Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 16, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Validity of assessment order - Period of limitation of 3 years u/s 73 of GST - the three years period ends only on 30.09.2021 within which since the order dated 08.07.2021 has been passed it is saved by limitation. - Insofar as other merits of the case like submission of supporting documents etc., this Court need not go into those aspects and that matter has to be necessarily gone into by the appellate authority before whom the petitioner can file appeal under Section 107 of the Act. - Petition dismissed - HC
Income Tax
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Nature of loss from purchase and sale of share - speculation or non speculation loss - ITAT held that deployment of funds in the instant case is more in the business of money lending from where the interest was earned and further the income earned from sources other than share transactions and also in treating the loss so incurred by the assessee-company as non-Speculation Loss and Explanation to provision of Section 73 of the Income Tax Act, 1961 is not applicable in this case - order of ITAT confirmed. - HC
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Deduction u/s 10B(7) r.w.s. 80IA(10) - Denial of deduction as assessee is having “more than the ordinary profits” - The judicial pronouncements clearly makes it mandatory for the Revenue to prove that there is some special arrangement between the assessee and its associated enterprise to earn extra profit and this burden of proof has not been discharged by the Department. - No additions - AT
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Disallowance of set-off u/s 70 of share trading business loss against income from profession - the assessee has been able to substantiate that the shares were purchased for the purpose of trading and earning profit and not for purpose of holding them as investment to earn capital gains/dividend income. This is this is evident from the fact that during the first year itself, almost all of the scripts purchased by the assessee were sold by him - we hold that the CIT(A) has erred in facts and law in holding that the loss from sale of shares was short-term capital losses and hence not eligible for set of against income from profession of the assessee - AT
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Scope of re-assessment proceedings u/s 147 - Benefit of exemption u/s. 10(23C)(iiiae) proposed to be denied - addition on account of Cash deposited in the Bank account - the additions made by Ld. Assessing Officer on other grounds not finding part of reasons for reopening assessment, are liable to be set-aside. - AT
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Reopening of assessment u/s 147 - eligibility of reasons to believe - the sole basis for the AO to form reasonable belief of escapement of income is, Tax Audit Report filed by the assessee along with return of income, which was very much available with the AO, when he had completed assessment proceedings u/s.143(3) of the Act. - notice issued by the AO u/s.148 of the Act, and consequent assessment proceedings u/s.147 of the Act, are bad in law - AT
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Validity of assessment - notice u/s. 143(2) was issued by the AO having no jurisdiction over assessee - Since in the instant case said Instruction of CBDT has not been followed and the ITO having no jurisdiction over the assessee issued notice u/s. 143(2) of the Act, the same is bad in law and thus, the assessment proceedings becomes void ab initio. - AT
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Periphery Development Expenses - Disallowance of expenses as only objection raised by the ld. AO is that some of the expenditure debited by the assessee cannot be termed as exclusively for the purpose of the business - The expenditures have been incurred under the guidance of District Periphery Development Committee as well as Periphery Development Society. - the ld. 1st Appellate Authority has appreciated the nature of the business, i.e. mining of Iron Ore, vis-à-vis incurrence of these expenditures - the additions were rightly deleted - AT
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MAT Computation - Addition to the book profit - no person can be permitted to gain from his own mistake either deliberately or intentionally or otherwise done. Giving a pedantic interpretation to the book profit as mentioned in the Explanation would be the antithesis to the purpose, for which it was enacted by the legislature and would result in absurdity and contradictions. Hence amount which was rightfully offered as income by the assessee during the assessment proceedings is also required to be added to the Book Profit for the purposes of section 115JB also - AT
Customs
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Smuggling - Baggage Rules - Bonafide baggage or not - Gold Jewellery - Liquor - one fails to understand, petitioners who claim to be pilgrims visiting an alien country would wear costly jewellery even if it be their customs - the fact that the petitioners also purchased 112 bottles liquor beyond the permissible limits and attempted to walk though the green channel without making declaration also shows that the visit to India by the petitioners were not purely as pilgrimage alone - Levy of penalty and redemption fine sustained - HC
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Classification of imported goods - used motor boats describing the same as Excursion Boats - boat can be classified as yacht or not - boats or vessel are not registered with MMD, since they are more than 20-25 years old and are of less than 20 tonnage - there is no report given by MMD that the impugned boats are yachts. - The impugned order, has erred in concluding that the imported boats are yachts classifiable under CTH 8903, cannot be sustained - AT
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Import of TV in CKD (unassembled) in parts - rejection of declared value - classification of branded assemblies - Customs Act, 1962 is not a law of morality; nor is it a law of property. It is intended to provide a framework and procedure for asserting the constitutional jurisdiction assigned for levy of duty on imported goods. The consistent thread in the several decisions cited by both sides is the applicability of the framework for assessment and permitting reconstructed depiction solely on evidence of attempted subterfuge. A motive must clearly be proved. The motive should also display disproportionate windfall from such subterfuge. Neither is on record here. - AT
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Benefit of exemption - scope of the term 'Machinery used for the production of a commodity' - denial of benefit on the ground that some of the key machines like Coil Winding Machine, Heat Press, Curing Drier, were not imported - following the various decisions, the benefit of exemption allowed - AT
DGFT
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Inclusion of provisions in continuation to Public Notice No. 10/2015-20 dated 24.05.2022 - additional provisions for allocation of Tariff Rate Quota (TRQ) of Crude Soya bean oil and Crude Sunflower oil for FY 2022-23 and 2023-24. - Public Notice
Indian Laws
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Enhancement of credit limit - Criminal Conspiracy - framing of charges against the Company - maintainability of prosecution proceedings against the company being a juristic person - This Court is of the considered opinion that if the trial is allowed to go, it will amount to gross miscarriage of the justice, since, the petitioner Company cannot be punished/sentenced after being held guilty of committing an offence being a juristic person. Therefore, there would be no purpose to proceed with the trial against the petitioner. - HC
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Dishonor of Cheque - acquittal of the accused - The title “M/s” used in the complaint, affidavit-in-evidence, agreement dated 04.09.2010 and in the statutory notice, before the words “Zenith Constructions”, may also lead to an inference, that it was actually a partnership firm. In such circumstances, if it was not actually a partnership, but an individual proprietary concern, the burden to prove the same lay squarely on the complainant. On the other hand, the claim of the complainant that he was the sole proprietor of Zenith Constructions was also not denied by the accused. In view of this, it would only be appropriate to remit the matter to the Trial Court to clearly reach a definite finding whether the complainant is the sole proprietor of Zenith Constructions or not. - HC
IBC
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Scope of the "Point of difference" - Divergent views of the members of tribunal - matter referred to third member - appellant sight that more points to be included in the reference made to third member - this `Tribunal’ is of the earnest opinion that the said `impugned order’ cannot be termed by no stretch of imagination as `an Order’, in the teeth of culling out of `the point of difference’ (between the `Hon’ble Two Members of the Tribunal’) and formulating the same, is just a `Ministerial Act’ (`on Administrative Side’) of the `Tribunal’, without an entry upon any `Adjudicatory Process’. - No appeal is maintainable against the same - AT
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Maintainability of application - initiation of CIRP - While a written contract cannot be treated as a pre-requisite to proving the existence of financial debt, the Adjudicating Authority must be satisfied that the Corporate Debtor is not being dragged into Corporate Insolvency Resolution Process mala fide for any purpose other than the resolution of the Insolvency. In the present matter, there is no evidence to Allow or Admit present Application - Tri
Service Tax
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Correct calculation of tax liability - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - benefit of input tax credit - This ought to have been properly examined by the Designated Committee as unnecessarily the assessee is being denied is not of the right to settle the dispute under the Scheme - If the credit was lying un-utilized, the petitioner was entitled to pay 50% of the net amount that is the tax due from the petitioner. However, this has not been done. - Matter restored back - HC
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Recovery of Short paid Service Tax - taxability of reimbursements - The nature of service should make no difference to the taxability of reimbursements when Rule 5 under which the tax was demanded itself has been ultra vires by Supreme Court in the case of Intercontinental Consultants and Technocrats Pvt. Ltd. - the demands confirmed against the appellant do not survive - AT
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Refund of excess paid service tax - amount paid under mistake of law - it becomes clear that the amount is not the amount as would have been authorized by law. The adjudicating authority while denying the refund of said excess amount has invoked section 11B of Central Excise Act 1944. - The limitation of section will not be applicable. - AT
Case Laws:
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GST
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2022 (6) TMI 655
Violation of principles of natural justice - opportunity of hearing not provided - levy of penalty - HELD THAT:- It is clear from the record that Notice as well as order impugned was passed on the same date i.e. 06/01/2022. An opportunity of hearing has not been afforded to the petitioners and therefore, it is in breach of principles of natural justice. The petition requires consideration and hence, the same is allowed. The impugned order dated 06/01/2022 passed by respondent No.2 is hereby quashed and set aside. The petitioner shall appear before the authority within a period of three weeks from the date of receipt of this order - Petition allowed by way of remand.
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2022 (6) TMI 653
Violation of principles of natural justice - restoration of cancellation of registration of petitioner - time limitation - HELD THAT:- Following the earlier order passed by the learned Judge of this Court in a batch of cases in the matter of TVL. SUGUNA CUTPIECE CENTER VERSUS THE APPELLATE DEPUTY COMMISSIONER (ST) (GST) , THE ASSISTANT COMMISSIONER (CIRCLE) , SALEM BAZAAR. [ 2022 (2) TMI 933 - MADRAS HIGH COURT] where it was held that the petitioner is hereby directed to approach the Appellate Authority on the terms indicated in para 229 of the order made by this Court in the case of Tvl.Suguna Cutpiece Center case, where if such an appeal is filed within the time stipulated therein, the same shall be entertained and considered and final order shall be passed within the time stipulated therein. The petitioner is hereby directed to approach the Appellate Authority on the terms indicated in para 229 of the order made by this Court in the case of Tvl.Suguna Cutpiece Center case, where if such an appeal is filed within the time stipulated therein, the same shall be entertained and considered and final order shall be passed within the time stipulated therein.
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2022 (6) TMI 652
Validity of assessment order - Period of limitation of 3 years u/s 73 of GST - reversal of Input tax credit - assessment year 2017-18 - case of petitioner is that the assessing officer should have passed an order within three years period from the due date for furnishing of annual return for the financial year to which the tax was not paid or short paid or input tax credit wrongly availed etc. - HELD THAT:- Insofar as the limitation point raised by the learned counsel for the petitioner is concerned, as has been rightly pointed out by the learned Government Advocate, that, the three years period ends only on 30.09.2021 within which since the order dated 08.07.2021 has been passed it is saved by limitation. Therefore, that point cannot be canvassed by the learned counsel for the petitioner in favour of the petitioner. Insofar as other merits of the case like submission of supporting documents etc., this Court need not go into those aspects and that matter has to be necessarily gone into by the appellate authority before whom the petitioner can file appeal under Section 107 of the Act. This writ petition is not entertainable and accordingly it is dismissed.
