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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter June 27, 2022 Case Laws in this Newsletter: GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise Articles ISSUANCE OF SUMMONS UNDER GST Taxability of Reimbursement of expenses under Service tax and GST Unnecessary litigation by revenue even before the Supreme Court, on settled legal position about power of Tribunal to admit new claims. News Interview with The Times of India (as published on June 24, 2022) – Shri Shaktikanta Das, Governor, Reserve Bank of India Notifications Customs 52/2022 - dated 24-6-2022 - Cus (NT) Customs Brokers Licensing (Amendment) Regulations, 2022 GST 1/2022 - dated 24-6-2022 - GST CESS Goods and Services Tax (Period of Levy and Collection of Cess) Rules, 2022 Income Tax 68/2022 - dated 24-6-2022 - IT U/s 280A(1) of IT Act 1961, Central Government, in consultation with the Chief Justice of the High Court of Uttarakhand designates Special Court in the Uttarakhand 2 of 2022 - dated 24-6-2022 - IT Format, Procedure and Guidelines for submission of Form No. 1, Form No. 2 and Form No. 2A for Securities Transaction Tax (STT) Highlights / Catch Notes GST Profiteering - purchase of flats / shops - it is alleged that the Respondent had not passed on the benefit of ITC to him by way of commensurate reduction in prices and charged full rate of GST on the amount due to him against payments - The amount that has been profiteered by the Respondent from his shop buyers/ recipients of supply in the above mentioned project shall be refunded by him, along with interest @18% thereon, from the date when the above amount was profiteered by him till the date of such payment, in line with the provisions of Rule 133 (3) (b) of the GCST Rules 2017 - NAPA Visit to Get Source Profiteering - purchase of Flat - it is alleged that the Respondent had not passed on the benefit of Input Tax Credit (ITC) to him by way of commensurate reduction in prices - the ITC as a percentage of the turnover that was available to the Respondent during the pre-GST period (April 2016 to June 2017) was 0% and during the post-GST period (July 2017 to September-2020), it was 11.76% for the Project ‘Jeevan Ananda'. This confirms that post-GST, the Respondent has benefited from additional ITC to the tune of 11.76% - NAPA Visit to Get Source Income Tax TDS on virtual digital asset (VDA) - Guidelines for removal of difficulties under sub-section (6) of section 194S of the Income-tax Act, 1961 - Circular Visit to Get Source Payment on transfer of virtual digital asset - Amends various rules i.e. Due Date of payment of TDS (Rule 30) - Certificate of TDS (Rule 31) - Quarterly statement / Return of TDS (Rule 31A) - New Forms - Income-tax (19th Amendment) Rules, 2022 - Notification Visit to Get Source Nature of subsidy receipt - value of the MILIEV grant given by the Dutch government as a subsidy for purchase of wind turbine generator - transfer of right by the assessee to another company - Whether it could not be brought to tax in the hands of the assessee u/s.28(iv) when the assessee did not purchase the equipment, but transferred the right to another company? - HELD No - HC Visit to Get Source Benefit of Direct Tax Vivad Se Vishwas Act 2020 - Correctness of revenue withdrawing the Form 3 declaration already issued in favour of the assessee - The scheme had been periodically extended and one has to look to the object for such extension and one of the objects was to augment the revenue and if that was the object of the scheme then liberal interpretation requires to be given, however, not to the extent of reviving the scheme but to consider the declaration filed under the scheme will before the closure of the scheme and to direct them to be processed in accordance with law. - HC Visit to Get Source Valuation of the property under gift - Assessment u/s 15(2) of the Gift Tax Act determining the taxable gift - The assessee or her legal heir is now contesting the ownership of the property. Looking at from general principles of law, the burden is on the assessee or her legal heir to prove that the ownership of the property vests with someone else, not the assessee. The entries in Revenue records, or the name of the assessee in Municipal Corporation, are not conclusive as regards the ownership of the property. The Tribunal, therefore, in our considered view, rightly observed that the assessee failed to place contra evidence on the ownership of the property. - HC Visit to Get Source Claim of TDS credit - If the assessee proves that such tax has been deducted by the parties but it has not been reflected in the form no. 26AS, this issue has been considered by CBDT in office memo dated 11th March 2016. In paragraph no. 3, the CBDT has directed the officers not to enforce demand arising in such circumstances. Further, merely because the tax deductor has not filed the TDS return there is enough mechanism available to catch hold of such defaulting tax deductor. No doubt, it is the duty of the assessee to show that tax has been deducted. - AT Visit to Get Source Unexplained cash credit u/s 68 - unexplained cash deposit in the bank account during post-demonetization period - Even otherwise the ld. AO should have appreciated that the currency in whatever form was in Indian Rupee and the same was withdrawn from bank, duly disclosed in the audited books of account, regularly shown in the cash balance carried forward and the assessee had sufficient cash in hand as on the date of announcement of demonetization scheme - Additions deleted - AT Visit to Get Source Exemption u/s 11 - presumption that registration u/s.12A and 80(G)(5) is cancelled - as section 12A registration was not traceable assessee again applied for it - the denial of benefit under section 11 of the Act by the ld. AO merely on account non production of registration certificate is incorrect and we direct the AO to grant the benefit of section 11 & 12 benefit to the assessee and also direct to delete the addition made on this count consequent there upon. - AT Visit to Get Source Deduction u/s 80IA - treating the assessee-company as a ‘Contractor’ and not ‘Developer’ by the Department - merely because in the agreement for development of infrastructure facility, assessee is referred to as contractor or because if some basic specifications are laid down, it does not detract the assessee from the position of being a developer, nor will deprive the assessee from claiming deduction under Section 80IA(4) of the Act. As such, looking to the overall aspects of work undertaken by the assessee we can safely come to the conclusion that the assessee is engaged in development of the infrastructure facility and therefore, a developer, which entails the assessee to claim benefits under Section 80IA(4) - AT Visit to Get Source Income accrued in India - interest income on loans in the form of suppliers credit given to Indian parties - As alleged that the Indian parties from whom the assessee has received interest income are also the clients of the assessee in India with whom contracts were executed through the Permanent Establishment in India and the assessee has received fees for technical services in a previous year from them, but then the performance of contracts through the PE or receipt of fees for technical services from such clients is irrelevant as long as the interest income is not demonstrated to be attributable to the permanent establishment. Such an attribution cannot be inferred or assumed - AT Visit to Get Source Genuineness of expenses - Liability accrued under development agreement was not provided for by the assessee in the books of account - As rightly concluded by the learned CIT(A), it was thus not a case of any postponement of tax liability by the assessee but was a case of preponement of tax liability. - Additions deleted - AT Visit to Get Source Ad-hoc disallowance of the expenses - the contention of the assessee is that due to flood material evidences was washed away and FIR was duly registered, further it is stated that the accounts of the assessee was duly audited and no adverse observation has been recorded by the auditors. - it is a liberal view ought to have been adopted by the authorities below. Moreover the authorities below have not pointed out any specific absence of the vouchers - Additions deleted - AT Visit to Get Source Entertainment tax subsidy - capital or revenue receipt - disallowance u/s. 37 - AO made ad hoc disallowance u/s. 37 @ 10% of expenditure. However, the said disallowance was not added by AO in the assessment order because the AO has added entire entertainment subsidy as capital receipt. This is an ad hoc disallowance. AO has not pointed out any specific expenditure which was in the nature of revenue expenditure. AO cannot presume it. Therefore, the AO is directed to delete the said disallowance - AT Visit to Get Source Source of Cash deposited into the Bank Account - Agricultural income - advances received from customers in land transactions - CIT(A) ought to have considered the agricultural