Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 21, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
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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Non-service of detailed SCN - Validity of Summary show cause in Form GST DRC-01 - The contents of the said Summary show cause in Form GST DRC-01, dated 20.12.2018, does not provide the specific alleged violations by the Petitioner and also does not specifically give the opportunity to the Petitioner to rebut the allegations of the Respondent Department. Thus, in essence, the said Form GST DRC-01 dated 20.12.2018, cannot be considered as an opportunity provided by the Respondent to the Petitioner before passing of the Impugned Summary Adjudication order in Form GST DRC- 07 - Summary Order in Form GST DRC-07 quashed and set aside - HC
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Condonation of delay in filing the appeal before the First Appellate authority - Petitioner submitted that, SCN was not uploaded on the portal and Petitioner was not aware of the same - order passed under Section 74 of the Act on the ground of violation of principles of natural justice - appellant directed to file a statutory appeal within 15 days - HC
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Confiscation of vehicle alongwith goods - Evasion of GST in connivance with the transporter or not? - If the rectification application is considered and adjudicated, the question of considering connivance may not survive. However, for complete adjudication, the respondents must consider the question of connivance so that the petitioner can pursue all grounds for complete adjudication. - HC
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Valuation of supply - pure agent services or not - The activity of deploying trainees to the Company to undergo training is undertaken by the Appellant in his own interest as a NEEM Facilitator. While the NEEM Regulations make provisions for the NEEM Facilitator to partner with Companies/Industries to provide the training, it makes the Facilitator responsible for payment of stipend and for issue of the training completion certificate. The Regulations do not cast any responsibility on the Company or the Industry who is providing the practical training - The appellant do not fulfil the conditions and clauses of meaning of “pure agent” - AAAR
Income Tax
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Effect to the e-Appeals Scheme, 2023 - Prescribed income tax authorities shall exercise the powers and perform functions to facilitate the conduct of e-appeal proceedings, in respect of such persons or classes of persons or incomes or classes of income or cases or classes of cases, with respect to appeals covered under section 246 - Notification
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Manner of disposal of application for advance ruling - In case difference of opinion between the members, decision will be taken by Majority with the help of Third Member - e-advance rulings (Amendment) Scheme, 2023 - Notification
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Signing of Application for Advance Ruling - The condition of mandatory digital signature has been done away with - Income-tax (Ninth Amendment) Rules, 2023
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Reopening of assessment u/s 147 - Time limit for notice - Scope of new provision section 148A - The High Court following the decision of Apex Court has held that, since the time period for issuance of reassessment notice for assessment year 2013-14 stood extended until 30th June, 2021 and the income alleged to have escaped assessment is beyond Rs.50 lakhs, the first proviso of Section 149 (as amended by the Finance Act, 2021) is not attracted in the facts of this case - SLP of the assessee dismissed - SC
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Depreciation - Cost of acquisition - depreciation to be allowed on WDV of the predecessor or Revaluation of assets - Conversation of firm to a company - The assessee as per Section 32 r/w Rule 5 of the Act quoted above, will be entitled to claim depreciation in respect of any assets on the actual cost of the said assets. The actual cost of the said assets will be the actual cost which the assessee paid to the predecessor after revaluing the assets and certainly in our view assessee will be entitled to claim depreciation for the subsequent years on the basis of the actual cost paid. - HC
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Reopening of assessment u/s 147 - impugned order u/s 148A(d) as well as the impugned notice u/s 148 passed and issued in the name of non-extant entity - Constitution of proprietorship firm after Dissolution of Partnership Firm - The impugned order u/s 148A(d) and notice u/s148 were passed and issued against a non-extant entity, as such the same cannot be complied with. - HC
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Denial of benefit of section 11(1)(d) - Earmarked funds - To be treated as corpus donation or not - It is a well-settled position in law when a trust received a particular sum, which is earmarked, for a specific purpose, it constitutes nothing but a receipt to be treated as forming part of the corpus - Benefit of exemption allowed - AT
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Addition u/s 56(2)(viia) - purchase of shares of closely held company at 3.5 times of Book value - the provision of section 56(2)(viia) would be attracted in the case of a recipient firm or company which receives the shares of a company without any consideration or for a consideration which is less than the aggregate fair market value of the shares by an amount exceeding fifty thousand rupees. - CIT(A) rightly deleted the additions - AT
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Deemed dividend u/s. 2(22)(e) - nature of receipt - business transactions or loan - assessee company has received amount from another company having common and substantial shareholding - since the nature of transaction is business advances, addition cannot be made as deemed dividend - AT
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Exemption u/s 11 - Deemed income - Permissible Adjustment to be made by the CPC u/s 143(1) - The benefit of deduction of the deemed income specified u/s 11(3) is available to the assessee and therefore such adjustment cannot be made in the return of income under the provisions of section 143(1) of the Act. - AT
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Revision u/s 263 - carry forward of losses on sale of shares - where there are two possible views and the Assessing Officer has taken one of the possible views, no action to exercise powers of revision can arise, nor can revisional power be exercised for directing a fuller enquiry to find out if the view taken is erroneous. This power of revision can be exercised only where no enquiry, as required under the law, is done. It is not open to enquire in case of inadequate inquiry. - AT
Customs
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Simplified regulatory framework for e-commerce exports of Jewellery through Courier mode - Form HA modified - Courier Imports and Exports (Electronic Declaration and Processing) (Second Amendment) Regulations, 2023 - Notification
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Notification for Continuation of anti-dumping duty u/s 9A of the Customs Tariff Act, 1975 not issued - The decision taken by the Central Government not to impose anti-dumping duty despite a recommendation having been made by the designated authority for imposition of anti-dumping duty, cannot be sustained as it does not contain reasons nor the principles of natural justice have been complied with - Matter remitted back to the Central Govt. for fresh consideration - AT
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Validity demand of Customs Duty - non-application of mind while adjudicating the order - violation of principles of natural justice - As the order has been passed without taking into consideration the written submissions made by appellant, we find that the order has been passed without application of mind and needs to be sent back to the adjudicating authority for passing a speaking order taking into account all the submissions made. - AT
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Classification of goods proposed to be imported - Fuel Cell System to be used in manufacturing of Hydrogen Fuel Cells Vehicles - the Fuel Cell System which is made up of seven components viz. Fuel Processing System, Fuel cell stack module, Air Processing System, Thermal Management System, Electric module, FCS monitoring control and module and DC-DC Converter proposed to be imported by the applicant merits classification under CTH 85.01 and more specifically under CTH 8501 33 20 - AAR
DGFT
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DGFT amends the Policy for General Authorisation for Export of Chemicals and related Equipments (GAEC) - Paragraph 10.08 (ix) in the Foreign Trade Policy 2023 amended - Notification
IBC
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CIRP - Power to declare moratorium for prohibiting - Provisions of Section 14(1) shall not apply in respect of the Production Sharing Contracts, Revenue Sharing Contracts, Exploration Licenses and Mining Leases made under the Oilfields (Regulation and Development) Act, 1948 (53 of 1948) and rules made thereunder - Insolvency and Bankruptcy Code, 20 - Notification
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Withdrawal of CIRP after approval of Resolution Plan - whether the settlement Proposal u/s 12A (filed by Ex-Promoter) can be entertained deferring consideration of approval of Resolution Plan by the Adjudicating Authority - HELD No - SC
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CIRP - Prohibition on recovery proceedings against the Corporate debtor - A conjoint reading of the proviso to Section 14 of the IB Code and the provisions of Section 33 of the IB Code, would show that where the resolution plan is rejected or not accepted, the Tribunal is required to pass an order requiring corporate debtor be liquidated in the manner laid down in the chapter and carry out such other actions as mandated therein. - HC
SEBI
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Corporate Debt Market Development Fund - Net set of regulations in respect of Alternative Investment Fund set up and making investments, notified - Securities and Exchange Board of India (Alternative Investment Funds) (Second Amendment) Regulations, 2023 - Notification
Service Tax
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Adjudication of demand of service tax post GST era - submission of the appellants is that, in respect of the period when the Service Tax regime was in force, the proceedings should have been initiated prior to the repeal of the Service Tax regime on 01.07.2017, and that they could not be initiated after the said repeal of Chapter V of the Finance Act, 1994 - The contention of the petitioner dismissed - HC
Central Excise
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Classification of goods - mixed fuel oil (MFO) - Order of tribunal holding that, the MFO in the present case was classifiable under Tariff Heading 27101119 and Chapter 27 CETA sustained - there is no material to substantiate the revenue’s argument, that the product (MFO) conformed to the description of “other” motor oil which inter alia, was, after its admixture with any substance, other than hydrocarbon oil. On the contrary, the product was mixed with motor gasoline, which concededly is a hydrocarbon oil. - SC
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Remission of duty - loss of molasses due to natural causes - In the entire show cause notice, which is on record, there is no allegation that the petitioners had clandestinely removed the molasses in contravention of Rule 8 and had not paid the duty thereupon. - The duty cannot be levied u/s 11A of the Act even if the remission application is liable to be dismissed. - HC
Case Laws:
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GST
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2023 (6) TMI 835
Computation of profiteering - Constitutional Validity of anti-profiteering provisions contained in Section 171 of the G.S.T. Act and Rules - HELD THAT:- As rightly held by the learned Writ Court, if the prayer for stay of the impugned provisions is granted, it would tantamount to granting the main relief in the writ petition apart from the settled legal position that a statutory provision is deemed to be valid in law unless it is being struck down. However, the appellants restrict the prayer with regard to amount of profiteering as computed by the first respondent in the order dated 30th September, 2022 and have raised various issues, which are all on the merits of the matter, which can be decided only after affidavit in opposition is filed by the respondents in the writ petition. However, considering the fact that as against the order impugned in the writ petition, the appellants did not have any other alternate remedy and the appellants have also questioned the vires of the statutory provision, there will be an order of interim stay of the order passed by the first respondent dated 30th September, 2022 subject to the condition that the appellants deposit with the Registrar General of this Court a sum of Rs. 6 crores. On such deposit being made, Registrar General is directed to deposit the said amount in an interest bearing account and the same shall continue in deposit till the writ is disposed of and shall abide by the orders that may be passed in the writ petition. Appeal disposed off.
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2023 (6) TMI 834
Reversal of Input Tax Credit (ITC) - Availing ineligible input tax credit (ITC) - Necessary particulars as demanded were supplied or not - While it is the petitioner's case that those particulars have been supplied, learned Government Advocate would submit that the particulars have to be supplied in a tabulation that was specifically put to the petitioner - HELD THAT:- It is unclear as to whether the particulars have been supplied in this specific manner and whether the entirety of the supporting documents have been produced before the Assessing Officer - However, a perusal of the impugned order makes it clear that it is only in paragraph 5 onwards that the Assessing Officer has embarked on the determination/crystallisation of the amount to be reversed on a comparison of the ITC claimed under GSTR 3B and GSTR 2B. This determination, in the considered view of the Court, ought to have been put to the petitioner in the show cause notice itself prior to passing of the impugned order, such that the petitioner had been afforded sufficient opportunity to respond the same and, or provide details in support of the claim of ITC - Prior to the impugned order of assessment, what was exchanged was only general notices calling for particulars to which the petitioner is seen to have responded, albeit, insufficiently. Thus, and in the interests of substantial justice, impugned order of assessment dated 17.03.2023 is set aside and shall be treated as a show cause notice by the petitioner, who shall appear along with all details in support of the reversal under the impugned order on Thursday, the 13th July, 2023, at the specific request of the learned counsel for the petitioner, without expecting any further notice in this regard - This Writ Petition stands disposed off.