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Income Tax
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2022 (6) TMI 651
Disallowance on account of bad debts written off - question Whether the Appellate Tribunal was right in deleting the disallowance on account of bad debts written off has not? been framed by the High Court, the Revenue has preferred the present Appeal - HELD THAT:- As considering the findings recorded by the CIT A that the written off amount as bad debts by the assessee was fraudulent and not genuine and since there is no further discussion by the High Court in the impugned order on the aforesaid, we are of the view that the High Court ought to have framed the aforesaid additional question so that the same could have been heard along with the other questions of law framed while admitting the appeal. In view of the above and for the reasons stated above and without expressing anything on merits on the proposed additional question, we set aside the impugned order passed by the High Court and we direct that the following question of law, namely, Whether the Appellate Tribunal was right in deleting the disallowance on account of bad debts written off be also dealt with and considered by the High Court along with the other questions of law in accordance with law and on its own merits.
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2022 (6) TMI 650
Nature of loss from purchase and sale of share - speculation or non speculation loss - ITAT held that deployment of funds in the instant case is more in the business of money lending from where the interest was earned and further the income earned from sources other than share transactions and also in treating the loss so incurred by the assessee-company as non-Speculation Loss and Explanation to provision of Section 73 of the Income Tax Act, 1961 is not applicable in this case - HELD THAT:- The Tribunal confirmed such finding of the CIT (Appeals) made on facts.In the circumstances, we find no substantial question of law arises on the said two questions. Disallowance u/s 14A r.w.r.8D - ITAT upholding the order of the CIT(Appeals) VIII, Kolkata in holding that the entire disallowance made by the Assessing Officer Rule 8D(2)(iii) of the Income Tax Act, 1961 is not applicable on this issue - HELD THAT:- Reading of the above finding of the tribunal which had approved the finding of the Commissioner of Income Tax (Appeals), we find that the tribunal has rightly taken note of the factual position and rejected the appeal filed by the revenue. That apart, the law under issue has been well-settled and under what circumstances the provision available under Rule 8D(2) can be made applicable and mechanical exercise of such power was held to be bad in law. Therefore, we find that no question of law much less substantial question of law arises for consideration on the third issue as well.
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2022 (6) TMI 649
Revision u/s 263 - Application for withdrawal was filed by the appellant-assessee through its managing director stating that after the order passed by the ld. PCIT-4, Kolkata u/s. 263 a fresh order u/s. 143(3)/263 dated 20.12.2019 was also passed by the AO and did not make any adverse decision or additions and concluded same as original assessment u/s. 143(3) and as such no grievance of the assessee against the order passed u/s. 263 - HELD THAT:- We, after perusal of above application and hearing the ld.DR on this issue since he has no objection for such withdrawal of appeal by appellant. This appeal may be treated as infructuous and dismissed on withdrawal. Appeal of assessee is treated as dismissed on withdrawn.
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2022 (6) TMI 648
Capital gain - applicability of provision u/s 50C - AO proceeded by adopting the stamp duty value rate as full value of consideration in light of provisions of section 50C - HELD THAT:- A perusal of the order of the ld. CIT(A) shows that the assessee raised objections before the ld. CIT(A) claiming that the Assessing Officer ought to have referred the matter to the Departmental Valuation Officer. We find that the ld. CIT(A) did ask the AO to get the valuation report from the DVO, which the Assessing Officer called from the DVO and the DVO determined the market value of the impugned property. Assessee submitted valuation report of some valuer, valuing the market value of the property at Rs. 5.50 crores. This valuation report was dismissed by the CIT(A) holding that when the same was available at the time of assessment proceedings and even at the time of filing the appeal, it was never submitted and only after receiving the valuation report from the DVO, the assessee has submitted this valuation report. Assessee did not point out any defect or error or infirmity in the determination of market value by the DVO. Though the stamp duty value is at Rs. 8,85,68,900/-, the same has been valued by the DVO at Rs. 12,86,55,700/-, which means that the DVO has put the value on a higher side than the circle rate - Appeal of assessee dismissed.
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2022 (6) TMI 647
Addition u/s 68 - AO is of the opinion that the assessee has failed to establish the genuineness and credit worthiness of the investor and proceeded by making an addition - HELD THAT:- The undisputed fact is that none appeared before the ld. CIT(A) who was convinced that the assessee did not want to pursue the appeal and, therefore, drew support from the decision of the Hon'ble Supreme Court in the case of B.N. Bhattachargee and Other [ 1979 (5) TMI 4 - SUPREME COURT] We are of the considered view that the first appellate authority ought to have considered the documentary evidence brought on record by the assessee. Therefore, in the interest of justice and fair play, we deem it fit to restore the appeal to the file of the CIT(A). The ld. CIT(A) is directed to decide the appeal afresh after affording reasonable and sufficient opportunity of being heard to the assessee. Appeal of the assessee is allowed for statistical purposes.
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2022 (6) TMI 646
Penalty u/s 271(1)(c) - deferred revenue expenditure did not pertain to the assessment year under consideration, it was not allowable and accordingly he disallowed the same - HELD THAT:- A perusal of the assessment order reveals that while making the addition of Rs.26,080/- on account of deferred revenue expenditure, no satisfaction has been recorded by the A.O. as to whether it is a case of concealment of particulars of income or furnishing of inaccurate particulars of income. We find force in the arguments of the Learned A.R. and the decisions relied on by the Learned A.R. On this score itself similar view is taken by Hon ble Karnataka High Court in the case of CIT vs. M/s. SSAs Emerald Meadows [ 2015 (11) TMI 1620 - KARNATAKA HIGH COURT] This decision is confirmed by the Hon ble Supreme Court reported [ 2016 (8) TMI 1145 - SC ORDER] - In this view of the matter, the orders of the authorities below are set aside and penalty is cancelled. Ground of appeal No.1 of the assessee is allowed. Power of CIT-A to Levy of penalty under section 271AAA - CIT-A deleted the penalty levied under section 271(1)(c) by holding that A.O. had erroneously applied the provisions of Section 271(1)(c) however directed the A.O. to initiate penalty proceedings under section 271AAA - HELD THAT:- We find an identical issue arose before the Hon ble Kerala High Court in the case of CIT vs., Eminent Enterprises [ 1992 (6) TMI 20 - KERALA HIGH COURT] as held that it is not open to the First Appellate Authority i.e., Ld. CIT(A) to set aside the order of the A.O. and order a remand or to give any directions. Thus we are of the view that the Ld. CIT(A) was not justified in giving direction to the A.O. to levy penalty under section 271AAA of the I.T. Act, 1961. We, therefore, set aside the order of the Ld. CIT(A) on this ground. Accordingly, ground of appeal No.2 of the assessee is allowed.
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2022 (6) TMI 645
Deduction u/s 80IC - claim of deduction at 100% on account of substantial expansion undertaken by the assessee - HELD THAT:- We find the Ld. CIT(A) while deciding the issue in favour of the assessee had relied on the decision of his predecessor in assessee s own case for the A.Y. 2011-12 [ 2021 (7) TMI 183 - ITAT DEHRADUN] and had followed the decision of Hon ble Himachal Pradesh High Court in the case of Stovekraft India vs., CIT [ 2017 (12) TMI 69 - HIMACHAL PRADESH HIGH COURT] . As decided in M/S. AARHAM SOFTRONICS [ 2019 (2) TMI 1285 - SUPREME COURT] Assessee having set up a new industry of a kind mentioned in section 80-IC(2) and started availing exemption of 100 per cent tax under section 80-IC(3) (which is admissible for five years) could start claiming exemption at same rate of 100 per cent beyond period of five years if it carried out substantial expansion in its manufacturing unit in terms of section 80-IC(8)(ix) within period of ten years.- Decided against revenue.
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2022 (6) TMI 644
Exemption u/s 11 - applicability of first proviso to section 2(15) to the micro finance activity carried out by the assessee - submission of the Ld.DR that the receipts from micro finance activity falls under the category of advancement of any other object of general public utility, if it exceeds the specified limit of Rs.10,00,000/- during the year, the said activity cannot be considered to be charitable activity - HELD THAT:- CIT(A), by following the decision of ITAT in assessee s own case [ 2017 (12) TMI 1218 - ITAT VISAKHAPATNAM] as passed an order held that the micro finance activity of the assessee falls under the category of relief of the poor and not under the category of advancement of any other object of general public utility within the meaning of sec.2(15) of the Act. It is accordingly held that the first proviso to sec.2(15) is not applicable to the case of the assessee. Consequently, it is held that the assessee is eligible for exemption u/s 11 of the Act. Hence, the AO is directed to allow exemption u/s 11 of the Act. These grounds of appeal are therefore allowed. Disallowance of capital grant expenses, loans write off expenses, loss on sale of bus, loss on valuation of fixed assets and Gradatim software expenses debited to income and expenditure account in the nature of capital expenditure on the ground that the exemption u/s 11 is denied - HELD THAT:- CIT(A) allowed all the above said five disallowances, since the assessee is entitled for exemption u/s11 of the Act and gave a direction to the AO to delete the additions made on account of the above said five disallowances. The Ld.CIT(A) further stated that, once the assessee is entitled for exemption u/s 11, these disallowances are not warranted. Therefore, we do not find any infirmity in the order passed by the Ld.CIT(A). Thus, we dismiss the ground Nos.3 to 7 raised by the revenue.
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2022 (6) TMI 643
Deduction u/s 54F - non-disclosure of capital gain arising out of sale of agricultural land in her return of income - controversies revolve around the two major issues being exempt income from sale of agricultural plots and deduction u/s 54F for capital gain earned from the sale of non-agricultural plots which has been decided by the CIT(A) in favour of the appellant - HELD THAT:- As it is a fact that none of the document has been considered by the Ld. AO to whom the remand report was sought for. It is also acceptable by us that 20 days time is not sufficient enough to give a comment on the set of additional documents submitted by the assessee before the Ld. CIT(A) by the Ld. AO and to prepare a remand report upon due application of mind to enable the Ld. CIT(A) come to a valid conclusion. We find that reasonable opportunity has not been provided to the Ld. AO on this aspect which goes to the root of the matter and therefore, in the absence of such compliance as mandated in the statute the impugned order passed by the Ld. CIT(A) cannot be given a stamp of approval by us. Hence, in our considered opinion the matter required to be remanded to the file of the Ld. AO for proper adjudication of the issues. We, therefore, set - aside the order passed by the CIT(A) and restore the issue to the file of the Ld. AO to decide the same afresh upon giving an opportunity of being heard to the assessee and upon considering the additional evidences so adduced by the assessee or any other evidence which the assessee may choose to file at the time of hearing of the matter. We also make it clear that the assessee would also not seek for any unnecessary adjournment before the Ld. AO and would cooperate with best of his abilities to get the issue resolved. Revenue s appeal is, therefore, allowed for statistical purposes.
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2022 (6) TMI 642
Deduction u/s 10B(7) r.w.s. 80IA(10) - Denial of deduction as assessee is having more than the ordinary profits - HELD THAT:- A.O in this case has not brought out why the profits of the assessee will not considered as ordinary profits in the course of business. The A.O has specifically not demonstrated any proof of arrangement for disallowance under the provisions of sec. 10B(7) r.w.s. 80-IA(10) of the Act. The judicial pronouncements clearly makes it mandatory for the Revenue to prove that there is some special arrangement between the assessee and its associated enterprise to earn extra profit and this burden of proof has not been discharged by the Department. In view thereof, we do not find any reason to interfere with the findings of the ld. CIT(A) and the relief provided to the assessee is sustained.