activity. It is also noted it was claimed by the assessee that the advances received from customers were refunded before year end but we find no such verification done by both the authorities below to confirm whether such advances were refunded or not. - We deem it proper to restrict the addition on account of non furnishing of requisite details regarding the refund made to customers on account of advances received on land transactions. - AT Visit to Get Source Customs Restrictions on import of products made of plastic - Department made aware of changes in Plastic Waste Management Rules as notified - Order-Instruction Visit to Get Source Seeking release of seized goods - Jurisdiction - the seizure memo are not on record. However, the panchnama which has been placed on record along with the counteraffidavit says that officers of the Customs Department had informed that the exportable goods of the petitioner "appear to be liable for confiscation" and, therefore, they intended to seize the said goods. The expression "appear to be liable for confiscation" is clearly distinguishable from the expression "reason to believe" which are briefly analysed. - a prima facie case is made out for provisional release of the goods under section 110A of the Customs Act, more particularly, considering the fact that the goods are not included in the prohibited list - HC Visit to Get Source Seeking release of seized goods - memory cards of different specifications - The denial of provisional release appears not to have considered the legal framework for exercise of authority laid down in section 110 to section 126 of Customs Act, 1962 and, instead, has been sought to be justified in terms of section 150 of Customs Act, 1962. - Provisional release under section 110A of Customs Act, 1962, by adjudicatory determination or on appellate intervention, does not stand in the way of disposition as the owner deems fit. Shipping bills, filed for declaration of intent to export, is to be dealt in accordance with section 51 of Customs Act, 1962 for which responsibility vests with the supervisory establishment of the customs administration. This advisory is enunciated as a reminder that legislative intent must be adhered to at all times. - AT Visit to Get Source Delay in filing of appeal before Commissioner (Appeal) - Period of limitation for date of assessment of Bill of entry - to tbe counted from the date of communication of order or from the date of upload on the website - no Court would presume such a document uploaded in the website as genuine unless it is a public document containing seal and signature of the public authority or its certified copy that would meet the requirement of Section 79 of the Indian Evidence Act. - AT Visit to Get Source Revocation of Customs Broker License - proceeding under Regulation 17 of CBLR, 2018 has already reached its penultimate stage - A period of 59 (fifty nine) days from the date of issuance of copy of Inquiry Report to the Appellant/CB has already expired and as such, at all probability, the respondent Principal Commissioner is in process of passing the Final Order under Regulation 17(7) ibid in accordance with law and hence at this stage, no fruitful purpose shall serve in deciding the present Appeal on merit by this Tribunal. - AT Visit to Get Source DGFT Amendment in Import Policy Condition of Water Melon Seeds under ITC(HS) Code 1207 70 90 of Chapter-12 of ITC (HS), 2022, Schedule-I (Import Policy) - Import of Water Melon Seeds falling under ITC(HS) code 12077090 is 'Free' till 30.09.2022. Given import shall be allowed from Kandla (INIXY1) and Mundra (INMUN1) Ports only. - Notification Visit to Get Source SEBI Modification in the Operational Guidelines for Foreign Portfolio Investors, Designated Depository Participants and Eligible Foreign Investors – Bank account details to which the payment is to be done electronically - Circular Visit to Get Source Naming / Tagging of demat accounts maintained by Stock Brokers - all demat accounts maintained by stock brokers should be appropriately tagged - Circular Visit to Get Source Case Laws: GST 2022 (6) TMI 1127 Profiteering - purchase of flats - it is alleged that the Respondent had not passed on the benefit of ITC to him by way of commensurate reduction in prices and charged full rate of GST on the amount due to him against payments - contravention of Section 171 of CGST Act - Interest and Penalty - HELD THAT:- On perusal of the records and the Reports of the DGAP, the Authority finds that the Anti-profiteering provisions do not apply to the project The Serenas , since the draw for the selection of the allottees, the allotments, the Builder-Buyer agreements, and construction activities were executed in the GST period only. The Respondent entered into an agreement with the Contractor for the construction of Residential Units on 31.08.2017 after which construction activities started on 10.091017. Further the Respondent held the draw on 20.07.2017. Post draw, the first Builder-Buyer agreement was entered into on 18.09.2017. Therefore, the Residential project The Serenas was launched in the post-GST regime and there was no price history of the residential units sold in the pre-GST regime which could be compared with the Post-GST base price to establish whether there was any profiteering by the Respondent or not as the Respondent neither availed any ITC nor had any turnover in pre-GST regime on Residential dwelling units. The Authority finds and determines that the Respondent has profiteered by an amount of Rs. 42,21,321/- for the project `Signum 36' during the period of investigation i.e. 01.07.2017 to 30.06.2019. The above amount that has been profiteered by the Respondent from his shop buyers/ recipients of supply in the above mentioned project shall be refunded by him, along with interest @18% thereon, from the date when the above amount was profiteered by him till the date of such payment, in line with the provisions of Rule 133 (3) (b) of the GCST Rules 2017 - This Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce the prices to be realized from the buyers of the shops commensurate with the benefit of ITC received by him. Interest - HELD THAT:- The Respondent is also liable to pay interest as applicable on the entire amount profiteered, i.e. Rs. 42,21,321/-, for the project 'Signurn 36'. Hence the Respondent is directed to also pass on interest @18% to the customers/ shop buyers/ recipients on the entire amount profiteered, starting from the date from which the above amount was profiteered till the date of passing on/ payment, as per provisions of Rule 133 (3) (b) of the CGST Rules 2017. Penalty - HELD THAT:- It is evident from the above narration of facts that Respondent has denied the benefit of Input Tax Credit (ITC) to the customers/shop buyers in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and he has thus committed an offence under Section 171 (3A) of the above Act and therefore, he is liable for imposition of penalty under the provisions of the above Section. However, since the provisions of Section 171 (3A) have come into force w.e.f. 01.01.2020 whereas the period during which violation has occurred is w.e.f. 01.07.2017 to 30.06.2019, hence the penalty prescribed under the above Section cannot be imposed on the Respondent retrospectively - Accordingly, Show Cause Notice directing him to explain why the penalty prescribed under Section 171 (3A) of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him, is not required to be issued. Application disposed off. 2022 (6) TMI 1126 Profiteering - purchase of Flat - it is alleged that the Respondent had not passed on the benefit of Input Tax Credit (ITC) to him by way of commensurate reduction in prices - contravention of section 171 of CGST Act - Interest and Penalty - HELD THAT:- It is clear from a plain reading of Section 171 (1), that it deals with two situations:- one relating to the passing on the benefit of reduction in the rate of tax and the second about the passing on the benefit of the ITC. On the issue of reduction in the tax rate, it is apparent from the DGAP's Report that there has been no reduction in the rate of tax in the post-GST period; hence the only issue to be examined is whether there was any benefit of ITC with the introduction of GST. On this issue, it has been revealed from the DGAP's Report that the ITC as a percentage of the turnover that was available to the Respondent during the pre-GST period (April 2016 to June 2017) was 0% and during the post-GST period (July 2017 to September-2020), it was 11.76% for the Project Jeevan Ananda'. This confirms that post-GST, the Respondent has benefited from additional ITC to the tune of 11.76% (11.76% - 0%) of his turnover, and the same was required to be passed on to the customers/flat buyers/recipients. The DGAP has calculated the amount of ITC benefit availed by the Respondent which needs to be passed on to all the recipients of supply including the Applicant No. 1 as Rs. 1,85,70,263/-. The Authority finds that the Respondent has profiteered by an