Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 22, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
GST
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Key points from court decision: Petition for anticipatory bail granted. Specific guidelines in place. Bail is rule, jail is exception.
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High Court considered petitioner's claim of unfair GST registration cancellation. No relief granted due to availability of alternative remedies.
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Petitioner's GST registration cancelled, claiming violation of natural justice. No alternative remedy pursued. Dismissed writ petition.
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High Court found violation of natural justice as petitioner didn't get chance to contest tax demand. Orders set aside for reconsideration. Remit 10% disputed tax within 15 days.
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The Advance Ruling Authority decided not to admit an application due to a pending issue on GST payment.
Income Tax
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Unsecured loans at 9% rate disallowed in tax assessment; Respondent explained transactions, no substantial legal question raised.
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HC: Petitioners not liable u/s 50 of Black Money Act for non-disclosure of foreign assets pre-2015. Prosecution violates Constitution.
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Assessee's appeal allowed as penalty u/s 272A(1)(d) deleted due to valid reasons. Change to digital assessment justified.
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Property deal: Agreed vs actual value. Stamp duty paid explained. Legal provisions not violated. Assessee's appeal allowed.
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Payments to USA parent company not taxable in India as not FTS under u/s 195. AE didn't "make available" tech knowledge.
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The tribunal ruled that the reimbursement of connectivity charges does not constitute technical, managerial, or consultancy services.
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Assessee failed to prove genuineness of transactions claiming LTCG exemption, resulting in addition u/s 68. Court confirms AO's findings.
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Cash deposits during demonetization period properly examined by Assessing Officer. Non-disclosure of income from scrap sales debunked. Revision u/s 263 not justified.
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Trust's late 80G registration rejected. Tribunal directs re-evaluation. Trust must comply with regs.
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The Tribunal ruled in favor of the society on advertisement expenses dispute. Additional charges for services need verification.
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Exemption denied due to missing audit report. Assessee not entitled to claim exemption u/s 10(23). Remanded for fresh adjudication.
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The tribunal found that the company was not given a fair chance during the appeal process. Case sent back for a new review.
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Provisional approval for registration u/s 80G rejected due to time limit. Trusts can apply for provisional reg. before regular reg.
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Expenses on Electric Transformer treated as capital expenses. Installation costs not for personal benefit. Relief allowed to assessee.
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Issues addressed: Exemption eligibility, State status, and taxability of interest income. Assessee found eligible for exemption.
Customs
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New rates for converting foreign currencies to Indian Rupees are out! Check out the updated rates.
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CESTAT ruled against custom valuation rules violation in dispute over brass goods import value. Appeals allowed for re-examination.
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The importer was held liable for misdeclaration, claiming goods as 'electrical and control switches' instead of 'modems.' Matter remanded for further evaluation for levy of penalty.
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Solar lanterns with USB ports for solar charging classified under Customs Tariff Heading 94055040, not 85131090. No interference with classification decision.
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CESTAT ruled Apatite (Ground) Calcium Phosphate = CTH 2510 NOT CTH 2835. Overseas supplier Global Ceramics involved.
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Fe content for export duty - Fe content to be determined on Wet Metric Ton basis, not Dry Metric Ton. Circular must be followed.
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CESTAT ruled in favor of appellant's refund claim for Customs duty on Anhydrous Ammonia import. Appellant complied with conditions.
SEZ
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New rules allow sale of certain metal wastes generated from repair in Domestic Tariff Area. Export-import balance required.
Corporate Law
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Grant of statutory interest to workers ensured; Section 483 provides right to appeal - workmen & secured creditors treated equally. Workmen's claims protected in liquidation.
SEBI
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New SEBI rules for Clearing Corporations: Guidelines for Core SGF & Default Waterfall. Participants must comply with risk-based contributions.
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New rules to prevent market manipulation! Pre-open trading for IPOs & relisted stocks now more secure & transparent. Stay informed & trade wisely!
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Introducing a new auction system for fair pricing of listed Investment Companies and Investment Holding Companies.
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New SEBI rules: PCMs must report major and minor non-compliances in system audits using Annexure 4. Audit reports, including past compliance, to be reviewed by PCM Governing Board and sent to CCs.
Central Excise
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CESTAT ruled that appeals abate after Corporate Insolvency Resolution Process (CIRP) begins. Tribunal's powers are limited.
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2024 (6) TMI 955
Seeking grant of anticipatory bail - use of false, forged, or fake documents and the offence of abetment - in its operations has the Petitioner been associated with irregularities or offences - HELD THAT:- In BHADRESH BIPINBHAI SHETH VERSUS STATE OF GUJARAT ANOTHER [ 2016 (2) TMI 416 - SUPREME COURT] the Hon'ble Supreme Court has laid down specific guidelines for applications for anticipatory bail. The Hon'ble Supreme Court held 'The prosecutrix has moved an application in these proceedings for perusing new evidence on the basis of which she claims that the appellant has committed breach of conditions of anticipatory bail and regular bail. It is not necessary for us to go into the allegations made in this application.' In GURBAKSH SINGH SIBBIA VERSUS STATE OF PUNJAB [ 1980 (4) TMI 295 - SUPREME COURT] , the Hon ble Apex Court held that The question whether to grant bail or not depends for its answers upon a variety of circumstances, the cumulative effect of which must enter into the judicial verdict . It is settled law that while considering the prayer for grant of anticipatory bail, the accusation's nature and gravity and the accused's exact role must be properly comprehended before arrest is made. In the event of some doubt as to the genuineness of the Prosecution, the normal course of events is that the accused is entitled to an order of anticipatory bail. The Court must adequately exercise its jurisdiction to protect the personal liberty of a citizen. It is also a well-accepted principle that bail is the rule and the jail is the exception. This Court views that even if the Petitioners are granted pre-arrest bail, there cannot be any apprehension for the Prosecution that they will tamper with the evidence. The material placed on record discloses that the Petitioners have a permanent abode. It is not the Prosecution's case that the Petitioners would flee away from the jurisdiction of the Court. The facts do not warrant custodial interrogation of the Petitioners - Petition allowed.
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2024 (6) TMI 954
Maintainability of petiton - alternative remedy u/s 30 of GST Act to file an application - Cancellation of GST registration of the petitioner - violation of principles of natural justice and violative of Articles 19 and 21 of the Constitution of India - HELD THAT:- Hon ble Apex Court in WHIRLPOOL CORPORATION VERSUS REGISTRAR OF TRADE MARKS, MUMBAI ORS. [ 1998 (10) TMI 510 - SUPREME COURT] held that in certain contingencies viz., when writ petition is filed for enforcement of fundamental rights, or where there has been a violation of principles of natural justice or when the proceedings impugned are wholly without jurisdiction or the vires of an act is challenged, the writ petition could be maintainable in spite of availability of alternative remedy. In the instant case the petitioner banks upon the violation of principles of natural justice to maintain the writ petition. In this context, a perusal of the show cause notice dated 22.06.2023 shows that the 1st respondent has given required particulars of the non-existent tax payers from whom the petitioner allegedly obtained bogus tax invoices. Admittedly, the petitioner has alternative remedy to challenge the impugned order which he did not avail. Therefore, no order deserved in the writ petition. However, considering that the petitioner s registration has been cancelled and thereby he cannot continue his business activities, it is deemed apposite to give an opportunity to the petitioner to challenge the impugned order either by way of filing a petition U/s 30 of the GST Act or to file an appeal within a reasonable time. Petition dismissed.
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2024 (6) TMI 953
Maintainability of petiton - alternative remedy u/s 30 of GST Act to file an application - Cancellation of GST registration of the petitioner - violation of principles of natural justice and violative of Articles 19 and 21 of the Constitution of India - HELD THAT:- Hon ble Apex Court in WHIRLPOOL CORPORATION VERSUS REGISTRAR OF TRADE MARKS, MUMBAI ORS. [ 1998 (10) TMI 510 - SUPREME COURT] held that in certain contingencies viz., when writ petition is filed for enforcement of fundamental rights, or where there has been a violation of principles of natural justice or when the proceedings impugned are wholly without jurisdiction or the vires of an act is challenged, the writ petition could be maintainable in spite of availability of alternative remedy. In the instant case the petitioner banks upon the violation of principles of natural justice to maintain the writ petition. In this context, a perusal of the show cause notice dated 22.06.2023 shows that the 1st respondent has given required particulars of the non-existent tax payers from whom the petitioner allegedly obtained bogus tax invoices. Admittedly, the petitioner has alternative remedy to challenge the impugned order which he did not avail. Therefore, no order deserved in the writ petition. However, considering that the petitioner s registration has been cancelled and thereby he cannot continue his business activities, it is deemed apposite to give an opportunity to the petitioner to challenge the impugned order either by way of filing a petition U/s 30 of the GST Act or to file an appeal within a reasonable time. Petition dismissed.
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2024 (6) TMI 952
Maintainability of petition - availability of alternative remedy U/s 30 of GST Act - Cancellation of GST registration of the petitioner - violation of principles of natural justice and violative of Articles 19 and 21 of the Constitution of India - pivotal argument of petitioner is that the petitioner never indulged in bogus purchases or supplies to accommodate his suppliers to claim ITC fraudulently. HELD THAT:- Thus, Hon ble Apex Court in WHIRLPOOL CORPORATION VERSUS REGISTRAR OF TRADE MARKS, MUMBAI ORS. [ 1998 (10) TMI 510 - SUPREME COURT] held that in certain contingencies viz., when writ petition is filed for enforcement of fundamental rights, or where there has been a violation of principles of natural justice or when the proceedings impugned are wholly without jurisdiction or the vires of an act is challenged, the writ petition could be maintainable in spite of availability of alternative remed. In the instant case the petitioner banks upon the violation of principles of natural justice to maintain the writ petition. In this context, a perusal of the show cause notice dated 23.06.2023 shows that the 1st respondent has given required particulars of the non-existent tax payers from whom the petitioner allegedly obtained bogus tax invoices. Therefore, there are no venom in the contention of the petitioner that the show cause notice is bereft of required particulars and thereby the principles of natural justice were violated. Admittedly, the petitioner has alternative remedy to challenge the impugned order which he did not avail. Therefore, no order is deserved in the writ petition. However, considering that the petitioner s registration has been cancelled and thereby he cannot continue his business activities, it is deemed apposite to give an opportunity to the petitioner to challenge the impugned order either by way of filing a petition U/s 30 of the GST Act or to file an appeal within a reasonable time. The writ petition is dismissed.
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2024 (6) TMI 951
Violation of principles of natural justice - petitioner was not provided a reasonable opportunity to contest the tax demand on merits - HELD THAT:- On examining the impugned orders, it is evident that the tax proposal was confirmed because the petitioner did not file written objections or attend the personal hearing. By taking into account the assertion that the petitioner could not participate in proceedings on account of being unaware of the same, the interest of justice warrants that the petitioner be provided an opportunity to contest the tax demand on merits by putting the petitioner on terms. Therefore, the impugned orders dated 10.07.2023 are set aside and the matters are remanded for reconsideration on condition that the petitioner remits 10% of the disputed tax demand in respect of each assessment period as agreed to. Such remittance shall be made within a period of 15 days from the date of receipt of a copy of this order. Petition disposed off.
