a certificate issued by the beneficiary of the contract viz., M/s. Bharatiya Nabhikiya Vidyut Nigam Limited, to the first respondent. On perusal of letter dated 09.11.2015, issued by the third respondent also revealed that the refund clause of the FTP under which the petitioner is entitled for the claim of TED, sufficiently proved and satisfy the discharge of the obligations on the part of the third respondent. However, the petitioner unable to obtain the benefits from the first respondent. The impugned order cannot be sustained and it is liable to be quash - Petition allowed.

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• Corporate Laws

• 2024 (6) TMI 510
  Seeking transfer of company petition to the NCLAT - Liquidation of a company - 5th proviso to Section 434(1)(c) of the Companies Act, 2013 - HELD THAT:- In view of 5th proviso to Section 434(1)(c), any party or parties to any proceedings relating to the winding up of company pending before any Court may file an application for transfer such proceedings and the Court may, by order, transfer such proceedings to the Tribunal which was then to be dealt with by the Tribunal as an application for initiation of corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016. It is only where the winding up proceedings have reached the stage where it would be irreversible, making it impossible to set the clock back, that the Company Court must proceed with the winding up instead of transferring the proceedings to NCLT to be decided in accordance with the provisions of the Insolvency and Bankruptcy Code, 2016. Since the Official Liquidator has not invited any claims from the creditors or workers of the company in liquidation, the transfer of proceedings to the NCLT would ensure speedier resolution of the corporate insolvency resolution process while also allowing for a more technical consideration of issues and that further proceedings before the NCLT allows for the creditors to be active and final determinants of how the insolvency resolution process would take place. This Court had also expressed apprehensions in respect of the claims of the workmen as the Official Liquidator had not invited any claims in respect of the creditors/workmen as per the requirement of Rule 148 of the said Rules. Mr.Khan for the Official Liquidator and Ms.Cheema for the Applicant have clarified that Section 53(1)(b) read with Section 15(1)(c) read with Regulations 6(2)(c) and 12(1) of the Insolvency and Bankruptcy Code, 2016 (the IBC ) would take care of the same. Therefore, in my view, exercise of power under the 5th proviso to Section 434(1)(c) would be appropriate. The Company Petition shall be treated by the NCLT as an application for initiation of the Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016. The order of admission dated 28th September 2017 is recalled/revoked.

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• FEMA

• 2024 (6) TMI 509
  Application for compounding contravention under FEMA - petitioner filed Form FC-TRS belatedly, resulting in investigations and complaints under various Acts - HELD THAT:- Rule 8(2) of the Compounding Proceeding Rules states that The Compounding Authority shall pass an order of compounding after affording an opportunity of being heard to all concerned as expeditiously as possible and not later than 180 days from the date of application. Thus, the second respondent becomes a concerned party. In case the first respondent was advised by the letter dated 15.06.2017, since the investigations on charges of money laundering against the petitioner were ongoing, compounding proceedings ought not to be undertaken in the matter and the case has to be remitted to the respondent Department. Rule 4(1) of the Compounding Proceeding Rules specifies the powers of the first respondent to compound contraventions, stating that if any person contravenes any provisions of FEMA, 1999, except clause (a) of Section 3 of that Act. Section 3 (a) deals with contraventions which are suspected of Money Laundering. Thus, Rule 4(1) clearly empowers the first respondent to compound all contravention, except for those that might be suspected of money laundering. In addition to the that, a proviso has been added to Rule 8(2) of the FEMA (Compounding Proceedings) Rules, 2000 vide Gazette Notification dated 20.02.2017, which states that provided that with respect to any proceeding initiated under Rule 4, if the Enforcement Directorate is of the view that the said proceeding relates to a serious contravention suspected of terror financing, or affecting the sovereignty and integrity of the nation, the compounding authority shall not proceed with the matter and shall remit the case to the appropriate Adjudicating Authority for adjudicating contravention u/s 13. Compounding application was returned to the petitioner on account of the Proviso to Rule 8(2) of the FEMA (Compounding Proceedings) Rules, 2000 which does not empower the first respondent to compound contraventions suspected of money laundering.

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• Service Tax

• 2024 (6) TMI 508
  Levy of service tax - business auxiliary service - GTA Service - suppression of facts or not - extended period of limitation - interest and penalties - HELD THAT:- No action has been initiated by the Department on the letter dated 26.10.2007 wherein the information of non-payment of Service Tax was intimated by the appellant. But later, the Show Cause Notice was issued, on 15.10.2012, demanding Service Tax for the period 2007-08 to 2010-11, alleging that the appellant has suppressed the intimation about non-payment of Service Tax on GTA and business auxiliary service. It is found that suppression of fact with intention to evade payment of tax does not exist in this case. The appellant has categorically informed the Department about the non-payment of Service Tax vide letter dated 26.10.2007. On receipt of the letter, no action has been taken by the Department. In such circumstances, the demand of Service Tax by invoking the extended period of limitation is not sustainable. In the present case, the demand notice for the period from 2007-08 to 2010-2011 has been issued vide the Show Cause Notice dated 15.10.2012. Thus, the entire demand confirmed in the impugned order is barred by limitation of time. Accordingly, the demand confirmed in the impugned order is not sustainable on the ground of limitation. Interest and penalties - HELD THAT:- Since the demand itself is not sustainable, the question of demanding interest and imposing penalties does not arise. The impugned order is set aside - appeal allowed.