amount of Rs. 1,85,70,263/- during the period of investigation i.e. 01.07.2017 to 30.09.2020. This amount of Rs. 1,85,70,263/- includes the amount relating to the Applicant No. 1 amounting to Rs. 1,27,892/-. The above amount that has been profiteered by the Respondent from the recipients of supply in the Project shall be refunded by him, along with interest @18% thereon, from the date when the above amount was profiteered by him till the date of such refund payment and per the provisions of Rule 133 (3) (b) of the CGST Rules 2017. The Authority finds no reason to differ from the above-detailed computation of profiteering in the DGAP's Report or the methodology adopted and hence, the Authority determines the profiteered amount for the period from 01.07.2017 to 30.09.2020, in the instant case, as Rs. 1,85,70,263/-. This Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce the prices to be realized from the buyers of the flats commensurate with the benefit of ITC received by him. Interest - HELD THAT:- The Respondent is also liable to pay interest as applicable on the entire amount profiteered, i.e. Rs. 1,85,70,263/-. Hence the Respondent is directed to also pass on interest @18% to the customers/ flat buyers/ recipients on the entire amount profiteered, starting from the date from which the above amount was profiteered till the date of passing on by way of refund payment, as per provisions of Rule 133 (3) (b) of the CGST Rules 2017. Penalty - HELD THAT:- The Respondent has denied the benefit of ITC to his home buyers in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has committed an offence under Section 171 (3A) of above Act. That Section 171 (3A) of the CGST Act, 2017 has been inserted in the CGST Act, 2017 vide Section 112 of the Finance Act, 2019, and the same became operational w.e.f. 01.01.2020. As the period of investigation was 01.07.2017 to 30.09.2020, therefore, the Respondent is liable for imposition of penalty under the provisions of the above Section for the amount profiteered from 01.01.2020 onwards. Application disposed off. Income Tax 2022 (6) TMI 1125 Nature of subsidy receipt - value of the MILIEV grant given by the Dutch government as a subsidy for purchase of wind turbine generator - transfer of right by the assessee to another company - Whether it could not be brought to tax in the hands of the assessee u/s.28(iv) when the assessee did not purchase the equipment, but transferred the right to another company? - HELD THAT:- ITAT deleted the addition made by the assessing officer, on the ground that the grant was given by the Dutch Government as a matter of policy and it had nexus with the equipment and not with the buyer and hence, it was not possible for the purchaser to transfer the grant and the same was directly disbursed to the manufacturer. It was also pointed out by the appellate authorities that the revenue failed to produce any cogent material to prove that the assessee received over and above the disclosed consideration of Rs.2 crores; and there was no incriminating document made available against the assessee. The Appellate Authorities further noted that as per the agreements entered into the parties, the finance companies were allowed to operate the wind mills on lease and the payment of lease rentals was assured by Wescare and the assessee was to pay operational lease rental calculated as the electricity consumed x TNEB rates 25 paise per unit. We do not find any good reason to disagree with the reasonings so recorded by the appellate authorities. Addition in respect of off set credits alleged to have been received by the respondent / assessee - CIT(A) was of the view that there is absolutely no document on record to indicate with the authority that the assessee did receive offset credits and accordingly, deleted the addition made by the assessing officer, which finding of the CIT(A) was also affirmed by the Tribunal. In the absence of any concrete material, we have no option except to concur with the view taken by the appellate authorities. Electricity charges paid to Wescare - This court is of the opinion that without any substantive material, the respondent / assessee cannot be construed as owner of the wind mills and hence, the payment made by them to Wescare can be treated only as consumption charges for the electricity supplied to them, that too, for business purposes. As such, there is no question of law much less substantial question of law arisen for consideration. 2022 (6) TMI 1124 Reopening of assessment u/s 147 - HELD THAT:- No scrutiny has taken place in the case of assessee for the relevant year. His case was processed u/s 143(1) - The intimation under Section 143(1) being not an assessment there is no question of Assessing Officer having formed an opinion thus the question of changing the same does not arise in the present case. So far as primary contention of the petitioner w.r.t. the jurisdictional issue is concerned, admittedly as per documents placed on record by the petitioner himself Income Tax Return for the Assessment Year 2019-20 carries the details of the Assessing Officer as Ward 5, Yamuna Nagar. Income Tax Returns for the Assessment Year 2020-21 and that for the year 2021-22 do not carry any details of the Assessing Officer. The petitioner is not in a position to controvert the findings recorded by the Authority on facts. It is not possible to go into the aforesaid factual findings while exercising jurisdiction under Article 226 of the Constitution of India. Ld. Counsel for the petitioner has placed reliance on judgment passed by High Court of Delhi in 'Dushyant Kumar Jain vs. Deputy Commissioner of Income Tax and another' [ 2016 (5) TMI 113 - DELHI HIGH COURT] to further contend that it is the same AO who passed the original assessment order, who is empowered to exercise powers under Section 147/148 to reopen the assessment. The said judgment again will have no bearing on the facts of the present case. The reason is not far to seek. In the present case order under Section 143(3) was never passed. After going through the record of the case, we do not find that the Authorities fell into any jurisdictional error which would warrant interference by the writ Court. As discussed herein above, the petitioner has been given sufficient opportunities of hearing and has been confronted with all the material that forms basis for reopening the case. 2022 (6) TMI 1123 Direct Tax Vivad Se Vishwas Act 2020 - declaration rejected as Form 3, dated 27th January, 2021, which was issued, was stated to have been issued inadvertently and therefore cancelled - Correctness of revenue withdrawing the Form 3 declaration already issued in favour of the assessee - HELD THAT:- Very often we come across cases where the assessee comes to the court stating that they have not been permitted to make alterations or amendments to the declaration which they have filed and very often such requests are declined on flimsy, frivolous and hypertechnical ground. When such cases come before the Court, the revenue would contend that they are guided and bound by the terms and conditions of the VSV Act and until and unless there is a specific provision provided for under the Act or the Rules framed thereunder, the assessee has no right to make any alteration. If the same stand is applied to the case of the revenue before us, the only answer which can be given is that once a declaration is issued in Form no.3, there appears to be no statutory provision which permits the Department to withdraw or cancel the Form 3. It may be a different aspect if there are reasons for either not fully accepting the Form 3 declaration while issuing Form 4 declaration or for any other reasons, which is not the case before us. Therefore, we are of the prima facie view that the Form 3 declaration once having been issued can be processed and taken to its logical end either may be fully in favour of the assessee or otherwise but there appears to be no provision to withdraw Form 3 declaration which was admittedly issued in favour of the assessee on 27th January, 2021. Delay in filling in appeal - period of limitation - scope of condonation of delay - as argued Circular dated 4th December, 2020 covers cases only when the appeals are filed with an application for condonation of delay between 1st April, 2019 and 31st January, 2020 and the appeal in the assessee s case was filed before this Court on 8th January, 2021 and therefore in terms of the Circular, an application under the VSV Act is not maintainable - One important issue which the revenue has lost sight of is that the appeal which is filed before this Court on 8th January, 2021 was time barred and there was a delay of 400 days in filing the appeal. Even prior to filing the appeal the assessee had filed the declaration under the VSV Act on 30th December, 2020. This appears to have been done by abundant caution mentioning the cut off date as 31st January, 2020 in column B of the Declaration. The assessee was put on notice and the affidavit and the application for condonation of delay along with the