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2023 (6) TMI 833
Attachment proceedings under Section 83 of CGST Act - out of the total amount of Rs. 56,14,388, Rs. 46 lakhs came to be withdrawn by the respondents from the bank account of petitioner maintained with HDFC Bank - Requirement of pre-deposit - HELD THAT:- Having gone through the material placed on record, it would emerge that pursuant to the show cause notice issued under Section 73 of the Act, adjudication order dated 02.03.2022 came to be passed in FORM GST DRC 07, whereby, the petitioner was directed to make payment of Rs. 56,14,388/- within the stipulated time. It is not in dispute that the petitioner preferred an appeal under Section 107 of the Act after the period of limitation i.e. after a period of three months. Along with the said appeal, petitioner has also preferred separate application for condonation of delay. The said proceedings are still pending before the Appellate Authority. Now, it is the contention of the petitioner that, in the meantime, on completion of period of three months, the respondents have passed an order of provisional attachment under Section 83 of the Act and thereby amount of Rs. 46 lakh came to be withdrawn from the account of the petitioner maintained with HDFC Bank. It is the case of the petitioner that as per the provisions contained in section 107 of the Act, the petitioner is required to pre-deposit 10% of the amount of tax i.e. Rs. 3,55,334/-. However, the respondents have recovered an amount of Rs. 46 lakh and therefore it is prayed that the respondents be directed to refund the remaining amount of Rs. 42,44,664/- to the petitioner - such contention is misconceived in view of the provisions contained in Section 73(9) read with Sections 78 and 107 of the Act. Petition dismissed.
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2023 (6) TMI 832
Violation of principles of natural justice - non-service of SCN - detailed order in terms of Section 73 of the JGST Act not provided to petitioner - HELD THAT:- It is crystal clear that no show cause notice in terms of Section 73 (1) of the JGST Act, 2017 has been served by the Respondents upon the Petitioner towards imposition of the tax, interest and penalty under the JGST Act amounting to Rs. 8,04,134/- for the concerned period. The reliance of the Respondents on the alleged Summary show cause in Form GST DRC-01, dated 20.12.2018, is also of not much avail. The contents of the said Summary show cause in Form GST DRC-01, dated 20.12.2018, does not provide the specific alleged violations by the Petitioner and also does not specifically give the opportunity to the Petitioner to rebut the allegations of the Respondent Department. Thus, in essence, the said Form GST DRC-01 dated 20.12.2018, cannot be considered as an opportunity provided by the Respondent to the Petitioner before passing of the Impugned Summary Adjudication order in Form GST DRC 07. Similar issue was adjudicated by a Co-ordinate Bench of this Court in the case of Nkas Services Private Limited v. State of Jharkhand and Others [ 2021 (10) TMI 880 - JHARKHAND HIGH COURT] , wherein this Court has held A summary of show-cause notice as issued in Form GST DRC-01 in terms of Rule 142(1) of the JGST Rules, 2017 (Annexure-2 impugned herein) cannot substitute the requirement of a proper show-cause notice. The Appellate authority should have decided the case on merit and should have given its finding on the grounds of Appeal that DRC-07 has been issued without issuing any no show cause notice in terms of Section 73 (1) of the JGST Act, 2017 and also without any adjudication order. The Summary Order in Form GST DRC-07, dated 19.01.2019 bearing reference number ZA200119000232J, issued by the Respondent No. 4 whereby tax, interest and penalty under the JGST Act amounting to Rs. 8,04,134/- has been imposed on the Petitioner, is hereby, quashed and set aside - Application allowed.
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2023 (6) TMI 831
Cancellation of GST registration of petitioner - rejection of appeal only on the ground that the petitioner failed to file appeal within stipulated period of three months and failed to file online appeal as per the provision of GST Act - HELD THAT:- The petitioner has relied upon an unreported Judgment passed in Santanu Mondal -vs- The Superintendent, Central Goods and Service Tax, Asansol Division, Range-IV Ors. [ 2022 (9) TMI 1471 - CALCUTTA HIGH COURT] wherein the Appellate Court held that the assessing authority, being the Assistant Commissioner should take into consideration this fact and examine as to whether the registration of the appellant could be restored or not. Since the Appellate Authority has solely proceeded on the ground of limitation without touching the above-mentioned facts, the matter should be remanded back to the original authority for fresh consideration. In the present case also the Assessing Authority, the respondent no. 1 without considering the grievance of the petitioner had cancelled the certificate only on the ground that the petitioner has not submitted reply to the show cause and the Appellate Authority has dismissed the appeal of the petitioner on the ground that the appeal is barred by limitation and not filed through online process. In view of the facts and circumstances of the case, the order passed by the Appellate Authority dated January 27, 2023 as well as the order passed by the respondent no. 1 dated November 16, 2021 are set aside - respondent no. 1, the Assistant Commissioner of State Tax, Silliguri Circle is directed to consider the case of the petitioner afresh by giving an opportunity to the petitioner to file reply to the show cause notice and also to afford an opportunity of personal hearing to the petitioner and to pass a reasoned and speaking order on merits in accordance with law within a period of six weeks from the date of communication of this order - appeal disposed off.
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2023 (6) TMI 830
Condonation of delay in filing the appeal before the First Appellate authority - writ petition filed after the period of limitation for filing the appeal that too beyond the condonable period - SCN was not uploaded on the portal and Petioner was not aware of the same - order passed under Section 74 of the Act on the ground of violation of principles of natural justice - HELD THAT:- Considering the peculiar facts and circumstances of the case, liberty can be granted to the appellant to file a statutory appeal, more so when certain sums of money have already been recovered by the department from the electronic cash ledger. In the result the appeals are disposed of by directing the appellant to file a statutory appeal before the first appellate authority and if the same is filed within a period of 15 days from the date of receipt of the server copy of this order, the appeals shall be entertained without rejecting the same on the ground of limitation.
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2023 (6) TMI 829
Confiscation of vehicle alongwith goods - Evasion of GST in connivance with the transporter or not? - Rectification of error apparent on the face of the record as contemplated u/s 161 of the KGST Act - HELD THAT:- This Court will have to decide on whether the third respondent must be directed to consider the petitioner s application dated 18.11.2022 notwithstanding certain typographical errors, and whether the petitioner must be reserved with liberty to file affidavit to establish his case that he has not connived with the transporter and therefore there cannot be confiscation of the subject vehicle. If the rectification application is considered and adjudicated, the question of considering connivance may not survive. However, for complete adjudication, the respondents must consider the question of connivance so that the petitioner can pursue all grounds for complete adjudication. The petition stands disposed of, directing the third respondent to simultaneously adjudicate on the petitioner s rectification application dated 18.11.2022 notwithstanding the errors in mentioning the vehicle number in certain places in the application.
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2023 (6) TMI 828
Valuation of supply - pure agent services or not - entitlement to claim deduction of the reimbursement of amount of stipends and other expenses received from the NEEM Trainer from the value of supply - Rule 33 of the CGST Rules, 2017 - HELD THAT:- To qualify mere receiving payment under the cover of reimbursement of Stipend amount and other expenses incurred by the Appellant in accordance with AICTE (NEEM) Regulations to ensure wealth, safety and health of NEEM Trainees from NEEM Trainer as a payment received by a pure agent, all parameters prescribed in conditions and meaning stated u/r 33 of the CGST Rules are required to be fulfilled. In this case, despite giving enough opportunity, the appellant is neither able to establish that appellant was fulfilling conditions of pure agent . Appellant was not found to be duly authorized at the time of making payment of stipend on the behalf of the NEEM trainer/the recipient. There is only one supply of deployment of NEEM Trainees, whereas, administration of Trainees is ancillary work of deployment of NEEM Trainee, entire working is as per NEEM Regulation. The terms of the agreement make it clear that the expenditure of payment of stipend to the NEEM Trainees was on his own and not on the behalf of the NEEM Trainer. The appellant, as per NEEM Regulations, has the sole responsibility to engage NEEM Trainees and supply them to Trainer under separate agreements - As per terms of para 3 and para 5.1 (xiii) of the agreement with LG, stipend will be paid by company / NEEM Trainer to the appellant and by the appellant to the NEEM Trainees, respectively. Whereas, as per para 8(a) of the agreement with Interplex, payment of stipend will be made by company / NEEM Trainer to the appellant and as per para 8(b), stipend will be paid by the appellant to the NEEM Trainees. It is the Appellant who is obligated to pay the stipend to the trainees. Since the trainee has registered with the Appellant/NEEM Facilitator, it is the responsibility of the Appellant to deploy the trainee in a suitable industry to undergo training at the industry for a specific period and pay the stipend during the training period. The activity of deploying trainees to the Company to undergo training is undertaken by the Appellant in his own interest as a NEEM Facilitator. While the NEEM Regulations make provisions for the NEEM Facilitator to partner with Companies/Industries to provide the training, it makes the Facilitator responsible for payment of stipend and for issue of the training completion certificate. The Regulations do not cast any responsibility on the Company or the Industry who is providing the practical training - No doubt the terms of the agreement with the Company specify that the stipend amount paid to the Appellant is to be utilized only for the purpose of paying the trainees, but this does not make the Appellant a pure agent of the Company since the NEEM Regulations does not require the Company/Industry to pay a stipend to the trainees. Therefore, the Appellant does not satisfy the definition of pure agent as given in the explanation to Rule 33. The appellant do not fulfil the conditions and clauses of meaning of pure agent prescribed under rule 33 of the CGST Rules, 2017. Hence, the appellant is not allowable to claim deduction of the reimbursement of amount of stipends and other expenses received from the NEEM Trainer from the value of supply.
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Income Tax
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2023 (6) TMI 837
Disallowance of bogus loss incurred in penny stock - transaction was pre-arranged as well as sham and was carried out through penny script company/paper company - ITAT deleted the addition - HELD THAT:- Tribunal has considered the order passed by the SEBI and has observed that for the particular period mentioned, the script of M/s. VAS Infrastructure is blacklisted or is penny stock or sham and bogus scripts/shares - the assessee has purchased shares online through various brokers and the payments were made to brokers are reflected in the Bank Account. Also observed that the assessee had transferred the shares through online platform of stock exchange that too through broker. The report of investigation wing is much later than the dates of purchase/sale of shares and the order of SEBI is also much later than the date of transaction and the order of SEBI nowhere stated that the transaction at earlier dates as void. The entire transaction of purchase and sale of the scripts was through National Stock Exchange or Bombay Stock Exchange and that also through the authorized brokers. Tribunal has therefore opined that merely on the conjecture and surmises, the Assessing Officer cannot make disallowance. No substantial question of law - Decided against revenue.
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2023 (6) TMI 836
Revision u/s 263 - Bogus LTCG - CIT alleges failure of AO to investigate/verify details filed in respect of suspicious transactions on shares rendering the assessment so made to be erroneous in so far as it is prejudicial to the interest of the revenue - HELD THAT:- One cannot possibly say that the Assessing Officer had sleepwalked on the issues involved. Noticeably, the Pr.CIT himself has not entered into any minimal inquiry on the issues himself, if so considered expedient and there is not even prima facie demonstration of fallacy in the action of the AO which rendered the order erroneous and which also simultaneously caused prejudice to the revenue. Merely because the expectations of the Revisional Commissioner are purportedly not met, it should not, in our opinion, necessarily trigger revisional action u/s 263 of the Act in every case. Allegations in the revisional order are not justified and there is no systematic effort on the part of the Pr.CIT to support the allegations. A reference made on behalf of the Revenue in the case of Sudha Eashwar [ 2020 (1) TMI 771 - ITAT CHENNAI] is governed by its own set of facts. The applicability of Section 263 was not the subject matter of controversy therein. The shares were transacted through the intermediaries / Stock Brokers duly registered with the SEBI. The Pr.CIT has given undue considerations to the so called abnormal increase in the price by wrongly invoking the principles of preponderance of probabilities. It is trite that the degree or standard of proof required to establish a fact cannot be defined precisely. The drastic increase or decrease in the price of large number of shares in a given year is an ordinary phenomenon in the stock market where price discovery happens depending on host of uncertain factors both internal and external. SEBI is the watchdog for any manipulative actions in the stock market. The assessee has entered into meager transactions of sale of mere 15000 shares held by it and no adverse SEBI report is available implicating the assessee for any concerted or manipulative action which may give rise to any kind of suspicion of any fictions gains. The order of co-ordinate Bench does not tend to remove the fetters placed on the scope of Section 263 under consideration in the present case. Some inadequacy will not render each and every order erroneous on the touchstone of Section 263 where the extent of inquiry has been questioned by the Revisional Commissioner. The issue requires to be looked in the context and setting of facts in each case. Decided in favour of assessee.