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• 2024 (6) TMI 507
  Demand of 5%/6% of the value of the exempted services provided by the appellant during the impugned period i.e. 2009-10 to 2013-14 - common input services used in self-trading - appellants are maintaining separate books of accounts has been intimated by them to their jurisdictional authority - penalty - violation of principles of natural justice. The appellant contested the show-cause notices, but the adjudicating authority without examining the records and the facts of the case, passed the impugned order holding that the appellant is required to pay the amount equal to 5%/6% of the value of exempted services in terms of Rule 6 (3) of the Cenvat Credit Rules, 2004. HELD THAT:- Although the appellant is maintaining separate account for exempted as well as taxable services and reversed the proportionate cenvat credit attributable to the exempted services. For transaction charge services, the service tax paid by the appellant was not proportionately reversed by the appellant. But on pointing out by CERA audit, the appellant has reversed the same. The same has been recorded by the adjudicating authority in the impugned order. As the fact of proportionate reversal of cenvat credit is on record and no credence was done by the adjudicating authority to the said fact, therefore, the impugned order is not sustainable in the eyes of law. It is found that as the appellant has already reversed the proportionate cenvat credit attributable to exempted services, in that circumstances, the appellant is not required to pay any amount equal to 5%/6% of the value of the exempted services. The same view has been taken by this Tribunal in the case of M/s Chryso India Private Limied Vs. Commissioner of CGST Central Excise, Kolkata North [ 2023 (5) TMI 596 - CESTAT KOLKATA] , wherein this Tribunal has observed even prior to Rule 6 (3AA) coming into effect from 01/4/2016, they have been taking the view that mere non filing of the option letter should not be used to deprive the assesssee from reversing the proportionate Cenvat Credit. The very fact that the Rule 6 (3AA) has been brought into effect from 1/04/2016 wherein the Adjudicating Authority is empowered to allow the assesse to reverse the Cenvat on proportionate basis on being pointed out, shows the legislative intent to allow the assessee to pay proportionate Cenvat Credit as the first option. Thus, as the appellant has already reversed the proportionate input cenvat credit attributable to exempted services, in that circumstances, the appellant is not liable to pay an amount equal to 5%/6% of the value of the exempted services. Penalty - HELD THAT:- As no demand is sustainable against the appellant, no penalty is imposable on the appellant. The impugned order is set aside - appeal allowed.

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• 2024 (6) TMI 506
  Benefit of the entry no. 29(h) of the mega N/N. 25/2012-ST dated 28th June, 2012 - AIIMS Rishikesh falls under the description Governmental Authority - extended period of limitation. Benefit of the notification - HELD THAT:- It is seen that the definition of works contract service at the material time specifically included erection, commissioning or installation of plant, machinery, equipment or structures, whether prefabricated or otherwise, installation of electrical and electronic devices, plumbing, drain laying or other installations for transport of fluids, heating, ventilation and air conditioner . There was no doubt that the said service was taxable. Moreover, there was no exemption to this category of service if provided for purposes other than commerce or industries . The appellants have paid VAT under works contract. Thus, we hold that the said service provided by appellant was taxable. The appellants have shown that there was exemption for period after 01.07.2012 but for period prior to that no exemption has been shown. Thus demand for the period prior to 01.07.2012 has rightly been confirmed. Extended period of limitation - HELD THAT:- For period prior to 01.07.2012 there was absolutely no doubt as the service was specifically covered in the definition itself. There was no scope of as doubt. Thus, there are no merit in the defense of the appellant. Appeal dismissed.

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• 2024 (6) TMI 505
  Refund of service tax - challenge to self-assessment for refund claims - principles of unjust enrichment - HELD THAT:- The law on the refund claims have been settled by the Supreme Court in ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV [ 2019 (9) TMI 802 - SUPREME COURT] that refund can be sanctioned only in pursuance of the assessment made and not de hors the assessment. The principle was laid down in the case of PRIYA BLUE INDUSTRIES LTD. VERSUS COMMISSIONER OF CUSTOMS (PREVENTIVE) [ 2004 (9) TMI 105 - SUPREME COURT] under the provisions of the Customs Act and thereafter, in the case of COLLECTOR OF CENTRAL EXCISE, KANPUR VERSUS FLOCK (INDIA) PVT. LTD. [ 2000 (8) TMI 88 - SUPREME COURT] a case under Central Excise Act. Later, in the case of ITC Limited, the issue considered was whether the refund could be sanctioned without challenging the self assessment and it was conclusively held that all assessments, including self assessments are appealable and therefore, unless the same is modified, no refund could be sanctioned so as to alter the assessment on the principle that refund proceedings are in the nature of execution proceedings and they cannot be used to determine the liabilities of the parties. The appellant paid the service tax voluntarily and in the absence of any challenge the assessment became final. Following the law that refund can be allowed on the basis of the assessment made and assessment cannot be altered in the refund proceedings as they are merely in the nature of execution proceedings, the present refund claim by the appellant is not maintainable without challenging the assessment. The present refund proceedings, which have been filed on the basis of the decision in the case where appellant was not a party and in the absence of any challenge to the assessment, on which he paid the service tax are liable to be rejected. There are no reason to go into the issue of applicability of Section 11 B of the Excise Act - appeal dismissed.