memorandum of grounds were served on the assessee and soon after receipt of the same on 12th January, 2021 a revised declaration under the VSV was filed mentioning the relevant details. On 21st January, 2021 delay in filing the appeal was condoned and the appeal was also admitted. The question would be as to what is the effect of the condonation of the delay in filing the appeal. The last date for filing the appeal was 13th December, 2019 but the appeal was filed only on 8th January, 2021. Consequently, there was a delay of 400 days. By virtue of the order passed by this Court on 20th January, 2021 condoning the delay, it is deemed that the appeal filed by the revenue for all purposes was within time, that is, as if the appeal had been presented not later than 13th December, 2019. This would be the correct interpretation of the legal provisions and the effect of an order of a court condoning the delay. This is as a result of deeming fiction which is created by condoning the delay committed by the revenue and treating the appeal as if it had been presented within time. Thus the appeal filed by the revenue before this Court for all purposes should be treated to have been an appeal filed not later than 13th December, 2019. Thus the petitioner/assessee was well within his right to have chosen to avail the benefit of the VSV Act and the declaration filed by the assessee has to be treated to be a valid declaration and has to be processed in accordance with the provisions of the VSV Act. The other aspect would be whether the revenue can take advantage of its wrong. In other words, the revenue now seeks to contend that the assessee cannot avail the benefit of the Scheme on the ground that the appeal was filed by them much after 31st January, 2020, that is, on 8th January, 2021 alone and therefore, in terms of the clarification issued by the CBDT the declaration cannot be entertained. We are of the clear view that the order passed by the revenue dated 9th September, 2021 is not sustainable and not in accordance with law. In the result, the writ petition is allowed. The order dated 9th September, 2021 as well as the earlier reply as given by the revenue to the assessee namely, letter dated 15th July, 2021, are held to be bad in law and accordingly quashed. The scheme had been periodically extended and one has to look to the object for such extension and one of the objects was to augment the revenue and if that was the object of the scheme then liberal interpretation requires to be given, however, not to the extent of reviving the scheme but to consider the declaration filed under the scheme will before the closure of the scheme and to direct them to be processed in accordance with law. We direct the concerned respondent to restore the Form 3 declaration dated 27th January, 2021 which was withdrawn/deleted from the server of the Department and process the Form 3 declaration in accordance with law. This direction be complied with by the appropriate respondent within a period of eight weeks from the date of receipt of the server copy of this order. 2022 (6) TMI 1122 Stay of demand - stay prayer was rejected on the ground that petitioner has not paid 15% of the disputed demand and hence petitioner is not eligible for stay of demand - HELD THAT:- We are reluctant to interfere with the order dated 08.12.2021 passed by respondent no.1 rejecting the petition for stay filed by the petitioner. However, we are of the view that since appeal of the petitioner is pending before the respondent no.3, petitioner may file a fresh application for stay before the appellate authority hearing the appeal, and in the event of such an application being filed within a period of fifteen (15) days from to-day, the same shall be considered by respondent no.3 expeditiously within a period of two (02) months from the date of filing of the application and in accordance with law. 2022 (6) TMI 1121 Reopening of assessment u/s 147 - Notice after expiry period after four years - mandation of recording satisfaction by Commissioner - HELD THAT:- Commissioner endorses the satisfaction on the reasons recorded by the AO, the Commissioner has to apply his mind and he cannot pass order mechanically and without having read the reasons. In this case satisfaction has been endorsed, in our view without even reading the reasons, mechanically. Reason for us to make this observation is that reason recorded by the AO contain contradictions, which if the Commissioner had bothered to read would have come to his notice and he could have taken appropriate remedial measures. As contradictions/errors in the reasons are typographical errors. We do not agree with the same, it cannot be termed as typographical error. Even the assessing officer has not applied his mind after drafting the reasons and perhaps not even read the reasons before forwarding it to the Commissioner for consideration and as noted above, if the Commissioner had also read the reasons he would have noted errors/contradiction. In paragraph No.1 which says The assessee has e-filed its Return of Income on 30/9/2012 declaring total income at Rs.42,312/-. The case was selected for scrutiny under CASS for the Assessment Year 2012-2013 and the assessment was completed under Section 143 (3) of the said Act on 12/12/2004 assessed total income at Rs.42,310/-. In the penultimate paragraph of the reasons it is recorded In this case return of income was filed but no scrutiny assessment was made and only requirement to initiate proceeding under Section 147 is reason to believe which has been recorded above. Petitioner is a company in the business of carrying on business of jewellery and bullion trade whereas in the reasons it is alleged that petition has failed to disclose truly and fully all material facts relevant to salary of which income chargeable to tax escaped assessment. Since the sanction has not been obtained satisfactorily before issuance of notice under Section 148 of the said Act as prescribed under Section 151 of the said Act, we allow the petition in terms of prayer clause (a) which reads as under: (a) that this Hon'ble Court be pleased to issue writ of certiorari or a writ in the nature of certiorari or any other appropriate writ under Article 226 of the Constitution of India, calling for records pertaining to the impugned reopening notice dated 29/3/2019 issued by the Respondent No.2 (being Exhibit 'E' hereto) and after going into the validity and legality thereof to quash and set aside the same. 2022 (6) TMI 1120 Valuation of the property under gift - Assessment u/s 15(2) of the Gift Tax Act determining the taxable gift - method and mode of valuation of property - HELD THAT:- The method and mode of valuation suggested by the assessee and/or documents relied on by the assessee are independently considered and rejected. The CIT(A) and the Tribunal have accepted the revised valuation given in the assessment order dated 04.03.2011. Except raising a bald allegation that the property has been excessively valued than what was prevailing at the time of execution of gift deed, hardly any material much less substantial material is placed before the Authorities under the Act, atleast to canvass the ground in this Court that the finding of fact is recorded without considering the material on the record. The i pse dixit contention does not carry the assessee anywhere. Each one of the orders we have independently considered in this behalf and we are in agreement with the findings of fact recorded by the Tribunal on the valuation. Hence, the argument advanced by the assessee on the valuation, now determined by the Authorities under the Act, does not warrant interference and is without merit and rejected. Ownership to the property - We notice the legal heir of the assessee particularly, the donee under the gift deed dated 20.04.1995, was granted liberty by the Supreme Court to raise objections on ownership of the property. The objections as rightly pointed out by Mr. Christopher Abraham, go to the root of the very transaction under which the legal heir of the assessee is contesting the ownership. The assessee or her legal heir is now contesting the ownership of the property. Looking at from general principles of law, the burden is on the assessee or her legal heir to prove that the ownership of the property vests with someone else, not the assessee. The entries in Revenue records, or the name of the assessee in Municipal Corporation, are not conclusive as regards the ownership of the property. The Tribunal, therefore, in our considered view, rightly observed that the assessee failed to place contra evidence on the ownership of the property. The findings of fact recorded by the Tribunal are concurrent findings of fact recorded by the Authorities under the Act. Expecting the Tribunal to restate every conclusion while confirming the findings in all fours, is not the requirement of the adjudication before the Tribunal. Therefore, the findings are tenable and are sustained accordingly. No ground is made out warranting firstly, interference and secondly, for limited purpose, remitting the matter to the Tribunal. 