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2023 (6) TMI 827
Reopening of assessment u/s 147 - Time limit for notice - Scope of new provision section 148A - mandatory procedure of Section 148A followed or not? - as per HC [ 2022 (9) TMI 883 - DELHI HIGH COURT] since the time period for issuance of reassessment notice for assessment year 2013-14 stood extended until 30th June, 2021 and the income alleged to have escaped assessment is beyond Rs.50 lakhs, the first proviso of Section 149 (as amended by the Finance Act, 2021) is not attracted in the facts of this case and even without the benefit of Instruction No.01/2022 the impugned notice is within limitation- HELD THAT:- Having gone through the impugned judgment and order passed by the High Court, no interference of this Court is called for. SLP dismissed.
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2023 (6) TMI 826
Nature of subsidy receipt - value of the MILIEV grant given by the Dutch government as a subsidy for purchase of wind turbine generator, could not be brought to tax in the hands of the assessee u/s.28(iv) - Tribunal accepting the letter of the broker that no off set credits were given to the assessee - Tribunal allowing the electricity charges paid to Wescare as a deduction - HC confirmed ITAT decisions. HELD THAT:- No case for interference is made out under Article 136 of the Constitution of India. SLP dismissed.
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2023 (6) TMI 825
Exemption u/s 11 - scope and amplitude of the definition charitable purpose - correct interpretation of the proviso to Section 2(15) charitable purpose - HELD THAT:- The impugned order does not call for interference, having regard to the law declared by this Court in the case of Assistant Commissioner of Income Tax (Exemptions) vs. Ahmedabad Urban Development Authority [ 2022 (10) TMI 948 - SUPREME COURT] . The special leave petition is accordingly dismissed. All pending applications are disposed of.
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2023 (6) TMI 824
Reopening of assessment u/s 148A - service upon the AO - petitioner failed to file any objections to the notice even though the opportunity and time of two weeks were granted to the petitioner to file objections - HELD THAT:- The period from the date of the impugned order dated 29/07/2022 till today will stand excluded or in any case; the timeline will stand proportionately extended. We clarify that we have not examined the merits of the matter because the same has to be examined by the AO. Needless to add, all contentions of all parties, including the defences available to the Assessee u/s 149 of the Income Tax Act and all rights and contentions that may be available to the Assessee and the Revenue in law. The rule is accordingly made absolute in terms of prayer clause b of this petition which reads as follows with liberty to the AO to make fresh order after considering petitioner s objections/response.
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2023 (6) TMI 823
Depreciation - Cost of acquisition - depreciation to be allowed on WDV of the predecessor or Revaluation of assets - Conversation of firm to a company - Consideration paid in shares in lieu of Cash - ITAT held that assessee is eligible for claiming depreciation on revalued assets - HELD THAT:- As for assessment year 2008-09, predecessor, i.e., the partnership firm has claimed depreciation for five months from 01/04/2007 to 31/08/2007 and successor, i.e., assessee has claimed depreciation for assessment year 2008-09 for the period from 01/09/2007 to 31/03/2008. If succession had not taken place during assessment year 2008-09 and the predecessor, i.e., the partnership firm would have claimed Rs. 1 crore as depreciation, both predecessor and successor for that year could claim together only Rs. 1 crore as depreciation and nothing more. Admittedly, this is what happened in the case at hand also. Appeal pertains to AY 2009-10 in which year the asset is clearly owned by successor, i.e., assessee. The assessee as per Section 32 r/w Rule 5 of the Act quoted above, will be entitled to claim depreciation in respect of any assets on the actual cost of the said assets. The actual cost of the said assets will be the actual cost which the assessee paid to the predecessor after revaluing the assets and certainly in our view assessee will be entitled to claim depreciation for the subsequent years on the basis of the actual cost paid. Appellant submitted that for the actual cost no money was paid but shares were issued in lieu of cash. Certainly that will be the cost which assessee has paid to procure the assets. This is the reason given by ITAT in the impugned order and we are in agreement with the view expressed by ITAT.
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2023 (6) TMI 822
Validity of Reassessment order u/s 148A - violation of principles of natural justice - no opportunity of personal hearing was granted to the assessee - HELD THAT:- Admittedly, no opportunity of personal hearing was granted to the assessee. In the order passed u/s 148A(d) there is a reference to certain transactions done by two companies. Admittedly, in the show cause notice there was no such allegation concerning these two companies qua the appellant/assessee. Also hearing was not fixed by the AO on 29.03.2022. But the show cause notice states that the e-response should be filed by the assessee not later than 29.03.2022. Therefore, this is also an error committed by the Assessing Officer. Thus there has been violation of principles of natural justice - The writ petition is allowed. The order passed u/s 148A(d) is set aside and the matter is remanded back to the Assessing Officer for fresh consideration.
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2023 (6) TMI 821
Reopening of assessment u/s 147 - impugned order u/s 148A(d) as well as the impugned notice u/s 148 passed and issued in the name of non-extant entity - Constitution of proprietorship firm after Dissolution of Partnership Firm - HELD THAT:- Petitioner filed his additional affidavit alongwith the supporting documents. In his said additional affidavit, the petitioner testified the above mentioned facts. Petitioner also placed on record a number of supporting documents including invoices raised by the Chinese exporters on the petitioner. Petitioner also placed on record copies of his Income Tax Returns pertaining to the Assessment Years 2005-06 to 2015-16, filed under his PAN [instead of PAN of dissolved firm]. The said additional affidavit, supported with a plethora of documents, it does not appear to be a case of deliberate concealment of facts. If the petitioner wanted to defraud revenue, he would not have declared the imports in books of accounts as proprietor of Kapoor Electric Mart. The impugned order u/s 148A(d) and notice u/s148 were passed and issued against a non-extant entity, as such the same cannot be complied with. The impugned order u/s 148A(d) and notice u/s 148 of the Act both dated 31.03.2023 are set aside. The respondents would be at liberty to take further steps in accordance with law.
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2023 (6) TMI 820
Rectification of mistake u/s 154 - AO did not include the surcharge and education cess in MAT credit - mistake apparent from record or debatable issue - HELD THAT:- The assessee s ground pertains to the issue whether MAT Credit is excluding surcharge and education cess or not. CIT(A) rightly pointed out that assessee has not filed any appeal against order u/s 143(1) and since the issue is a debatable issue therefore it cannot be rectified under section 154 of the Act, unless there is a mistake apparent from record. As gone through the above findings of Ld. CIT(A), and noted that there is no infirmity in the order passed by CIT(A), therefore, we dismiss the appeal of the assessee.
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2023 (6) TMI 819
Assessment in the name of company amalgamated - order was passed in the name of non-existent entity - HELD THAT:- Both the A.O. and the Assessee/appellant herein were aware of the amalgamation and the Representative of the Assessee has participated in the assessment proceedings. The assessment order came to be passed on 14.01.2015 in the name of M/s. Bioseed Research India Ltd. (since amalgamated with DCM Shriram Limited) . It is also gathered from the assessment order that, though order mentioned the name as M/s. Bioseed Research India Ltd., but in the bracket, it has also been mentioned that since amalgamated with DCM Shriram Limited . Accordingly it cannot be said that order has been passed in the name of non existing company as the name of the amalgamated company has clearly been mentioned by the AO in the assessment order. Assessee (M/s DCM Shriram Ltd.) has participated in the assessment proceedings and the A.O. has rightly mentioned the name of Assessee as M/s. Bioseed Research India Ltd. (since amalgamated with DCM Shriram Limited) and mere mentioning the name of both the Companies has not resulted in any hardship to the Assessee. Disallowance u/s 80IB(8A) - proof of carrying on research activities - royalty income from Hybrid Cotton Seeds - CIT(A) allowed deduction - HELD THAT:- As trade value received and paid by assessee in respect of technology of Mahyco Mansanto Biotech (I) Ltd. was separate from royalty income which have been received by the assessee company on which deduction u/s 80IB(8A) has been claimed - in the absence of anything on record to prove that the assessee has not carried out any research activities during the year under consideration in respect of Hybrid cotton seeds the disallowance has been deleted. The said observation of the ld CIT(A) neither erroneous nor suffers from infirmity, which requires no interference. Ground of the revenue dismissed. Disallowances u/s 80IB (8A) - miscellaneous income derived from operation profit - CIT-A allowed the claim - HELD THAT:- Since the Ld. CIT(A) has gone into the factual details of the miscellaneous income earned by the assessee and given a conclusion that the amount of Rs. 3,92,972/- is nothing but items of income related to research activities of the company, the same would be considered as business income on which the deduction u/s 80IB (8A) of the Act would be allowable, we find no error or infirmity in the order of CIT(A). Accordingly Ground of the Revenue is dismissed.
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2023 (6) TMI 818
Income from other sources - Additional compensation of land received by the assessee from HUDA - CIT(A) deleted addition - HELD THAT:- CIT(A) concluded that the enhanced compensation received by the assessee company from HUDA was also transferred to OILP in accordance with the collaboration agreement. CIT(A) before granting relief to the assessee also noted that the enhanced compensation received by the appellant has been duly offered to tax as income by OIPL under the head income from operation for F.Y. 2014-15 relevant to A.Y. 2015-16. We concur with the findings arrived by the Ld. CIT(A) that since the entire land rights were transferred by the appellant to OIPL and the enhanced compensation including interest thereon was offered to tax by OIPL after claiming deduction of 50% of interest u/s. 57 of the Act and the same income cannot be taxed in the hands of assessee. Decided against revenue.
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2023 (6) TMI 817
TP adjustment - international transaction relating to provision of software development services to the overseas AEs - Comparable selection - HELD THAT:- Larsen Toubro Infotech Ltd. cannot be comparable to the assessee as it is in diversified activities. The company has also developed various products and created marketing intangibles. Further, being a part of the Larsen Toubro group, it has substantial brand value. Infobeans Technologies Ltd.being functionally similar to the assessee, is a comparable. Cybercom Datamatics Information Solutions Ltd. company, in addition to software development services, is providing various other consultancy, advisory, technical and surveyor of information services. Whereas, segmental information relating to its activities are not available in the Annual Report. Considering the aforesaid factors, various Benches of the Tribunal, including Delhi Benches have excluded this company from being treated as comparables. Maintaining judicial consistency, we hold that the company cannot be treated as comparable to the assessee. Adjustment on account of interest on outstanding receivables from the AEs - while rejecting assessee s submission, the TPO computed interest at the rate of 4.329% in respect of receivables, which remained outstanding beyond the period of 60 days from the date of issue of invoice - HELD THAT:- While considering identical issue in assessee s own case in assessment years 2010-11, 2011-12, 2012-13, the Tribunal has deleted similar adjustments made by the TPO. Identical view was expressed by the Tribunal while deciding assessee s appeal for assessment year 2014-15 [ 2019 (5) TMI 621 - ITAT DELHI] after following the decision of Kusum Healthcare Pvt.ltd. [ 2017 (4) TMI 1254 - DELHI HIGH COURT] decided the issue in favour of the assessee.