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2022 (6) TMI 641
Exemption u/s 11 - Charitable activity u/s 2(15) - HELD THAT:- We find that the assessee is a Parishad namely The Uttar Pradesh Awas Evam Vikas Parishad which has been incorporated by the Legislative Assembly vide Uttar Pradesh Awas Evam Vikas Parishad Adhiniyam 1965. The scope of activities to be performed by the Parishad are strictly circumscribed by the provisions contained under section 15 of the said very enactment under the head function of the board and through the Parishad it is the Government of Uttar Pradesh itself which has been carrying on the objects of general public utility, in due discharge of its functions, duties and thereby it has acquired the status of a State under Article 12 of the Constitution of India - HELD THAT:- As in the case of assessee itself for assessment year 2015-16, the case of the assessee was reopened u/s 148 and Assessing Officer has again examined the activities of the assessee and has granted exemption u/s 11 of the Act. Also relying on provisions of section 10(46) CBDT itself has granted exemption u/s 10(46) on the similar activities being undertaken by different assessees. In this respect reliance was placed on the notifications issued by CBDT in the case of Yamuna Expressway Industrial Development Authority and Greater Noida Industrial Development Authority. CBDT has examined the activities of these organizations and has issued notifications exempting the income u/s 10(46) of the Act - activities being undertaken by assessee are similar to the activities being undertaken by the assessee. In view of all these facts and circumstances assessee be allowed exemption u/s 11 of the Act. We find that after noting down the detailed arguments of both the parties in appeals issue decided the issue of grant of exemption u/s 11 in favour of the assessee. Transferring certain amounts to IDRF account and was directly reflecting that account in the balance sheet and was not routing through the profit loss account - AO has added back these amounts while denying exemption u/s 11 - HELD THAT:- We find that this issue has already been dealt by the Hon'ble Allahabad High Court in the case of Lucknow Development Authority [ 2013 (9) TMI 570 - ALLAHABAD HIGH COURT ] has held that the money transferred to this fund is to be utilized for the purpose of project as specified by the committee having constituted by the Government and the same could not be treated to be belonging to the authority or the receipt is taxable in its hand.
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2022 (6) TMI 640
Penalty u/s 271(1)(c) - furnishing inaccurate particulars of income - addition of capital based on the particular furnished in the revised return - argument of assessee before us is that the assessee has not furnished any inaccurate of particular of income. As such the assessee voluntary before any detection or show cause notice to be issued by the Revenue disclosed correct amount of the capital gain by revising the return of income or by furnishing the revised computation of income - HELD THAT:- We are in agreement with contention of the learned AR that assessee has revised the computation of income voluntary though case of the assessee at that time was selected for the limited scrutiny vide notice dated 13th September 2016 but there was not issued any notices under section 142(1) of the Act by the Revenue. The revenue authority was not even reached to the any prima facie conclusion that the amount of capital gain was not fully offered in the return of income. But the assessee voluntary revised the computation of income when issue came to his notice and paid the due taxes. Therefore it is assumed that, though the assessee in original return committed mistake in furnishing inaccurate amount of capital gain but the same is bona-fide mistake which was done away filing revised computation. We also note that AO in assessment framed under section 143(3) made the addition of capital based on the particular furnished in the revised return. Therefore in the given fact and circumstances it cannot be held that the assessee has concealed the income or furnished inaccurate particular of income. We note that the Hon'ble Supreme Court in the case of CIT vs. Reliance Petroproducts Pvt. Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] discussed the term inaccurate particular by as the word 'particulars' must mean the details supplied in the return, which are not accurate, not exact or correct, not according to truth or erroneous . Thus, to arrive at the conclusion that, the assessee has furnished inaccurate particulars of income, it has to be tested whether the detail furnished in the return of income is incorrect or erroneous or falls. In other words the element of consciousness in furnishing inaccurate particulars of income coupled with circumstantial evidences should be present in the particular case. Unless, the characters of inaccurate particulars of income as discussed above are present in any particular case, the penalty provisions under section 271(1)(c) of the Act cannot be attracted. - Decided in favour of assessee.
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2022 (6) TMI 639
Disallowance of set-off u/s 70 of share trading business loss against income from profession - distinction between shares held as stock-in-trade and shares held as investment - HELD THAT:- From the assessee's conduct, it is evident that the shares were not purchased for purpose of holding them as investment and the fact that most of the shares were sold by the assessee during the first itself indicates that the assessee intended to purchase and sell shares as business activity and not to hold shares on long-term basis for earning capital gains or earning dividend income - CBDT has also issued guidelines for assessing officers on tests for distinction between shares held as stock-in-trade and shares held as investment vide office memorandum, dated 13.12.2005 [F. No. 149/287/2005-TPL] and one of the criteria mentioned therein is whether, the purchase is made solely with the intention of resale at a profit or for long-term appreciation and/or for earning dividends and interest and also the typical holding period for securities bought and sold. We see that in instant facts, almost all the shares which the assessee purchased during the year were sold by him. As noted above, out of 34 stocks purchased during the year, the assessee sold 32 of those scripts, which is a clear indicator that the intention at the time of purchase of scripts was to sell them at a profit. On the issue that the assessee has employed his own capital or reflected shares as investment, we note that in the case of CIT v Naishad I. Parikh 2013 (10) TMI 292 - GUJARAT HIGH COURT the Gujarat High Court held that where assessee claimed share trading and future options losses and further, assessee had substantiated entire transactions by furnishing valid and statutorily accepted documents, merely debiting directly these items in capital account instead of in profit and loss account and, not routing share trading account through audited account under section 44AB, could not be a ground to disregard legally acceptable claim of assessee. Therefore, the assessee has been able to substantiate that the shares were purchased for the purpose of trading and earning profit and not for purpose of holding them as investment to earn capital gains/dividend income. This is this is evident from the fact that during the first year itself, almost all of the scripts purchased by the assessee were sold by him - we hold that the CIT(A) has erred in facts and law in holding that the loss from sale of shares was short-term capital losses and hence not eligible for set of against income from profession of the assessee. - Assessee appeal allowed.
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2022 (6) TMI 638
Addition of difference in confirmations filed by the sundry creditors or non-satisfactory confirmations - HELD THAT:- AO by way of remand report dated 21.08.2014 and rejoinder dated 15.10.2014 has confirmed to have verified accounts of all 7 parties qua transactions with the Assessee by receiving the confirmations from the said creditors and the reconciliation statement given by the Assessee, therefore, considering the confirmations received from the parties, the Ld. Commissioner deleted the addition under challenge. Even otherwise we do not find any reason and/or material to controvert the finding of the ld. Commissioner in deletion of the addition under challenge. Consequently, ground No. 1 is dismissed. Addition u/s.40(A)(2)(b) on account of payment made to the interested parties - addition was made by the AO on account of disallowances u/s. 40(A)(b) of the Act and the Ld. Commissioner observed the said amount has been made in the nature of advance and not made towards expenses, hence, the provision of section 40A(2)(b) of the Act are not applicable - HELD THAT:- Commissioner that the Assessee's firm should have deducted the amount to its capital account but the same is not covered u/s. 40A(2)(b) of the Act. Ld. Commissioner accepted the claim of the Assessee to the effect that payment of Rs. 17 lakhs is not u/s. 40A(2)(b) of the Act as the amount of Rs. 9 lakhs is on account of payment made to Shri Virat Bhushan which was not debited to the partners capital account and Rs. 8 lakhs in the name of Ms. Shalini is the old balance as on 01.04.2009. However, the Ld. Commissioner held that the Assessee has not charged interest on the amount of advance to Ms. Shalini on which the interest is calculated @12% i.e. 96,000/- which is being disallowed out of interest paid by the Assessee firm and the same is being added back in the taxable income for the year under consideration. Commissioner and the Central Scrutiny report dated 17.04.2015 which was filed by the Revenue Department, may be inadvertently before the bench wherein with regard to the addition made in hand no appeal is recommended , and are inclined not to interfere with the conclusion drawn by the Ld. Commissioner on the issue in hand. Therefore, ground No. 2 stands dismissed. Addition u/s. 68 of the Act on account of deduction made from the creditors without disclosing in the current asset - amount made as advance for property, was also deducted from the creditors but the same should have been separately disclosed under the current asset - HELD THAT:- The owner of the property is Shri Vivek Bhusan in his individual capacity, hence, it cannot be shown as advance in the balance sheet of the firm. Whereas, the Assessee before the Ld. Commissioner reiterated its claim that the AO has accepted that it is a mere mistake on the part of the Assessee therefore he did not debit the amount to the capital account of Shri Vivek Bhushan, partner, who is owner of the property. In view of this fact, the said amount shown as advance against property has been debited to capital account of the partner during the FY 2011-12 relevant to Assessment Year 2012-13. Considering all the peculiar facts and circumstances of the case we do not find any reason and/or material to controvert the findings of the Ld. Commissioner. Even in the Central Scrutiny report dated 17.04.2015 on the issue under consideration 'no appeal was recommended' therefore, in totality we do not find any infirmity in the order of the Ld. Commissioner qua issue in hand. Hence, ground No. 3 also stands dismissed.
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2022 (6) TMI 637
Scope of re-assessment proceedings u/s 147 - Benefit of exemption u/s. 10(23C)(iiiae) proposed to be denied - addition on account of Cash deposited in the Bank account - AO has not made any additions and nor even discussed the issue on the basis of which the reassessment proceedings were initiated. - HELD THAT:- The Courts on various occasions have held that when on the ground on which reopening of assessment was based, no addition was made by Assessing Officer, then Assessing Officer could not make additions on some other grounds which did not form part of reasons recorded by him. The Hon'ble Supreme Court in the case of Pr. CIT v Lark Chemicals (P.) Ltd [ 2018 (10) TMI 382 - SC ORDER] . held that where High Court having noticed that order passed consequent to reassessment, had not confirmed addition attributable to reasonable belief of Assessing Officer while issuing reopening notice, and set aside the said reassessment order, SLP filed against decision of High Court was to be dismissed. In the recent case of Aishwarya Rai Bachchan [ 2022 (3) TMI 524 - ITAT MUMBAI] held that where AO recorded reasons on basis of which reassessment was initiated, but did not make any addition in reassessment proceedings, in such case primary reason to believe that income had escaped assessment would fail and reassessment could not be treated as a valid order. Again in ACIT v. Everest Education Society [ 2021 (2) TMI 223 - ITAT PUNE] ITAT held that where reasons recorded and notice issued under section 147/148 was with respect to underutilization of income of assessee trust for which there had been no addition made, but Assessing Officer made addition on account of 'anonymous donation' under section 115BBC, Assessing Officer having acted beyond his jurisdiction, and therefore Commissioner (Appeals) had rightly directed Assessing Officer to delete addition so made. Unexplained cash deposits in bank account - As no addition was made by Ld. Assessing Officer in respect of cash deposits made in the bank account of the assessee, which was the basis on which reassessment was initiated for the captioned year. Now, therefore once the Revenue has accepted the assessee's contentions in respect of the cash deposits, and has not made any addition on the basis of which reassessment was re-opened, and have proceeded to make additions on entirely different set of issues not forming part of notice issued u/s. 148 of the Act, the issue for consideration is whether additions made during reassessment proceedings can be sustained. In our considered view, in the light of Hon'ble Supreme Court's decision in the case of Pr. CIT v Lark Chemicals (P.) Ltd.[supra] and jurisdictional High Court in the case of CIT v. Mohmed Juned Dadani [ 2013 (2) TMI 292 - GUJARAT HIGH COURT] Assessing Officer is precluded from making the afore-said additions made in reassessment proceedings. In our view, once having accepted the assessee's version regarding cash deposit of Rs. 89,60,505/-, wherein Ld. Assessing Officer did not make any addition on that count in reassessment proceedings (in fact, this aspect of cash deposit of Rs. 89,60,505/- does not even find mention in the entire reassessment order), the additions made by Ld. Assessing Officer on other grounds not finding part of reasons for reopening assessment, are liable to be set-aside. Having held that additions made during reassessment proceedings deserve to be set aside on grounds of jurisdiction, we are not going into the individual grounds with respect to merits of the case. - Decided in favour of assessee.