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2024 (6) TMI 950
Violation of principles of natural justice - no opportunity of personal hearing - petitioner was unaware of the aforesaid order or notices that preceded the impugned order as they were posted in the GST common portal and that the petitioner/Proprietor of the petitioner was hospitalised due to ill health - HELD THAT:- Considering the submissions made by the learned counsel for the petitioner and the learned Government Advocate for the respondent, considering the fact that the amount of tax involved is only Rs. 1,31,998/- (Rs. 65,992/- x 2) and considering the fact that a sum of Rs. 41,475/- has already been recovered form the petitioner towards arrears of due under the impugned order, the impugned order stands quashed by giving liberty to the petitioner to make fresh representation before the respondent within 30 days from the date of receipt of a copy of this order. The impugned order, which stands quashed, shall be treated as addendum to the show cause notice that preceded the impugned order. Petition disposed off.
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2024 (6) TMI 949
Seeking quashing of impugned order - petitioner is willing to deposit 10% of the disputed tax to the credit of the respondent - HELD THAT:- This Court is inclined to exercise its discretion in favour of the petitioner after recording the submission of the learned counsel for the petitioner that the petitioner is willing to deposit 10% of the disputed tax to the credit of the respondent. The impugned order, which stands quashed, shall be treated as addendum to the show cause notice issued to the petitioner. The petitioner shall file a reply within a period of 30 days from the date of receipt of a copy of this order. The petitioner shall pay the amount from its Electronic Cash Register within the aforesaid period. It is submitted that the respondent will pass final orders on merits and in accordance with law within a period of 3 months thereafter. Petition allowed.
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2024 (6) TMI 948
Rejection of appeal against cancellation of the petitioner's GST registration - HELD THAT:- The order issued in Suguna Cutpiece v. The Appellate Deputy Commissioner (ST) (GST) and others [ 2022 (2) TMI 933 - MADRAS HIGH COURT ], was a conditional order and that the petitioner should be directed to comply with all conditions stipulated therein. It is not necessary to adjudicate this matter on merits. Instead, by following the decision in Suguna Cutpiece , this writ petition is disposed of by holding that the petitioner is directed to file returns for the period prior to the cancellation of registration, together with tax dues along with interest thereon and the fee fixed for belated filing of returns within a period of forty five (45) days from the date of receipt of a copy of this order. The writ petition is disposed off.
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2024 (6) TMI 947
Levy of GST - seigniorage fee and mining lease amounts paid by the petitioner to the Government - HELD THAT:- The Division Bench of this Court in A. Venkatachalam v. Assistant Commissioner (ST), Palladam [ 2024 (2) TMI 488 - MADRAS HIGH COURT] where it was held that ' It is made clear that there shall be no recovery of GST on royalty until the Nine Judge Constitution Bench takes a decision.' T he petitioner is permitted to submit his reply to the intimation within a maximum period of four weeks from the date of receipt of a copy of this order. Petition disposed off.
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2024 (6) TMI 946
Scope of Advance Ruling application - Levy of GST - reverse charge mechanism - royalty payments - HELD THAT:- As per sub section (2) of the Section 98 of the Central Goods And services Tax Act, 2017, it is clearly specified that the Authority shall not admit the application where the question raised in the application is already pending or decided in any proceedings in the case of an applicant under any of the provisions of this Act. It is clear that the applicant has approached the authority, for the identical and similar issue of payment of GST under RCM on the royalty payment and hence it is observed that the applicant has approached this authority, on the issue which has already been raised in applicant s own, case under the provisions of the central Goods and Services Tax Act, 2017 and hence we hold that in terms of section 98 (2) of the central Goods And Services Tax Act, 2017, the present application is not admitted and rejected without going into the merits of the case. Application rejected.
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Income Tax
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2024 (6) TMI 945
Treatment of Unsecured Loans - Unsecured loans taken at the rate 9% p.a. disallowed in the tax assessment - Distinguishing the case law cited by the Department, ITAT agreed with the CIT-Appeals and held that the Respondent has discharged the onus of explaining the transactions - ITAT has also examined another decision of the ITAT in respect of another assessee, which also had a valid loan from Javda India Impex Ltd. and agreed with the findings in that case to hold that the addition to the income had been raised merely on conjecture and surmise. HELD THAT:- Having heard the parties and having reviewed the record, we do not find this to be a fit case for an appeal, that raises any substantial question of law - a prerequisite for this Appeal to be entertained. This is not a case of accounting entries masquerading as purchase of goods or services. The evidence on record, has led to the questions of fact being answered concurrently in two rounds of review, in favour of the Respondent. Therefore, no substantial question of law arises.
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2024 (6) TMI 944
Validity of assessment order passed u/s 143 (3) r.w.s. 144B on the ground of violation of principles of natural justice - HELD THAT:- Admittedly, in this case it is apparent that the show cause notice had been digitally signed on 26th March 2024 at around 18.17.08 hours. As such, the same could not have been served on the petitioners prior to 18.17 hours of 26th March 2024. It would also appear that the petitioner no. 1 was barely provided 24 hours to respond as the response of the petitioner no. 1 was required to reach the respondents by 19.00 hours on 27th March 2024. Admittedly, 25th and 26th March 2024 were holidays on account of holi festival . Petitioners have been able to make out a case that the petitioner no. 1 did not get reasonable opportunity to respond to the show cause. Be that as it may, it is noted that the petitioner no. 1 had filed its response on 30th March 2024, which fact would corroborate from the online acknowledgment issued by the respondents which is at page 26 of the writ petition. Obviously, therefore, the submit response button tab was kept activated for the petitioner no. 1 to file its response. Once such response was on record, in my view, the faceless assessment unit was obliged to consider the same. From the materials on record including the order dated 31st March 2024 it would appear that the faceless assess unit has not considered the response submitted by the petitioner no. 1 by recording that no response had been filed by the petitioner no. 1 within the stipulated time. The aforesaid appears to be a mechanical approach adapted by the faceless assessment unit. In view thereof, the order dated 31st March 2024 passed un/s 143 (3) read with Section 144B of the said Act cannot be sustained and the same is accordingly set aside and quashed. The authority shall dispose of the matter preferably within a period of 6 weeks from the date of communication of this order in the manner as directed hereinabove.
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2024 (6) TMI 943
Offence punishable u/s 50 of the Black Money Act - non-disclosure of foreign assets and false statements made by the petitioners - petitioners, office bearers of certain business establishments of two British Companies - The Act came into force on 01-07-2015, and the petitioners were summoned and assessed u/s 10 of the Act in 2018 - Prosecution was initiated u/s 50 and 52 of the Act based on the n- petitioners contended that the Companies were closed before the Act came into force and thus, they could not be prosecuted under a law that was not in existence at the time of the alleged offense HELD THAT:- The prosecution so initiated against these petitioners did not and cannot pass constitutional muster under Article 20 of the Constitution of India. Non-disclosure of an assessment of the tax return for the year 2007-08 or 2009-10 cannot be used to criminally prosecute these petitioners, for an act that has come into force in the year 2015. The law, as on the date alleged, was not the law of such disclosure of assessment. Therefore, the criminal law cannot be set into motion against the petitioners in the aforesaid facts of the case, as it cannot pass muster of Article 20 of the Constitution of India. A caveat, this Court is considering the criminal liability fastened upon the petitioners by the prosecution including under Section 72 (c) of the Act and the consideration has led to an unmistakable conclusion that it falls foul of Article 20 of the Constitution of India. The Special enactment is a statute. Article 20 comes under Chapter III of the Constitution of India, a fundamental right. Constitution of India is not a statute. It is the fountain head of all statutes including the special statute. Therefore, the rigour of any provision of the Act should pass muster of Article 20 of the Constitution of India and it fails to pass such muster in the case at hand and the failure leads to obliteration of the crime against the petitioners.
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2024 (6) TMI 942
Assessment framed u/s 144B declining sec. 80P deduction - assessee chose to file sec. 154 rectification seeking the very deduction u/sec. 80P - A perusal of the AO's detailed discussion in his sec. 154 rectification reveals that he recomputed the very disallowance on netting basis as reduced by the proportionate expenses - HELD THAT:- We have given our thoughtful consideration to the vehement rival stands against and in support of the impugned disallowance(s). Suffice to say, we see no reason to interfere with the learned lower authorities action for the precise reason that purpose of a sec. 154 is to correct apparent mistakes only than carrying-out roving enquiries as held in T S Balram ITO vs. Volkart Bros. [ 1971 (8) TMI 3 - SUPREME COURT] - We accordingly reject the assessee s instant lead appeal for the very reason of maintainability of sec. 154 rectification proceedings. It s corresponding stay application has also follows the suit. Same order to follow in assessee s latter as well as in stay application since raising the question of sec. 154 rectification only in principle. These assessee s appeals with stay applications are dismissed in above terms. A copy of this common order be placed in the respective case files.
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2024 (6) TMI 941
Deduction u/s 80P(2)(d) - interest received from the Co-operative Banks - assessee submitted that it is a Co-operative Housing Society and has made investments in fixed deposits with Co-operative Banks and earned interest income from savings in Co-operative Banks, and interest income from term deposits in Co-operative Banks - as per AO interest income which was earned from the term deposit, has been reported in the financial statements under the head Repair and Maintenance Fund and Sinking Fund and is not offered as income in the Profit and Loss account - AO held that the Co-operative Bank cannot be considered as Co-operative Society, and therefore the Co-operative Bank has rightly been excluded from availing the benefits of deduction under section 80P HELD THAT:- We find that in Mavilayi Service Co-operative Bank Ltd. [ 2021 (1) TMI 488 - SUPREME COURT] while analysing the provisions of section 80P(4) of the Act held that section 80P(4) is a proviso to the main provision contained in section 80P(1) and (2) and excludes only Co-operative Banks, which are Co-operative Societies and also possesses a licence from RBI to do banking business - the limited object of section 80P(4) is to exclude Co-operative Banks that function at par with other commercial banks, i.e. which lend money to members of the public. Thus, we are of the considered view that section 80P(4) of the Act is of relevance only in a case where the assessee, who is a Co-operative Bank, claims a deduction under section 80P of the Act, which is not the facts of the present case. Therefore, we find no merits in the aforesaid reasoning adopted by the AO in denying deduction under section 80P(2)(d) of the Act to the assessee. As regards the claim of deduction under section 80P(2)(d) of the Act, it is also pertinent to note that all Co-operative Banks are Co-operative Societies but vice versa is not true. We find that the coordinate benches of the Tribunal have consistently taken a view in favour of the assessee and held that even the interest earned from the Co-operative Banks is allowable as a deduction under section 80P(2)(d) of the Act. Denial of deduction u/s 80P(2)(d) - interest income which was directly credited to Repair and Maintenance Fund and Sinking Fund - CIT(A), did not grant any relief to the assessee on the basis that claim of deduction on the interest income would require a revised return of income for which the time has elapsed - HELD THAT:- We find that in Goetz India Ltd. [ 2006 (3) TMI 75 - SUPREME COURT] and Pruthvi Brokers and Shareholders Pvt. Ltd [ 2012 (7) TMI 158 - BOMBAY HIGH COURT] as held that the appellate authority can entertain a fresh claim made by the assessee, even if such a claim was not made in return of income or by way of revised return of income. In the present case, it is undisputed that the interest income was also earned by the assessee from its deposits in Co-operative Bank, i.e. Saraswat Co-operative Bank Ltd. Since the AO has now considered the aforesaid interest income as income from other sources and added the same to the total income of the assessee, we are of the considered view that in view of our findings rendered in foregoing paragraphs, the assessee is also entitled to deduction under section 80P(2)(d) of the Act on the aforesaid interest income -As a result, grounds raised by the assessee are allowed.