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2023 (6) TMI 816
Admission of additional evidences by CIT(A) - HELD THAT:- CIT(A) for admission of additional evidences had relied on the decision rendered in the case of CIT vs. Virgin Securities and Credits P. Ltd.[ 2011 (2) TMI 207 - DELHI HIGH COURT] and concluded that the admission of additional evidences was crucial for the disposal of appeal. Before us, no fallacy in the findings of CIT(A) has been pointed out by Revenue nor has Revenue pointed that the required procedure was not followed by CIT(A) before admission of additional evidences - no reason to interfere with the order of CIT(A) - Decided against revenue. Addition on account of delayed deposit of PF/ESI - HELD THAT:- AR has fairly submitted that the issue in the present ground is covered against the assessee by the decision of Checkmate Services Pvt. Ltd. ( 2022 (10) TMI 617 - SUPREME COURT ) - we uphold the action of AO and set aside the order of CIT(A) on this ground. Disallowance u/s 14A r.w.r. 8D - Mandation of recording satisfaction - assessee had suo moto disallowance - HELD THAT:- CIT(A) while deciding the issue has noted that suo moto disallowance made by assessee was not found to be defective by AO and no adequate satisfaction as mandated u/s 14A(2) of the Act was recorded by AO before invoking Rule 8D. Before us, no fallacy in the findings of CIT(A) to the extent of his recording a finding that no proper satisfaction was recorded by AO before invoking Rule 8D has been pointed out by Revenue.Once the procedure prescribed under Section 14A(2) r.w. Rule 8D has not been followed by Revenue then in that case the Revenue cannot proceed to work out the disallowance on ad hoc basis over and above that has been made by assessee. We, therefore, direct the AO to restrict the disallowance u/s 14A as suo-moto made by assessee. Decided against revenue. Compensation received by the assessee - Short Term Capital Gain or income from other sources - HELD THAT:- We find that CIT(A) after placing reliance on the decision of Vodafone [ 2012 (1) TMI 52 - SUPREME COURT] has held that the compensation received by the assessee was not merely for transaction of one or more tangible rights but was receipts of bundle of rights as investing partner as the whole profit making process was impaired - assessee was never engaged till date in insurance business with any other party and genuineness of the transaction was beyond the shadow of doubt. As held compensation received by the assessee was akin to liquidated damages and therefore in the nature of capital receipts. He has for the reasons noted in the order and which have been reproduced hereinabove has held the AO s attempt to bring the compensation in the category of assets described u/s 55(2)(a) of the Act for taxation as Short Term Capital Gains was erroneous. No fallacy in the findings of CIT(A) has been pointed out by Revenue. Deduction u/s 80IB - new unit in Jammu (Sambha) backward district - close connection between the assessee and Berger Paints Co. to whom most of the sale were made from Jammu Division and assessee was not generating much profits in the business from other business whereas the return generated from Jammu Division was higher than the total income of the Manufacturing and Processing business - HELD THAT:- CIT(A) has held that AO was not justified in invoking the provision of Section 80IB (10) of the Act as the foundational facts were not supplied by the AO and the action of AO was not in accordance of law. He has further given a finding that on verifying the detailed working submitted by assessee, the assessee has demonstrated that the Jammu Unit for which the assessee has claimed deduction was operating at lowest rate of profit and sales made to Berger Paints was at lower price as compared to other unrelated customers. He has further given a finding that the deduction was allowed to the assessee in scrutiny assessment proceedings in earlier years on similar facts. Before us, Revenue has not pointed to any fallacy in the findings of CIT(A) nor has placed any material on record to demonstrate that the observations of CIT(A) while allowing the claim of the assessee is not based on the material on record. Decided against revenue.
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2023 (6) TMI 815
Denial of benefit of section 11(1)(d) - earmarked funds being corpus donation - assessee- trust being a public charitable trust, runs a school primarily to address students from the very lower strata of the society and relying on donors to fund the school - HELD THAT:- AO has grossly erred in treating the Earmarked funds as revenue receipts particularly when the clear evidence before the assessing officer had demonstrated that what the donors had given was nothing but Earmarked funds for new building, room and campus developments. We note that stand taken by AO is not tenable in law, reason being that trust deed is only constitution of the trust and the nature and character of donation can be decided based on the intention of the donor and the direction given by the donor. Intention of the donor can be judged through receipt given by the donee or letter of the donor to the effect that he is donating the amount in the corpus fund. It is a well-settled position in law when a trust received a particular sum, which is earmarked, for a specific purpose, it constitutes nothing but a receipt to be treated as forming part of the corpus. As decided in case of Shri Ramakrishan Seva Ashrama [ 2011 (10) TMI 369 - KARNATAKA HIGH COURT ] wherein it was held that Where donation received by assessee-trust is kept in deposit account and income earned therefrom is utilized for charitable purposes, assessee is entitled to benefit of exemption u/s 11(1)(d) in respect of said income. Ground No.1 raised by the assessee allowed. Excess cash deposits into the bank account - HELD THAT:- We note that the position taken by the AO is that since total cash deposits into the bank account exceeded the total fees received, the excess needs to be treated as income of the assessee. However, we note that reconciliation filed before the Bench clearly states that there should not be any difference. We note that it is second round of appeal before this Tribunal on the same issue, hence we note that third inning should not be given to the assessee for this small addition. Thus addition sustained partly. - Decided partly in favour of assessee.
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2023 (6) TMI 814
Addition u/s 56(2)(viia) - difference in valuation of shares as per book value and the value adopted as per DCF Method - CIT(A) while deleting the above addition held that provision of Section 56(2)(viia) are not applicable to the transaction of purchase of shares by the assessee particularly when the purchase price is higher than FMV shares - HELD THAT:- A combined reading of the provisions of section 56(2)(viia) and the Memorandum explaining the provisions shows that the provision of section 56(2)(viia) would be attracted in the case of a recipient firm or company which receives the shares of a company without any consideration or for a consideration which is less than the aggregate fair market value of the shares by an amount exceeding fifty thousand rupees. In the case in hand the assessee has admittedly purchased shares and CCCPS of Ansal Township from IIRF India Realty II Ltd and IFIN Realty Trust @Rs. 2777/- as against the book value / FMV of Rs. 815.59. A.O. held that since the difference cannot be added in the hands of the seller i.e. IIRF India Realty II Ltd, therefore, the addition has to be made in the hands of the assessee. Provisions of section 56(2)(viia) are not attracted to the Assessee - Appeal filed by the Revenue is dismissed.
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2023 (6) TMI 813
Deemed dividend u/s. 2(22)(e) - nature of receipt - business transactions or loan - assessee company has received amount from another company having common and substantial shareholding - shareholding in excess of 20% in the two companies - HELD THAT:- As there have been various transactions of receipt and payment between the assessee and Saga Developers P. Ltd. for the transfer of fund as and when required for the purpose of business, the money that was advanced was in the nature of trade advance. As relying on case of Raj Kumar [ 2009 (5) TMI 17 - DELHI HIGH COURT] we are of the view that the amount received by the assessee cannot be termed as deemed dividend within the meaning of s. 2(22)(e) of the Act and therefore its addition cannot be made. Thus no addition u/s 2(22)(e) of the Act of the Act could be made in the present case. Decided in favour of assessee.
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2023 (6) TMI 812
Revision u/s 263 - assessment as framed by AO u/s 143(3) - as per CIT claim made by the assessee was not in accordance with the provisions of Sec.36(1)(vii) since the claims includes items like TDS payable, advance premium deposit, unpaid wages, salary and wages payable, loan given to various parties, prepaid expenses, DEPB receivable, duty drawback receivable, electricity deposit, provision for bad and doubtful debts etc. - HELD THAT:- This was a case of no-enquiry / no-verification by AO. We are not inclined to accept this argument on the face of the assessment order. A specific query was raised by AO during the course of assessment proceedings and the same was duly responded to by the assessee. Assessment order also takes note of the fact that the requisite details were furnished by the assessee and no comments have been made on the conduct of the assessee in the assessment order, in this regard. The plea raised by Ld. CIT-DR could not be accepted. Another line of argument is that certain items as pointed out in the revisional order could not be allowed u/s 36(1)(vii). As submitted that the assessee had explained that the debts arose as a result of debit note raised on purchase due to quality issues. The argument that, AO failed to carry out enquiries regarding the debit notes. AO did not enquire when the assessee had sold the entire stock purchased and he did not enquire as to how the purchases were accounted for in the earlier years how the stock was adjusted. This argument would stand negated by the fact that no discrepancy has been pointed out either by AO or by Pr. CIT in the purchases made by the assessee or stock maintained by the assessee. The only allegation in the revisionary order is that certain items claimed by the assessee could not be held to be revenue in nature since this would be allowed only when the assessee is a going concern. No other doubt, whatsoever, has been raised against the claim so made by the assessee. Allegation that the amounts were written-off so as to avoid capital gains on slum sale is bereft of any concrete material on record. Therefore, this argument also could not be accepted. CIT-DR also referred to the recent decision in the case of Khyati Realtors Pvt. Ltd. [ 2022 (8) TMI 1141 - SUPREME COURT] for the submission that the item of expenditure falling u/s 30 to 36 will not be covered by Section 37. We find that the assessee had made a claim u/s 36(1)(vii) and considering the nature of certain items, made partial claim u/s 28 r.w.s. 37 which was accepted by AO. The subsequent decision of Hon ble Supreme Court could have never been considered by AO while framing the assessment. No apprehension has been raised by AO against the claim so made by the assessee. It was a case of adoption of one of the possible views which is not contrary to any law. Revision of the order was no sustainable in the eyes of law and hence, liable to be quashed. Decided in favour of assessee.
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2023 (6) TMI 811
Penalty u/s 271(1)(c) - willful concealment v/s mistake on human error - addition made towards expenditure incurred on raising authorized share capital - As argued Appellant has provided all the necessary evidences and the same is supported by various Judicial Pronouncements - HELD THAT:- The Delhi High Court in the case of CIT vs. Brahamputra Consosium Ltd. [ 2011 (8) TMI 8 - DELHI HIGH COURT ] on similar facts held that the claim of deduction of the fee paid to ROC to increase the authorized share capital though cannot be treated as revenue expenditure, however, penalty cannot be imposed as the assessee had not filed any wrong particulars of income or made a false claim. Similarly in the case of Jefferris India Pvt. Ltd. [ 2019 (4) TMI 279 - ITAT MUMBAI ] also held that no penalty can be imposed u/s. 271(1)(c) of the Act on account of disallowance of expenses incurred for increase of authorized share capital since no penalty can be imposed when there was no willful concealment and mistake involved only a human error - Decided against revenue.