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2022 (6) TMI 636
Reopening of assessment u/s 147 - eligibility of reasons to believe - TDS u/s 194I - non-deduction of TDS on payment made for machinery hire charges in excess of prescribed limits - HELD THAT:- In this view of the matter and by following the decision of M/s.URC Construction (P) Ltd. [ 2017 (4) TMI 1142 - ITAT CHENNAI] , we are of the considered view that, re-opening of assessments for the AYs 2007-08 2008-09, are bad in law and liable to be quashed, because, reasons recorded by the AO does not discernable that there is a failure on the part of the assessee to disclose fully and truly all material facts necessary for that assessments. Further, from the reasons, it is abundantly clear that the sole basis for the AO to form reasonable belief of escapement of income is, Tax Audit Report filed by the assessee along with return of income, which was very much available with the AO, when he had completed assessment proceedings u/s.143(3) of the Act. Therefore, we are of the considered view that under these facts and circumstances of the case, proviso to Sec.147 of the Act, come into operation and thus, we are of the considered view that notice issued by the AO u/s.148 of the Act, and consequent assessment proceedings u/s.147 of the Act, are bad in law and thus, re-assessment orders passed by the AO for the AYs 2007-08 2008- 09 are quashed. - Decided in favour of assessee.
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2022 (6) TMI 635
Validity of assessment - notice u/s. 143(2) was issued by the AO having no jurisdiction over assessee - HELD THAT:- As the assessee being a non corporate residing at Kolkata having income above Rs. 20 lakhs, the jurisdiction was with DCIT/ACIT and notice for selecting the case of the assessee for scrutiny u/s. 143(2) of the Act was only with ACIT/DCIT. Since in the instant case said Instruction of CBDT has not been followed and the ITO having no jurisdiction over the assessee issued notice u/s. 143(2) of the Act, the same is bad in law and thus, the assessment proceedings becomes void ab initio. We, therefore, quash the impugned assessment proceedings and allow the legal ground No. 1 raised by the assessee.
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2022 (6) TMI 634
Capital gain on sale of land - completion of sale - Return was selected for limited scrutiny assessment under CASS for the reason, sale consideration of property in ITR is less than sale consideration of property reported in AIR - HELD THAT:- As the transfer of the immovable property cannot be said to be complete till the deed is registered and it cannot be said to have been completed earlier because by virtue of s. 47 or section 75 of the Registration Act 1908. These sections, therefore, have nothing to do with the completion of a sale. The object of these sections is to decide which of two or more registered instruments in respect of the same property is to have effect. So far as the third parties like tax authorities are concerned, the relevant date will be the date of registration, when the transfer deed is get completed. Our observations made above, however, are subject to the applicability of provisions of section 2(47) of the Income Tax Act in relation to the definition of transfer under Income Tax Act which is to be seen in the peculiar facts and circumstances of each case. The gist of the discussion made above is that the proposition canvassed by Shri Surana, assessee that by virtue of provisions of section 47 and section 75 of the Registration Act, the transfer will be deemed to be complete on the date of presentation of the deed to the sub registrar is not well founded and is, therefore, repelled. So far as the contention the assessee that since the title of the assessee was defective, therefore, there was no transfer, we do not find any force in the above contention of the ld. counsel for the assessee. The registered sale deed executed in favour of the assessee by Shri Sujit Kr. Bindal has never been set aside by any court of competent jurisdiction. Though, the plea of the assessee is that his sale deed was not valid, whereas, the assessee, himself, has sold the above said property by way of three registered sale deeds to Priyanka Promoters and Developers. Moreover, the alleged gift executed by Shri Sujit Kr. Bindal allegedly to his brother, in our view, will not have any impact until and unless the registered sale deed in favour of the assessee by the said Sujit Kr. Bindal is not declared null and void by any court of competent jurisdiction. It is commonly known that the sale deed is registered in front of the Sub-Registrar and the seller admits the sale deed in the presence of witnesses who append their signatures in admission of witnesses. In this case also, the purchase deed in favour of the assessee is a registered deed which might have been presented and registered in the presence of witness before the Sub-Registrar, therefore, the plea of the assessee that the same did not confer title upon the assessee is frivolous at this stage. Assessee has transferred whatever the rights he has in the property to Priyanka Promoters and Developers by way of registered deed which constitutes transfer of capital asset as per the provisions of section 2(47) of the Income Tax Act. So far as the plea that there was a dispute relating to the title of the property, hence there was less saleable price of the property is concerned, we find that the said issue has not been properly considered by the ld. CIT(A). Though, it has been mentioned by the Ld. CIT(A) in the impugned order that the said Sujit Kr. Bindal has appeared before the Assessing Officer and had also furnished the copy of a suit filed against the Priyanka Promoters and Developers, however, no copy of the same has been produced on file before us. It is not clear as to who is/was in possession of the property in question. What are the allegations by the seller relating to the title of the property and whether those allegations/claim made by the original owner/seller had any bearing on the sale price of the property in relation to the sale deeds made by the assessee. Therefore, we restore the matter to the file of the CIT(A) with a limited direction that the ld. CIT(A) will make or cause to make such enquiry so as to ascertain the aforesaid facts and to find out whether there was any justifiable reason for the assessee to transfer the aforesaid property at a much lower rate than the market rate and what would have been the market/saleable value of the property under the circumstances and accordingly to decide this limited issue afresh in accordance with law. - Appeal of assessee allowed for statistical purposes.
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2022 (6) TMI 633
Periphery Development Expenses - Disallowance of expenses as only objection raised by the ld. AO is that some of the expenditure debited by the assessee cannot be termed as exclusively for the purpose of the business - CIT-A deleted the addition - HELD THAT:- To our mind, AO failed to appreciate the nature of the assessee's business and the atmosphere where he has been carrying out his business. The expenditures have been incurred under the guidance of District Periphery Development Committee as well as Periphery Development Society. Certain isolated instance of expenditure brought to our notice are not of personal nature rather they were incurred for keeping the harmonious atmosphere at mining site i.e. to give donation on festival or to help local authority in there functioning. These expenditure are to be seen in comparison of return of Rs. 234 crores of income shown by the assessee. Therefore, the ld. 1st Appellate Authority has appreciated the nature of the business, i.e. mining of Iron Ore, vis- -vis incurrence of these expenditures after considering the well reasoned finding of the ld. CIT(Appeals), we do not find any infirmity and, therefore, respectfully following the order of the Coordinate Bench in earlier years, we do not find any merit in this ground of appeal and it is rejected. Disallowance of Consultancy Charge - addition made as there is a relationship between the managerial staff of both the assessees i.e. assessee and Pushpak Financial Services Pvt. Limited and assessee failed to demonstrate the nature of services rendered by M/s. Pushpak Financial Services Pvt. Limited - CIT-A deleted the addition - HELD THAT:- AO himself has not disputed about the payments made by the assessee to M/s. Pushpak Financial Services Pvt. Limited. In other words, the existence of service providers has not been doubted. Now the issues are raised qua the transactions, the only passing reference made by the ld. AO in a non-speaking assessment order is that evidences depicting the nature of services provided to the assessee were not produced. It is pertinent to observe that the ld. Assessing Officer failed to appreciate the controversy in right perspective. He has not properly investigated the issue, rather in a hurried manner made the addition by making certain vague observation, which is running into few lines only. The assessee has submitted that service provider has suffered the taxes on the payments made by the assessee, both are taxable at the same rate. The invoices produced by the assessee depict the nature of services rendered by the service provider. In other words, the assessee has submitted that Pushpak Financial Services Pvt. Ltd. had provided managerial consultancy including verification of day-to-day business and banking transactions. If the magnitude of the business carried out by the assessee is looked into, vis- -vis the charges then it is just a normal charges paid by the assessee. We do not find any error in the finding of the CIT(Appeals) on this point and this ground of appeal is rejected. Disallowance u/s 40A(3) - Rates for sale of Iron Ore to different parties, he observed that the assessee had made sales to associate concerns at a lower rate than the sales made to other parties - HELD THAT:- AO has taken the rates of sales made to an independent party and observed that to the extent lower rate charged from associate concerns amounts to suppression of profit. He made addition to such profit to the income of the assessee. The details compiled by him for a comparative study of the rates were annexed at Annexure 'A' 'B' to the assessment order. Though these Annexures were not filed originally alongwith the appeal but during the course of hearing, ld. CIT(DR) had supplied copies of these Annexures to the Bench as well as to the ld. counsel for the assessee. We had taken them on the record. Suppression of Net Profit - HELD THAT:- In the present case, the ld. Assessing Officer has not applied any domestic transfer pricing concept. It was not available in this year. In the scheme of Income Tax Act, if by incurrence of such expenditure, some undue benefit is being extended to the sister concern, then claim of those expenditure could be disallowed. But nowhere it has been provided that assessee should earn deemed profit according to the calculation of the revenue official. In the present case, the assessee has not shown losses rather in the understanding of the Assessing Officer, he failed to show the profit as calculated by the ld. Assessing Officer. We have confronted the ld. D.R. to show us the provision under which the assessee can be compelled to make the sales to the sister concerns also at the market price or at the same price at which it was made to other concerns. Apart from the above observation, it is to be appreciated the circumstances under which such sales have been made. The assessee has obtained renewal of lease licence understanding that iron ore produced in his mines will be used in a captive plant. In that exercises, he has sold the goods to the plant of the sister concern. The third reasoning assigned by the ld. Commissioner is that independent buyers would buy the material according to their requirement, whereas M/s. Thakur Prasad Sao Sons Pvt. Limited was bound to purchase the raw material produced by the assessee. Therefore, the assessee was never required to find out the customer for the iron ore produced by him. He was also bound to achieve the targets put by Indian Bureau of Mines, so in case excess material was produced and not able to sell to the independent buyer, in that case his associate concern i.e. M/s. TPSL would procure all the material produced by the assessee. Undisclosed investment - HELD THAT:- A perusal of the above finding would indicate that the ld. CIT(Appeals) has deleted this addition after finding out that a particular amount has been accounted for twice. It is an arithmetical error which has been corrected and there cannot be any addition for such type of mistake under section 69 of the Income Tax Act. After going through the order of the ld. CIT(Appeals), we do not find any error in this finding and this ground of appeal is rejected.
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2022 (6) TMI 632
Late deposit of employees' share of contribution of ESI and PF - HELD THAT:- As there is no dispute between the parties regarding the date of deposit of PF ESI, which clearly is beyond the prescribed date of deposit as applicable under the relevant section of the I.T. Act. Further, there is no dispute between the parties that the deposits were made before the filing of return of income for the relevant assessment year. The Hon'ble Allahabad High Court, in the case of 'Sagun Foundry (P.) Ltd[ 2016 (12) TMI 1479 - ALLAHABAD HIGH COURT] has dealt with a similar issue and after taking into account the judgment of the Hon'ble Supreme Court in the case of 'CIT vs. Alom Extrusion Ltd.' [ 2009 (11) TMI 27 - SUPREME COURT] has decided the issue in favour of the assessee - there has been amendment in section 36(1)(va) of the Act, I find that the said amendment is applicable w.e.f. 1.4.2021 and is prospective in nature and not retrospective. - Decided in favour of assessee.