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2024 (6) TMI 940
Levy of penalty u/s 272A(1)(d) - non-compliance of notice u/s. 142(1) due to the Accountant's Covid-19 illness - unproved sundry creditors as brought to tax u/s 69A r.w.s. 115BBE(1) - HELD THAT:- Assessee has responded to the final show cause notice which has resulted in passing the regular assessment order u/s. 143(3) r.w.s. 144B of the Act, during the faceless assessment proceedings. The assessee has explained that on going assessment proceedings came to know only after the receipt of penalty notice issued u/s. 272A(1)(d) - Since the assessee s Accountant was also not well past Covid-19 Pandemic situation, the assessee could not reply to the earlier statutory notices and filed its reply which has resulted in passing the regular assessment order dated 23.09.2022 u/s. 143(3) in the faceless regime. AO extracted the reply filed by the assessee that his Accountant suffering from Covid-19 ill health and his prolonged absence made the assessee not to file the details. Thereafter a new Accountant was engaged, with various difficulties collected the information and submitted before the assessing officer which are reproduced in Page No. 22 of the assessment order. Thus the assessee has been able to show reasonable cause for the failure to comply with statutory notices issued u/s. 142(1) - assessee has made reply to the final show cause notice with relevant materials and the assessing officer after considering the reply of the assessee, framed the assessment on 23.09.2022. Once the assessee has made compliance, though after some delay but it was well before the assessment order was framed, after considering the reply and documents filed by the assessee, then it does not fall in the category of non-compliance by the assessee at all. Hence, subsequent penalty levied by the Assessing Officer is not justified. Even otherwise, when this is the year of changing the mode of assessment proceedings from physical to digital/electronically, then the delay in compliance due to change in the mode of communication and proceedings is a bonafide reasons and not deliberate. Accordingly, the penalty levied by the Assessing Officer under section 272A(1)(d) is deleted. Assessee appeal allowed.
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2024 (6) TMI 939
Deduction 80P(2)(d)/80P(4) - interest income earned from investment with Co-operative Banks - HELD THAT:- Section 80P(4) of the Act is of relevance only in a case where the assessee, who is a Co-operative Bank, claims a deduction u/s 80P of the Act. We also find that in PCIT v/s Annasaheb Patil Mathadi Kamgar Sahakari Pathpedi Ltd. [ 2023 (5) TMI 372 - SC ORDER] the Hon ble Supreme Court held that a taxpayer who is merely giving credit to its members cannot be said to be the Co-operative Banks/Banks under the Banking Regulation Act and the banking activities under the Banking Regulation Act are altogether different. Therefore, the Hon ble Supreme Court held that the assessee, a co-operative credit society, could not be termed a bank/Co-operative Bank and that being a credit society, it was entitled to exemption under section 80(P)(2) of the Act. Thus, we find no basis in denial of deduction claimed under section 80P(2)(d) of the Act in respect of interest income earned from the investments with Co-operative Banks. Claim of deduction u/s 80P(2)(d) of the Act, it is also pertinent to note that all Co-operative Banks are Co-operative Societies but vice versa is not true. We find that the coordinate benches of the Tribunal have consistently taken a view in favour of the assessee and held that even the interest earned from the Co-operative Banks is allowable as a deduction under section 80P(2)(d) of the Act. We find that the coordinate bench of the Tribunal in Jansevak Co operative Society Ltd. [ 2023 (2) TMI 1141 - ITAT MUMBAI] allowed the deduction claimed by the assessee under section 80P(2)(d). We uphold the plea of the assessee and direct the AO to grant deduction under section 80P(2)(d) of the Act to the assessee in respect of interest income earned from investment with Co-operative Banks. Accordingly, we set aside the impugned order passed by the learned CIT(A). As a result, the grounds raised by the assessee are allowed.
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2024 (6) TMI 938
Denial of benefit u/s 11 - Form No. 10B was filed belatedly as per section 139 - HELD THAT:- if the return of income by the assessee was filed within the stipulation as provided in section 139 of the Act, the CIT (E) is empowered to condone the delay in filing the form no. 10B. In this case the assessee has filed the return well within the time provided in section 139 of the Act and condoning delay in form no. 10B is not an anomaly. Further, as held by various courts that document, i.e. form no. 10B is substantive in nature but filing of the same is procedural in nature and delay in filing of the same can t be fatal for the claim of the assessee. Here in this case the assessee filed the form no. 10B well before processing of return u/s. 143(1) (a) of the Act and passing of assessment order u/s. 143(3) of the Act, in these circumstances, we do not find any force in the order of the authorities below and the assessee is entitled to claim the exemption. Appeal of the assessee is allowed and the AO is directed to delete the addition and allow the exemption claimed u/s. 11 and 12.
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2024 (6) TMI 937
Addition u/s 69 - difference in agreed and actual deal - addition towards source of stamp duty being paid during registration time and remained unexplained - HELD THAT:- It is observed that the assessee has submitted copy of purchase deed wherein the value of property was taken at Rs. 30 Lacs and duly accepted by the State Stamp Authorities. Here it is pertinent to mention that such type of transactions is being covered by the provisions of section 50C (In case of the assessee it will be section 43CA, as the seller is a builder and property under consideration is assuming to be his inventory and not a capital asset) r.w.s. 56(2)(vii) Here it is pertinent to mention that in such type of transactions of property, it is appropriate and rather the AO is duty bound to apply provisions of section 43CA/50C r.w.s. 56(2)(vii) of the Act. In this case there is no finding against the assessee that transaction entered into violates section 43CA at the end of seller and section 56(2)(vii) of the Act at the end of buyer, i.e. the assessee under consideration. The paramount evidence against the assessee would have been the violation of section 43CA and 56(2)(vii) of the Act. It is also not demonstrated by the authorities below that what action they have taken against the seller, i.e. M/s. Gour and Suhane Associates, Makronia, Sagar. As far as the difference between the value of agreement, i.e. 36 Lacs vis- -vis registry value is concerned, we have gone through the registry document (Purchase deed) and found no anomaly in the same. Provisions of section 68 to 69B of the Act applicable only in those cases where the assessee is duty bound to maintain the books of accounts as per the provisions of section 44AA of the Act. In this case the assessee lady is a salaried employee at State Govt. owned Medical College and is not liable to maintain the books of accounts as prescribed u/s. 44AA of the Act. Secondly the provisions of section 68 to 69B of the Act are deeming provisions and can be applied only when there is some strong glitching evidence found against the assessee. Like in an action u/s. 132(Search and seizure) or 133A (Power of survey) of the Act, revenue discovered any evidence, which the assessee is not able to explain. AO wrongly applied the provisions of section 69 of the Act, which is further changed by the Ld. CIT (A) to section 69A of the Act, as the explanation of the assessee alongwith the above discussion found to be reasonable and the assessee is able to discharge her duty. AO and the Ld. CIT (A) applied wrong provisions of the Act. Based on above, we are not inclined to confirm the orders of authorities below as the same are based on wrong application of law and the assessee s contentions found to be bonafide. In these terms the AO is directed to delete the addition - Appeal of assessee allowed.
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2024 (6) TMI 936
Taxability of Payment as FTS - TDS u/s 195 - assessee has made payments towards royalty, IT, technical services and administrative service fees to its parent company in USA without deducting TDS - proceedings u/s 201(1) - AO held that the services rendered by the AE were managerial, technical, and consultancy in nature, falling within the definition of FTS as per section 9 of the Act, thus taxable in India - CIT(A) affirmed the AO's view, observing that the services rendered by the AE were not merely administrative but included advice incorporated by the assessee in its business - assessee finally contended that AE has not make available any knowledge, experience etc, while providing administrative services and hence as per the Article 12(4)(b) DTAA of Indo Us the payments made are out of the purview of FTS HELD THAT:- After referring to the judgment of D-Beers [ 2012 (5) TMI 191 - KARNATAKA HIGH COURT] and Raymond[ 2002 (4) TMI 891 - ITAT MUMBAI] for interpreting the expression make available . The coordinate Bench has held that in order to attract taxability of an income under Article 12(4)(b), not only payments should be in consideration for the rendering of technical services or consultancy services but in addition to that the payment being consideration for rendering of technical services the services so rendered should also be such that make available technical knowledge, experience, skill, know how or process consist of the development and transfer of a technical plan or technical design. n the present case though the AO has observed that the AE has make available the technical knowledge to assessee. However, failed to bring on record any material to support this averment. Therefore, the case of the assessee is squarely covered by the judgment of Tyco( 2023 (2) TMI 247 - ITAT BANGALORE] We also observed that the judgment of Shell ( 2012 (2) TMI 98 - AUTHORITY FOR ADVANCE RULINGS] as relied upon by the AO at the time of assessment has already stands overruled by the Hon ble Bombay High Court. So far as other judgment of EON Technology Vs DCIT relied upon by the AO there the issue was regarding the taxability of commission payments made to AE. Which is not the case herein before us. Thus we are of the view that payments made by assessee were not in the nature of FTS hence we allow the appeal of the assessee.
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2024 (6) TMI 935
Fee for technical Services (FTS) u/s 9(i)(vii) - assessee received reimbursement of connectivity charges from Huawei India for provision of connectivity services for international communication - Admittedly, India and Hong Kong did not have any double taxation avoidance of the Agreement during the concerned Assessment Years - contention of the assessee before the A.O. that the services provided do not constitute managerial services, the services provided do not constitute consultancy services and there is no human intervention involved in provision of connectivity services and thus, the services rendered do not constitute technical services. HELD THAT:- The contention of the Department that, the Revenue has been treated considering the clauses 2.2(a) to (e) of the Agreement that the Assessee provides plethora of services to its AE right from negotiating agreements with third parties entering into purchase agreement, to issuing inspection certificates certifying the products and services. Revenue treated these services as not only technical in nature but also managerial and consultancy services against the fact that assessee has only paid for connectivity services and the services are merely ancillary to enabling the provision of inter-connect services and part of the processing the product. Hence, in our considered opinion, the amounts cannot be treated as technical or managerial or consultancy services. The Reliance is being placed on the judgment of Bharti Airtel Ltd. [ 2024 (1) TMI 804 - SC ORDER] The assessee has earned 1% markup on the reimbursement of connectivity charges. This is the amount earned by the assessee in the entire transaction. The AO may invoke relevant provisions of the Income Tax Act and the DTAA for taxing of the said income earned.
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2024 (6) TMI 934
Disallowance u/s 14A r.w.r. 8D - whether any exempt income earned or not? - expenditure incurred on earning exempt income - HELD THAT:- In the present case, it is evident from the record that no disallowance was made under Rule 8D(2)(i) of the Rules. Further, the AO made a disallowance of Rs. 66,80,562 under Rule 8D(2)(ii) of the Rules in respect of the expenditure incurred by way of interest, during the previous year, which is not directly attributable to any particular income or receipt. We find that in CIT v/s HDFC Bank Ltd., [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] held that where assessee's own funds and other non-interest bearing funds were more than the investment in tax-free securities, no disallowance under section 14A of the Act can be made of the part of interest payments. Thus we find no merit in disallowance made by the AO under section 14A read with Rule 8D(2)(ii) of the Rules. Disallowance computed u/s 14A read with Rule 8D(2)(iii) - Special Bench of the Tribunal in the case of ACIT v/s. Vireet Investment (P) Ltd. ( 2017 (6) TMI 1124 - ITAT DELHI ) held that only those investments are to be considered for computing average value of investments, which yield exempt income during the year. Therefore, we direct the AO to recompute the disallowance under section 14A read with Rule 8D(2)(iii) of the Rules in view of the aforesaid decisions, and if the disallowance so computed by applying above said principles works out to be lower than the value of exempt income, then the disallowance under section 14A should be restricted to the lower amount so computed. Accordingly, the impugned order in respect of deletion of disallowance under section 14A read with Rule 8D(2)(ii) of the Rules is upheld. While in respect of disallowance made under section 14A read with Rule 8D(2)(iii) of the Rules, the impugned order is modified, and the AO is directed to compute the disallowance under section 14A read with Rule 8D(2)(iii) of the Rules in view of directions as rendered in the foregoing paragraph. As a result, the grounds raised by the Revenue pertaining to deletion of disallowance under section 14A of the Act are partly allowed for statistical purposes. Disallowance u/s 36(1)(iii) - assessee has advanced interest free loan on which interest was not charged by the assessee - HELD THAT:- From the financial position of the assessee, as per the consolidated capital account and balance-sheet, as noted in the foregoing paragraph, it is evident that the assessee's own funds and interest free funds are more than investments, including the investments for earning exempt income, and interest-free advances given. We find that in CIT v/s Reliance Utilities Power Ltd.[ 2009 (1) TMI 4 - BOMBAY HIGH COURT] held that if funds are available with the assessee, which are sufficient to meet the investment, then presumption would arise that the investment is made out of funds so available with the assessee and, therefore, no disallowance under section 36(1)(iii) can be made - we find no infirmity in the impugned order in deleting the disallowance made u/s 36(1)(iii) - grounds raised by the Revenue pertaining to deletion of disallowance u/s 36(1)(iii) are dismissed.