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2023 (6) TMI 810
Disallowance on account of sales commission - as per AO assessee was unable to substantiate that the commission was paid against particular service or benefit rendered to the business entity with some basis or standard commensurate to the benefit derived - HELD THAT:- AO has made the addition, assigning the reason that the assessee was unable to substantiate its contention by not furnishing the evidence in support of the job performed by the service providers. Assessee has furnished information and evidence like ITR, Computation form 16A of the commission recipients. AO has not initiated or conducted any further enquiry from the beneficiaries concerned. Merely on the basis of information which was not available with the Ld AO regarding qualification and experience of service providers, since some of them are connected people to the assessee the disallowance was made. No specific finding / reasoning to the disallowance was commented by the Ld AO. Ld CIT(A) also have analysed the issue, only on the basis of fact that the bills raised on the buyer s has no mention about the selling agent thus the argument of the assessee is not backed by any documentary evidence. In absence of any cogent finding by the authorities below, we are unable to understand that how it was perceived that the commission paid was bogus without making any enquiries with the concerned payees. The fact that the similar payment of commission, which was a practice of the trade of the assessee, was allowed by the department in the immediately succeeding assessment years makes the assessee s contention more believable. No specific details to dislodge the contention of the assessee were brought to our knowledge - Decided in favour of assessee. Addition u/s. 14A r.w.r 8D - sufficiency of own funds - HELD THAT:- It is the settled law now that No disallowance u/s 14A can be made if there are interest free funds available with the assessee exceeds the investment. In the present case Ld AO has not checked this aspect, which was observed by the Ld CIT(A). It was also a fact that there was no exempt income of the assessee during the relevant AY, therefore, disallowance u/s 14A r.w.r. 8D is not called for. Thus when the assessee company had admittedly not received any exempt income, which is apparent from the records, during the year under consideration, no disallowance u/s.14A could have been made in its hands - Decided in favour of assessee. Addition u/s. 41(1) - six parties were found with very old balances and are casually continuing -redit amount shown against these six creditors were outstanding intact consecutively for more than previous three years without any reason - HELD THAT:- All the alleged creditors have confirmed that the outstanding amounts are payable to them, such confirmations were available in the paper book of the assessee. It was also substantiated by the ld. AR that almost entire amounts of the said creditors were paid in the subsequent years, details of the same were furnished before the ld. CIT(A). CIT(A) has dealt with this issue exhaustively, has rightly appreciated the facts of the present case and has judiciously decided the issue in favour of the assessee by deleting the addition made by the ld. AO. Addition u/s 68 - Credit balance in the balance sheet of the assessee, recorded under the head Reimbursement for BG - CIT(A) deleted the addition - HELD THAT:- Admittedly, the amount available in the credit side of balance sheet of the assessee shown as reimbursement of bank guarantee was reflecting the amount of bank guarantees extended to various parties as per the terms of agreement between the assessee as an agent and M/s Refratechnik GmbH as the principle. AO could not establish the fact that how and why the amount of the bank guarantees has to be treated as income of the assessee. CIT(A) has correctly appreciated the facts of the issues and deleted the addition.Revenue has reiterated the observations of ld. AO, nothing new has been brought to our attention in order to substantiate the contentions of the department, we therefore, are of the opinion that the issue has dealt with justifiably by the ld. CIT(A), thus, no interference is called for. Ground No. 3 of the revenue is dismissed. Suppression of closing stock - CIT(A) deleted the addition - HELD THAT:- The explanations advanced by the assessee before revenue authorities supported with information and evidence were found to be plausible, ld. CIT(A), who had analyzed the issue after considering all the material facts, therefore, in our considered view has substance to concur with. AO s observation was based on half facts which is evident from the observation of the ld. CIT(A) while deciding this issue that in the ensuing year the explanation for the similar transaction has been accepted by the revenue, thus, contains no merits. In sight of such factual findings by the ld. CIT(A), the view of the ld. AO is unacceptable and deserves to be quashed. Suppression of income - amounts received as per agreement for making expenses and payment - CIT(A) deleted the addition - HELD THAT:- AO has made his observations based on information furnished in the form of ledger account of the parties without considering the other aspects of issue or supporting evidence, nor any further explanation regarding the issue were called for from the assessee. Ld. CIT(A) has deliberated on the issue exhaustively and arrived at a just and appropriate finding that the amount available on the liability side of the assessee s balance sheet were not receipts of the assessee in the nature of income but were amounts received towards contractual obligations of the assessee towards agreements entered into. Thus we refrain ourselves from interfering with the findings of the ld. CIT(A). Addition made as treating the post assessment assessable value of the foreign purchases determined by the Customs for levying duty instead of the amount shown in the bills as the cost of the foreign purchases made by the assessee firm - CIT(A) deleted the addition - HELD THAT:- Admittedly, the assessee has imported material from abroad for Rs. 26,55,892/- however the custom authorities had assessed the value of the same at Rs. 27,03,784/- for the purpose of levying of duty, the difference of Rs. 47,894/- was considered as unexplained investment u/s 69. We do not find any merit in the observation of the Ld AO, therefore, are of the considered opinion that view taken by the Ld CIT(A) has no infirmity in it and thus deserves to be upheld and we do so. In the result Ground No 7 of the revenue is dismissed. Non-business nature of expenses claimed under the Head Business promotion by the assessee firm - CIT(A) deleted addition - HELD THAT:- Disallowance was on lumpsum basis stating the reason that the expenses are of personal/ non business or in the nature of kickback. No justification in support of view expressed by the Ld AO was offered. Such lumpsum / adhoc disallowance without pointing out specific expense or payment with a reasonable cause to be disallowed, is not permissible. We therefore of the considered view that Ld CIT(A) has rightly deleted the addition made.
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2023 (6) TMI 809
Exemption u/s 11 - Deemed income - Permissible Adjustment to be made by the CPC while processing the return u/s 143(1) - assessment of trust - assessee in the present case is a public charitable trust and registered under the provisions of section 12AA - CIT(A) NFAC Delhi confirming the assessment of the returned income of Rs. NIL at a taxable income whilst processing us 143(1) - HELD THAT:- As per CBDT Instruction bearing No. 1814/1989 no adjustment can be made by denying the deduction or relief claimed by the assessee based on the decision of Hon ble High Court or the Tribunal. It is equally important to refer the judgement of Ahmedabad Tribunal in the case of Gujarat State Lions Conservation Society [ 2018 (6) TMI 1833 - ITAT RAJKOT] We note that the benefit of deduction of the deemed income specified under section under section 11(3) is available to the assessee and therefore such adjustment cannot be made in the return of income under the provisions of section 143(1) of the Act. Accordingly, we set aside the finding of the learned CIT(A) and direct the AO to delete the adjustment made - Decided in favour of assessee.
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2023 (6) TMI 808
Levy of late fee before 01.06.2015 u/s 234E - Rectification of mistake u/s 154 suo moto made by the AO/TDS, CPC, Ghaziabad raising the demand inter alia the late fee u/s 234E - HELD THAT:- AO while passing the order u/s 154 of the Act has not given any reasons as to the mistake apparent on the face of the record. Anyway, since the late fee for non-filing the statement of TDS/TCS [under section 200A(1)/206CB of the Act respectively] are no-longer res-integra the action of AO/CPC u/s 154 of the Act cannot be sustained. As decided in KERALA GRAMIN BANK VERSUS THE INCOME TAX OFFICER (TDS) , KOZHIKODE/PALAKKAD [ 2023 (3) TMI 405 - ITAT COCHIN] no hesitation in allowing assessee s appeals inasmuch the processing is for a period prior to 01/6/2015. Appeals filed by the assessee are allowed.
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2023 (6) TMI 807
Validity of final assessment order passed by AO u/s 144C(13)/263/143(3) in pursuance to the directions of DRP - assessment order under challenge was passed in pursuance to the directions of CIT u/s 263 - Assessee submitted while deciding assessee s appeal against the order passed u/s 263 Tribunal set aside the order passed u/s 263 and restored the assessment order, which was subjected to proceedings u/s 263 - HELD THAT:- We find, the assessment order under challenged in the present appeal was passed by the AO in pursuance to an order passed by the Learned CIT under Section 263 of the Act. It is evident, against the revisionary order passed under Section 263 of the Act, the assessee had preferred an appeal before the Tribunal. While deciding assessee s appeal [ 2022 (6) TMI 1407 - ITAT DELHI] has set aside the order u/s 263 and restored the assessment order, which was subjected to revisionary proceedings. Thus, when the revision order passed u/s 263 itself, is not in existence, the consequential orders passed in pursuance to the revision order, including, the impugned assessment order cannot survive. Assessment order quashed.
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2023 (6) TMI 806
Income tax proceedings against company in liquidation - NCLT has approved assessee s resolution plan submitted under the Insolvency and Bankruptcy Code - HELD THAT:- As in the case of Sirpur Paper Mills Ltd [ 2022 (1) TMI 977 - TELANGANA, HIGH COURT] it is vivid that all claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not a part of the resolution plan. We also note that provisions of section 238 of the IBC which clearly says that provisions of IBC shall have an overriding effect over all other laws. This, if there is any doubt, section 238 IBC makes it abundantly clear that provisions of the IBC would prevail over the Income Tax Act. We find that ld IRP had not impleaded himself to represent the assessee-company in the present appeal, hence, in view of Section 14 of I B code there cannot be any continuation of any pending proceedings before this Tribunal. Hence, we deem it fit to dismiss the appeal of the assessee as not maintainable in the present format.
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2023 (6) TMI 805
Revision u/s 263 - carry forward of losses on sale of shares - HELD THAT:- CIT has wrongly assumed jurisdiction on wrong facts in as much as, as mentioned elsewhere, the assessee has made its intention very clear in the notes to computation of income wherein it has specifically mentioned and clarified that the assessee is not inclined to claim the carry forward of losses on sale of shares. We are of the further opinion that the ld. CIT proceeded on the premise that the assessee is a newly incorporated company which has been incorporated solely for tax evasion purposes, without realizing that the assessee is in this line of business since 2010, holding a valid tax residency certificate with a global business license issued by the assessee Financial Services Commission in Mauritius. CIT has proceeded on the assumption that the assessee is not entitled for any treaty benefit for taxation of capital gain in India. The ld. CIT has clearly ignored the fact the assessee has neither claimed nor carried forward such capital loss in its return of income filed in India. It is a settled position of law that powers u/s 263 can be exercised by the Commissioner on satisfaction of twin conditions, i.e., the assessment order should be erroneous and prejudicial to the interest of the Revenue. By 'erroneous' is meant contrary to law. Thus, this power cannot be exercised unless the Commissioner is able to establish that the order of the AO is erroneous and prejudicial to the interest of the Revenue. Thus, where there are two possible views and the Assessing Officer has taken one of the possible views, no action to exercise powers of revision can arise, nor can revisional power be exercised for directing a fuller enquiry to find out if the view taken is erroneous. This power of revision can be exercised only where no enquiry, as required under the law, is done. It is not open to enquire in case of inadequate inquiry. Appeal under consideration, the ld. CIT called for valuation report in revisionary proceedings. However, when the valuation reports were filed by the assessee, CIT chose to set aside the entire matter back to the file of the AO without appreciating that it was incumbent upon CIT to himself examine the valuation reports and verify as to how the case of the assessee was erroneous and prejudicial to the interest of the Revenue following the ration laid down in the case of the Delhi Airport Metro Express [P] Ltd [ 2017 (9) TMI 529 - DELHI HIGH COURT ] We set aside the order of the ld. CIT and restore that of the Assessing Officer dated 09.12.2019 framed u/s 143(3) of the Act. Decided in favour of assessee.
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2023 (6) TMI 804
Income tax proceedings against company in liquidation - reopening of assessment when NCLT has approved assessee s resolution plan submitted under the Insolvency and Bankruptcy Code - HELD THAT:- As resolution plan under the IBC as concluded in light of hon ble jurisdictional High Court s decision [ 2021 (12) TMI 1182 - BOMBAY HIGH COURT] that the same indeed carries precedence over the income tax dues as per hon ble Apex Court decision in Ghanshyam Mishra s case [ 2021 (4) TMI 613 - SUPREME COURT] Faced with the situation, we adopted the hon ble jurisdictional High Court reasoning mutatis mutandis to allow assessee s twin appeals.