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• 2024 (6) TMI 504
  Levy of service tax - Restaurant Services - sale of food items by way of Take-Away and Home Delivery - HELD THAT:- The issue is no longer res integra and has been decided by this Tribunal in the case of Haldiram Marketing Pvt. Ltd. Vs. Commissioner of CGST, GST, Delhi East Commissionerate [ 2023 (2) TMI 783 - CESTAT NEW DELHI] , where the facts and circumstances are identical and hence, the present case is squarely covered by the observations made therein. In the case of Haldiram Marketing Pvt. Ltd., the brief facts noted are that they were engaged in running food outlets, where packaged food items could be purchased and also availed restaurant dining facilities. Additionally, the appellant there also provided the facility of Take Away of food items. On audit, it was noticed that the appellant was providing services in respect of Take Away orders by way of preparing and packaging food items for the customers. The Tribunal, after considering the provisions of Section 65 B(44) read with 66E of the Finance Act also considering the Circular No.334/3/2011- TRU dated 28.02.2011 and the clarification issued thereafter on 13.08.2015 that the transaction involving Pick-up or Home Delivery of the food items sold by the restaurants are not liable to service tax, being in the nature of sale only and no amount is charged for free delivery of food as the dominant nature of the transaction is that of sale and not service, as the food items are not served at the restaurant and there is no other element of service, which is normally offered at the restaurant. Since the facts of the present case are absolutely identical and give rise to the issue of taxability of sale of food items through Take Away or Home Delivery , the activity is clearly of sale of food and does not involve any service element and, therefore, following the ratio of the judgement, the activity of sale of food items by Take Away or Home Delivery by the appellant is not liable to service tax. The impugned order deserves to be set aside - Appeal allowed.

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• 2024 (6) TMI 503
  Levy of service tax under erection, commissioning or installation services (ECIS) or under management of maintenance or repair services (MMR) by invoking the best judgment assessment - benefit of cum-tax extended - HELD THAT:- Both learned counsel for the appellant and Shri Manoj Kumar, learned authorized representative appearing for the department have stated that the present matter may also be remanded to the adjudicating authority for passing a fresh order in the light of the observations made by the Tribunal in the order on [ 2017 (12) TMI 450 - CESTAT NEW DELHI] in the matter of the appellant for the previous years. The impugned order is accordingly, set aside and the matter is remanded to the adjudicating authority for passing a fresh order in the light of the observations made. However, as it has been stated by learned counsel for the appellant that the adjudicating authority has not decided the matter after remand, it is directed that the adjudicating authority shall decide the matter within a period of three months from the date a copy of this order is produced before the adjudicating authority by either of the parties. Appeal allowed by way of remand.

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• 2024 (6) TMI 502
  CENVAT Credit - input services - advertisement services - HELD THAT:- In M/S BANSAL CLASSES PVT. LTD. VERSUS COMMISSIONER, CENTRAL GOODS AND SERVICE TAX [ 2018 (7) TMI 1012 - CESTAT NEW DELHI] , on which reliance has been placed by the Commissioner (Appeals), the Tribunal held the appellant will be entitled to the Cenvat Credit of service tax paid on Advertising Services as input service. It also needs to be noted that the Additional Commissioner (Appeals), by order dated 31.01.2013, also dropped the proceedings that had been initiated by the show cause notice dated 17.07.2012 issued to the appellant for the prior period from 2009 to 2011 and nothing has been pointed out by the department to show that this order has been set aside. The order impugned dated 15.03.2018 passed by the Commissioner (Appeals) deserves to be set aside and is set aside - Appeal allowed.