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2024 (6) TMI 933
Addition u/s 68 - Bogus LTCG claimed exempt u/s 10(38) - assessee had failed to discharge the onus to establish the genuineness of the transactions - Onus to prove - AO concluded that the assessee had failed to explain as to why the shares of LDPL and MARL were purchased in off market transactions when the assessee maintained a de-mat account and regular trading in market was done through the demat account and assessee had also not explained why the purchased shares were kept in pool account of the broker when the assessee was maintaining its own demat account - HELD THAT:- The discrepancies and adverse evidence collected by the AO in the course of assessment were not explained by the assessee and the thrust was always on the documentary evidence of the transactions. The documentary evidences cannot be relied upon and treated as conclusive in view of various unanswered questions as already discussed earlier and the dubious nature of transactions. The surrounding circumstances of the transactions establish that the transactions entered into by the assessee were not genuine. Assessee had not discharged its onus against the overwhelming adverse evidences that has been brought on record by the Revenue authorities. The thrust of the assessee s argument is that the sale consideration was received by cheque on which STT was paid and, therefore, the LTCG earned was genuine cannot be accepted in view of multiple adverse evidences collected by the Revenue and the assessee cannot be treated as a passive beneficiary of the transactions. The Hon ble Supreme Court held in the case of Security And Exchange Board of India vs. Rakhi Traders Pvt. Ltd., ( 2018 (2) TMI 580 - SUPREME COURT ) that in trade transactions with huge price variations of the transactions, it will be too na ve to hold that the transactions were through screen based trading and hence anonymous. According to the Apex Court, such conclusion would be overlooking the prior meeting of minds involving synchronization of buy and sale order and that such transactions were manipulative/deceptive device to create a desired loss and/or profit. The transactions entered into by the assessee are not genuine. The manner of purchase of shares of LDPL MARL in off-market transactions, inordinate delay in dematerialization of those shares and their dematerialization just days before their sale; the assessee has not discharged its onus against the adverse evidences brought on record by the AO and no satisfactory reply was given to explain the same. The unusual sequence in the purchase transactions, the preponderance of probabilities and the surrounding circumstances as discussed above, are heavily loaded against the genuineness of the transactions and, therefore, we have no hesitation in confirming the findings of the AO which was upheld by the ld. CIT(A). As the Revenue had invoked the provisions of Section 68 of the Act, the onus was squarely on the assessee to prove the genuineness of the credit transaction, which has not been discharged. The objection of the Ld. AR that the Revenue didn t add the entire sale consideration u/s 68 of the Act is also not relevant. The facts remains that the LTCG claim of the assessee was credited to books of the assessee and when the addition is made to the extent of LTCG credit we can t expand it to include the entire sale consideration. What is relevant is that the Revenue has brought enough materials on record to exhibit the transactions as sham or bogus as well as unexplained and the assessee has miserably failed to establish the genuineness of the impugned credit entry of LTCG appearing in the accounts. Since the exempted LTCG claim of the assessee was only a fa ade created to conceal the true nature of the credit entry appearing in the accounts, the addition as made by the AO is confirmed and the order of the ld. CIT(A) is upheld. Decided against assessee.
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2024 (6) TMI 932
Revision u/s 263 - as per CIT AO has not made inquiry with regard to the cash deposits made during demonetization and further he has not examined non-disclosure of income from scrap sales - HELD THAT:- PCIT has observed that on perusal of assessment record, he found that the cash book and bank account statements from the assessee were not obtained and copy of bank account for the relevant period not placed on file. These facts led him to conclude that the cash deposits made by the assessee were not examined by the AO. If the aforesaid observations of learned PCIT are kept in juxtaposition to the order-sheet entries of the AO as well as the questionnaires along with notices issued u/s 142(1) of the Act and replies furnished by the assessee, there can be two conclusions. Firstly, without making any inquiry the Assessing Officer has misstated the facts and made false entries in the order-sheets. Secondly, PCIT has not examined the records properly. Keeping in view the details of inquiry conducted by the Assessing Officer, which is manifest from the materials brought on record in the form of notices issued under section 142(1) and 143(2), the order-sheet entries, replies filed by the assessee, it is not possible under any circumstances to conclude that the Assessing Officer has misstated the facts or has recorded false order-sheet entries. Therefore, the only conclusion one can reach is, the allegations made by the PCIT that the Assessing Officer has not conducted any inquiry with regard to cash deposits during demonetization period, is not based on materials on record, or rather, contrary to materials on record. The materials on record certainly make it clear that learned PCIT has initiated proceedings under section 263 of the Act mechanically without properly examining the assessment records. Non-disclosure of scrap sales, the materials on record clearly reveal that there, in fact, is no such nondisclosure of scrap sales. The Audited financial statement furnished in course of assessment proceedings clearly indicate that the scrap sales, indeed, were shown by the assessee. The primary conditions for invoking section 263 of the Act are, the order sought to be revised must be erroneous and at the same time prejudicial to the interest of Revenue. Unless, these twin conditions are satisfied, section 263 of the Act cannot be invoked. In the facts of the present case, learned PCIT has put much emphasis on Explanation 2 to section 263 of the Act. In our view, Explanation 2 to section 263 of the Act does not invest unbridled power with the revisionary authority so as to empower him to invoke revisionary jurisdiction arbitrarily. In the facts of the present appeal, the materials brought on record clearly reveal that the Assessing Officer has conducted thorough inquiry on various issues, including the issues on which learned PCIT has exercised jurisdiction u/s 263 - After satisfying himself with the result of enquiry, the Assessing Officer has completed the assessment. That being the factual position emerging on record, the assessment order cannot be held to be erroneous and prejudicial to the interest of Revenue - In absence of any material brought on record by the revisionary authority to establish the lack of inquiry, mere allegation would not suffice. Decided in favour of assessee.
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2024 (6) TMI 931
Rejecting the application for final Registration u/s. 80G(5)(iii) in Form No.10AB belatedly on 23.11.2022 - HELD THAT:- It is undisputed fact that the Trust was created on 06-05-2011 and Final registration u/s. 12AB was granted to the assessee Trust. Similarly, Provisional registration u/s. 80G was granted on 11-02-2022. However, the assessee failed to File final registration under 80G(5) within six months period but filed on 23-11-2022 is barred by limitation and treated the Application as not maintainable. Circular No. 6 of 2023 dated 24-05-2023 was not considered by Ld CIT[E] while rejecting Final registration u/s.80G of the Act vide order dated 28-05-2023. This Circular clarified that even in case, where the application in Form No. 10AB was rejected by the CIT(E) on or before issuance of this circular dated 24-05-2023, the assessee trust can make fresh application in Form 10AB on or before 30-09-2023. Thus, the ld. CIT(E) has not considered the clause 7 of the Circular No.6 of 2023 thereby rejected the application, which is in our considered view is against the circular issued by the CBDT. We hereby set aside the impugned order passed by CIT(E) with a direction to reconsider the From No.10AB for Final Registration u/s. 80G of the Act by giving proper opportunity of being heard to the assessee trust. Needless to say the assessee trust should co- operate by furnishing all the required details as mandated under the law for granting final registration u/s. 80G of the Act. Appeal filed by the assessee is allowed for statistical purpose.
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2024 (6) TMI 930
Disallowance u/s 14A r.w.r. 8D(2) - Undisputedly, the assessee had not earned any exempt income during the year - HELD THAT:- We find that the ratio laid down in the case of PCIT Vs. Era Infrastructure (India) Ltd[ 2022 (7) TMI 1093 - DELHI HIGH COURT] has held that the amendment made in Section 14A of the Act by Finance Act, 2022, will be applicable prospectively and also held that disallowance u/s 14A of the Act should not exceed the exempt income earned by the assessee during the year, is squarely applicable and no disallowance is called for in the present case. The common issue raised in both the years are allowed. Addition u/s 41(1) - AO made this addition based on information that certain companies claimed irrecoverable amounts from the appellant - HELD THAT:- Considering the prayer of the ld. Counsel for the assessee for admission of additional evidence under Rule 29 of the Income tax Rules and also considering the facts which prima facie suggests that there was no liability in the books of accounts in the name of the two concerns, namely, M/s. Premco Rail Engineers Ltd. and Ripley Company Limited, we are inclined to restore the issue to the file of the jurisdictional Assessing Officer for a fresh adjudication in light of the submissions of the assessee as well as the additional evidence adduced by the assessee. Needless to mention that the assessee shall produce all necessary documents/evidence, in support of its claim before the Assessing Officer and shall co-operate till the disposal of its appeal. Accordingly, this Ground relating to addition u/s 41(1) of the Act raised by the assessee is allowed for statistical purposes.