2022 (6) TMI 1119 Disallowance u/s 14A r.w.s 8D - assessee has made suo motto disallowance - HELD THAT:- AO noted only general observation and proceeded to disallow under Rule 8D of the Rules. We do not find any reference to nature of expenditure incurred by the assessee and quantum of expenditure disallowed by the assessee with regard to books of accounts that how it is it inadequate or incorrect. Merely noting general observations does not satisfy requirement of section 14A (2) - Thus, we hold that the AO has failed to record satisfaction about incorrectness of voluntarily disallowance offered by the assessee on examination of the accounts, that it is incorrect. AO does not have authority to invoke the provisions of Rule 8D of the Rules without recording satisfaction. Satisfaction of the ld AO mandated u/s 14A (2) is the entry gate for invoking computation of disallowance u/r 8D . In assessee s own case similar issue is decided by the coordinate bench in earlier years. Therefore, in absence of any such satisfaction no disallowance under Section 14A of the Act - AO is directed to retain the disallowance offered by the assessee under Section 14A of the Act. Accordingly, ground no. 1 (a) of the appeal is allowed. Claim of TDS credit - HELD THAT:- The assessee has shown a tax deduction at source made by tax deductor which has been paid to the credit of Central Government by the various parties. However, assessee has submitted the list of 16 such parties where the amount of income has been offered by the assessee as income however, consequent TDS was not granted as credit to the assessee. The reason being that it did not appear in form no. 26AS of the assessee. If the assessee proves that such tax has been deducted by the parties but it has not been reflected in the form no. 26AS, this issue has been considered by CBDT in office memo dated 11th March 2016. In paragraph no. 3, the CBDT has directed the officers not to enforce demand arising in such circumstances. Further, merely because the tax deductor has not filed the TDS return there is enough mechanism available to catch hold of such defaulting tax deductor. No doubt, it is the duty of the assessee to show that tax has been deducted. This issue is squarely covered in favour of the assessee by the decision of the Hon'ble Gujarat High Court in case of Kartik Vijaysinh Sonavane [ 2021 (11) TMI 682 - GUJARAT HIGH COURT] Therefore, this issue is restored to the file of the learned Assessing Officer for limited purpose of verification and thereafter to grant credit of the same. Further a sum where the tax deduction at source could not be reconciled. This issue is also restored to the file of the learned Assessing Officer with a direction to the assessee to show that how such TDS is refundable from credit is available to the assessee. Accordingly, ground no. 2 of the appeal is partly allowed. 2022 (6) TMI 1118 Penalty u/s 271(1)(c) - defective notice u/s 274 - Whether draft assessment order accompanied with Notice of Demand, tax Computation sheet and Show Cause Notice for penalty u/s 271 (1) (c) can it be considered as draft assessment order or a final assessment order? - HELD THAT:- Admittedly the draft assessment order passed by the learned assessing officer on 21/12/2016 is accompanied with the notice of demand as well as show cause notice u/s 274 r.w.s. 271 (1) (c) of the even date. Issue that arises is whether draft assessment order accompanied with Notice of Demand, tax Computation sheet and Show Cause Notice for penalty u/s 271 (1) (c) can it be considered as draft assessment order or a final assessment order. If it is a final assessment order then naturally the procedure laid down under the act has not been followed by the ld AO. In such circumstances, the assessment order passed by the AO becomes void ab intio and to be quashed. Appeal of assessee allowed. 2022 (6) TMI 1117 Exemption u/s 11 - registration under Section 12A rejected - assessee is a society registered with Registrar of Societies claiming that the objects of the society are of charitable and religious nature, assessee applied for registration u/s 12A - HELD THAT:- What is required to be examined at the time of grant of registration, as per the provisions existing at the relevant point of time, is the genuineness of the activities of the trust or institution and the objects of the trust. In so far as the objects are concerned, as discussed by us earlier, the very nature of objects for which the society was created, as appearing in the bye laws, clearly demonstrate that it is for charitable and religious purpose. There cannot be any doubt regarding the objects of the trust. As regards, genuineness of the society, materials on record reveal that it is carrying out activities to advance its objects. Therefore, there cannot be any serious doubt regarding the genuineness of the society. The so called infraction pointed out by CIT(Exemption), such as, claim of exemption under Section 10(23BBA) and section 10(23C)(v) in our view, neither impinge on genuineness of the Trust nor its charitable/religious nature. In case, assessee claims wrong exemption, it can be dealt with appropriately under the relevant provisions of the Act - a wrong claim of exemption, by itself, cannot debar assessee from getting exemption u/s 12AA - As per settled legal principles, though, assessee may be enjoying registration under Section 12A/12AA of the Act, however, its claim of exemption under Section 11 is not automatic. In case of violation of any of the conditions of sections 11 and 13 of the Act, the claim of exemption can be denied. However, that by itself does not affect the grant of registration under Section 12A/12AA of the Act. Allegations of CIT(Exemption) that the source of investment in construction of building was not properly explained, it is observed, in response to the query raised, assessee has furnished supporting evidence to explain such source. In fact, Learned CIT(Exemption) also accepted the aforesaid factual position - alleging that the return of income only shows the donations to have been utilized for day to day affairs and payments were made to other societies from the donations, he has persuaded himself not to grant registration u/s 12AA. One more allegation of the Learned CIT(Exemption) is regarding the receipt of corpus donation in absence of registration under Section 12AA - In our view, these issues should not cloud the vision of Learned CIT(Exemption) at the stage of granting registration under Section 12AA. At the stage of granting registration under Section 12A of the Act, authority concerned should not assume the role of assessing officer to examine whether the conditions for availing exemptions u/s 11 are fulfilled or not. These aspects certainly can be looked into at the stage of assessment. In any case of the matter, even after grant of registration u/s 12AA if in future, it is found that the activities of the trust are ingenuine and the trust is deviating from the objects based on which registration was granted, the authority concerned can proceed to cancel the registration. In the facts of the present case, there is nothing on record to suggest that either the activities of the trust are ingenuine or the objects are not of charitable or religious nature. We set aside the impugned order of Learned CIT(Exemption) and direct him to grant registration to assessee under Section 12AA - Appeal of assessee allowed. 2022 (6) TMI 1116 Reopening of assessment u/s 147 - tangible material to reopening of assessment - change of opinion - HELD THAT:- Hon ble Gujarat High Court in the case of Ami Ashis Shah [ 2021 (3) TMI 1174 - GUJARAT HIGH COURT] observed that the re-opening of assessment u/s 147 of the Act is held to be unsustainable since the original ITR was processed u/s 143(1)a of the Act and no new tangible material was found and notice was given on the ground that the assessee did not offer to tax certain income. As in the case of Commissioner of Income Tax v. Kelvinator India Limited [ 2010 (1) TMI 11 - SUPREME COURT] wherein, it has been held that, one needs to give a schematic interpretation to the words reason to believe , failing which, Section 147 of the Act would give arbitrary powers to the Assessing Officer to reopen the assessment on the basis of mere change of opinion , which cannot be per se reason to reopen. Reappraisal of same facts/documents/information means change of opinion. AO has no power to review his order. Order which has been passed purportedly without application of mind would itself confer jurisdiction upon the Assessing Officer to reopen the proceeding without anything further, the same would amount to giving premium to an authority exercising quasi-judicial function to take benefit of its own wrong. Thus alleged re-assessment proceedings are bad in law and liable to be quashed - Decided in favour of assessee. 