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2022 (6) TMI 631
MAT Computation - Addition of difference between income as per 26AS and as per books - Addition to the book profit while computing the same u/s.115JB of the Act - HELD THAT:- It is not the case of the assessee that the income shown in Form No. 26AS was not the assessee's income or was not required to be shown by the assessee in the books of account while computing the profit and loss statement. In other words, the income which was now shown and offered by the assessee as income of the assessee was required to be duly shown by the assessee in the book profit while preparing the accounts, including the statement of the profit and loss account in accordance with the Companies Act, 2013. Once the error was committed by the assessee in preparation of Profit and loss statement by not adding the entire amount shown in 26AS as income of the assessee either on account of omission, inadvertent error or by way of fraud which was otherwise required to be included in the statement of the profit and loss account, then it cannot be said that the said amount which was wrongly or deliberately or otherwise left to be included in the book of accounts, cannot be added to the book profit for the purpose of section 115JB of the Act. In our considered opinion, no person can be permitted to gain from his own mistake either deliberately or intentionally or otherwise done. Giving a pedantic interpretation to the book profit as mentioned in the Explanation would be the antithesis to the purpose, for which it was enacted by the legislature and would result in absurdity and contradictions. Hence amount which was rightfully offered as income by the assessee during the assessment proceedings is also required to be added to the Book Profit for the purposes of section 115JB also - Assessee appeal dismissed.
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Customs
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2022 (6) TMI 629
Seeking provisional release of imported goods - Goods detained on the ground of undervaluation and it was alleged that the declared value was only 10% of the actual value - HELD THAT:- Admittedly, permission to ware house the said goods imported under section 49 of the Act, was given on 01.06.2015 and summons dated 04.06.2015 under section 108 of the Act, came to be issued, calling upon the Director of the respondent / writ petitioner to appear for enquiry on 04.07.2015, which was a Saturday. Thereafter, no communication / show cause notice was issued nor the goods detained were released, according to the respondent / writ petitioner and therefore, they preferred petition seeking a mandamus to the appellants to release the subject goods in terms of section 110A of the Act. The learned counsel appearing for both sides made elaborate arguments, citing case laws, for and against the impugned order passed by the learned Judge, in directing the appellants to release the subject goods unconditionally. Ultimately, they fairly submitted that the same were raised only for academic interest and the Act was subsequently, amended and the subject matter in issue is pending consideration before the Hon'ble Supreme Court. It is also submitted that the subject goods lying in the custody of the Department, which are perishable in nature, have now, become obsolete and therefore, the same are of negligible value. This court is of the opinion that no further orders need be passed with respect to release of the subject goods at this stage, except directing the appellants to complete the adjudication proceedings, if not completed earlier, and pass appropriate orders, on merits and in accordance with law, as expeditiously as possible - Appeal disposed off.
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2022 (6) TMI 628
Smuggling - Baggage Rules - Bonafide baggage or not - Gold Jewellery - Liquor - whether the respective petitioners were required to declare jewellery items worn by them on their person after disembarking from the aircraft or were entitled to walk through green channel without making any declaration before the proper officer of the Customs Department? - levy of penalty - HELD THAT:- As per Section 80 of the Customs Act, 1962, a proper officer, at the request of a passenger, can detain any article in a baggage of a passenger which are either dutiable or the import of which is prohibited, in respect of which, a true declaration has been made under Section 77 for being returned on his leaving India and if for any reason, the passenger is unable to collect the article at the time of leaving India, the article may be returned to him through any other passenger authorised by him who would be leaving India or as cargo consigned to him - jewellery items are not articles of personal effect. Jewellery are any other articles other than the articles of personal effect . Therefore, the petitioners being tourist within the meaning of Rule 2(1)(v) of the said Rules are governed by Sub Clause (b) of the Rule 3 of Baggage Rules, 2016. The said Rule read with Annexure I makes it clear that gold or silver ornaments upto a value of Rs.50,000/- worn in person or carried on person are only freely importable. Import of gold or silver ornaments exceeding Rs.50,000/- cannot be considered as part of bonafide baggage of tourist travelling to India. The petitioner should have paid customs duty, if they intended to deliver, sell them or gift them to a person in India. On the other hand, if they intended to retain them, they should have requested the proper officer to detain them for being returned to them. The reasoning of the learned single judge of the Kerala High Court inVIGNESWARAN SETHURAMAN VERSUS UNION OF INDIA [ 2014 (12) TMI 268 - KERALA HIGH COURT] that The Customs Act, 1962 and the Baggage Rules, 1998 do not provide sufficient warning to foreign tourists entering India that wearing a gold chain is prohibited. The Act and the Rules do not even remotely indicate that a foreign tourist entering India cannot wear a gold chain on his person, in other words, foreign tourists entering India are in a boundless sea of uncertainty as to whether it is prohibited or not. As the Customs Act, 1962 and the rules framed thereunder contemplate confiscation and levy of penalty as also prosecution, the State has a duty to specify with a degree of certainty as to what is prohibited and what is not, without leaving it to the foreign tourist to guess what is prohibited and what is not . cannot be accepted. Further, one fails to understand, petitioners who claim to be pilgrims visiting an alien country would wear costly jewellery even if it be their customs - the fact that the petitioners also purchased 112 bottles liquor beyond the permissible limits and attempted to walk though the green channel without making declaration also shows that the visit to India by the petitioners were not purely as pilgrimage alone - the conduct of the petitioners attempting to walk through the green channel without proper declaration had raised serious doubts and thus proceedings initiated against the petitioners are in accordance with the provisions of the Customs Act, 1962. Petition dismissed.
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2022 (6) TMI 627
Classification of imported goods - used motor boats describing the same as Excursion Boats - to be classified under CTH 89011030 or under CTH 89039200? - boat can be classified as yacht or not - country of origin - HELD THAT:- It can be seen that the boat to be considered as a pleasure vessel or boat is to be owned and used by an individual or a body corporate for themselves or a group of people who are duly authorized or permitted - Whereas in the instant case, the boat is used for tourism purposes. It can be seen that Government of Andhra Pradesh, Port Department, Kakinada have issued a provisional certificate of registration to the boats imported by the appellants. The Department of Tourism, Government of Andhra Pradesh, Visakhapatnam have certified that the boats are imported by the appellants for the purpose of creating excursions and itineraries in Vizag to facilitate development of promotion of tourism in adventure. This being the case, it is not open for the department to consider the boats to be pleasure yachts to be used by a person or group of persons. The excursion boats are classifiable under 8901. Therefore, the classification arrived at by the Revenue cannot be sustained. The impugned order argues that boats or vessel are not registered with MMD. It is seen that in response to an application made by the appellants MMD inform that in terms of Merchant Shipping Act, 1958, the boats cannot be registered as they are more than 20-25 years old and are of less than 20 tonnage and as the area of operation is in Vizag, MMD Chennai cannot register them and they are to be registered locally only. It is found that the boats are registered by the Port Authority at Kakinada. As submitted by the appellant, there is no report given by MMD that the impugned boats are yachts. The impugned order, has erred in concluding that the imported boats are yachts classifiable under CTH 8903, cannot be sustained - the same are classifiable under CTH 8901 - Appeal allowed - decided in favor of appellant.
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2022 (6) TMI 626
Import of TV in CKD (unassembled) in parts - rejection of declared value - classification of branded assemblies - Recovery of Customs Duty - recovery under section 18 of Customs Act, 1962 or under section 28 of Customs Act, 1962 along with interest as applicable under setion 28AB of Customs Act, 1962? - enhancement of the assessable value solely on the ground that the imported goods aggregate as the finished goods and by adjusting the list price of the manufacturers of these goods at Singapore - confiscation - penalties - HELD THAT:- The impugned order has discarded the declared value for being associated with description of goods that did not find merit with the adjudicating authority; there is no allegation that the parts , of themselves, were undervalued. It is the finding that parts declared in the relevant bills of entry, taken together, are, in reality, branded assemblies classifiable against a tariff item in the First Schedule to Customs Tariff Act, 1975 other than that sought for in the relevant bills of entry that has prompted the finding of irreconcilability with invoice and, therefore, have the value therein rejected for assessment. There is, however, no finding that, physically and as presented, the goods are not parts even if they add up to finished goods upon assembly. The determination of the price itself is fraught with contradictions and presumptions. The adjudicating authority has relied upon appraisal of an interested party, viz., the domestic entities dealing with the brands that, allegedly, had been procured by the importers at Singapore - The computation, under the authority of best judgement in the impugned order, does not bear any resemblance to the framework within which such valuation should be re-determined. Consequently, the revised valuation is set aside. The critical aspect for clubbing rests entirely upon the establishment of fraud and deliberate subterfuge for, admittedly, nefarious purpose; the inculpatory statements of the parties to those transaction was found to suffice for holding that the decision of the Tribunal setting aside the clubbing had erred in placing reliance on an earlier decision of the Tribunal which, while finding affirmation by the Hon ble Supreme Court by distinguishment from the judgement in COMMISSIONER OF CUSTOMS, NEW DELHI VERSUS PHOENIX INTERNATIONAL LTD. [ 2007 (9) TMI 275 - SUPREME COURT] , did not apply to the facts of the dispute. Such evidence is sorely lacking in the records before us and the finding of the adjudicatory authority is a summation of several disjointed facts culminating in conjecture. None of the cited decisions permit detriment on the basis of such foray. In re Phoenix International Ltd, the subterfuge adopted to bypass the prohibition, vide paragraph 156 (A) of the EXIM Policy 1992-97 placing consumer goods in the negative list, was brought on record for setting aside the order of the Tribunal disapproving the clubbing of imported synthetic shoe uppers and soles and insoles from the same supplier at Bangkok. It is those very facts that distinguished the judgement therein from the facts in appeal before the Hon ble Supreme Court in COMMISSIONER OF CUSTOMS, NEW DELHI VERSUS SONY INDIA LTD. [ 2008 (9) TMI 19 - SUPREME COURT] . Customs Act, 1962 is not a law of morality; nor is it a law of property. It is intended to provide a framework and procedure for asserting the constitutional jurisdiction assigned for levy of duty on imported goods. The consistent thread in the several decisions cited by both sides is the applicability of the framework for assessment and permitting reconstructed depiction solely on evidence of attempted subterfuge. A motive must clearly be proved. The motive should also display disproportionate windfall from such subterfuge. Neither is on record here. The goods have been imported, and presented, separately and independently; no evidence, other than conjecture about the conspiracy to disassemble branded products, is on record. Appeal dismissed - decided against Revenue.