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• 2024 (6) TMI 501
  Classification of service - supply of tangible goods service or not - whether the supply of computers, monitors, laptops and other IT equipment by the appellant to its customers on rental basis would tantamount to supply of tangible goods service or a deemed sale as per Article 366(29A) of the Constitution of India read with the definition of sale as per the WBVAT Act, 2003? - HELD THAT:- A similar issue came up before the Tribunal, Chennai in the case of M/S. LINDSTROM SERVICES P. LTD. VERSUS PRINCIPAL COMMISSIONER OF GST CENTRAL EXCISE [ 2020 (11) TMI 14 - CESTAT CHENNAI] wherein the Tribunal examined this issue and held that In case of termination of the contract, customers / clients shall redeem from the assesse, the work wear that have been in the use. As the issue has already been settled that if the appellant is paying VAT on the rentals, which is deemed sale, in terms of Article 366(29A) of the Constitution of India, the appellant is not liable to pay Service Tax under the category of supply of tangible goods service, therefore, relying upon the decision of the Tribunal, it is held that the appellant is not liable to pay Service Tax. The impugned order set aside - appeal allowed.

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• 2024 (6) TMI 500
  Valuation - inclusion of reimbursable amount in addition to the charges collected by them for the CHG service - pure agency services - HELD THAT:- It is observed that the appellant has specific agreements with 56 clients and there is no dispute that the charges collected by them can be classified as pure agents. The adjudicating authority has issued a certificate stating that the charges collected by the appellant are pure agents. The adjudicating authority has relied upon the Chartered Accountants Certificate and came to the conclusion that the appellant is not liable to pay service tax on the reimbursable expenses demanded by the department on the charges collected as pure agents. The department has not brought in any evidence to show that the reimbursable expenses collected by the appellant are not towards rendering of service as pure agents. The Chartered Accountants Certificate specifically clarifies that these reimbursable expenses are collected by the appellant as pure agents. In the accounts of appeal, the review contended that there is no indication in the order in which the adjudicating authority has cross-verified the Chartered Accountants Certificate with primary documents such as bills, invoices and other relevant records. There is no reason to doubt the genuineness of the certificate issued by the Chartered Accountants. Thus, there is no infirmity in the order passed by the land adjudicating authority by relying on the certificate issued by the Chartered Accountants. The demand dropped in the impugned order is upheld - the adjudicating authority has rightly dropped the demand on the basis of the impugned order on this court - appeal dismissed.

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• 2024 (6) TMI 499
  Short payment/non-payment of service tax - liability to pay service tax under Reverse Charge Mechanism - business Auxiliary service - incentive received, extension warranty commission and unclaimed creditors written off - wrongful availment of CENVAT Credit - extended period of limitation - penalties. Short payment/non-payment of service tax - liability to pay service tax under Reverse Charge Mechanism - HELD THAT:- There is nothing on record to show that there still was shortcoming in the amount so paid. The show cause notice has been issued after the date of payment (28.12.2015) and after the information about said payment (31.12.2015) to the department. The impugned show cause notice is of 10.03.2016. As per the statutory mandate of the aforementioned Section 73(3), the impugned show cause notice should not have been issued vis- -vis five of the above mentioned spot memos. In such scenario there arises no occasion for imposition of penalties. There have been several decisions of this Tribunal and even of the Hon ble High Court, wherein it has been held that once the entire proposed payment was made along with the interest prior to the issue of show cause notices and application intimating the said payment has also been filed, there remains no question to impose any penalty - the demand arising have been wrongly confirmed. Levy of service tax - Business Auxiliary Services - incentive received, extension warranty commission - unclaimed creditors written off - HELD THAT:- The apparent fact on record is that the appellants are interested in selling their cars and the respective accessories. The buyers who are interested in buying their cars, if need loan prior the said purchase, they have been referred to the financial institutes. From this admitted factual aspect, to our opinion, it is clear that the appellants actually are promoting their own business by facilitating their customers to avail loan. The clients of the appellants are the said customers. For want of any arrangement between the financial institutes and the appellants, those institutes cannot be called as the service recipients. No question of existence of any service being rendered by the appellant to those financial institutes at all arises merely for the reason that they were given certain space in appellant s premises - there is no evidence produced by the department either in the form of an agreement or in form of any guidelines from the bank or the financial institutes for the basis of giving commission to the appellants, it is held that appellants were not rendering Business Auxiliary Services to the financial institutes/banks. Levy of service tax - amount shown as unclaimed creditors written off - HELD THAT:- It is apparent from the appellant s submission that some amount against the sale of accessories to the buyers remains in the account of appellant which is not returned to the customers. The said amount, after certain period of time is recorded as written off in the appellant s record. From no stretch of imagination, the amount received from sale of accessories can be alleged to be an amount towards rendering any kind of service. With these observations, it is held that the demand raised by Spot Memo No.4 for an amount of Rs.3,06,099/- along with the interest has wrongly been confirmed. Extended period of limitation - HELD THAT:- The short payment has already been made good by appellant himself. The said payment may not be the sufficient proof to falsify the alleged suppression with intent to evade the duty. However, the nondeclaration of certain amount in the ST-3 returns per se does not become an act of willful suppression or mis-representation. The burden is upon the department to bring some evidence towards any positive act of the appellant to prove that the appellant had mala fide intent to not to pay the duty - in the absence of any evidence produced by the department, it is held that extended period should not have been invoked. This finding is sufficient to hold that the show cause notice itself is barred by the period of limitation. The show cause notice is held void ab initio vis- -vis five of the spot memos. It is also held barred by the time of limitation - Appeal allowed.