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2024 (6) TMI 929
Disallowance of advertisement expenses (newspaper and other media insertions expenses ) - HELD THAT:- As M/s. Red Eye Media Pvt. Ltd. (being an agent of M/s. Dainik Bhaskar) had charged the assessee society for the advertisements in the newspaper, viz. Dainik Bhaskar the same rate which was fixed by the newspaper company, therefore, the observation of the A.O that the assessee society was unreasonably charged for the said work is found to be factually incorrect. Discount of 15% that M/s. Red Eye Media Pvt. Ltd. had received from M/s Dainik Bhaskar on the bill amount, we are of the view that as the said discount/incentive was received by M/s. Red Eye Media Pvt. Ltd. in its capacity as that of an agent of the aforesaid newspaper company, thus, the same, cannot have any bearing on determining the reasonableness of the charges that were borne by the assessee society for the advertisements in the newspapers carried out through the aforesaid specified person. 15% discount received by M/s. Red Eye Media Pvt. Ltd. from M/s Dainik Bhaskar was not an incentive/discount that the assessee society could have obtained if it had got the said advertisement work done either directly through the newspaper company or through some other agent. As M/s. Red Eye Media Pvt. Ltd. (supra) had billed the assessee society the same amount that the newspaper company had billed to M/s. Red Eye Media Pvt. Ltd., thus, it can safely be concluded that the related party had not availed any profit from the assessee society - Thus adverse inferences drawn by the A.O as regards unreasonableness of the charges raised by M/s. Red Eye Media Pvt. Ltd. (supra) regarding the advertisement work done for the assessee society through insertions in the newspapers vactaed. Hoarding Expenses - Although the CIT(Appeals) had summarily accepted the aforesaid claim of the assessee society, but in absence of any material, which would substantiate the aforesaid claim of the assessee society, i.e., M/s. Red Eye Media Pvt. Ltd. was providing additional services as stated hereinabove, we are unable to endorse the same. On being specifically queried about the nature of services which were rendered by M/s. Red Eye Media Pvt. Ltd. (supra) and to place on record documentary evidence supporting the said factual position, the Ld. AR submitted that the same were not readily available with him. Considering the aforesaid facts, we are of the view that justification given by the assessee society as regards the additional charges raised by M/s. Red Eye Media Pvt. Ltd. (supra) for carrying out advertisement through M/s. A.S. Advertiser, Raipur (supra) cannot be summarily accepted and would require necessary verification. We, thus, in all fairness, restore the matter to the file of the A.O with a direction to look into the reasonableness of the advertisement expenditure in the backdrop of the claim of the assessee society that M/s. Red Eye Media Pvt. Ltd. (supra) had raised additional charges with respect to the advertisement services rendered through M/s. A.S. Advertiser, Raipur (supra) for certain services which were provided by it, viz. script writing, photoshoots, layout and designing etc. Thus, the Grounds of appeal Nos. 1 2 raised by the revenue are partly allowed for statistical purposes. Addition made on account of Commission brokerage expenses - Considering the fact that the A.O had failed to deal with the aforesaid documentary evidence that is stated to have been filed by the assessee society in the course of the proceedings before him, the matter in all fairness requires to be revisited by him. At the same time, we may herein observe that the assessee society in the course of the set-aside proceedings shall not only substantiate its claim for the aforesaid commission/brokerage expenses, but also shall provide explanation as to on what basis the bills raised in the name of ITM University located at Aurangabad, Nagpur and Mumbai etc. were to be considered in its case. We, thus, in terms of our aforesaid observation restore the matter to the file of the AO Addition on account of depreciation - AO had declined the assessee's claim for depreciation on fixed assets for the reason that once the cost of assets had been allowed as expenditure at one time, no additional benefit of depreciation could thereafter be allowed - HELD THAT:- We are of the view that for both the reasons, viz. (i) that as observed by the CIT(Appeals), the assessee had not claimed the cost of assets as an application; and (ii) that prior to Section 11(6) of the Act made available on the statute w.e.f. A.Y.2015-16, the assessee was entitled to claim depreciation u/s.32 of the Act on assets whose cost has been allowed as application for charitable purposes u/s.11(1)(a) of the Act, there was no justification for the A.O to have disallowed its claim for depreciation. Decided in favour of assesee.
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2024 (6) TMI 928
Order of CIT(Appeals) u/s 250 - Unexplained cash credit u/s 68 and u/s 41(1) on account of outstanding balances of creditors - HELD THAT:- It was the allegation of the AR and rightly so that, though the CIT(A) has mentioned the case is being decided on merits, but the order of CIT(A) was more of reproduction of the order of AO, nothing transpires from the impugned order that he had decided the issues with independent application of mind. The appeal of the assessee was not decided on merits by the CIT(A) and in such cases, we are consistently taking a view that such cases should be restored back to the files of CIT(A), therefore, we, in absence of any distinguishable features in the present case, without going into the merits of the case are of the opinion to restore the issues raised in the present appeal back to the files of CIT(A) for adjudicating the same afresh, with affording reasonable opportunity of being heard to the assessee, which the assessee shall comply in most diligent manner without any fail. The assessee will be at liberty to submit necessary explanations and submission in the set aside proceedings. As in absence of deliberation on the issues on its merits before the CIT(A) based on material available on record, in the interest of justice, we find it appropriate to restore the present appeal back to the files of Ld. CIT(A) for fresh adjudication. Appeal of the assessee is partly allowed for statistical purposes.
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2024 (6) TMI 927
Exemption claimed u/s 10(23C) - exemption disallowed due to non-filing of the required audit report in Form 10BB before the specified date - HELD THAT:- As submitted by the assessee during the course of appellate proceedings that the assessee does not enjoy the registration u/s 10(23) of the Act, therefore, the assessee is not entitled to claim exemption u/s 10(23) of the Act. However, it was submitted instead of taxing the gross receipts, the net income was required to be taxed after allowing the allowable expenditure. In our view, the assessee is required to be assessed as AOP and the assessee is entitled to the deduction of expenses from the gross receipts as available to any other AOP. We deem it proper to remand back the matter to the file of the Assessing Officer with a direction to tax only the net income after giving deduction of expenditure claimed by the assessee in the form of regular expenditure, salary, puja expenditure and all other expenditure which are admissible in law. We further find that the CIT (A) without adjudicating ground No.1 raised by the assessee before him has decided the issue of eligibility of the assessee to claim section 10(23) of the I.T. Act. In our view, once the assessee has no registration u/s 10(23) of the Act, then the income of the assessee is required to be computed by applying the normal provisions of the I.T. Act as AOP and therefore, in our considered opinion, the net income only was required to be taxed. Since the learned CIT (A) had not adjudicated the above ground, therefore, we deem it proper to remand back this issue to the file of the learned CIT (A) to decide the issue afresh after granting due opportunity of being heard to the assessee to furnish the evidence and making its submission - we remand the issue to the file of the learned CIT (A) for fresh adjudication.
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2024 (6) TMI 926
Treatment of specified bank notes deposits - estimation of income at 8% on aggregate credits in bank accounts - addition of certain amounts to the income of the assessee - HELD THAT:- We some force in the grievance of the assessee that without giving an opportunity to him, this addition is made. We also find that there is nothing suspicious in the submission of the assessee that having not been accustomed to the new procedures, the assessee missed the notices sent through e-mail and thereby could not participate in the proceedings - granting an opportunity would meet the ends of justice to put forth his case before the AO on all the issues under enquiry. We set aside the impugned order and restore the matter to the file of AO for taking a view according to law, after hearing the assessee. It is the last opportunity to the assessee to get the matter disposed of on merits. Appeal of assessee is treated as allowed for statistical purposes.
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2024 (6) TMI 925
Ex-parte appellate order by CIT(A) without providing reasonable opportunity - HELD THAT:- It is a matter of fact borne from record that on the first occasion when the appeal was fixed for hearing before the CIT(Appeals), i.e., on 15.10.2018, the assessee company had specifically vide its letter of even date that was filed with the CIT(Appeals) on the same date requested him for an adjournment. Considering all we find that the CIT(Appeals) had wrongly observed that the assessee company had failed to comply with and participate in the course of proceedings which were fixed before him on 15.10.2018. Also, we find substance in the claim of the Ld. AR that now when the notice dated 19.11.2018 issued by the office of the CIT(Appeals) fixing the hearing of the appeal on 03.12.2018 was in itself received by the assessee company on 04.12.2018, therefore, there was no occasion for the assessee appellant to participate in the proceedings before the said first appellate authority. We find it incomprehensible that though the assessee company had vide its letter dated 06.12.2018 duly brought the aforesaid fact of having been intimated about the fixation of the appeal for 03.12.2018 only as on 04.12.2018, but the CIT(Appeals) had brushed aside the said material fact and instead of having afforded an opportunity of being heard to the assessee company had proceeded with the matter and disposed off the appeal on the very next date, i.e, on 07.12.2018. The very manner, in which, the CIT(Appeals) had disposed off the appeal of the assessee is in clear violation of the basic principles of natural justice. It is a case where the assessee company had suffered dismissal of the appeal vide an ex-parte order without having been afforded sufficient opportunity to participate and prosecute the matter before the first appellate authority. We, thus, in terms of our aforesaid observations, restore the matter to the file of the CIT(Appeals) with a direction to re-adjudicate the same after affording a reasonable opportunity of being heard to the assessee company. Appeal of the assessee is allowed for statistical purposes.
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2024 (6) TMI 924
Rejection of application for registration u/s 80G - assessee post obtaining provisional approval and applied for regular/permanent approval - CIT(E) rejected the application on the ground that the application is not filed within time limit prescribed under clause (iii) of third proviso of section 80G(5) - HELD THAT:- We find that on similar set of facts, the Coordinate Bench of Jodhpur Tribunal in the case of Bhamashah Sundarlal Daga Charitable Trust [ 2023 (11) TMI 1210 - ITAT JODHPUR ] as held the concept of Provisional registration was mainly to facilitate the registration of newly formed Trust/Institutions which have not yet begun the activities. The parliament in its wisdom has decided to differentiate between the Trust which were newly formed and the trust which were already doing charitable activities. In the second category of cases, there are again two possibilities, one trust was already doing charitable activities and was already having Registration u/s 12AA or 80G(5) of the Act, such trust were directed to re-apply for registration under new procedure on or before 30th August, 2020 but due to Covid- 19 this date was subsequently extended. There is Second category of trust/institutions which were already doing Charitable Activities but had never applied for registration u/s.80G(5) of the Act It is not mandatory that every charitable trust/institution has to apply for registration u/s.80G(5) of the Act. However, there is no bar in the Act that such trust or institutions cannot apply for registration u/s80G in the new procedure. In these kinds of cases, the Trust/Institute though doing charitable activity may apply first for the Provisional Registration under the Act. After getting the Provisional Registration the Trust/Institution have to apply for Regular registration. These kind of Trust/Institutes will fall under sub clause (iii) of the Proviso to Section 80G(5) of the Act, since they have obtained Provisional registration. In this case to avoid the absurdity as discussed by us in earlier paragraph, we are of the opinion that the words, within six months of commencement of its activities has to be interpreted that it applies for those trusts/institutions which have not started charitable activities at the time of obtaining Provisional registration, and not for those trust/institutions which have already started charitable activities before obtaining Provisional Registration. We derive the strength from the Speech of Hon ble Finance Minister and the Memorandum of Finance Bill 2020. Thus we restore the matter back to the file of ld. CIT(E) to reconsider the application afresh by following the decision [supra] and to pass order afresh in accordance with law. Needless to order that before passing order, the ld. CIT(E) shall grant reasonable opportunity of hearing. Appeal of assessee is allowed for statistical purposes.
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2024 (6) TMI 923
Capital gain computation - addition by invoking the deeming provisions of section 50C - HELD THAT:- Since the assessee has claimed and received the sale consideration amounting to Rs. 35 lakh which is equivalent to the fair market value of the said property and not the value as adopted by the Stamp Valuation Authority at Rs. 45 lakh, therefore, the lower authorities ought to have referred the matter to the Departmental Valuation Officer for valuing the fair market value of the property. Therefore, grounds raised in the assessee s appeal are allowed for statistical purposes and the matter is restored to the jurisdictional AO for carrying out necessary exercise of referring the matter to the Departmental Valuation Officer and decide the issue in accordance with law as discussed herein above. Appeal of the assessee is allowed for statistical purposes.