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2022 (6) TMI 625
Benefit of exemption - scope of the term 'Machinery used for the production of a commodity' - denial of benefit on the ground that some of the key machines like Coil Winding Machine, Heat Press, Curing Drier, were not imported - Benefit of N/N. 11/97-Cus at Sr No 143 - HELD THAT:- There is no dispute that these three machines are used in process of production of the finished products namely Electronic Plastic Film Capacitor and these three machines were imported to augment the existing production capacity of the appellant at various stage to streamline the production process. The phrase Machinery used for the production of a commodity. used in Notification No 153/86-Cus., dated 1-3- 1986, was considered by the tribunal in case of LAKHANPAL NATIONAL LIMITED VERSUS COLLECTOR OF CUSTOMS, BOMBAY [ 1996 (11) TMI 146 - CEGAT, NEW DELHI] where it was held that it is clear that the Tribunal has categorically held that the machine should produce a commodity for considering it as a `machine for production of the commodity . Therefore, the submissions made by the learned Advocate that all machineries means set of machines working conjointly to produce the commodity does not merit consideration. If such an interpretation is placed then all plants with series of machineries would get exempted. If the interpretation as placed by the learned Advocate is accepted then in circumstances, where a factory carries out a single process alone with a individual single machinery would get exempted. Such interpretation would create chaos and unintended benefit would flow to all factories, when the legislature has not intended to grant the benefit to machines carrying out an individual function alone without production of a commodity. In the case of COMMISSIONER OF CENTRAL EXCISE, MADRAS VERSUS KARUNA ACQUA FARMS [ 1997 (8) TMI 304 - CEGAT, MADRAS] it was held that the learned CCE(A) has rightly allowed the benefit of the Notifications to the appellants. Appeal allowed - decided in favor of appellant.
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Corporate Laws
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2022 (6) TMI 624
Seeking approval of the Composite Scheme of Amalgamation - Section 230 to 232 and other applicable provisions of the Companies Act, 2013 read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- This Tribunal is of the considered view that the scheme as contemplated amongst the petitioner companies seems to be prima facie in compliance with the provisions of the Companies Act, 2013. Further there seems to be no objection on the part of the shareholders that the Scheme is in no way detrimental to the interest of the shareholders of the Company. In view of absence of any other objections having been placed on record before this Tribunal and since all the requisite statutory compliances having been fulfilled, this Tribunal sanctions the Scheme of Amalgamation along with Company Petitions as well as the prayer made therein. The Learned Counsel for the Petitioner Companies submitted that no investigation proceedings are pending against the Transferor or Transferee Companies under the provisions of the Companies Act, 1956 or the Companies Act, 2013 and no proceedings against the petitioner companies for oppression or mismanagement have been filed before this Hon'ble Tribunal or erstwhile Company Law Board - Notwithstanding the above, if there is any deficiency found or, violation committed qua any enactment, statutory rule or regulation, the sanction granted by this Tribunal will not come in the way of action being taken, albeit, in accordance with law, against the persons concerned and also the directors and officials of the petitioners. The scheme is approved - company petition are allowed.
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2022 (6) TMI 621
Scope of the Point of difference - Divergent views of the members of tribunal - matter referred to third member - appealable order or not - appellant sight that more points to be included in the reference made to third member - Seeking Permanent Injunction restraining the Respondent No.1 and/or Vindhya Telelinks Limited from holding any purported `Extra Ordinary General Meeting of the 1st Respondent, proposed to be held at Kolkata on 19.06.2021 or on any other date - HELD THAT:- In the instant case on hand before this Tribunal, the point of difference, stated / formulated by the Hon ble Members of the National Company Law Tribunal dated 11.02.2022 in CP Nos. 112, 113 and 114/KB of 2021 is a mere statement upon a Ministerial Act and it is neither a preliminary order nor an interlocutory order and does not partake the character and status of an Order, as per Section 421 (1) of Companies Act, 2013. Further, the point of difference formulated by the Hon ble Members of the Tribunal on 11.02.2022 does not finally and conclusively determine the Right of Parties, in quite earnest, as opined by this Tribunal. Although, in the instant case, it is argued on the side of the Appellants that an Appeal lies against any Order passed by the Tribunal and therefore, the instant Company Appeal Nos. 67, 68 and 69 of 2022 are preferred before this Tribunal as against the Order dated 11.02.2022 made in CP Nos. 112, 113 and 114 of KB of 2021, because of the fact that the term, `any proceedings before the `Tribunal occurring in Section 420 (1) of the Companies Act, 2013, is wider than Judicial Proceedings, this Tribunal is of the earnest opinion that the said `impugned order dated 11.02.2022 of the Tribunal in CP Nos. 112, 113 and 114 of KB of 2021 cannot be termed by no stretch of imagination as an Order, in the teeth of culling out of the point of difference (between the Hon ble Two Members of the Tribunal) and formulating the same, is just a Ministerial Act (on Administrative Side) of the Tribunal, without an entry upon any Adjudicatory Process. It does not effectively determine any Right or Obligation of the Parties to the LIS. Apart from that, the impugned order dated 11.02.2022, passed by the Hon ble Members is nothing but a part and parcel of their Statutory Duty because of their occupational status enjoined upon them, in referring the matter to the Hon ble President of the Principal Bench of National Company Law Tribunal, to resolve the impasse in regard to the point of difference formulated by them and no opportunity is to be provided to the Parties for the purpose of hearing, when Section 419 (5) of the Companies Act, 2013, is conspicuously silent in this regard, of Hearing the Parties and also there is no requirement of supply of formulation of the point of difference framed by the Hon ble Members of the Tribunal on 11.02.2022 to the Parties. The appeal filed by the Appellants before this Appellate Tribunal are per se not maintainable in the eye of law and they are otiose one, because of the crystalline fact that the formulation of point of divergence is not an Appealable Order, pending rendering of an opinion/decision by the Hon ble Third Member (on the aspect of maintainability of CP Nos. 112, 113 and 114/KB of 2021 on the file of the Tribunal) in embarking upon the aspect of resolving the differences/controversies centering around the subject matter in issue. Resultantly, the instant Appeals fail.
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Insolvency & Bankruptcy
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2022 (6) TMI 623
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- It is undisputed fact that the Corporate Debtor has borrowed the funds from Respondent No.1 and the amounts claimed to be in default is approx. Rs. 216.95 Crore - Security held and certificate of registration of charges issued by Registrar of Companies is also not in dispute. At any point of time some acknowledgment of accepting its liability by Corporate Debtor exists that too within stipulated time period of three years (Article 137 of the Limitation Act, 1963). Hence, Section 18 of the Limitation Act, 1963 provides for a fresh period of limitation shall be computed from the time when the acknowledgment was so signed and hence the stand of the Appellant does not seem to be correct - Now, it is a settled law by the Hon ble Apex Court that the Code does not exclude the Application of Section 14 or Section 18 or any other provisions of Limitation Act. Hence, it can be firmly said that the provisions of Section 18 of the Limitation Act, 1963 are applicable to the proceedings under the Code and hence, the impugned order deserves to be upheld. Appeal dismissed.
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2022 (6) TMI 622
Jurisdiction - power/authority of Respondent No.1/Resolution Professional (RP) to freeze Bank Accounts - HELD THAT:- On going through the impugned order passed by the Adjudicating Authority (National Company Law Tribunal) Division Bench-II, Chennai, it is clear that the Adjudicating Authority had not addressed the legal aspect(s) of the matter that whether the Respondent No.1 / Resolution Professional had any authority in Law to freeze Bank Account belonging to the Appellant. Since that aspect of the matter was not addressed by the Adjudicating Authority and the same is conspicuously absent at the time of passing of the impugned order, this Tribunal , is constrained to interfere with the said order, and sets aside the same because of the fact that the Respondent No.1 / Resolution Professional, in Law has only An Authority to exercise control over Bank Accounts operated by the Corporate Debtor and not otherwise. Appeal allowed.
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2022 (6) TMI 620
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - whether the Petition under section 7 of the Code is barred by limitation or not? - HELD THAT:- It is apparent that transaction between the parties was purely financial in nature and from time to time the terms and conditions were also revised. Further, the balance sheet of the Corporate Debtor for the Financial Year 2018 -2019 reflects that there are admitted dues of the Financial Creditor, which are duly acknowledged by the Corporate Debtor - there has been continuous acknowledgement by the Corporate Debtor, which would extend the limitation period from time to time. From the records produced before the Adjudicating Authority, it is clear that there is a debt due and payable by the Financial Creditor to the Corporate Debtor and there is a default on the part of the Corporate Debtor - It is also apparent that there is an admission of debt by the Corporate Debtor through various documents as indicated herein. The present petition filed by the Financial Creditor is complete in all respects as required by law. The Petition establishes that the Corporate Debtor is in default of a debt due and payable and that the default is more than the minimum amount stipulated under section 4 (1) of the Code, stipulated at the relevant point of time - Petition admitted - moratorium declared.
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2022 (6) TMI 619
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- It is the contention of the Corporate Debtor s that there is no written contract regarding any loan being sanctioned to the Corporate Debtor by the Financial Creditors. In this regard, reliance placed on the stand taken by the NCLAT in NARENDRA KUMAR AGARWAL, SUMAN AGARWAL VERSUS MONOTRONE LEASING PRIVATE LIMITED, BIMAL KANTI CHOWDHRY IRP [ 2021 (1) TMI 717 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] wherein it was held that the written contract cannot be treated as an essential element or prerequisite to prove the existence of Financial Debt. The Financial Creditor has failed to bring on record any other evidence in the form of a loan agreement, promissory note, contract or any document to substantiate its claim that there was a financial debt and a default of the same. The Financial Creditor has produced the Corporate Debtor s Annual reports for the Financial Years 2016-17 and 2017-18. However, the same do not reflect any debt due specifically to the Financial Creditor - the Financial Creditor has placed reliance on its bank statements and confirmation of accounts of the Corporate Debtor that reflect transactions between the parties. However, in absence of any written document indicating the purpose of the said transactions, it cannot be assumed to have been towards a loan as claimed by the Financial Creditor. While a written contract cannot be treated as a pre-requisite to proving the existence of financial debt, the Adjudicating Authority must be satisfied that the Corporate Debtor is not being dragged into Corporate Insolvency Resolution Process mala fide for any purpose other than the resolution of the Insolvency. In the present matter, there is no evidence to Allow or Admit present Application - Petition dismissed.
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2022 (6) TMI 618
Seeking Liquidation of Corporate Debtor - violation of the Resolution Plan - HELD THAT:- On perusal of the record, it is seen that the successful Resolution Applicant has implemented half of the plan and according to the Respondents, payments have been made to the other creditors - the Respondents have given One Time Settlement offers to the Applicant, but the Applicant has refused to accept the same and has also refunded the amount given as guarantee. The conduct of the successful Resolution Applicant does reflect poorly on the successful Resolution Applicant and whether the successful Resolution Applicant should be given an opportunity to make the payments as resolved under the Resolution Plan is a very doubtful question. In the interest of the integrity of the process of resolution with an ultimate aim to allow the enterprise once again to stand on its feet, all the stakeholders should strive towards reviving the Corporate Debtor and avoid the liquidation to the extent possible.Hence, the successful Resolution Applicant is directed to pay the balance amount to the Applicant, as agreed in the Resolution Plan within two months from the date of this order, failing which an appropriate course of action shall be followed keeping the tenets of the code in right earnest - application allowed.