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2023 (6) TMI 803
Undisclosed investment (Interest) - interest has been disallowed by the CIT(A) on the grounds that unaccounted interest was computed by the revenue authorities on assumption basis - HELD THAT:- On going through the entire contents, since no amount receivable could deciphered, we decline to interfere with the reasoned order of the ld. CIT(A) on this issue. Undisclosed Receipts - revenue authorities determined unaccounted profit on Meerut project and Jaipur project - sole basis for making the addition was the letter written by the marketing head after leaving the job from the assessee company wherein marketing head had sought the sales incentives @ 1% - HELD THAT:- As the revenue authorities have accepted the total amount of booking received of Rs. 31.97 Cr. till 2009 whereas as per the letter of Ex. Marketing Head, the sale figure has been considered as Rs. 60 Cr. for determination of profits. Similarly, the revenue has accepted the total booking of Rs.70.29 Cr. towards the sale whereas for determination of the profits, the projection as mentioned by Ex. Marketing Head of Rs. 279 Cr. has been considered. While considering the letter of Ex. Marketing Head for determination of sales to the tune of Rs. 279 Cr. and working out the profits/undisclosed income consequently, while doing so, the revenue has not even recorded the statement of Ex. Marketing Head and confronted the same to the Principle Officer of the company. Appeals of the revenue are dismissed.
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Customs
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2023 (6) TMI 802
Condonation of delay of 1247 days in filing appeal - sufficient reasons for delay not provided - HELD THAT:- There are no satisfactory explanation submitted for approaching this Court with such an inordinate delay. Accordingly, the Civil Appeal stands disposed of on the ground of delay.
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2023 (6) TMI 801
Classification of goods - sweet corn or maize? - Scope of Show cause notice (SCN) - it was held by CESTAT that sweet corn is not cereal for the purposes of exclusion from chapter 12 of the First Schedule to Customs Tariff Act, 1975. HELD THAT:- There are no reason to interfere with the orders impugned under these appeals - appeal dismissed.
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2023 (6) TMI 800
Refusing permission to the petitioner to correct certain entries in the shipping bills - due to an inadvertent error, the petitioner entered a scheme code relating to the Duty Draw Back Scheme (Scheme Code No. 19) instead of the scheme code applicable to Duty Free Import Authorisation Scheme (scheme code No. 26) - opportunity of hearing not provided - violation of principles of natural justice - HELD THAT:- There is considerable merit in the contention taken by the Learned Counsel for the petitioner that since Ext. P18 was issued without affording an opportunity of hearing to the petitioner, that order is liable to be set aside on that short ground alone. It is not evident from Ext. P18 that the same was issued after affording to the petitioner an opportunity of stating its case. Considering the nature of the order it was only appropriate that a decision was taken on Ext. P17 application after affording to the petitioner an opportunity of hearing. The matter is remitted to the competent authority, who shall take a fresh decision in the matter after affording to the petitioner an opportunity of being heard and having regard to the provisions of Section 149 of the Act and Circular No. 36/2010 - Petition allowed by way of remand.
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2023 (6) TMI 799
Refund of SAD - rejection on the ground of unjust enrichment - it is alleged that appellant has not established that the duty element (CVD) [paid at the time of import of goods] has not been passed on to the buyer of goods - HELD THAT:- As pointed out by the Ld. Counsel for respondent that in para 12 of the OIO, the issue has been elaborately discussed by the original authority. It is also noted in the said para that the Chartered Accountant certificate produced by the respondent is in accordance with Board circular. It is also recorded that the respondent furnished copies of the balance sheet and all relevant documents. The department alleges that Chartered Accountant certificate does not mention that the documents have been verified. It needs to be stated that when the original authority has noted that the Chartered Accountant certificate is in accordance with Board circular, there are no merit in the argument put forward by the department. The appeal filed by department is dismissed.
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2023 (6) TMI 798
Continuation of anti-dumping duty under Section 9A of the Customs Tariff Act, 1975 - notification for continuation of anti-dumping duty not issued - imports of Hot-Rolled flat products of alloy or non-alloy steel from China PR, Japan, Korea RP, Russia, Brazil and Indonesia - domestic industry suffered material injury and unutilized capacities and surplus production - requirement of compliance of principles of natural justice - HELD THAT:- The maintainability of the appeal under Section 9C of the Tariff Act was examined at length by this very Bench in M/S APCOTEX INDUSTRIES LIMITED AND OTHERS VERSUS UNION OF INDIA AND OTHERS [ 2022 (11) TMI 1096 - CESTAT NEW DELHI] and it was held that the appeal would be maintainable against the decision of the Central Government contained in the office memorandum not to impose anti-dumping duty. The Bench also examined whether the determination by the Central Government was legislative in character or quasi-judicial in nature and after examining the relevant provisions of the Tariff Act, the 1995 Anti-Dumping Rules and the decisions of the Supreme Court and the High Courts observed that the function performed by the Central Government would be quasi-judicial in nature. The Bench also, in the alternative, held that even if the function performed by the Central Government was legislative, then too the principles of natural justice and the requirement of a reasoned order have to be complied with since the Central Government would be performing the third category of conditional legislation contemplated in the judgment of the Supreme Court in STATE OF T.N. SECRETARY HOUSING DEPTT. MADRAS VERSUS K. SABANAYAGAM ANR. [ 1997 (11) TMI 520 - SUPREME COURT] . The Gujarat High Court in REALSTRIPS LIMITED 1 OTHER (S) VERSUS UNION OF INDIA 1 OTHER (S) [ 2022 (9) TMI 1171 - GUJARAT HIGH COURT] examined whether quasi-judicial process was involved in issuance of the notification by the Central Government and after analyzing the decision of the Supreme Court in INDIAN NATIONAL CONGRESS (I) VERSUS INSTITUTE OF SOCIAL WELFARE ORS. [ 2002 (5) TMI 847 - SUPREME COURT] , the Gujarat High Court held that the notification issued by the Central Government would be quasi-judicial in nature. The inevitable conclusion, therefore, that follows from the aforesaid discussion is that the decision taken by the Central Government not to impose anti-dumping duty despite a recommendation having been made by the designated authority for imposition of anti-dumping duty, cannot be sustained as it does not contain reasons nor the principles of natural justice have been complied with and the matter would have to be remitted to the Central Government for taking a fresh decision on the recommendation made by the designated authority. The matter is remitted to the Central Government to reconsider the recommendation made by the designated authority in the light of the observations made - Appeal allowed by way of remand.
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2023 (6) TMI 797
Recovery of short paid Customs Duty - though appellant 1 had filed detailed reply to the various allegations made in the show cause notice, the Principal Commissioner has mistakenly not considered the same - non-application of mind - violation of principles of natural justice - HELD THAT:- The basic reason for the order is non-disputing of the fact as stated in the show cause notice. Appellant 1 has filed a detailed reply which has not been recorded by the Principal Commissioner. There cannot be any dispute that the appellant has contested the various issues raised in the show cause notice. Further the Principal Commissioner while passing the order has not taken into account these submissions. Admittedly he has only referred to the reply filed by the partner for passing the order treating it to be the reply filed by the company - As the order has been passed without taking into consideration the written submissions made by appellant 1, we find that the order has been passed without application of mind and needs to be sent back to the adjudicating authority for passing a speaking order taking into account all the submissions made. The appeals are allowed by way of remanding back to the adjudicating authority for reconsideration.
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2023 (6) TMI 796
Classification of goods proposed to be imported - Fuel Cell System to be used in manufacturing of Hydrogen Fuel Cells Vehicles - to be classified under 8708 or under CTH 8501 33 20? - HELD THAT:- In terms of Note 3 to Section XVI, the Fuel Cell system is to be classified as per its principal function which is generation of electricity. Therefore, for this reason also, the Fuel Cell System are classifiable under CTH 85.01 only. Reliance is placed on the judgement of Hon'ble CESTAT, Chandigarh in case of M/S. HERO ELECTRIC VEHICLES PVT. LIMITED VERSUS COMMISSIONER OF CUSTOMS, LUDHIANA [ 2018 (6) TMI 141 - CESTAT CHANDIGARH ], wherein it was held that the product having essential character and performing principal function of a motor is to be classified as electric motor only. The contention of the applicant as well as the ratio laid down by the honourable Tribunal, are agreed upon. As the Fuel Cell System is an electrical power generating equipment as detailed above, it automatically gets excluded by the provisions of Note 2(f) to Section XVII of the Customs Tariff and therefore merits classification under Heading 85.01 as Electric Generators as they are excluded from the provisions of Notes to Section XVII of the Customs Tariff. Therefore, in terms of aforesaid Section Note 2(f) read with the HSN Explanatory Note to Heading 87.08, the fuel cell system cannot be regarded as 'parts' of motor vehicle in terms of Heading 87.08. Section Note 2(a) above categorically states that parts which are goods included in any of the headings of Chapter 85 are in all cases to be classified in their respective headings. Although certain exclusions have been made by way of the Note 2(a) to Section XVI of the Customs Tariff, the CTH 8501 is not excluded by virtue of this note. The Fuel Cell System is specifically covered under CTH 8501 by virtue of section note of the section XVI of schedule I of the Customs Tariff Act, 1975, therefore it cannot be covered under the CTH 87.08. As per the data disclosed in the CAAR-1 Application the output of the Fuel Cell System will be 80 kW (net) and 90 kW (gross). Based on these disclosures the corresponding entry in the Tariff is 8501 33 20. Thus, the Fuel Cell System which is made up of seven components viz. Fuel Processing System, Fuel cell stack module, Air Processing System, Thermal Management System, Electric module, FCS monitoring control and module and DC-DC Converter proposed to be imported by the applicant merits classification under CTH 85.01 and more specifically under CTH 8501 33 20.
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Insolvency & Bankruptcy
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2023 (6) TMI 795
Initiation of the insolvency process ordered to be proceeded with - principal was paid and there was dispute regarding balance amount - disputed claim - time limitation - Section 9 of IBC - HELD THAT:- In the present case, this Court is of the opinion that the facts which justified the appellants to contend that the amounts claimed by the respondent, were disputed did exist thus justifying the adjudicating authority s decision to decline the application. The NCLAT in this Court s opinion, fell into error and holding otherwise. Appeal allowed.
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2023 (6) TMI 794
Withdrawal of CIRP after approval of Resolution Plan - Whether after approval of the Resolution Plan by Committee of Creditors under Section 30, sub-section (4) and filing an Application before the Adjudicating Authority for its approval, any Settlement Proposal under Section 12A (filed by Ex-Promoter) can be entertained deferring consideration of approval of Resolution Plan by the Adjudicating Authority - NCLAT [ 2022 (1) TMI 1323 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] held The Adjudicating Authority being not satisfied that there is adequate reason to accept the prayer of the Appellant, no error has been committed by the Adjudicating Authority in rejecting the Application - HELD THAT:- There are no good ground and reason to interfere with the impugned judgment, as the appellant, cannot invoke Section 12A of the Insolvency and Bankruptcy Code, 2016 in the absence of requisite concurrence/consent of 90% of the creditors. Appeal dismissed.
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2023 (6) TMI 793
CIRP - Prohibition on recovery proceedings against the Corporate debtor - Imposition of moratorium - statutory bar imposed by Section 14 of the Insolvency and Bankruptcy Code, 2016 - resolution plan rejected - requirement of Liquidation of Corporate Debtor - HELD THAT:- The fact remains that the IRP was unable to obtain a resolution plan within the specified time and the resolution plan not having manifested and the request for extension of time has been rejected by the Tribunal, the consequences as provided by the proviso to Section 14 of the IB Code is deemed to have taken effect. The proviso stipulates that if the Adjudicating Authority approves the Resolution Plan under sub-section (1) of Section 31 of the IB Code or passes an order for liquidation of corporate debtor under Section 33 of the IB Code, the moratorium shall cease to have effect. A conjoint reading of the proviso to Section 14 of the IB Code and the provisions of Section 33 of the IB Code, would show that where the resolution plan is rejected or not accepted, the Tribunal is required to pass an order requiring corporate debtor be liquidated in the manner laid down in the chapter and carry out such other actions as mandated therein. From a reading of the above, it is apparent that the prohibition under Section 14 of the IB Code prohibiting the initiation of proceedings or continuation of proceedings was in place as on the date of filing of the appeal. The instant appeal could not have been registered and the parties ought to have awaited the result of the proceedings pending before the NCLT, Chennai in IBA No. 483/2020 - the Registry is directed to return the papers with liberty to the appellant to re-present the same before this Court or before the Competent Forum, in accordance with law. The appeal stands ordered accordingly and disposed off, for statistical purpose.