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2024 (6) TMI 922
Validity of assessment u/s 147 - Cash deposits in the bank account as undisclosed income - HELD THAT:- As cash deposit in the bank account of the assessee and the assessee has not filed any income-tax return under the provision of section 139(1) of the Act. Admittedly, the cash deposit in the bank account ipso-facto does not represent the income. There can be multiple reason for deposit of cash in a bank for example the money borrowed, sales of agricultural produce, sale proceeds of property, sale proceeds of household items or any other receipt which is not liable to tax. How to establish the fact that the cash deposited in the bank account does not represent the income of the assessee in the absence of any return of income filed by the assessee u/s 139(1) - We are of the opinion that the AO, in the absence of any return filed by the assessee, cannot draw any inference about the justification for the source of cash deposit based on documents. Regarding the transaction being cash deposits carried out by the assessee, there is no mechanism available with the AO except to initiate the proceeding u/s 147 of the Act. For initiating the proceedings u/s 147 AO has to form prima facie reason to believe that income of the assessee has escaped assessment which has been done, in out considered view, in the instant set of facts. The ground raised by the assessee challenging the validity of the assessment framed u/s 147 of the Act, is hereby dismissed. Cash deposits in the bank account treating the same as undisclosed income of the assessee - On perusal of the cash book and the bank statement available in paper book we note that there were sufficient withdrawals from the bank account in cash prior to the deposit of cash in the bank except the source of cash shown in the cash book - Revenue has not brought anything on record justifying that the withdrawal of cash from the bank account has been utilized by the assessee somewhere else either for making investment or incurring personal/ other expenditure. Accordingly, we can presume that the cash withdrawal from the bank has been used for the purpose of cash deposit in the bank. Accordingly, we hold that to that extent i.e. cash withdrawal claimed to be used for cash deposit, the addition is not warranted. AR at the time of hearing before us has not explained the source of cash therefore we hold that such cash deposits represent the income of the assessee. Thus, the addition of the same is liable to be sustained.
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2024 (6) TMI 921
Nature of expenses - treatment of expenditure on installation of Electric Transformer - assessee reiterated that the ownership of such transformer is always with the State Government or Electricity Company as per statutory provisions, thus, such expenditure can be considered as capital expenses - HELD THAT:- We find that there is no dispute that the assessee made such payment to GEB for installation of transformer at the project developed by the assessee. It is not the case of AO that the transformer was purchased by the assessee for his personal need. We find that before the ld. CIT(A), the assessee made similar submission in his written submission as summarily made before us. CIT(A) on appreciation of facts, held that the land and other amenities which were forming part of project was handed over to the ultimate buyers and ownership was transferred to the society. The builder (assessee in the present case) no more enjoys the right to the property. The installation of transformers was not for the ultimate benefit of builder. The expenses were borne out of the receipt from ultimate beneficiaries. In such cases, the expenses like purchase of land and other expenses was just a work in progress for the assessee and not an asset with enduring benefits for the assessee. On the basis of such observation, the ld. CIT(A) allowed relief to the assessee. We also in agreement with the contention of assessee that the assessee has not got any personal benefit from such expenses. The ownership of such asset lies with the Gujarat Electricity Board or the electricity distributor company. No personal benefit of enduring in nature is received or enjoyed by assessee. Thus, we affirm the order of ld. CIT(A), resultantly, the appeal of revenue is dismissed.
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2024 (6) TMI 920
Eligibility for exemption u/s 10(23AAA), 11, and 12 - Status of the assessee as State within the meaning of Article 289(1) of the Constitution of India - only reason for the denial of assessee claim by the AO is that such a claim has not been made in the original return filed before him - HELD THAT:- It is found that assessee was fulfilling all the conditions as laid down for the purposes of section 11 to 13 of the act. Assessee is applying its income derived from property held under trust for the purposes approved in the registration certificate u/s 12A. The only reason for the denial of assessee claim by the AO is that such a claim has not been made in the original return filed before him hence he relied upon the judicial pronouncement on honorable supreme court in the case of M/s Goetze (India) Ltd. [ 2006 (3) TMI 75 - SUPREME COURT] wherein it is provided that assessee cannot make any fresh claim before the assessing officer except by revising its return of income. As in this case no revised return has been filed by the assessee but the same case law doesn t stop the CIT(A) and ITAT to entertain the fresh claim of the assessee whether a revised return has been filed or not. We have thoroughly gone through the order of AO and found that assessee is applying more than 85% of the gross income towards objects of the institution. The surplus of the institution has been invested in the modes prescribed u/s 11(5) of the act. Assessee filed an audit report to form no. 10B. In view of these facts and the reason given by AO for not applying provisions of section 11 and 12 in the case of assessee, we found that the order of CIT (A) is correct and we find no perversity in the order of CIT (A). we do not find any sustainable reason assigned by AO which can justify the denial of assessee s claim for exemption under the provisions of sec 11 and 12 hence, ground nos. 1,2 and 3 raised by revenue are dismissed. Status of the Assessee as State - As there is a thin line of demarcation between bodies of the State to whom for implementation of Government projects, work in relation thereto is assigned and as a result thereof, during the performance of such activity on behalf of the State, income is earned though utilised for the same purpose and instrumentalities carrying on trade and/or business activity of the State Government earning income. In both the cases aforesaid there is existence of deep and pervasive State Control. In the former case, the body to whom work has been entrusted and income is earned acts as a nodal agency of the State whereas in the latter case it is not so as the instrumentality having independent identity has income arising from its trading and/or business activity and conduct of such activity not being attributable to State in any manner. The aforesaid distinction is discernible from various cases decided by the Hon'ble Supreme Court as well as the High Courts. In the case of Andhra Pradesh State Road Transport Corporation [ 1964 (3) TMI 15 - SUPREME COURT] , the Andhra Pradesh State Road Transport Corporation constituted under the Road Transport Corporations Act, 1950, by a notification issued by the Andhra Pradesh Government, was held not be immune from liability to income-tax on income derived from its trading activities, under article 289 of the Constitution of India for the reason that though the majority of its shares are owned by the Andhra Pradesh Government and its activities are controlled by the State, the Corporation has a separate personality of its own, the trading activities are the trading activities of the Corporation and the profit and loss arising therefrom are the profit and loss of the Corporation and therefore, the income derived by the Corporation from its trading activities cannot be said to be the income of the Andhra Pradesh State under Article 289. Thus, on the basis of the aforesaid observations, that a trading activity carried on by the corporation is not a trading activity carried on by the State departmentally, nor is it a trading activity carried on by a State through its agents appointed in that behalf, the Hon'ble Supreme Court held that the income derived by the Corporation from its trading activities cannot be said to be the income of the Andhra Pradesh State under Article 289(1) of the Constitution of India. The following principles deserve to be kept in focus while considering the question of taxability of interest earned on FDRs by an Instrumentality of the State and/or Department/Organization of the State: (1) Interest income arising out of the business/trading activity carried out by the instrumentality of the State would be taxable in its hands; (2) The statute under which the instrumentality of the State is brought into existence must expressly provide for principal and agent relationship betwixt the State and such instrumentality; and in the absence thereof, any interest income derived by such instrumentality would be taxable as income in their hands.; (3) Any income by way of interest earned by the instrumentality of the State after having received any amount of grant or subsidy for the implementation of project/scheme i.e., earmarked purpose of the State would not be taxable as income in the hands of such instrumentality of the State or the State.; (4) Any income by way of interest much less any income earned by a Department/Organization of the State would not be taxable in the hands of either the State and/or such Department/Organization of the State. (5) Carrying on business activity for profit motive by an instrumentality and/or Department of the State is immaterial for determining the taxability of income. Thus we hold that assessee is a State within the meaning of Article 289(1) of the Constitution of India being an instrumentality of State within the meaning thereof. Here there is an existence of deep and pervasive State control may afford an indication that the assessee is a state agency or instrumentality. Here the assessee enjoys monopoly status which is State conferred or State protected. Here the functions of the assessee are of public importance and closely related to governmental functions. It would be a relevant factor in classifying the assessee as an instrumentality or agency of the Government. If a department of a government is transferred to an entity like assessee, it would be a strong factor supporting this inference of the assessee being an instrumentality or agency of the Government. Decided against revenue.
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Customs
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2024 (6) TMI 919
Valuation of imported goods - ball valves/check valves/cartridges of brass - rejection of declared value - Redetermination of value - HELD THAT: -The discard of applicability of rule 4 and rule 5 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 by the proper officer in both proceedings under section 28 of Customs Act, 1962 was not founded on proper scrutiny of availability of such information but solely on account of disinclination, from point of view of practical convenience, to do so. That is not appropriate discharge of responsibility devolving on the adjudicating authorities taking recourse to section 28 of Customs Act, 1962. Furthermore, it is noticed that, in the dispute by M/s Tisha International, the first appellate authority has not rendered a finding on the plea that disregard of procedure has jeopardized the survival of the computed value. There are no hesitation in holding that re-determination of assessable value has been undertaken in breach of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 and has proceeded whimsically after rejection of declared value as transaction value. There has been no effort to ascertain availability of transaction value of identical goods or similar goods contemporaneously imported. It is worth noting that the appellants, too, had failed to adduce evidence of these and, thus, disabuse the presumption that such imports had not taken place. The resort to computed value under rule 8 of the said rules is entirely at variance with the Interpretative Notes to the said Rules. It is only appropriate that the disputes are restored to the original authorities for subjecting the respective show cause notices to a proper disposal in accordance with the framework stipulated in Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - appeals are allowed by way of remand.
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2024 (6) TMI 918
Misdeclaration and undervaluation of imported goods - modems - automated teller machines - automated teller machine processors - Application filed u/s 129B(2) for being heard afresh - penalty u/s 112 of Customs Act, 1962 - HELD THAT:- The appellant was undoubtedly held to be a registered company and one among several within a conglomerate that included the importing entity. It is also on record that the importer was held to be liable for consequences of misdeclaration for having claimed the imported goods to be electrical and control switches instead of modems and it was alleged that the appellant-company had afforded a cover for the supply of purportedly finished modems to the customers. Thus, it would appear that the submission of Learned Counsel that the impugned order is deficient in details from which it could reasonably be concluded that penalty under section 112 was liable to be invoked. It is also correct that the stipulations for imposing penalty under section 112(a) and 112(b) are mutually exclusive requiring a detailed finding on the role of any person on whom penalty was to be imposed. In the absence of such finding, it is not appropriate to determine whether the empowerment to impose penalty has been validly invoked. On the finding that the goods are liable for confiscation, which has since been attained finality, there is need for evaluation of the role of the appellant. Matter remanded back to the original authority to determine whether the conditions specified in section 112(a) of 112(b) of the Customs Act, 1962 are found applicable in the instant case insofar as the appellant herein is concerned. Appeal allowed by way of remand.
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2024 (6) TMI 917
Classification of imported goods - Solar lantern - to be classified under Customs Tariff Heading 94055040 or under CET 85131090? - benefit of Serial No.587 of Notification No. 050/2017-cus. - HELD THAT:- The Customs officials have drawn the samples for testing. In the very first case, there is Solar Mini Emergency Light with LED as inbuilt Solar Panel . In other cases, there are no inbuilt solar panels but they have all with USB port‟ with marking Solar Charging and they have also separate AC Charging point. There is nothing to deduce from the Test Report of the Revenue that this USB Ports cannot be used for charging the lanterns through solar panels. In the absence of any findings on this, the Appellants are correct and they are all lanterns having USB Port specifically for Solar charging. Overall, it would show that the lanterns are basically solar lanterns‟ and further ports have been given for normal charging through electricity in case of emergency. The issue of solar lantern was also before the Mumbai Bench, in the case of M/S. AURA SOLAR PRODUCTS PVT. LTD., SHRI RAHUL NAHAR VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-III [ 2020 (5) TMI 504 - CESTAT MUMBAI] . The Hon‟ble Mumbai Tribunal has held ' For classifying the one of two lamps in the package Revenue has relied on the fact that it can be charged with the normal power supply using suitable adapters. While doing so they ignore the fact that the technical opinion given by the IIT Professor clearly states that the normal mode of charging the batteries in the lamps will be solar power only.' The Appellant is correct in classifying the goods under CTH 94055040 and there are no reason to interfere with the OIA passed by the Commissioner (Appeals) on the issue of classification. The impugned order upheld - appeal of Revenue dismissed.