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PMLA
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2022 (6) TMI 617
Seeking grant of regular bail - Money Laundering - commission of predicate offences - disbursal of duty drawback on the overvalued exports subsequently leading to extra duty drawbacks - offences under Sections 132 and 135 of the Customs Act, 1962 - twin conditions as envisaged under Section 45 of the PMLA are applicable or not - HELD THAT:- In the matter of regular bail under Section 439 of the Cr.P.C., a Court must consider aspects, including but not limited to, the larger interest of the State or public, whether the accused is a flight risk, whether there is likelihood of his tampering with evidence, whether there is likelihood of his influencing witnesses, etc. Apart from these, another factor relevant would be the gravity of the alleged offence and/or nature of the allegations levelled, which may serve as an additional test that can be applied while keeping in view the severity of the punishment that the offence entails - It is equally well-settled that economic offences constitute a class apart and need to be visited with a different approach, given their severity and magnitude. Albeit these offences are likely to adversely impact the economic fabric of the Country. But each case must be adjudged on the basis of the peculiar facts and circumstances, while striking a balance between the right to personal liberty of the applicant and the interest of the society in general. The embargo imposed by Section 45(1) PMLA on grant of bail that has taken form of twin conditions (i) that the Public Prosecutor shall be given an opportunity to oppose the application for release, and (ii) where the Public Prosecutor opposes such application, the Court should be satisfied that there are reasonable grounds for believing that the accused is not guilty of the offence and that he is not likely to commit any offence while on bail. The limitations so imposed are in addition to those imposed under Cr.P.C. and have an overriding effect over the provisions of the Code, in case there occurred any inconsistency between the provisions of the two - Be that as it may, in 2017, the constitutional validity of Section 45 of the PMLA came to be challenged before the Supreme Court in Nikesh Tarachand Shah [ 2017 (11) TMI 1336 - SUPREME COURT ], wherefore, by a judgment rendered in 2018, explicating the defects inherent in the provision and the challenges posed thereby, the Supreme Court held that the twin conditions imposed by Section 45(1) of the PMLA were manifestly arbitrary, discriminatory and violative of Articles 14 and 21 of the Constitution of India. In the instant case, the offence is squarely made out against the applicant as DRI has already filed a complaint and cognizance has already been taken by the concerned Court. As per the allegations, the applicant is unique modus operandi to procure the goods from various places within India to export the same in the name of different firms/companies by inflating the value by several times. Two sets of invoices bearing the same serial number and dates were prepared. The invoices of inflated value were produced before Indian custom authorities and actual values were sent to consignee therefore on the basis of inflated values, extra duty drawbacks were claimed by accused other than what was admissible, and in this manner, Rs. 32.25 crores were fraudulently availed by applicant/accused - The DRI has already filed a complaint against the applicant and cognizance has been taken by the concerned Court and there is no challenge to the cognizance and, therefore, there is no force in the argument of the applicant that no schedule offence is made out. This Court finds no reasonable ground for believing that the applicant is not guilty of the alleged offence. From a prima facie view of the material placed on record and in light of the gravity of alleged offence, it cannot be said that the applicant is not likely to commit any such offence while on bail - Bail application dismissed.
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Service Tax
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2022 (6) TMI 616
Correct calculation of tax liability - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Works Contract - Erection Commission and Installation Services - benefit of input tax credit - opportunity of hearing not provided - HELD THAT:- The demand if any could have been restricted only to the net of the amount after adjustment of Rs.1,03,71,501 from Rs.3,49,09,640 less the amount deposited by the petitioner merely because the credit cannot be denied, provided the credit was validly availed. This ought to have been properly examined by the Designated Committee as unnecessarily the assessee is being denied is not of the right to settle the dispute under the Scheme - If the credit was lying un-utilized, the petitioner was entitled to pay 50% of the net amount that is the tax due from the petitioner. However, this has not been done. There is no discussion in the Impugned Order. There is no merits in the impugned order passed by the respondents by demanding a sum of Rs.1,54,20,216 from the petitioner. The rules contemplate hearing. The hearing is meant for proper determination of the amount to be paid by an assessee. The petitioner has not been heard - the impugned order is set aside - case remitted back to the jurisdictional officer to arrive at the proper amount to be paid by the petitioner in the provisions of the scheme. Petition allowed by way of remand.
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2022 (6) TMI 615
Refund of unutilized accumulated CENVAT Credit - time limitation - refund rejected on the ground that they have been filed beyond one year of date of invoice - Rule 5 of Cenvat Credit Rules, 2004 read with Notification No.27/2012 CE (NT) dt. 18.06.2012 - period April 2012 to December 2013 - HELD THAT:- In principle the issue of limitation or time bar in the impugned order stands settled in favour of the appellants in view of the Larger Bench decision in the case of CCE CST, BENGALURU SERVICE TAX-I VERSUS M/S. SPAN INFOTECH (INDIA) PVT. LTD. [ 2018 (2) TMI 946 - CESTAT BANGALORE] where it was held that in respect of export of services, the relevant date for purposes of deciding the time limit for consideration of refund claims under Rule 5 of the CCR may be taken as the end of the quarter in which the FIRC is received, in cases where the refund claims are filed on a quarterly basis. However, during the course of hearing learned consultant for the appellants could not produce documents to prove that the claims filed by the appellants were in time as enunciated by the larger Bench. Thus, it was not possible to verify the claim of the appellants that the respective refund applications have been filed within one year of realization of the export proceeds in the relevant quarter - this Bench will not be in a position to decide whether or not the different claims filed by the appellants are covered by the decision of the Larger Bench in the case of M/s. Span Infotech. For the limited purpose of verification of the relevant dates of realization of export proceeds and the dates of filing of the refund claims, the matter should go back to the original authority to verify the same and to grant applicable refund to the appellants in the light of the principle laid down by the Larger Bench in the case of M/s. Span Infotech - the appeals are allowed by way of remand to the original authority.
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2022 (6) TMI 614
Recovery of Short paid Service Tax - works contract service - taxability of reimbursements - demand of service tax on the entire amount including what has been paid by it to the third parties and is reimbursed by the client - HELD THAT:- The Commissioner has in the impugned order recorded that the appellant was claiming reimbursement. It is not the case of the Revenue that the appellant entered into a turnkey contract for the entire service and was hiring sub-contractors for various purposes. If such was the arrangement, the appellant would be the service provider and its service would be the entire package on which it would be liable to pay the service tax. The others would have been the sub-contractors to the appellant who would have been liable to pay service tax on the amounts they received for their services. In such an arrangement the services of others would have been input services to the appellant on which the appellant would have been entitled to avail Cenvat credit of the service tax paid by such sub-contractors. Revenue accepts that the appellant was receiving two types of payment one for its services and another towards reimbursement of the expenses which it incurred in hiring other service providers. Estimates of expenses to be incurred on the other service providers are approved by the client and the actual amounts incurred by the appellant are claimed by it as reimbursements from the client after submitting appropriate utilization certificates - In this arrangement, the only reason the Revenue sought service tax on the amounts reimbursed to the appellant by the client is that the appellant did not fulfill the conditions laid down in Rule 5 to qualify as a pure agent. However, it is found that Rule 5 itself has been held to be ultra vires of Section 67 by the Supreme Court in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] . The Commissioner sought to distinguish the appellant s case on the ground that the nature of services for which reimbursements were made in Intercontinental case were different from the case of the appellant. The nature of service should make no difference to the taxability of reimbursements when Rule 5 under which the tax was demanded itself has been ultra vires by Supreme Court in the case of Intercontinental Consultants and Technocrats Pvt. Ltd. - the demands confirmed against the appellant do not survive. The penalty imposed upon the appellant also needs to be set aside - Appeal allowed - decided in favor of appellant.
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2022 (6) TMI 613
Refund claims of accumulated credit - service tax paid on Commission Agent s service - rejection of refund on the ground of time limitation - relevant date for computing six months periods under N/N. 41/2007-ST - Section 11B of the Central Excise Act, 1944 - HELD THAT:- There is no dispute of the fact that the goods have been exported by the appellant during the period April 2008 to March 2009 by utilizing the services on which service tax was payable for the exported goods. The assessees have raised the contention that payment of service tax on commission agent service was made only on 31-3-2008 and 21.04.2010 and therefore refund claim is within the time limit of one year from the date of payment of service tax. A similar issue came up before Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, KANPUR VERSUS M/S PACIFIC LEATHER FINISHERS [ 2016 (2) TMI 727 - CESTAT ALLAHABAD] where it was held that limitation cannot start to run unless right to receive a claim or refund crystallized. In the present case, the right to claim/refund under Notification No. 41/2007-S.T. crystallized only when the service tax was deposited in October, 2008. Thus, the refund claim was filed within six months on 30-3-2009. Accordingly, we hold that the refund claim is within time. As issue has already been settled in favour of the appellant wherein it has been held that the relevant date for computing six months periods under Notification No. 41/2007-ST to be taken the date when service tax paid and not first day of month following quarter in which export made. Therefore, merely on the ground of limitation refund cannot be rejected. Appeal allowed - decided in favor of appellant.
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2022 (6) TMI 612
Refund of excess paid service tax - amount paid under mistake of law - claim rejected as the same has been filed after one year of the deposit invoking section 11 B of Central Excise Act, 1944 - HELD THAT:- It is observed that there is no denial on part of the Department about claim of appellant that the amount of Rs.2,83,505/- is an excess payment than the amount of tax to be deposited by the appellant. Consequently, it becomes clear that the amount is not the amount as would have been authorized by law. The adjudicating authority while denying the refund of said excess amount has invoked section 11B of Central Excise Act 1944. The bare perusal makes it clear that the Section applies for the refund of such amount which is an amount of duty or tax. As already observed amount in question is in the form of deposit. The issue is no more res-integra as has already been decided by this Tribunal in the case of R.S. CHEMICALS VERSUS COMMISSIONER OF CENTRAL EXCISE, NOIDA [ 2017 (4) TMI 884 - CESTAT ALLAHABAD] where it was held that the amount excess paid in December, 2003 is in the nature of Revenue deposit. Further, there is no limitation for refund of Revenue deposit - the refund claim is not barred by limitation. Even the decision of Hon ble Apex Court in MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA [ 1996 (12) TMI 50 - SUPREME COURT] , as has been relied upon by Commissioner (Appeals) has, while distinguishing the cases of refund into three broad categories, has clarified that in cases where the levy of a tax has been held to be (1) unconstitutional; or (2) void for want of inherent jurisdiction, it is open for the assessees to take advantage of the declaration of the law so made and claim refunds on the ground that they paid the tax under a mistake of law. This is because such claims are outside the ambit of the Excise Act. The limitation of section will not be applicable. Commissioner (Appeals) has wrongly applied the obiter-dicta of Mafatlal Industries case - Refund accordingly is held to have been wrongly rejected - appeal allowed - decided in favor of appellant.
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Central Excise
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2022 (6) TMI 611
Levy of penalty u/r 26 of CER, 2002 - allegation of facilitating Bluplast Industries Ltd. for taking fraudulent Cenvat Credit on the invoices issued by M/s Shah Foils Ltd. without supply of the goods - Rule 4(5) (a) of CCR - HELD THAT:- The charge was made of abatement in passing on fraudulent Cenvat Credit to M/s Bluplast Industries Ltd. on the invoices issued by M/s Shah Foils Ltd. without supply of the goods. It is found that on the same investigation and on the same facts a show cause notice was also issued to M/s Shah Foils Ltd. making the same allegation in the case of SHAH FOILS LIMITED, SHRI KARTIK R SHAH, SHRI RAMESH M SHAH VERSUS C.C.E. S.T. -SURAT-I, II, RAJKOT, AHMEDABAD-III [ 2019 (1) TMI 1162 - CESTAT AHMEDABAD ] that the M/s Shah Foils Ltd. passed on the fraudulent credit by issuing invoices without supply of the goods. The said charge was set aside by this tribunal and the same was upheld upto the Hon ble Supreme Court. Thus this tribunal in the case of M/s. Shah Foils Ltd. has held that the contention of the revenue is not sustainable regarding charge of issuance of invoices without actual clearance of goods. On this basis only present appellant were imposed penalty under Rule 26. Since, the tribunal in the above decision clearly held that the goods have been supplied along with invoices. The charges against the present appellants are not sustainable. The appellants are not liable for penalty under Rule 26 - Appeal allowed - decided in favor of appellant.