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PMLA
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2023 (6) TMI 792
Seeking unconditional withdrawal of the writ petition - constitutional validity of Sections 50, 63 and other provisions of the PMLA - HELD THAT:- Having said that the Court is constrained to observe that despite the Three-Judge Bench decision in the case of Vijay Madanlal Choudhary and Others vs. Union of India and Others [ 2022 (7) TMI 1316 - SUPREME COURT] , upholding the vires of various provisions including Sections 50 and 63 of PMLA, a new trend is developed in this Court to file writ petitions under Article 32 of the Constitution of India again challenging the constitutional validity of Sections 50, 63 and other provisions of the PMLA, also seeking consequential reliefs which otherwise would tantamount to by-passing the other alternative efficacious forums available to the petitioners under the law. The writ petition stands dismissed as withdrawn with limited liberty.
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2023 (6) TMI 791
Jurisdiction of the Adjudicating Authority under the Prevention of Money-Laundering Act, 2002 - quasi-judicial statutory authority and not a Central Agency - petitioners challenges the impugned order of the PMLA authority on the ground of coram non judice. HELD THAT:- Insofar as the objection as to coram non judice is concerned, there are two interpretations possible regarding the provisions of Section 6 of the PMLA - The one in favour of the petitioners is on the basis of sub-section (2) of Section 6, which stipulates that an Adjudicating Authority shall consist of a Chairperson and two other Members. The qualifications of the Members have also been provided in the proviso. Hence, as per the Scheme of the Act, the Adjudicating Authority has to comprise of three Members in total, out of whom one will be the Chairperson. However, it has been argued that at present the Adjudicating Authority is functioning only with a Chairperson, without any other Member having been appointed to fill the vacancies. Thus, the question of coram non judice arises - On the other hand, sub-section (5)(b) provides that a Bench may be constituted by the Chairperson with one or two Members, as the Chairperson of the Adjudicating Authority may deem fit. Hence, it is evident that the Chairperson has the discretion even to function with only one Member, which can very well be herself/himself. Proceeding on such premise, the objection as to coram non judice cannot be accepted. Hence, on a comprehensive interpretation of Section 6, it is clear that not only has the Chairperson the discretion to constitute a Bench with only one Member, but the norm also as per Section 6(7) is that the Bench will consist of a single Member and, only if the case is of a critical nature, a Bench consisting of two Members will be assigned the hearing - In the present case, the Chairperson, as a single Member, has proceeded to take up the hearing of the application under Section 17 of the PMLA which, in the light of Section 6, cannot be held to be vitiated on the ground of coram non judice. Apprehension of bias - Chairperson has been proceeding in hot haste and fixed the first hearing at the office of the ED, which is itself the complainant - HELD THAT:- The respondents have sought to explain away such venue by arguing that the CGO Complex, where the sitting was scheduled, houses all the offices Central Government including the ED office. Although in the Notice it was indicated that the meeting would be held in the ED office, it was held in a different Government office of the same building which was on the same floor as the ED office - That apart, the petitioners counsel participated in the hearing and never took the objection as to the venue. The mere selection of the ED office as a venue in the present context, in the absence of any other clinching factor to indicate bias, would not vitiate the proceeding, more so since the matter has not yet reached the final hearing stage - Hence, it cannot be said that the Chairperson committed any jurisdictional error in himself, as a single Member, to entertain and proceed with the hearing of the application pending before the Authority. There is no scope of entertaining the writ petition at this stage. However, in order to allay the apprehension of bias in the mind of the petitioners, a further opportunity of hearing ought to be given to the petitioners before closing the hearing on the pending interim applications - Application is disposed of by directing the Adjudicating Authority to afford an opportunity of hearing to the petitioners and/or their counsel and thereafter to pass necessary orders.
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Service Tax
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2023 (6) TMI 790
Adjudication of demand of service tax post GST era - Jurisdiction of Commissioner to pass the order impugned in the Writ Petition - repeal of Chapter V of the Finance Act, 1994 by Section 173 of the Central Goods and Services Tax Act, 2017 - submission of the appellants is that, in respect of the period when the Service Tax regime was in force, the proceedings should have been initiated prior to the repeal of the Service Tax regime on 01.07.2017, and that they could not be initiated after the said repeal. HELD THAT:- The aforesaid submission of the appellants is clearly misconceived in our view. This is evident from a plain reading of Section 174(2), which, despite the repeal and amendment of the Finance Act, 1994, saved the previous operation of the amended Act or repealed Acts, and orders or anything duly done or suffered thereunder. The amendment/ repeal did not affect any right, privilege, obligation, or liability acquired, accrued or incurred under the amended Act or repealed Acts, or orders under such repealed or amended Acts. The repeal/ amendment also did not affect any duty, tax, surcharge, fine, penalty, interest as are due, or may become due, or any forfeiture, or punishment - incurred or inflicted, in respect of any offence or violation committed against the provisions of the amended Act or repealed Acts. The submission of the appellants that the institution of the proceedings should have taken place before 01.07.2017, needs only to be noted to be rejected. The saving clause (e) expressly permits the institution of the proceedings or remedy despite the amendment/ repeal - If the liability of the assessee survived in respect of the taxing laws in force prior to its repeal/ amendment even after such repeal/ amendment, it does not stand to reason that the machinery for fixation and realization of such liability would not be available to the State. There are no merit in the plea of the appellants that the Commissioner lacked jurisdiction to pass the order impugned in the Writ Petition - appeal dismissed.
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2023 (6) TMI 789
CENVAT Credit - common input service used for taxable as well as exempt goods - mainly case of Revenue is that even though the respondent had paid back the full amount attributed to exempted service along with interest, they are liable to pay 8%/6%/5% of the value of exempted service for the reason that respondent have not maintained separate accounts. HELD THAT:- On this issue much water has been flown and in various cases, the Courts and Tribunal held that once the Cenvat credit of the common inputs used in relation to exempted service is reversed along with interest, the demand of 8%/6%/5% in terms of Rule 6(3) will not sustain. The Commissioner has also taken support from one of the land mark judgment in the case of CHANDRAPUR MAGNET WIRES (P) LTD. VERSUS COLLECTOR OF C. EXCISE, NAGPUR [ 1995 (12) TMI 72 - SUPREME COURT ] wherein it was held that even though the modvat credit was availed but subsequently the same is reversed along with interest situation become as if no Cenvat credit is availed. Accordingly the benefit of notification was extended. Thus, the demand of 8%/6%/5% cannot be made in the facts of the present case when the respondent has admittedly paid back the entire Cenvat credit along with interest which was partly attributed to exempted service - the demand is not sustainable - appeal of Revenue dismissed.
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2023 (6) TMI 788
Exemption from Service Tax to taxable service of production of goods on and for behalf of a client - Business Auxiliary Service (production of processing goods on behalf of client) - process of sterilizing goods of client on job-work basis and for which the job charges are collected - denial of exemption on the ground of client has not supplied raw material and after the process of sterilization the goods were not used further in the manufacture of final product by their client - N/N. 8/2005. HELD THAT:- There is no dispute that appellant have carried out the activity of processing of goods on behalf of the clients which is covered under taxable entry of Business Auxiliary Service - From the plain reading of the notification it is clear that not only the raw material should be processed by the job-worker but even some finished goods are also to be processed for the eligibility of exemption notification - In the present case, the packed goods were supplied to the appellant for carrying out process of sterilization therefore the packed goods before sterilization are semi-finished goods. Therefore the contention of the Revenue that only raw material should be processed to be eligible for exemption is incorrect as semi-finished goods are also allowed to be processed for making eligible for the above notification. The term production of goods has been explained under explanation-(i) of the aforesaid notification and according to which the job-worker is at liberty to process partly or fully to complete the product. Therefore, it is the provision that once the process is done which is required to complete the product, no further manufacturing is required. Therefore, the contention of the department that job worked good should be necessarily be used by the principal client for further manufacturing is contrary to the explanation-(i) of the notification. Therefore, on this count also the benefit of notification cannot be denied to the appellant. A plain reading of Board clarification issued vide No. B1/6/2015-TRU letter dated 27.07.2005, it can be seen that said clarification only deals with the issue of taxability of Business Auxiliary Service in particular production or processing of goods on behalf of client - there is no dispute about the taxability of service under the sub-heading of production or processing of goods on behalf of client, under taxable entry of Business Auxiliary Service, but the issue involved in the present case is eligibility to Notification No. 8/2005-ST. The aforesaid clarification does not deal with the issue of such exemption notification therefore the above clarification is of no help to the Revenue in the present case. The demand is not sustainable hence the impugned order is set-aside and the appeal is allowed.
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2023 (6) TMI 787
Refund of service tax allowed by passing separate orders - assesse has not availed cenvat credit in claiming refund of service tax under the said Notification No.41/2007-ST - contravention of the conditions of the Notification - HELD THAT:- There are no doubt, the adjudicating authority while scrutinizing the refund claims examined various aspects, however, no specific finding has been recorded in the line as recorded by the learned Commissioner(Appeals) in para 3 of the impugned order particularly the fact whether the assesse has availed cenvat credit while claiming the refund. In these circumstances, it is opined that the objections recorded in para 3 of the impugned order need to be verified by the adjudicating authority after affording an opportunity to the appellant to respond to the said objections - the impugned order is set aside and the appeals are allowed by way of remand to the adjudicating authority to verify the said facts.
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Central Excise
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2023 (6) TMI 786
Reduction of redemption fine - waiver of penalty - adjudication upon two show cause notices, one pertaining to the Central Excise Act and the second pertaining to the Customs Act - HELD THAT:- The appeal pertaining to the excise component has been permitted to be withdrawn in terms of the request which was made by the assessee. What survives then is the appeal of the assessee pertaining to the component of the Customs Act 1962 and the Transferred Case arising from the appeal filed by the Department before the High Court of Judicature at Bombay. In terms of Section 130E(b) of the Customs Act, an appeal lies against any order of the CESTAT relating, among other things, to the determination of any question having a relation to the rate of duty of customs or to the value of goods for the purposes of assessment. The appeal by the assessee pertaining to the customs component does not fall within the ambit of Section 130E(b) of the Customs Act 1962. Hence, it would be appropriate to transfer the appeal filed by the assessee to the High Court of Judicature at Bombay. Insofar as the Transferred Case is concerned, the Department had moved for transfer of the appeal which was instituted before the High Court to this Court in view of the pendency of the appeal filed by the assessee. Since the appeal by the assessee is being transferred to the High Court, the Transferred Case shall accordingly have to be remitted by restoring the appeal filed by the Department to the High Court of Judicature at Bombay for disposal. The appeal and the transferred case are accordingly disposed of.