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2024 (6) TMI 916
Reclassification of imported goods - Apatite (Ground) Calcium Phosphate - to be classified under CTH 25102030 or under CTH 28352690? - HELD THAT:- An absolutely identical issue, also based on parallel inquiry conducted against an identically situated importer viz. MUDRIKA CERAMICS I LTD. VERSUS COMMISSIONER OF CUSTOMS-AHMEDABAD [ 2024 (1) TMI 1294 - CESTAT AHMEDABAD] , was recently decided by this Tribunal, wherein it was held that ' There is nothing on record to suggest that the goods were not natural Calcium Phosphate or Apatite Calcium Phosphate, which require to be classified under CTH 2510 alone being the most specific classification based on description as per General Rules of Interpretation for Tariff.' After detailed examination of Tariff entries as well as HSN Explanatory Notes, this Tribunal concluded that the Calcium Phosphate (Apatite) was required to be classified under CTH 2510 and not under CTH 2835. While no retest or cross examination of the chemical examiner was granted in this case, however, it is noted that the very same overseas supplier viz. Global Ceramics is involved even in the present case and hence, one can safely conclude that for the same supplier related material, once the classification is already concluded by this Tribunal, identical view is required to be taken in this case as well. The impugned orders are set aside and the appeals are allowed.
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2024 (6) TMI 915
Recovery of special additional duty (SAD) of customs on imports that was discharged by debit of scrips under the export promotion schemes in Foreign Trade Policy (FTP) - N/N. 102/2007-Cus dated 14th September 2007 - HELD THAT:- The debit of scrips does not suffice for discharge of liability of special additional duty (SAD) under Customs Tariff Act, 1975; in such circumstances, eligibility for refund would arise only upon discharge of liability without recourse to scrips and upon claim after sale of the goods. Thus, while the sales, which is not controverted, entitles them to refund, such refund is to be limited to that which was validly paid as duty. As far as scrips are concerned, only restoration could have been sought which is not an issue in this appeal. The reliance placed by the appellant on the decision of the Hon ble High Court of Delhi in ALLEN DIESELS INDIA PVT. LTD. VERSUS UNION OF INDIA ORS. [ 2016 (2) TMI 247 - DELHI HIGH COURT] does not come to their assistance as public notice no. 06/RE/2013/2009-14 dated 18thApril 2013, issued by Director General of Foreign Trade Policy (DGFT), debarring recourse to scrips for discharge of duties on the particular import, was not relevant to facts that were pleaded therein. The appeal, seeking monetization of value of scrips , debited at the time of import, is dismissed.
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2024 (6) TMI 914
Applicability of export duty - determination of Fe content - whether the Fe content is to be determined on Wet Metric Ton basis or Dry Metric Ton basis? - HELD THAT:- The adjudicating authority has given a clear finding on this issue. He has relied upon the Board Circular No. 04/2012-Cus dated 17th February, 2012 states that for the purposes of charging export duty, the Fe (Iron) content in the Iron Ore Fines has to be determined on Wet Metric Ton basis and not Dry Metric Ton basis. Fe content on Dry Metric Ton basis certified by CRCL Report cannot be relied upon for levy of export duty. We agree with the submission of the Respondent. The Board Circular clearly specifies that the Fe content is to be determined on WMT basis. On applying the standard industry formula for determining Fe content on Wet Metric Ton ( WMT ) basis, after considering Fe Content on Dry Metric Ton ( DMT ) basis and Moisture content determined by CRCL, the Fe content works out to be below 58%, and therefore, in the impugned order he held that export duty is not applicable on the goods exported by the Respondent. The department has not adduced any reason why the Board Circular should not be applied to determine the Fe content in this case. The adjudicating authority has correctly applied the Formula and determined the Fe content on WMT basis. Thus, there are no infirmity in the determination of Fe content by the adjudicating authority. Circular No. 04/2012-Cus dated 17.02.2012 was issued by the Central Board of Excise and Customs (as it was known then), wherein it was specifically provided that the net Fe content for the purpose of charging export duty is to be determined on Wet Metric Ton basis. Hon ble Supreme Court in UNION OF INDIA VERSUS GANGADHAR NARSINGDAS AGGARWAL [ 1995 (8) TMI 73 - SUPREME COURT] ,wherein the judgment of the Hon ble Bombay High Court in the case of UNION OF INDIA AND OTHERS VERSUS GANGADHAR NARSINGDAS AGRAWAL AND ANOTHER [ 1986 (4) TMI 71 - HIGH COURT OF BOMBAY] was upheld, where it was held that ' Merely because in respect of moist iron ore the iron content cannot be determined directly by physical analysis this cannot lead to the result that the iron ore content cannot be determined at all or that the petitioners should be deprived of their just claim on that footing which is totally unwarranted by law.' Thus, Fe content is to be determined on Wet Metric Ton basis. The adjudicating authority has rightly followed the decision of the Hon'ble Supreme Court and the Circular issued by Board on this issue and dropped the proceedings. Accordingly, there are no infirmity in the impugned order passed by the adjudicating authority dropping the proceedings. The impugned order upheld - appeal filed by the Appellant (Department) dismissed.
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2024 (6) TMI 913
Refund claim for the payment of Customs duty on the import of Anhydrous Ammonia at a preferential rate - appellant has not challenged the assessment of duty done through RMS in EDI and paid duty so assessed through TR-6 Challan - benefit of N/N. 53/2011-Cus dated 01.07.2011 - requirement of submission of the Certificate of Country of Origin by the notification - HELD THAT:- It is found that initially, the show-cause notice was issued to the appellant alleging that as the appellant has not challenged the assessment of Bills of Entry in terms of the decision of the Hon ble Apex Court in the case of PRIYA BLUE INDUSTRIES LTD. VERSUS COMMISSIONER OF CUSTOMS (PREVENTIVE) [ 2004 (9) TMI 105 - SUPREME COURT] , therefore, the refund claim is not maintainable without challenging of the assessment of Bill of Entry and in the case of ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV [ 2019 (9) TMI 802 - SUPREME COURT] , it is found that for both the cases, the period involved is prior to self assessment regime i.e. prior to 08.04.2011. Therefore, the decisions of the said cases are not applicable to the facts and circumstances of the present case. Admittedly, in the case in hand, the Bills of Entry was filed through the EDI System and approval of the self assessment was done under Risk Management System. Therefore, the said decision of the Hon ble Apex Court is not applicable to the facts and circumstances of the case. In that view, the ground that the appellant has not challenged the assessment of the Bill of Entry, is not sustainable. The only objection raised by the Revenue is that the said Certificate is not as per the format under exemption Notification and not issued by the Malysia Chamber of Commerce. The appellant has produced the Certificate of Origin issued by the manufacturer/supplier and for the subsequent imports, the appellant has been able to produce the Certificate issued by the Malysia Chamber of Commerce from the same supplier of the identical goods under the Bills of Entry in question. Therefore, the appellant has subsequently complied with the condition of the Notification. The benefit of Notification No.53/2011-Cus dated 01.07.2011, cannot be denied to the appellant as the appellant has complied the subsequent condition of the Notification - the appellant is entitled for refund claim as prayed by the appellant. Appeal allowed.
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Corporate Laws
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2024 (6) TMI 912
Grant of statutory interest in accordance with Rule 156 of the Companies (Court) Rules, 1959 - scope of the Section 483 of the Companies Act, 1956 - pari passu principle for interest payment between secured creditors and workmen - HELD THAT:- Section 483 confers the right to appeal and forum for the same in respect of any order made in the matter of the winding up of a company by the High Court having jurisdiction in the matter - Further, it is settled position of law that while exercising the power of appeal under the provision of law, the appellate court is to exercise the power of appellate jurisdiction if the order is passed on erroneous consideration of the factual aspect. The purpose of Section 529-A is to ensure that the workmen should not be deprived of their legitimate claims in the event of the liquidation of the company and the assets of the company would remain charged for the payment of the workers' dues and such charge will be pari passu with the charge of the secured creditors. In the light of the definition of the vested right , it is evident that right accrues to person or persons attached to an institution or building or anything whatsoever, meaning thereby, if an incumbent is claiming a vested right, he is to substantiate before the court of law that the right has been created in his favour by an order passed by the competent authority in accordance with law. It is evident that in the instant case, the workmen never raised the claim of interest and no such claim of interest was ever adjudicated upon. The payments have been made to the workmen in priority against sale proceeds of unsecured assets of the company in compliance of the order dated 12th August 2016. It has been accepted by the parties and has attained finality. The section 483 of the Act 1956, confers power of the widest amplitude on the appellate court so as to do complete justice between the parties and such power is unfettered by consideration of facts like who has filed the appeal and whether the appeal is being dismissed, allowed or disposed of by modifying the judgment appealed against. The object sought to be achieved by conferment of such power on the appellate court is to avoid inconsistency, inequity, inequality in reliefs granted to the parties concern. This Court, after having discussed the issue and taking in to consideration the settled proposition of law and coming back to the impugned order passed by the learned Single Judge, is of the view that if the learned Single Judge has declined to interfere with the prayer made in the interlocutory application for grant of statutory interest, the same cannot be said to suffer from an error. The instant Company appeals are hereby dismissed.
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Service Tax
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2024 (6) TMI 911
Classification of services - separate rates have been provided for different activities - whether the appellant is liable for benefit of being a goods transport agency operator or is required to be subjected to Service Tax as a provider of cargo handling and business auxiliary services? - HELD THAT:- The appellants have produced on record a certificate from TISCO duly countersigned by the jurisdictional Central Excise authorities that the appellant had handled the cargo meant for export and therefore it was exempted from Service Tax in accordance with Circular No. B.11/1/2002-TRU dated 01.08.2002. It is found that the bulk of the payment is on account of transportation. Thus it cannot be disputed that the main or principal service and the essential feature of the service rendered by the appellant to TISCO was that of transportation of Chrome Ore/Concentrate from Sukinda Chromite Mines to Jajpur Road. The fact of unloading the goods at railway siding, guarding thereof, yard management, inventory management and loading of the goods to the wagons were in the nature of being incidental to the transportation of the goods from the mines to the railway sidings. The contract in the present case is a composite works contract and cannot be called upon for vivisection, in terms of rates for various activities being provisioned in the said Work Orders. Mere mentioning of separate rates for various activities, render the composite contract as vivisected, particularly in the light of the Board s Circular dated 20.02.2008 clarifying that the method of charging (billing) was not determinative of whether the service was in the nature of a multiple service or otherwise - there is nothing in the impugned work order, so as to be suggestive of submissions of Bills by the appellant to TISCO, based on individual activities at the specified rates. The service rendered by the appellant would need to be considered as a GTA service and not required to be categorized separately into cargo handling service or business auxiliary service . The impugned order is not in accordance with law and therefore liable to be set aside - Appeal allowed.
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2024 (6) TMI 910
Valuation - inclusion of value of free supplies in the assessable value - Section 67 of Finance Act, 1994 - HELD THAT:- The Airport Authority has provided certain non-monetary facilities which include barrack accommodation, medical expenses, lease accommodation, telephone charges, vehicle and vehicle hiring charges, stationary, dog squad expenses, miscellaneous expenses etc. to M/s. Central Industrial Security Force. This issue of inclusion of value of non-monetary benefits in the taxable value under Section 67 of Finance Act, 1994 is no longer res-integra as this Tribunal in [ 2024 (4) TMI 391 - CESTAT AHMEDABAD ] has already decided the matter in favor of the appellant i.e. M/s. Central Industrial Security Force. As the issue has already been decided in the above decision of this bench that the service tax demand on the value of non-monetary facilities extended to M/s. Central Industrial Security Force are not taxable, the order-in-original in this regard is set aside. So far as department s appeal is concerned, since the demand of service tax is not sustainable in this case, the question of imposing penalties under Section 76, 77 and 78 of the Finance Act, 1994 does not arise. As a result, the appeal filed by M/s. Central Industrial Security Force succeeds and the same is allowed - appeal of Revenue dismissed.