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2022 (6) TMI 610
CENVAT Credit - input services - service tax paid on outward goods transportation up to the premises of the buyer - place of removal - HELD THAT:- The issue is no longer res integra as submitted by the learned counsel for the appellants. The definition of input service under Rule 2 (l) of Cenvat Credit Rules, 2004 is quite comprehensive and encompasses every activity /service used in the provision of output services. Hon ble Apex Court in the case of COMMISSIONER OF CUSTOMS CENTRAL EXCISE AND SERVICE TAX, GUNTUR VERSUS M/S. THE ANDHRA SUGARS LTD. [ 2018 (2) TMI 285 - SUPREME COURT] held that outbound transportation from the place of removal gets covered by the definition of input service . Appeal allowed.
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2022 (6) TMI 609
Jurisdiction - power of Tribunal to review it s order - benefit of N/N. 29/89-C.E. dtd. 01.03.1989 - Applicability of benefit of Notification to Kerosene or not - classification of goods - classifiable under Chapter 2710.29 or under 2710.99 - case of appellant is that once it has been held and decided that the final products i.e. LABFS cleared by the Appellant to the manufacture of liner alkyl benzene (LAB) is classifiable under Chapter 2710.29 and not under 2710.99, the benefit of Notification No. 29/89-C.E. dated 01.03.1989 is available to the Appellant - levy of penalty - HELD THAT:- The present review application is filed by the applicant on the basis of Hon ble Supreme Court order in INDIAN OIL CORPORATION LTD. VERSUS COMMISSIONER [ 2016 (4) TMI 929 - SC ORDER] and the Hon ble apex court also held that if such review petition is filed within a month s time from today, the Tribunal is requested to decide those two abovementioned issues on merits, without reference to the period of limitation. It is also noticed that as per the provision of the Central Excise Act, Tribunal has no power to review the order. However, it is well settled law that all subordinate courts/tribunals/authorities were bound by the decision of the Apex Court until it was reviewed or corrected by the same court. The decisions rendered by the Apex Court being the highest judicial fora are binding on all subordinate courts. However, this apex court order can also be considered as remand for deciding the issue on merit. Considering the said facts, we now decide the issues on merits related to applicability of Notification No. 29/89-CE dtd. 01.03.1989 and legality of penalty of Rs. 36,00,000/- under Rule 173-Q of the Central Excise Rules, 1994 addressed by the Hon ble apex court. Whether the benefit of Notification 29/89-C.E. dtd. 01.03.1989 admissible to Applicant or not? - HELD THAT:- From the plain reading of above notification, it is clear that in above notification benefit was granted to the Kerosene falling under heading No. 27.10 of the Schedule of the Central Excise Tariff Act, 1985 (5 of 1986) intended for use in the manufacture of liner alkyl benzene or heavy alkylate. Clearly the above notification ibid is a conditional exemption notification, benefit of which is admissible subject to fulfillment of the conditions - Only product Kerosene falling under chapter heading 27.10 and consumed in the manufacture of linear alkyl benzene or heavy alkylate will be eligible for exemption under above Notification. Since the said factual position, related to conditions of notification cannot be ascertain at this stage specifically when the said issue was raised before the Tribunal first time. Now adjudicating authority must decide and verify the matter first whether products of applicant can be considered as Kerosene for the purpose of above exemption notification and thereafter, verify the use of products for manufacture of liner alkyl benzene / heavy alkylate. As per observations, the first issue is disposed off by way of remand to the adjudicating authority for passing a fresh order in the above terms - Adjudicating authority should complete the remand proceedings within three months of the receipt of this order and the applicant shall be allowed adequate opportunity of hearing and submission before a fresh decision is taken. Levy of penalty - HELD THAT:- It is a settled legal position that in cases where issue involved is the classification dispute and interpretation of rules / law /exemption notification are involved, no penalty can be imposed. In the present matter no penalty is imposable upon the appellant under Rule 173Q of the Central Excise Rules 1944 as the applicant has not violated any Rules / provisions with intention to evade payment of duty. It is only a matter of difference of opinion regarding classification of goods between the applicant and by the department. Therefore penalty needs to be set aside - Further, since the Applicant are public-sector undertaking, the allegation of mis-statement, or suppression of fact or contravenes provisions of Rule with intent to evade the payment of duty can not be alleged. Appeal allowed in part and part matter on remand.
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CST, VAT & Sales Tax
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2022 (6) TMI 654
Maintainability of petition - availability of alternative remedy of appeal - exclusion of period spent by the petitioner before this Court for the purposes of calculating the period of limitation before the Tribunal - HELD THAT:- The preliminary objection raised by the learned Advocate General, has to be sustained and the writ petition deserves to be dismissed on the ground of availability of an effective alternative remedy against the order impugned in the writ petition. However, there are merit in the argument raised by Mr. Z.A. Qureshi, learned senior counsel representing the petitioner on the issue that the period spent by the petitioner before this court be excluded for the purpose of calculation of limitation for filing the appropriate application before the Tribunal. Hence, it is directed that, in case the petitioner files the application(s) before the Tribunal seeking reference of question(s) of law arising out of the order passed by the Tribunal within 3 weeks from today, the period spent by the petitioner before this court in the present proceedings, shall be excluded, while calculating the period of limitation for the same. Petition disposed off.
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2022 (6) TMI 608
Validity of assessment order - reversal of Input Tax Credit (ITC) in terms of Section 19(2)(v) of the Tamil Nadu Value Added Tax Act, 2006 - HELD THAT:- The Division Bench of this Court in the case of THE STATE OF TAMIL NADU REPRESENTED BY ITS SECRETARY COMMERCIAL TAXES DEPARTMENT, THE DEPUTY COMMISSIONER (CT) (FAC) VERSUS M/S. EVEREST INDUSTRIES LIMITED [ 2022 (4) TMI 1204 - MADRAS HIGH COURT ] has decided the issue in favour of the assessee and it was held that Amendment Act 5 of 2015 is curative / declaratory in nature and would thus relate back to 11.11.2013, resultantly, the position insofar as the right of the manufacturers to avail ITC is, it becomes an absolute right, once the inputs are used in the manufacture or processing of the goods within the State, the subsequent event of the manufactured goods being sold by way of iner-state / intra-state sale would have no bearing nor does it result in imposing any limitation/restriction or whittle down the right to ITC earned in terms of Section 19(2)(ii) or 19(2)(v) of the TNVAT Act in the interregnum period. Thus, in view of the conclusion of the Division Bench of this Court to the effect that the amendment to Section 19(2)(v) is curative and declaratory, the petitioner is entitled to the relief as sought and the impugned assessment order is set aside - petition allowed.
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Indian Laws
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2022 (6) TMI 630
Enhancement of credit limit - Criminal Conspiracy - framing of charges against the Company - maintainability of prosecution proceedings against the company being a juristic person - Section 482 read with Section 397 of the Code of Criminal Procedure, 1973 - Section 227 of the Cr.P.C - HELD THAT:- The allegations are against the two officers, i.e. Accused No. 6, K. Ramakrishna and Accused No. 1, V.K. Maheshwari, who have already been discharged by the Coordinate Bench of this Court vide judgment and order dated 16th April, 2012 and 24th February, 2016, respectively. It is also an admitted fact that the allegation of the criminal conspiracy is between the petitioner company and the Accused No. 1, V.K. Maheshwari, who has been discharged by the Coordinate Bench of this Court. It is also an admitted fact that the petitioner company was charged for offence punishable under Section 120B/109/409 of the IPC read with Section 13(l)(d) and 13(2) of the PC Act. Therefore, one person all alone cannot commit an offence of conspiracy and be convicted for offence punishable under Section 120B of the IPC. Further, the offence punishable under Section 409 of the IPC could not survive anymore in view of the fact that Accused No. 1, V.K. Maheshwari, has already been discharged by the Coordinate Bench of this Court. This Court is of the considered opinion that if the trial is allowed to go, it will amount to gross miscarriage of the justice, since, the petitioner Company cannot be punished/sentenced after being held guilty of committing an offence being a juristic person. Therefore, there would be no purpose to proceed with the trial against the petitioner. In such an eventuality, jurisdiction of this Court under Section 482 of the Cr.P.C. comes to rescue. Petition allowed.
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2022 (6) TMI 607
Dishonor of Cheque - insufficiency of funds - rebuttal of Statutory presumptions under Sections 118 and 139 of NI Act - acquittal of the accused - HELD THAT:- It is settled position of law that a proprietary concern is not an independent juridical entity, apart from its proprietor. On perusal of the record including the evidence led by the parties, it is seen that the complainant, in the body of the complaint as also in the evidence, had categorically stated that he was the sole proprietor of M/s Zenith Constructions, which averments were not denied by the accused in the cross examination nor had he replied to the statutory notice issued by the complainant. However, it is also seen that absolutely no documentary evidence has been placed on record by the complainant to establish that he is the sole proprietor of Zenith Constructions which was a proprietary concern. The title M/s used in the complaint, affidavit-in-evidence, agreement dated 04.09.2010 and in the statutory notice, before the words Zenith Constructions , may also lead to an inference, that it was actually a partnership firm. In such circumstances, if it was not actually a partnership, but an individual proprietary concern, the burden to prove the same lay squarely on the complainant. On the other hand, the claim of the complainant that he was the sole proprietor of Zenith Constructions was also not denied by the accused. In view of this, it would only be appropriate to remit the matter to the Trial Court to clearly reach a definite finding whether the complainant is the sole proprietor of Zenith Constructions or not. An opportunity shall be given to the complainant to establish the fact that he is the sole proprietor of Zenith Constructions which is shown as payee in the cheque in question. The accused would also be questioned under Section 313 of the Cr.P.C. in the light of the evidence that may be adduced by the complainant in this regard and if so desired, to adduce evidence in rebuttal. After obtaining such further evidence, as may be adduced by the party/parties, the case shall be decided afresh in accordance with law, within three months from the date of appearance of the parties - The parties shall appear before the learned Trial Court on 20.06.2022.
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2022 (6) TMI 606
Dishonor of Cheque - non-issuance of summons of the revision on respondent/complainant - HELD THAT:- It is apparent from the record that in revision petition steps were not taken. The revision petitioner not only refused to take steps, but, asked for dismissal, and therefore, the revision petition was dismissed. Thus, there is no dispute that the matter was not decided on merits. Therefore, in order to sub-serve the ends of justice, the petitioner can be permitted to agitate his grievance in the revision petition on merits. However, record indicates that the petitioner has refused to take steps, as well as asked the learned Judge to dismiss his own revision, which speaks volume. It is desirable to restore the revision petition on certain terms, since revision petition was not decided on merits - Criminal Writ Petition is allowed.
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