2022 (6) TMI 1115 Disallowance of claim of bad debts - amount was worked out on the basis of short realisation from the debtors - Need for establishment of debt - HELD THAT:- In view of the ratio laid down in the case of T.R.F. Limited [ 2010 (2) TMI 211 - SUPREME COURT] holding that after 1-4-1989, it is not necessary for assessee to establish that debt, in fact, has become irrecoverable; it is enough if bad debt is written off as irrecoverable in accounts of assessee. Examining the facts in the instant case, we find that the assessee has rightly claimed the bad debts in its books of account and claimed it as deduction as bad debts as it has been shown as irrecoverable by the assessee and duly written off in the books of accounts. We, therefore, reverse the finding of the ld. CIT(A) and delete the disallowance of bad debts - Decided in favour of assessee. Disallowance made in respect of PF ESI in respect of employees contribution u/s. 36(1)(va) r.w.s. 2(24)(x) - scope of amendment - HELD THAT:- As assessee had made the remittance/payment of employees contribution towards PF ESI before the due date of filing of return of income u/s 139 (1) of the Act. Therefore we are inclined to allow the appeal of the assessee and direct the A.O. to delete the addition and hold that the Amendment brought in Finance Act 2021 w.e.f. 01.04.2021 by inserting an Explanation to section 36(1)(va) and section 43B of the Act is prospective in nature and would apply from AY 2021-22 onwards and, therefore, the Amendment is not applicable to the assessment year under consideration. - Decided in favour of assessee. 2022 (6) TMI 1114 Unexplained cash credit u/s 68 - unexplained cash deposit in the bank account during post-demonetization period - assessee s failure to establish the generation of cash deposited in the bank in high denomination during the demonetization period - HELD THAT:- We note that the cash sum of Rs. 94,50,000/- was deposited in the bank account held with Union Bank of India post-demonetization period. Assessee is a limited company and has regularly maintained books of account including the cash and all relevant details. It also holds account with two other banks. During the pre-demonetization period the assessee had withdrawn cash sum of Rs. 1,02,75,000/- from Tamilnad Mercantile Bank - As claimed by the assessee, this cash was withdrawn on various dates during July, 2016 and October, 2016 for making investment in unquoted shares and also for giving advance or purchase immovable properties. So far as this fact of withdrawing of cash is concerned the same has not been disputed by the Revenue authorities at any stage. The assessee s claim is very simple that the source of cash deposit of Rs. 94,50,000/- is the cash withdrawn of Rs. 1,02,75,000/- on various dates during the year itself which were before the announcement of demonetization scheme on 08.11.2016. The first observation of the Revenue authorities that why the assessee kept the funds idle with it for few months seems to have no merit in our view as it is the prerogative of the assessee company to utilize its funds in the way it finds prudent to be done so in the interest of running a business. We do not find anything unusual of the assessee keeping the cash in hand idle with it which was withdrawn from the bank and shown in the cash book. The second interesting observation by the ld. AO is that the denomination of currency withdrawn from Tamilnad Mercantile Bank do not tally with the denomination of the currency deposited in Union Bank of India. Though this allegation of the ld. AO made on the basis of information received by the ld. AO from bank u/s 133(6) of the Act was not provided to the assessee, thereby, denying the principles of interest of justice in not providing the assessee an opportunity to cross examine the information gathered by the ld. AO in the bank of the assessee and this action of the ld. AO in itself holds the assessment proceedings bad in law, in view of the ratio laid down by the Hon ble Apex Court in the case of Andaman Timber Industries ( 2015 (10) TMI 442 - SUPREME COURT ). Even otherwise the ld. AO should have appreciated that the currency in whatever form was in Indian Rupee and the same was withdrawn from bank, duly disclosed in the audited books of account, regularly shown in the cash balance carried forward and the assessee had sufficient cash in hand as on the date of announcement of demonetization scheme on 08.11.2016 and, in our considered view there remains no doubt about the genuineness of the transaction of cash deposit of Rs. 94,50,000/- in the bank account on 16.11.2016. The assessee has successfully shown the source of the same and thus, no addition is called for u/s 68 of the Act for the cash deposit. - Decided in favour of assessee. 2022 (6) TMI 1113 Levy of penalty u/s.271AAB - Jewellery found during the course of search and treated by the AO as undisclosed - HELD THAT:- As is evident from the charts filed by the assessee relating to addition of jewellery, the jewellery is inherited and acquired in this year or received any gift or pertaining to any specified year is not clear. As noted that the jewellery found in term of quantity and value and finally addition confirmed by CIT(A) in all three cases remains only to the extent of 10%. The 10% addition sustained on estimate may be on various reasons like valuation of jewellery by estimate in quantity and determination of value i.e., rate. We noted that this all depend on the social circumstances, family status and other consideration for holding of jewellery. But, the Revenue could not prove in these cases that jewellery pertains to any specified year, i.e., assessment year 2015-16. Cumulative of these factors is considered which seems that excess jewellery to the extent of 10% on estimate basis cannot attract penalty u/s.271AAB of the Act because this is simpliciter estimation. We noted that the penalty u/s.271AAB of the Act is discretionary and not mandatory as noted by various Co-ordinate Bench decisions and hence, by taking the quantum found in all these three cases and the quantum added in all these is just less then 10%, which is negligible and can be ignored easily due to various reasons noted above. In view of the facts and circumstances, we delete the penalties in these three cases, levied by the AO and confirmed by the CIT(A) u/s.271AAB of the Act and allow these three appeals of assessee. 2022 (6) TMI 1112 Exemption u/s 11 - presumption that registration u/s.12A and 80(G)(5) is cancelled - as section 12A registration was not traceable assessee again applied for it - HELD THAT:- As assessee expressed that the 12A registration was not traceable but placed on record that after receipt of the 12A, 80(G) registration was granted and was effective and not cancelled till the completion of the assessment. They have made necessary efforts to bring the facts on record by applying to the CIT(E) by writing a letter and upon no response they have subsequently availed the registration u/s.12AA of the Act. All these facts were not disputed by the ld. DR. We have also persuaded the extract of the Notes to the Provisions of Finance (No. 2), 2014 as given in CBDT circular no. 01/2015 dated 21.01.2015 where in the board has clarified so as to applicability of the registration certificate Thus once the registration has been granted and there is no contrary finding on record about the rejection of the trust registration the benefit of section 11 and 12 of the Act shall be available in respect of any income derived from held under trust in any assessment proceeding for an earlier assessment year which is pending before the Ld.AO. Here the ld. AR of the assessee already proved that the circumstantial evidence suggest that the assessee is having the registration but unable to provide the certificate and they have made sufficient effort to find out the truth and have also availed the fresh registration which is granted without any adverse observations on the activities of the trust. Thus the denial of benefit under section 11 of the Act by the ld. AO merely on account non production of registration certificate is incorrect and we direct the AO to grant the benefit of section 11 12 benefit to the assessee and also direct to delete the addition made on this count consequent there upon. Appeal of assessee allowed. 