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2024 (6) TMI 909
Levy of service tax - Consulting Engineer service - services rendered by the Appellant under the O M Agreement during the operations period - refund of service tax along with interest - principles of unjust enrichment. Levy of service tax - Consulting Engineer service - services rendered by the Appellant under the O M Agreement during the operations period - HELD THAT:- In the present case, a perusal of the Operation Agreement entered by the Appellant with HPLCL reveal that the Appellant has not rendered any advice, consultancy or technical assistance in any discipline of engineering - A perusal of the Agreement reveal that the Appellant themselves are liable to run the Power Plant for their own benefit and on its own account and they are not expected to provide any advice, consultancy, or technical assistance in any discipline of engineering to their clients HPLCL, during the operation of the plant. Accordingly, it is observed that the service rendered by them would not fall under the category of Consultancy Engineer s Service - the services rendered by the Appellant are not liable to service tax under the category of Consulting Engineer Service. Refund of service tax along with interest - time limitation - unjust enrichment - HELD THAT:- The tax in this case has been paid under mistake and hence the provisions of Section 11 B of the Central Excise Act,1944 and the provisions of limitation and unjust enrichment are not be applicable. Applicability of unjust enrichment - HELD THAT:- The Appellant stated that they have paid the tax under the category of Consulting Engineer service under a mistaken belief. As service tax is not payable in this case, the question of unjust enrichment does not apply to this case. The Appellant is eligible for the refund of service tax paid, along with interest - the impugned order is set aside - appeal allowed.
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Central Excise
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2024 (6) TMI 908
Ineligibility for input services credited in terms of the CENVAT Credit Rules, 2004 - credit cannot be denied unless and until the assessment made by the dealer is revised the credit at the recipient s end - sham transactions - HELD THAT:- The respondent filed invoices and returns before their jurisdictional offices and paid the service tax arising out of it. The Tribunal clearly held that even in the show-cause notice, there was no allegation that the services rendered under these invoices were not falling within the ambit of Rule 2(l) of the CCR 2004. In absence of making specific allegation in the show-cause notice, the appellant cannot be permitted to make out a new case on facts while passing the final order. The invoices and returns were necessary documents which were admittedly filed before the Jurisdictional Officer. Thus, necessary formalities and compliances were made by the respondent. The impugned order shows that they took U-turn during cross-examination. In that event, if the Tribunal has disbelieved their statements, the Tribunal has taken a plausible view which does not warrant any interference by this Court. In other words, the said contention of the Tribunal is a finding of fact and does not involve any substantial question of law. Appeal dismissed.
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2024 (6) TMI 907
CENVAT Credit - trading of investments, investment in shares - input services which were common to both manufacturing and trading activity - violation of rule 6(3)(i) of CCR, 2004 - HELD THAT:- The fact remains that there were investments in shares and securities, which is clearly a trading activity which is an exempted Service. The original authority has thought it fit to invoke Rule 6(3)(i) ibid to demand the quantum of credit that would have been availed as common input service on the exempted activity at 10% of the purchase price vide OIO No. LTUC/85/2013-ADC dated 29.3.2013. When the taxpayer challenged the said demand of the original authority, the first appellate authority having considered the amendment in the statute, has set aside the demand raised by the original authority vide OIA N0. 162/2015 dated 1.1.2015 - in order to quantify the consequential demand to be raised on the taxpayer, the first appellate authority has remitted the file to the original authority. The taxpayer - appellant being aggrieved against the above OIA, is before us by this appeal. The trading activity undertaken by the appellant remains disputed, though the taxpayer is trying to shift the burden on the Revenue, but however, when a SCN is issued indicating investment/trading in shares, when the said allegation is not disputed by noticee, it is then for the noticee to discharge the burden by disproving the allegations levelled against it, with the help of supporting documents. Therefore, the arguments of the taxpayer not subscribed that the Revenue has not discharged the burden establishing the availing of credit on the common activities as alleged. The direction of the first appellate authority is set aside to the extent of imposing appropriate penalty - it is deemed appropriate to direct the Adjudicating Authority who shall carry out the directions of the first appellate authority insofar as differential demand along with consequential interest, if any, is concerned. Appeal disposed off.
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2024 (6) TMI 906
Refund of differential duty related to payment of Additional duty of customs SAD - Transitional arrangements for input tax credit - HELD THAT:- As per the section 140(1) of the CGST ACT, 2017 CENVAT Credit of eligible duties can be carried forward as closing balance in ST-3 or ER-1 Returns as on 30.06.2017, thus as submitted by the appellant, differential duty paid after 01.07.2017 could not statutory be shown as credit carried forward in ER 1 Return as on 30.06.2017 even if the appellant had filed the return at a later stage. There is no enabling provision of CGST Act, 2017 for the transactional of the CENVAT credit of CVD and SAD paid on or after 01.07.2017. Section 142(3) of the CGST Act, 2017 governs the law relating to the transitional provisions including the refund of CENVAT Credit, duty, tax, interest or any other amount paid under the existing law and any amount eventually accruing to the person, which is not carried forward to GST. Thus it is evident that the duty paid by the appellant on or after 01.07.2017 cannot be included in the ER-1 Return for the period ending on 30.06.2012 and the finding given by the lower authority in this regard is unsustainable. Regarding CBIC Circular No. 207/5/2017 Service Tax dated 28.09.2017, the procedure prescribed therein was only in respect of service tax paid under reverse charge on or after 01.07.2017. CVD and SAD paid after 01.07.2017 on the goods imported prior to 01.07.2017 where eligible for CENVAT Credit, but could not avail because of introduction of GST from 01.07.2007 are eligible for refund in cash in terms of section 142(3) of CGST act 2017. Appeal allowed.
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2024 (6) TMI 905
Abatement of appeal - whether the Appeals continue after initiation of Corporate Insolvency Resolution Process (CIRP) and Order approving the Resolution plan passed/approved by the Learned NCLT under Insolvency and Bankruptcy Code, 2016? - HELD THAT:- The Mumbai bench of this Tribunal in the case of M/S. ALOK INDUSTRIES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, BELAPUR AND COMMISSIONER OF CEN. EXCISE, MUMBAI CENTRAL [ 2022 (10) TMI 801 - CESTAT MUMBAI] the Learned Advocate for the appellant observed that Rule 22 should be applicable the moment the successor interest with sufficient rights is appointed by NCLT to make an application for continuation of the proceeding. The Hon ble Supreme Court and High Courts in a catena of cases that the Tribunal is a creature of the statute; it cannot travel beyond the express powers vested under the Statute or Rules framed under the statute, while deciding a statutory Appeal filed before it against the Orders of the prescribed statutory authorities mentioned under the statute. The corollary, any order passed by the Tribunal beyond the vested powers under the statute would be non est in law. The appeal abates once the CIRP is initiated and IRP appointed and/or Resolution plan is approved - the appeals filed by the Appellant and the Revenue abate as per Rule 22 of CESTAT (Procedure) Rules, 1982. Appeal abated.
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2024 (6) TMI 904
Valuation of goods - stock transfer - computation of differential duty - Revenue neutrality - penalty - extended period of limitation. HELD THAT:- The Appellants cleared the goods on stock transfer to their sister units. The entire duty paid by the Appellants would be available to the recipient unit as Cenvat credit. Accordingly, the entire issue is of revenue neutral. The decision cited by the Appellant in the case of M/S. ANGLO FRENCH TEXTILES VERSUS CCE, PUDUCHERRY [ 2017 (9) TMI 1178 - CESTAT CHENNAI] , is squarely applicable in this case. In this case the demand confirmed has been set aside on the ground of revenue neutrality. Extended period of Limitation - penalty - HELD THAT:- The Appellants had not mis-declared or suppressed any information with an intent to evade payment of duty. Accordingly, the extended period of limitation not invokable in these cases. For the same reason, no penalty imposable on the Appellants . Accordingly, the penalties imposed on the Appellants is set aside. The impugned order set aside - appeal allowed.
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2024 (6) TMI 903
Rejection for waiver of show-cause notice - imposition penalty under Section 11AC of CEA - prior determination of duty under Section 11A(2) of the Central Excise Act, 1944 - demand of differential Central Excise duty along with Cess and interest - HELD THAT:- Where any duty of Excise has not been levied or paid or has been short levied or short paid by reasons of collusion or any willful misstatement or suppression of facts or contravention of any of the provisions of the Act or the Rules made there under with an intent to evade payment of duty, the person who is liable to pay duty as determined under sub-section 2 of Section 11A shall also be liable to pay a penalty equal to the duty so determined. In terms of the above provisions, the duty has to be necessarily determined under sub-section 2 of Section 11A has to determine the duty of Excise due from such person and there upon such person shall pay the amount so determined. In the impugned order, it is found that there is no allegation or determination of duty as per Section 11A (2) invoking the proviso to Section 11A. Therefore, the notice and the impugned orders imposing penalty under Section 11AC without determining the duty under Section 11A(2) as per the provisions of Section 11A cannot be sustained. The High Court of Karnataka in the case of Commissioner of Central Excise, Mangalore vs. Shree Krishna Pipe Industries [ 2004 (1) TMI 82 - HIGH COURT OF KARNATAKA AT BANGALORE] held in similar set of facts has held 'where assessee deposits the duty even prior to the issue of a show cause notice, penalty should not be imposed and interest should not be levied.' The penalty is not imposable as the duty has been paid before the issuance of show-cause notice and there is no determination of duty thereafter - the impugned order is set aside - appeal allowed.
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CST, VAT & Sales Tax
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2024 (6) TMI 902
Challenge to assessment order - without giving adequate time for the petitioner to produce documents required, the impugned assessment orders have been passed - violation of principles of natural justice - HELD THAT:- This Court is of the view that these Writ Petitions are nothing but an abuse of court proceedings. Since these Writ Petitions have been filed in time within few days after the impugned assessment orders were passed on the aforesaid dates, the petitioner is directed to file statutory appeals before the Appellate Authority under Section 107 of the TNGST Act, 2017 within a period of 30 days from the date of receipt of a copy of this order. Needless to state, the petitioner shall make pre-deposit as is contemplated under the provisions of TNGST Act, 1959 and TNVAT Act, 2006. Petition dismissed.
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2024 (6) TMI 901
Time limitation - Sustainability of SCN or the assessment orders - specific period of limitation prescribed under Section 21 (3) and Section 21 (4) of the Telangana Value Added Tax Act, 2005 - HELD THAT:- The Hon ble Supreme Court in the case of STATE OF PUNJAB AND OTHERS VERSUS M/S SHREYANS INDUS LTD. ETC [ 2016 (3) TMI 331 - SUPREME COURT] held ' the aforesaid expression would mean that the time can be extended even after original time prescribed in the said provision has expired.' It is by now a well settled proposition of law that when the plain reading of the provision of law is unambiguous and is very clear in its intent and object, the need for giving a different interpretation which is otherwise not reflected on its plain reading, cannot be permitted or that may not be sustainable. The argument advanced by the learned Special Government Pleader in the given factual backdrop would not be sustainable. Therefore, all the Writ Petitions would be liable to be allowed, as either the show-cause notices or the assessment orders in all the writ petitions have been issued beyond the period envisaged under Section 21 of the Act. Petition allowed.
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