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• Central Excise

• 2024 (6) TMI 498
  Refund of rebate amount with interest u/s 11BB of the Central Excise Act, 1944 - Applicability of Section 142(3) of the CGST Act, 2017 - HELD THAT:- Sub-Section (3) of Section 142 of the Act very clearly says any amount eventually accruing shall be paid in cash . In the circumstances, it is opined that respondents ought to have directed the sanctioning authority to refund the amount of duty refundable to petitioner in cash instead of credit in CENVAT account, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944. The amount shall be paid together with accumulated interest in accordance with law within four weeks of this order being uploaded. Petition disposed off.

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• 2024 (6) TMI 497
  Maintainability of petition - availability of alternative remedy - Admissibility of Cenvat Credit on Service Tax paid on outward transportation. Maintainability of petition - HELD THAT:- The writ petition is liable to be dismissed, as the petitioner has an alternate remedy under Section 35(A) of the Central Excise Act, 1944 before the Commissioner of Central Excise (Appeals). The appellate remedy prescribed under the Act cannot be allowed to be circumvented, merely because the petitioner is of the view that the petitioner may have a case on merits. The fact that the petitioner is required to pre-deposit the amounts before the appeal is entertained under Section 35(A) of the Central Excise Act, 1944 is also of no avail. Further, only 10% of the disputed tax is to be paid by the petitioner for filing an appeal before the first appellate Authority. The Writ Petition is liable to be dismissed with liberty to the petitioner to file statutory appeal under Section 35(A) of the Central Excise Act, 1944 within a period of 30 days from the date of receipt of a copy of this order. If such an appeal is filed within the time stipulated by this Court, the Appellate Commissioner shall entertain the appeal and dispose of the same on merits and in accordance with law. Petition dismissed.

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• 2024 (6) TMI 496
  Condonation of delay of 891 days in filing the Civil Miscellaneous Petition - sufficient cause for delay or not - HELD THAT:- There is no dispute about the fact that generally the lis is not to be rejected on the technical ground of limitation but certainly if the filing of appeal suffers from inordinate delay, then the duty of the Court to consider the application to condone the delay before entering into the merit of the lis - It requires to refer herein that the Law of limitation is enshrined in the legal maxim interest reipublicae ut sit finis litium (it is for the general welfare that a period be put to litigation). Rules of limitation are not meant to destroy the rights of the parties, rather the idea is that every legal remedy must be kept alive for a legislatively fixed period of time. It is settled position of Law that when a litigant does not act with bona fide motive and at the same time, due to inaction and laches on its part, the period of limitation for filing the appeal expires, such lack of bona fide and gross inaction and negligence are the vital factors which should be taken into consideration while considering the question of condonation of delay. The Hon ble Apex Court in Ramlal, Motilal and Chhotelal Vrs. Rewa Coalfields Ltd. [ 1961 (5) TMI 54 - SUPREME COURT] has held that merely because sufficient cause has been made out in the facts of the given case, there is no right to the appellant to have delay condoned. Thus, the expression sufficient cause has been dealt with which means that the party should not have acted in a negligent manner or there was a want of bona fide on its part in view of the facts and circumstances of a case or it cannot be alleged that the party has not acted deliberately or remained inactive . This Court, after taking into consideration the ratio laid by the Hon ble Apex Court as also the explanation furnished in the delay condonation application, is of the view that no sufficient cause has been shown to condone inordinate delay of 891 days in filing the appeal. The COD application dismissed.

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• 2024 (6) TMI 495
  Levy of Excise duty - manufacture and clearance of Fertilisers, namely, Di-Ammonium Phosphates (DAP), Nitrogen Phosphorus and Potassium (NPK) - Appellant has not utilized the CENVAT Credit on common input services under Rule 6(5) of the CENVAT Credit Rules, 2004 at the time of clearances of such fertilisers - alleged contravention of N/N. 1/2011-CE dated 01.03.2011 - HELD THAT:- Rule 6(5) of the CCR is a special provision allowing CENVAT credit on certain specified services such as maintenance or repair service, transport of goods by road service, security service etc. It has an overriding effect over the sub-rules (1), (2) and (3) of Rule 6 of CENVAT Credit Rules, 2004. The only limitation prescribed in the said sub-rule (5) is that the specific services should not be exclusively used in or in relation to the manufacture of the exempted goods. In the present case, it is observed that the appellant has utilized the said credit availed on the specified services only for payment of duty on other dutiable products such as Phospho Gypsum, Sulphuric Acid and Phosphoric Acid, which are removed by the Appellant on payment of Central excise duty at normal rate. The restriction mentioned in Rule 6(5) of the CENVAT Credit Rules, 2004 is not applicable to the Appellant. Accordingly, the availment of CENVAT CREDIT of input services as provided under Rule 6(5) of the CENVAT Credit Rules, 2004 would not be a bar to avail the benefit of concessional rate of duty as provided under Notification No. 1/2011-CE. The Appellant is eligible for the concessional rate of duty @1% available in terms of the Notification No. 1/2011-CE. Accordingly, the demand of duty confirmed in the impugned order is set aside. Since, the duty demanded is not sustainable, the question of demanding interest and imposing penalty does not arise. The impugned order is set aside - appeal allowed.