2022 (6) TMI 1111 Undervaluation of finished goods - Addition on the basis of investigation additions made by the Central Excise Department - assessee has filed appeal before CESTAT against such investigation - HELD THAT:- As decided in assessee own case additions made by the assessing officer and confirmed by the Ld. CIT(Appeals) are based on the basis of additions made by the Central Excise Department, against which the assessee has filed appeal before CESTAT. Accordingly, the matter was restored to the file of Ld. CIT(Appeals) for fresh adjudication in light of the order passed by CESTAT. However, we note that in the set aside proceedings even Ld. CIT(Appeals) gave only part relief even though CESTAT had deleted the additions proposed by the Excise Department. In view of the above order of CESTAT giving complete relief to the assessee and directions of ITAT in assessee s own appeal for assessment year 2008- 09, we are of the considered view that additions to the tune of ₹ 40 lakhs sustained by the Ld. CIT(Appeals) are liable to be set aside we also note that the additions have been sustained by Ld. CIT(Appeals) on purely estimate basis, as is evident from the observations made by Ld. CIT(Appeals) while passing the appeal order. It is well-settled law that no addition could be made on estimated basis without rejecting books of account of assessee as held by various Courts in the case of Asian Grantio India Ltd [ 2019 (10) TMI 1193 - ITAT AHMEDABAD] , Royal Marwar Tobacco Product [ 2007 (12) TMI 321 - ITAT AHMEDABAD ], Anil Kumar Company [ 2016 (3) TMI 184 - KARNATAKA HIGH COURT ] and Ercon Composites [ 2013 (12) TMI 902 - ITAT JODHPUR ] Accordingly, we are of the considered view that Ld. CIT(Appeals) has erred in facts and in law in confirming the addition. - Decided in favour of assessee. 2022 (6) TMI 1110 Deduction u/s 80IA - treating the assessee-company as a Contractor and not Developer by the Department - AO has denied deduction u/s 80IA(4) by holding that the assessee has acted as work-contract in the project awarded by the statutory bodies - CIT-A allowed the claim of deduction - HELD THAT:- The primary condition is that the enterprise must carry on the work of developing an infrastructure facility. As mentioned above, Explanation under sub-Section (13) of Section 80-IA clarifies that this section will not apply to any business which is in the nature of a works contract . In the present case the lower authorities have denied the benefit of Section 80-IA(4) to the appellant-company on the assumption that the appellant-company is engaged in executing merely a work contract and it is not carrying on the business of developing an infrastructure facility. The assessee has undertaken entirely and exclusively the projects awarded by the local government authorities, as it is evident from the records as explained and already narrated hereinabove and therefore, there is hardly any basis for assuming that it is merely a contractor executing a works contract. The difference between a developer and a contractor has to be properly analyzed and understood. Tender work under consideration are not for a specific work, rather they are for development facility as a whole. The responsibility is fully assigned to the developer for execution and completion of the work. Various stipulations contained in the Tender documents demonstrate various risks undertaken by the assessee for execution of the project work awarded by the competent authority in terms of financial resources, manpower deployment, both technical and administrative expertise, drawing and designing of the project specifications and getting approval from the competent authority, safety and security of project and human resources, compliances of various statutory rules and laws. Therefore, merely because in the agreement for development of infrastructure facility, assessee is referred to as contractor or because if some basic specifications are laid down, it does not detract the assessee from the position of being a developer, nor will deprive the assessee from claiming deduction under Section 80IA(4) of the Act. As such, looking to the overall aspects of work undertaken by the assessee we can safely come to the conclusion that the assessee is engaged in development of the infrastructure facility and therefore, a developer, which entails the assessee to claim benefits under Section 80IA(4) of the Act. Thus, the issue of claim of deduction under Section 80IA(4) of the Act is allowed in favour of the assessee 2022 (6) TMI 1109 Income accrued in India - interest income on loans in the form of suppliers credit given to Indian parties - interest is paid is effectively connected with the Permanent Establishment of the assessee in India and the interest income thereon was taxable as per Article 11(6) read with Article 7 of the DTAA - whether taxable at special rates as per Article 11(2) of the India-Japan? - CIT(A) held that the interest income on loans in the form of suppliers credit given to Indian parties is taxable at special rates as per Article 11(2) of the India-Japan DTAA specially because the assessee had a permanent Establishment in India during the said time - HELD THAT:- As decided in MARUBENI CORPORATION, JAPAN CARE OF MARUBENI INDIA PVT LTD [ 2022 (6) TMI 953 - ITAT MUMBAI] no part of interest income, by any stretch of logic, can be said to be directly or indirectly attributable to the Indian permanent establishment of the assessee company. As alleged that the Indian parties from whom the assessee has received interest income are also the clients of the assessee in India with whom contracts were executed through the Permanent Establishment in India and the assessee has received fees for technical services in a previous year from them, but then the performance of contracts through the PE or receipt of fees for technical services from such clients is irrelevant as long as the interest income is not demonstrated to be attributable to the permanent establishment. Such an attribution cannot be inferred or assumed; there has to be cogent material to establish the fact that the income in question, i.e. interest income in this case, is attributable to the permanent establishment. There is not even a whisper of a suggestion to that effect. For interplay of Article 11(6) and Article 7(1), in our considered view, the expression effectively connected with such permanent establishment must mean a situation in which the interest income in question can be said to be directly or indirectly attributable to the permanent establishment and can be brought to tax under article 7(1) as such. That is not even the case of the Assessing Officer before us. - Decided in favour of assessee. Levying surcharge and health and education cess on FTS income - HELD THAT:- We find that in the last paragraph of the assessment order, the Assessing Officer has specifically mentioned that the FTS income of Rs. 30,92,20,199 is to be taxed @10% as per the DTAA whereas the income said to be attributable to the PE is to be taxed at the rates applicable to foreign companies, i.e. 40% plus surcharge and cess as per the Income Tax Act. Yet, in the computation of tax liability, the surcharge as also health and education is also levied. That is certainly incorrect. In any event, this issue is covered, in favour of the assessee, by co-ordinate bench decisions, including in the case of DIC Asia Pacific Pte Ltd [ 2012 (6) TMI 686 - ITAT, KOLKATA] as held expression tax is defined in Article 2(1) to include income tax and is stated to include surcharge thereon, so far as India is concerned. Article 2(2) further extends the scope of the tax by laying down that it shall also cover any identical or substantially similar taxes which are imposed by either Contracting State after the date of signature of the present Agreement in addition to, or in place of, the taxes referred to in paragraph 1 . Education cess, introduced by the Finance Act, 2004, described in Section 2(11) of the Finance Act 2004, is nothing but in the nature of an additional surcharge. Accordingly, the education cess being in the nature of an additional surcharge is covered by Article 2. Accordingly, education cess cannot indeed be levied in respect of tax liability of the appellant company - Decided in favour of assessee. 2022 (6) TMI 1108 Disallowance of labour expenses - disallowance on account of cash payments towards land development agreement - HELD THAT:- As discrepancies pointed out by the AO while disallowing the claim of the assessee for labour charges paid to the said two contractors were also explained and clarified by the assessee during the course of remand proceedings and the same was apparently accepted even by the learned AO - The details of work executed by the said contractors for the assessee were also duly supported by the copies of bills and certificates issued by Engineer Geometric Consultant. CIT(A) found that the onus that lay on the assessee was satisfactorily discharged by him by filing all possible details including confirmations/affidavits and TDS; and, the business expediency as well as genuineness of the labour expenses was successfully established by the assessee. At the time of hearing before us, the learned DR has not been able to dispute this finding of fact specifically recorded by the learned CIT(A) on the basis of details and documents furnished by the assessee to give relief to the assessee by deleting the disallowance made by the AO on account of labour expenses. We, therefore, find no justifiable reason to interfere with the impugned order of CIT(A) giving relief to the assessee on this issue and upholding the same, we dismiss Ground No. 1 of the Revenue s appeal. Liability accrued under development agreement was not provided for by the assessee in the books of account - HELD THAT:- As noted by the CIT(A) in his impugned order on the basis of the relevant clause 3.4 of the Development Agreement, there was an understanding between both the parties that the land would finally be transferred to the prospective buyers of the bungalows in the scheme directly and because of this understanding the liability was not provided for in the books of accounts of the assessee. In any case, as rightly observed by the CIT(A) in his impugned order, there was no question of any loss to the Revenue by this accounting treatment given by the assessee because had the liability been provided in the books of accounts of the assessee, the profit declared by the assessee would have decreased to that extent. As rightly concluded by the learned CIT(A), it was thus not a case of any postponement of tax liability by the assessee but was a case of preponement of tax liability. Keeping in view all these facts of the case, we are of the view that the addition made by the Assessing Officer on this issue was rightly deleted by the learned CIT(A) vide his impugned order and upholding the same, we dismiss Ground No.2 of the Revenue s appeal. 