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2023 (6) TMI 785
Classification of goods - liquefied petroleum gas (LPG) and mixed fuel oil (MFO) - classifiable under Chapter 2710.11.19 or under Chapter 2710 19 90 of the First Schedule to the Central Excise Tariff Act, 1985 - HELD THAT:- Since both tariff entries fall within Chapter 2710, the chapter notes are an internal guide to their interpretation. Supplementary note (a), therefore holds the key to interpretation; it states that motor spirit means any hydrocarbon oil (excluding crude mineral oil) which has its flash point below 25 C and which either by itself or in admixture with any other substance, is suitable for use as fuel in spark ignition engines. A plain reading of the note would reveal that all the ingredients have to be satisfied. It is not sufficient if the product is a hydrocarbon oil or that it has a flash point below 25 C; it should qualify both conditions, and also fulfil the last condition that by itself, or in admixture with any other substance should be suitable for use as fuel in spark ignition engines. It is crucial that the admixture should be with any other substance. The use of the term other is significant because it is meant to exclude the reference to a class of oils, i.e., hydrocarbon oil. In the present case, this court finds merit in the GAIL s argument, which was accepted by the CESTAT, which is that the Chemical Examiner s report clearly revealed that the MFO was not mixed with any other substance; it was mixed with motor gasoline. In Oil India Limited [ 2002 (6) TMI 402 - CEGAT, NEW DELHI ] it was held that Since the main heading itself excludes crude, it cannot be taken that subsequent exclusion will bring it back under Heading 2710. There is also merit in the contention of the appellant that reference to admixture with any other substance is to be taken as substance other than mineral oil. The description under the heading Motor Spirit tallies with the description under Item 6 in the old Tariff. The decision of CESTAT was affirmed by this court, which dismissed the Revenue s appeal, in COMMISSIONER VERSUS OIL INDIA LTD [ 2003 (2) TMI 489 - SC ORDER ]. In the present case too, there is no material to substantiate the revenue s argument, that the product (MFO) conformed to the description of other motor oil which inter alia, was, after its admixture with any substance, other than hydrocarbon oil. On the contrary, the product was mixed with motor gasoline, which concededly is a hydrocarbon oil. Appeal dismissed.
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2023 (6) TMI 784
Valuation - intent to evade payment of duty - whether the goods sold to a related party or a sister concern should have been computed on cost of production basis which was not undertaken by the appellant herein? - it was held by HC [ 2022 (4) TMI 731 - MEGHALAYA HIGH COURT] that The Tribunal found that the assessee had indulged in under-valuation as per its convenience, to short pay the duty amount which has not been rebutted by submitting the prices charged to independent parties - HELD THAT:- Having perused the material placed on record, there are no reason to entertain this petition under Article 136 of the Constitution of India - petition seeking special leave to appeal is, accordingly, dismissed. Waiver of penalty - revenue neutrality - no suppression of facts - notification dated 27.03.2008 - HC [ 2019 (4) TMI 1346 - MEGHALAYA HIGH COURT ] held that It is clear that the duty is chargeable but it is 100% refundable, the question of intention to evade payment of duty pales into insignificance. But where the duty charged is not 100% refundable, then any act of concealment, misstatement or suppression of facts will give rise to the intention to evade payment of duty - HELD THAT:- The appeal is dismissed on the ground of delay as also on merits in terms of the signed order.
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2023 (6) TMI 783
Remission of duty - loss of molasses due to natural causes - rejection on the ground that on physical verification as done from time to time, no substantial loss was found till 23-6-2008 and all of a sudden in 81 days, the loss as claimed by the petitioner, was deducted, which was unlikely - HELD THAT:- Section 11A of Central Excise Act, on a plain reading confers the power upon the Central Excise Department to recover the dues not levied or not paid or short-levied or short-paid or erroneously refunded. It is well settled that the Central Excise Duty is a duty leviable on manufacture as defined under the Act i.e. the incidence of tax is manufacture - Rule 8 prescribes that the time when the duty is payable on manufacture at the time of removal; that is to say, the duty is payable on the goods when they are removed from the factory or the warehouse. In the present case, the petitioners claimed remission on loss of molasses due to natural causes, which was doubted by the department and a show-cause notice was issued calling upon the petitioners to show cause as to why the remission application may not be rejected and the duty may not be demanded - In the entire show cause notice, which is on record, there is no allegation that the petitioners had clandestinely removed the molasses in contravention of Rule 8 and had not paid the duty thereupon. In the absence of any allegation to the effect in the show cause notice and a consequent finding that the goods were removed without payment of duty, the duty cannot be levied under Section 11A of the Act even if the remission application is liable to be dismissed. In the present case, even with regard to the grounds for rejecting the remission application, the Authorities were of the view that the loss as claimed in a very small period makes the whole issue suspicious, this view was formed treating the measurement as done by the State Excise Authorities to be the correct method for valuation completely ignoring the fact that the remission as claimed by the petitioners was over a larger period of the assessment year, thus, the same is also contrary to the law as laid down by this Court in the case of BALRAMPUR CHINI MILLS LTD. VERSUS THE COMMISSIONER CENTRAL EXCISE ALLAHABAD [ 2017 (2) TMI 203 - ALLAHABAD HIGH COURT ] - in view of the law laid down in the case of Balrampur Chini Mills Ltd., the impugned orders rejecting the remission application are contrary to the said judgment, as such, the impugned orders are liable to be set aside on that ground also. The impugned orders in each of the writ petitions are set aside - the writ petitions are allowed.
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2023 (6) TMI 782
Alleged clandestine removal of MS Items - shortage of stock - order passed ex-parte - all the documents were not examined - violation of principles of natural justice - HELD THAT:- Admittedly, the Appellant s factory was undergoing labour unrest and because of closures of the unit they could not have received the PH Communications. It is on record that both the Lower Authorities have passed the Orders ex-parte. As submitted by the Ld. Advocate, they have many documents in their defence which they have annexed to the present Appeal. As these documents are required to be verified, the matter is required to be remanded to the Adjudicating Authority. Both the appellant as well as the Authorized Representative of the Revenue also agree that the matter has to be remanded to the Adjudicating Authority for this purpose. The Appeals are remanded to the Adjudicating Authority who will follow the Principles of natural justice and give the opportunity to the Appellant to make all their oral and written submissions - Appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2023 (6) TMI 781
Valid notice or not - resent challenge is to a document styled as 'notice' - perusal of the same makes it clear that it is in fact an order passed by the assessing officer disposing the additional rectification petition dated 12.04.2023 filed by the petitioner under Section 84 of the Tamil Nadu Value Added Tax Act, 2006. HELD THAT:- Being an order, it was incumbent upon the authority to issue notice to the petitioner, hear it and thereafter dispose the request for rectification of order of assessment dated 30.08.2019. This has not been done and though no counter has been filed in the matter since the matter is listed for admission only today, Mrs.E.Ranganayaki, learned Additional Government Pleader, who accepted notice for the Commercial Taxes Department has obtained instructions from the officer and confirms this fact fairly. In light of the fact that the additional rectification petition dated 12.04.2023 is now pending in light of setting aside of order dated 04.05.2023, the petitioner is permitted to appear before the authority for hearing of both the rectification petition as well as additional rectification petition dated 16.03.2023 and 12.04.2023 respectively on 23.06.2023 at 10.30 a.m. without expecting any notice in this regard to the hearing as scheduled aforesaid. These writ petitions are disposed.
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2023 (6) TMI 780
Forbearance from assessing or recovering any sums under Section 13 of the Tamil Nadu Value Added Tax, Act, 2006 from members - HELD THAT:- The writ petition is maintainable. As pointed out, not just a common, but identical cause of action has been espoused by 1087 assesses. Though, it is added that their status i.e., whether they are proprietorship concerns, partnership firms or HUF constitutes a question of fact that this Court would not touch upon, their prayer in common is based upon a circular issued by R2 and hence nothing found untoward in they having filed a single writ petition. It is an admitted position that 1087 members who have filed this writ petition form a significant majority of all the association members and it is only 10, who would stand distanced from this cause of action. In the present case as well, the petitioner association is registered under the provisions of the Tamil Nadu Societies Registration Act, 1975. Though the association is not recognized as an assessee by the Commercial Taxes Department, this would not stand in the way of the maintainability of this writ petition itself since admittedly, the cause of action espoused by all the members before the Court is identical, and relates to clarification dated 04.11.2015. Maintainability is addressed towards the prayer itself, which is for a mandamus as against the respondents - HELD THAT:- The respondents are agreed upon that the mandamus of the nature sought for is not liable to be granted. The petitioners pray for a direction that respondents must not assess or recover any sums under Section 13 of the Act. Section 13 deals with deduction of tax at source in works contract and fastens, on 'every person' responsible for paying any sum to any dealer for execution of works contract, the necessity to deduct an amount calculated at certain stipulated rates. The statutory position supports the position that the responsibility of tax deduction falls only upon certain specified persons and proprietorships, partnership firms and HUF stand excluded from this responsibility. - In the present case, the petitioner states that 1087 members whose cause it espouses are proprietary concerns, partnership firms or HUF. This is question of fact. That apart, individual assessee / members have received notices from the respondents and it is for them to respond to those notices clarifying and establishing their status, as to whether they are indeed proprietary concerns, partnership firms or HUF. Failure to do so will entail consequences that they must suffer. Likewise, adverse orders of assessment could also be challenged relying upon the relevant provisions of law. This writ petition is disposed permitting those assessees who are in receipt of notices to file replies before the authority establishing their status. If they do establish their status to be either proprietary concerns, partnership firms or HUF, then evidently they would be protected by virtue of the statutory exclusion in the explanation to Section 13(1) of 2006 Act.
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Indian Laws
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2023 (6) TMI 779
Bribe - Adoption of illegal means by the appellant in obtaining business of international re-insurance cover of another firm on yearly brokerage/commission - HELD THAT:- There was no occasion for interfering with the order of the IRDA by the Tribunal. It is a fact that the order of the Tribunal is in the nature of a remand order and this order in effect has only directed a fresh inquiry. Appellant had argued that so far as his client s complaint is concerned, they had discharged their onus by raising sufficient suspicion as regards the deal between the respondent no.5 and the appellant. But, it is found that barring the fact that the appellant had been given the brokerage contract, there is no other cogent material which would warrant a detailed investigation. The Tribunal has, exfacie, gone wrong in observing that the respondent no.5 had relied on documentary evidence in support of the complaint. The fact finding body has already come to its conclusion on lack of evidence. In the given circumstances, we do not find any useful purpose that would be served in subjecting the appellant or their contract with Jagson to another round of inquiry. In the order under appeal, the Tribunal has observed that the complaint showed that the appellant had relied on documentary evidence in support of the contention that Jagdish Gupta had sought bribe and was bribed by the officers of Marsh for diverting their re-insurance business - no such document found from which such a conclusion could be reached. The order of the IRDA passed on 9th January 2018 is sustained - appeal allowed.
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2023 (6) TMI 778
Seeking grant of Regular Bail - recovery of contraband - 500.18 Kg. of crystalline powder suspected to be Amphetamine - retraction of statement under Section 67 of the NDPS Act, 1985 - HELD THAT:- It is essential to observe that the date of arrest of the applicant is 21-2-2015 and that a period of more than seven years from the date of arrest of the applicant has since elapsed, the offence allegedly committed by the applicant punishable under Sections 22, 27A and 29 of the NDPS Act, 1985 in relation to the commercial quantity of 500 kgs. of mephedrone allegedly seized from the truck, in which the applicant was also allegedly present, is punishable with Rigorous imprisonment for a term which shall not be less than ten years but which may extend to twenty years and to a fine which shall not be less than Rs. 1 Lakh but which may extend to Rs. 2 lakhs. The alleged disclosure statement made by the applicant in terms of Section 67 of the NDPS Act, 1985, in terms of the verdict of the Hon ble Supreme Court in TOFAN SINGH VERSUS STATE OF TAMIL NADU [ 2013 (10) TMI 361 - SUPREME COURT ] is not admissible in evidence. In view thereof in terms of the verdict of the Hon ble Supreme Court in SUPREME COURT LEGAL AID COMMITTEE REPRESENTING UNDERTRIAL PRISONRE VERSUS UNION OF INDIA [ 1994 (10) TMI 290 - SUPREME COURT ], the applicant who is charged with the offences punishable under NDPS Act, 1985 with the minimum imprisonment of ten years and the minimum fine of Rs. 1 Lakh and who has been in jail for more than five years, is entitled to be released on bail, and is thus, subject to terms and conditions imposed - bail application allowed.
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