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• 2024 (6) TMI 494
  Recovery of Central Excise duty with interest and penalty - distribution of credit of tax paid on royalty charge - time period for issuance of issuance of SCN - HELD THAT:- It is seen that the notice covers the period after December 2007 in addition to a few months prior to extend to all credit taken on tax paid on royalties for five years till issue of notice that there is no justification offered for inclusion of the period after December 2007 in the notice till the normal period of limitation commences as relevant date in terms of section 11A of Central Excise Act, 1944. Consequently, save for credit assigned to Unit I during the normal period of limitation of one year computed in accordance with show cause notice dated 3rd August 2012, and credit assigned between August 2011 and December 2011 the proceedings stand barred by limitation. Thus the scope of disputation is, this, restricted. The submissions of the noticee that procedural infirmities should not stand in the way of substantive entitlement and that the law, as it stood then, did not envisage proportional distribution of credit were not dealt with in the impugned order. It would also appear that decisions supporting these propositions now produced before us had also not been placed before the adjudicating authority. It would, therefore, be appropriate for a the legality of the proposals in the notice to be decided afresh and limited to the period validated by section 11A of Central Excise Act, 1944 - the impugned order is set aside - matter remitted back to the original authority to be adjudicated afresh after hearing the assessee on their submissions. Appeal is allowed by way of remand.

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• 2024 (6) TMI 493
  Valuation of goods - inclusion of trade discount in the assessable value - HELD THAT:- It is found that a strange concatenation of facts here the facilities offered by the buyer for installation of equipment which is, actually, to the benefit of such buyer and the discount offered by appellant which, certainly, is not gain to the seller and contrived hyphenating of the two without any justification for concluding that the amount of trade discount is money value of the facilities at premises of customer. The benefit derived by each from burdening cost/loss on themselves are different and that there are two separate transactions does not appear to have crossed the minds of the lower authorities. The appellant has similar arrangements with oil marketing companies (OMC) and Thane Municipal Transport (TMT), to name a few. In MAHANAGAR GAS LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI II [ 2024 (3) TMI 341 - CESTAT MUMBAI] , it has been held that the appellants case is squarely covered under new Section 4(1)(a) of CEA which essentially permit different transaction values, unlike normal sales price existed prior to 1-7-2000, which has also been explained by C.B.E. C., vide its Circular No. 354/81/2000-TRU, dated 30-6-2000. There are no reason to sustain the order now impugned and is set aside - appeal allowed.

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• 2024 (6) TMI 492
  Clandestine removal of 536.134 MT of copper - diversion of imputs - existence of cogent and corroborative material establishing the fact of actual clandestine clearance or not - violation of principles of natural justice - availment of irregular Cenvat credit - time limitation. Clandestine removal - HELD THAT:- The allegations of clandestine removal of the final product of assessee are merely presumptive allegations. This Tribunal in Century Metal Recycling Pvt. Ltd. [ 2016 (1) TMI 967 - CESTAT NEW DELHI] has held that when there is no documentary evidence of clandestine removal of raw material i.e. transport details, buyer details, financial transactions etc. adduced, in the absence of the corroborative evidence, statutory records cannot be discarded merely on the basis of wrong interpretation and the presumption alleging the Cenvat credit as inadmissible is held unsustainable in that circumstance. In Suzuki Synthetics Pvt. Ltd. [ 2014 (11) TMI 990 - CESTAT AHMEDABAD] , the Tribunal observed that if the case of clandestine removal is to be sustained based on private records then the same is required to be supported by corroborative evidence with regard to purchase of raw material, manufacture of final goods, flow-back of money or identification of the buyers and their statement, etc. The ratio laid down in the above mentioned judgments is squarely applicable to the present case also as there is no corroborative and tangible evidence adduced by the department establishing clandestine clearance/diversion of input material by the assessee except the presumption about the same. Violation of principles of natural justice - HELD THAT:- Though the department has taken the plea that there are three test reports which supports the department s contention but it is observed that there is no apparent denial to the fact that the three of the samples picked up by the department were of irregular shape and were not homogenous at all and as is mentioned in CRCL Report itself. The sample as was picked up from the M/s. Nalwa Steel premises, the buyer of the assessee, the sample being absolutely homogenous and showing the result of 11.9% of copper content in the Ingot - Department has failed to show any cogent reason of concealing the M/s. Nalwa steels sample report. The adjudicating authority itself has held that not informing the assessee about M/s. Nalws Steels sample test report clearly shows that show cause notice has relied upon the test reports which did not favour the assessee. Non disclosing the vital fact of the report which supports assessee is held to be the violation of principal of natural justice. Wronful avaiment of CENVAT Credit - HELD THAT:- There is no evidence about transportation of 20.636 MT of ingots from the appellant to anybody else without payment of duty. No shortcomings have been noticed in the accounts maintained by the assessee. Thus, there is no iota of evidence or investigation made by the department to prove that the raw material of the assessee as shown to be consumed is an excess as compared to its consumption in the final products. There is no evidence even to show that the final products were clandestinely cleared by the assessee. In view thereof, the confirmation of the recovery of Cenvat credit alleging the same to be irregular for 20.636 MT of ingots to have been clandestinely removed is also not sustainable - the demand/reversal of availed Cenvat credit has wrongly been confirmed despite accepting the M/s. Nalwa Steels sample report. Extended period of Limitation - HELD THAT:- It is clear that department has produced no evidence about any evasion of duty by the appellant. The allegations of clandestine removal are held to have no supportive evidence. Admittedly, the assessee is a registered manufacturer. Returns were being regularly filed. Accordingly, the suppression of facts to evade duty has wrongly been raised against the appellant - the department has intentionally and wrongly concealed the correct test reports. In fact, the departmental adjudicating authority itself has appreciated the same while dropping the major part of demand - the demand, whatsoever has wrongly been confirmed on the assessee. Clearly the present is not the case of suppression of facts or misrepresentation as is alleged - the extended period of limitation has wrongly been invoked. The SCN itself is barred by time - Appeal allowed.

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• 2024 (6) TMI 491
  Reversal of CENVAT Credit - services used in or in relation to manufacture of dutiable final products and for exempted services, as provided in Rule 6 of Cenvat Credit Rules, 2004 - non-maintenance of separate records/inventory for the inputs/ input services - HELD THAT:- In case of CCE, DELHI VERSUS M/S INDRAPRASTHA GAS LIMITED [ 2017 (11) TMI 1391 - CESTAT NEW DELHI] Delhi Bench in identical case while dismissing the appeal filed by the revenue, observed identical issue decided in the case of CST, DELHI VERSUS MACHINE TOOLS (I) PVT LTD [ 2017 (8) TMI 833 - CESTAT NEW DELHI] , where it was held that it is clear that no credit is available on any input service attributable to trading during the material time. When no such credit is eligible, the respondent cannot avail the benefit of cenvat credit scheme. There are no merits in the impugned order - appeal allowed.

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• 2024 (6) TMI 490
  Goods supplied against international competitive bidding are chargeable to nil rate of duty - Exemption under N/N. 06/2002-C.E. dated 01.03.2002 as amended and N/N. 06/2006-C.E. dated 01.03.2006 as amended - extended period of limitation - HELD THAT:- From the permission letters issued by the Assistant Commissioner, it is observed that the Assistant Commissioner has categorically allowed the appellant to clear the goods without payment of duty and the appellant has also intimated the clearance details in the E.R.-1 returns filed by them. Therefore, it is found that the appellant has not suppressed any information from the department. Thus, the intention to evade payment of duties does not exist in this case. Hence, the demand of Central Excise Duty confirmed in the impugned order by invoking the extended period of limitation is not sustainable. The demand in the instant case has been raised for the period from 2005-06 to 2006-07 vide the Show Cause Notice dated 07.04.2010. Thus, the entire demand confirmed in the impugned order is barred by limitation. Hence, the entire demand of duty confirmed in the impugned order is liable to be set aside on the ground of limitation. Since, the demand itself is not sustainable, the question of demanding interest and imposing penalty does not arise. The impugned order is set aside on the ground of limitation - appeal allowed.

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• CST, VAT & Sales Tax

• 2024 (6) TMI 489
  Slump sale - sale or not - taxability. Whether the slump sale under the BTA would amount to sale of goods within the purview of the MVAT Act so as to be taxed, as held by the impugned order? - Whether the Reviewing Authority was within its jurisdiction under Section 25 of the MVAT Act to vivisect the BTA? - Whether the impugned order would stand vitiated or rendered illegal when tested on the provisions of law and the grounds as raised by the petitioner? HELD THAT:- The jurisdictional facts for the levy of VAT were certainly not satisfied in the review authority passing the impugned order. Thus, the reviewing authority has acted in excess of jurisdiction in exercising its powers under Section 25 of the MVAT Act in vivisecting the BTA. It is also clear to us that as per se slump sale under the BTA would not amount to sale of goods within the meaning of the MVAT Act, the reviewing authority could not have dissected or attempted to reconstruction of the BTA in the manner as done in the impugned order. When the reviewing authority intended to confine itself to the value assigned to the intangible assets as contained in Schedule 3.3 read with Section 3.3 and Section 2.5, the same has been borrowed / copied from the service tax demand notice in ad-verbatim manner. This is clear from the comparative extracts of the service tax demand notice and the extract of the impugned order and more particularly from perusal of paragraphs 13 to 26 and 30 to 31 of the impugned order when examined against paragraph 4, 5.1 to 5.4, 6.1 and 10 of the Service Tax demand notice, where the impugned order has clearly copied and pasted the findings and reasoning as contained in the service tax demand notice issued to the petitioner in regard to BTA. The amounts qua each of such intangible items as specified in Schedule 3.3 certainly could not have been regarded as the itemized amounts of sale price received by the petitioner on sale of goods, as would be understood in the usual course of business, much less considering that it is the sale of business in its entirety as comprehended under the BTA. For such reason, it was completely a flawed approach on the part of the reviewing authority to tax such part of the BTA considering the same to be petitioner s sales/turnover of sales, for the financial year 2010-11 qua the amounts of the intangible assets as set out in schedule 3.3 of the BTA. Thus, in the context of the BTA, the reviewing authority could not have regarded such intangible items to be in any manner sale of goods , so as to fall within the petitioner s turnover of sales. We may also observe that merely for the reason that schedule C of the MVAT Act under item 39 provides for goods of intangible or incorporeal nature that would not mean that de hors the context the BTA intended to achieve, the reviewing authority could not have arbitrarily singled out and/or picked up Schedule 3.3 and tax the items in question as contained therein to be the petitioner s turnover of sales for the said financial year. It would not be permissible for the reviewing authority to disintegrate the BTA and to attribute a different effect to the BTA which was far from realistic and in fact destructive of the BTA. Thus, in the facts of the present case slump sale under the BTA would not amount to sale of goods within the purview of the MVAT Act, attracting any tax in the manner as held in the impugned order - the impugned order is illegal and cannot be sustained, it is accordingly required to be set aside. Petition allowed.

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• 2024 (6) TMI 488
  Jurisdiction of the respondent to levy tax - compounding of tax evasion - violation of principles of natural justice - HELD THAT:- Though the learned counsel for the petitioner has relied on several judgments in support of his case to show that the assessment order has not been done and neither is the reassessment been done. The same would not apply to the petitioner in the present case for the reason that the petitioner had not approached this Court to show that the assessment order is not done or reassessment has not been done after subjecting himself to the statement agreeing to pay the penalty amount, CF amount, the Entry Tax amount as well as the VAT amount, by subjecting himself to the compounding of the offence under section 82 of the Act, which deals with compounding of the offence and pursuant to such compounding of the offence, the entire case is closed and nothing survives in view of the fact that the petitioner has compounded the offence which is forthcoming by the records produced by him, which nowhere depicts that he had paid such amount by way of any protest or taken any defence anywhere stating that it was under duress. Petition dismissed.

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• Indian Laws

• 2024 (6) TMI 487
  Applicability of the MPID Act to Co-operative Banks - Financial Establishment under Section 2(d) of the MPID Act - fraud practised while distributing loans - HELD THAT:- Merely because a co-operative bank to which the provisions of the BR Act are applicable by virtue of insertion of Section 56(a) with effect from 01.03.1966 or by virtue of amendment coming into effect from 01.04.2021 thereby transforming into a non-obstante clause, cannot be said to have been excluded by implication from the ambit of the MPID Act, in view of the definition of Financial Establishment contained in Section 2(d) of the MPID Act. True it is that any co-operative bank registered under the Central or State legislature to which provisions of BR Act are applicable, would be under supervision of the RBI. However, one cannot lose site of the fact that the BR Act merely seeks to have a control over the functioning of all the banking companies or the co-operative banks, however, it does not contain any specific provision defining any act or provide for any punishment for the offences which are punishable under Section 409, 420, 467, 468 and 471 read with Section 34 of the Indian Penal Code. Only some acts have been made punishable by making the offences cognizable as mentioned in Section 47. Consequently, it cannot be said that the purpose for which MPID Act has been brought in the statute book stands served by bringing the co-operative banks registered under the State legislature within the sweep of the BR Act. Both these enactments operate in different spheres. The Criminal Writ Petition is dismissed.

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• 2024 (6) TMI 486
  Acceptance of bid in a tender for providing manpower based on pricing and inclusion of GST - Scope of judicial review - HELD THAT:- It is not in dispute that the petitioner nos.1 and 2 have quoted a bid of 1.18, as against which, the bid of the respondent no.2, was of 1.03 which would indicate that the bid of the respondent no.2, was less than that of the petitioner nos.1 and 2. It would be clear from the language of clause 10 (B) of the NIT that the GST, would be payable, over and above this figure, as the NIT does not indicate the GST to be included in the financial bid, it being a statutory imposition, which is payable, by every successful bidder, over and above, the bid amount. The principles of judicial review in tender matters, are very narrow and it is not permissible for the Court, to read into the terms of the NIT, which is not reflected. There are no merit in the present petition so as to interfere - petition dismissed.

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