2022 (6) TMI 1107 Revision u/s 263 by CIT - assessment proceedings were reopened on limited scrutiny basis to analyse (a) Interest income mismatch and (b) deduction from income from other sources - HELD THAT:- As in our considered view, Pr. CIT has erred in facts in observing that the assessing officer did not verify the nexus between interest-bearing borrowed funds obtained and the interest-bearing loans and advances given by the assessee. In fact, it is observed that while setting aside the assessment order, the Pr. CIT has asked the AO to also examine the issue of disproportionate credit of dividend income with reference to investments in shares and also directed the AO to work out the disallowance u/s 14A in respect of dividend income, though the same did not form part of either the show cause notice issued u/s 263 and also it was beyond the scope of original assessment proceedings which were opened on limited scrutiny basis to examine issues specified above. During the course of assessment proceedings, we note that the Ld. AO made detailed enquiries on these issues and after consideration of time-to-time written submissions filed by the assessee and documents / evidence placed on record, the Ld. AO accepted the return of income filed by the assessee. The Gujarat High Court in the case of CIT v. Nirma Chemical Works [ 2008 (2) TMI 373 - GUJARAT HIGH COURT ] held that when the assessing officer after making due enquiries had adopted one view and granted partial relief, merely because the Commissioner took a different view of the matter, it would not be sufficient to permit Commissioner to exercise powers under section 263 of the Act. The Gujarat High Court in the case of CIT v. Kamal Galani [ 2018 (6) TMI 1052 - GUJARAT HIGH COURT ] has held that once assessing officer carried out detailed enquiries, it was not open for the Commissioner to reopen issues on mere apprehensions and surmises. In the instant case, detailed enquiries were made during the course of assessment proceedings by the Ld. Assessing Officer to enquire about the claim of expenses u/s 57 of the Act, to which the assessee filed time to time replies. Hence, in the instant facts, we are of the considered view that the assessment order was not erroneous or prejudicial to the interest of the revenue. In the result, the appeal of the assessee is allowed. 2022 (6) TMI 1106 Undisclosed stock found during the course of survey - HELD THAT:- As alleged excess stock is part of business income of the assessee and the same has been confirmed by the CIT(A) and the Revenue is not before us challenging the said finding. Now once it is confirmed that excess stock is part of business income, it is judicially settled that only profit element in such excess stock should be brought to tax. Keeping in to consideration the gross profit rate and net profit rate disclosed by the assessee in the audited financial statements and also the submissions of assessee that the assessee is ready to offer 12% profit on the excess stock, we with a view to end of dispute sustain the addition on account of undisclosed closing stock i.e. 12% of undisclosed stock 2022 (6) TMI 1105 Assessment u/s 153A - assessee has not accounted for 2/3 of its sales in its books of account as appearing in the seized documents - unaccounted sales found recorded in the hard disk - As found assessee has incurred expenses outside the books of account and if the same are taken into consideration, the resultant figures in all the three assessment years is net loss - HELD THAT:- As once drawn presumption that the contents of the documents of the assessee taken into possession during the search were true, then the same holds good for the entire entries found in those documents which means that the Assessing Officer cannot ignore the unaccounted expenses resulting into net losses in the captioned Assessment Years. Coming to the facts of the case in hand, we find that the additions made by the Assessing Officer are based upon the unaccounted sales found recorded in the hard disk. CIT(A) has restricted the additions to the extent of entries found to be not recorded in the books based upon the decision of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] - Since the additions sustained by the ld. CIT(A) are based upon the facts found at the time of search, we do not find any error or infirmity in the findings of the ld. CIT(A). Additions on account of undisclosed investment in stock is totally presumptuous and is based upon surmises and presumptions and is not even remotely connected with the facts unearthed at the time of search. We, therefore, do not find any reason to interfere with the findings of the ld. CIT(A). The impugned additions are deleted. - Decided in favour of assessee. 2022 (6) TMI 1104 Ad-hoc disallowance of the expenses - addition on the ground of non-availability of vouchers etc. in support of expenses claimed in books of account - HELD THAT:- As the finding is based on the premise that the assessee failed to substantiate the expenditure however the contention of the assessee is that due to flood material evidences was washed away and FIR was duly registered, further it is stated that the accounts of the assessee was duly audited and no adverse observation has been recorded by the auditors. Looking to the facts of the present case and more particularly the contention of the assessee that the record was washed away due to flood and coupled with the fact that there is no adverse inference by the auditors. I am of the considered view that it is a liberal view ought to have been adopted by the authorities below. Moreover the authorities below have not pointed out any specific absence of the vouchers hence. Therefore, considering totality of facts I hereby direct the AO to delete the addition. Decided in favour of assessee. 2022 (6) TMI 1103 Reopening of assessment u/s 147 - assessment was reopened on the basis of having some information regarding the cash deposit in the bank a/c of the assessee - HELD THAT:- The assessee has not rebutted the finding of the AO that he had written various letters to the assessee seeking explanation regarding cash deposits in the impugned assessment order - AO has recorded that verification letters were issued to the assessee on 24.02.2012, 19.12.2014, 07.08.2015 and 09.09.2015 seeking explanation regarding the source of the cash deposit, however despite the letters were duly served on the assessee no explanation was given to him. Assessee could not point out that before the Assessing Authority, the assessee had offered explanation regarding cash deposits. No reason to interfere into the decision of the Assessing Officer for reopening of the assessment. Ground No. 1 of the assessee's appeal is dismissed. Unexplained cash receipts - There is no dispute with regard to the fact that there was no representation on behalf of the assessee before the Assessing Officer. Therefore, the Assessing Officer made addition of the entire cash deposits. Hence, the subject matter of the assessment was the cash deposit. In the remand report before the Ld. CIT(A), AO accepted the explanation of the source of the cash deposit to the extent of the gift received from his father of Rs. 5,00,000/- and 1/3rd share of Rs. 6,44,300/- found to be explained. Thus, out of addition of Rs. 27,34,000/-, this amount of Rs. 11,44,300/- ought to have been reduced. Now coming to the rest of the addition the source of deposit was stated to be the lease amount received from one Sh. Shravan Singh. The evidences regarding receipt of lease amount was not believed by the authorities below on the basis that the lease deed as furnished did not disclose the name and address of the witnesses. This approach of the authorities below is erroneous in law and fact when the assessee has furnished certain evidences of ownership of land also the affidavits of person who had tilled the land. Revenue has not brought any material to suggest that the land remained uncultivated. In the absence of such evidence, the evidence filed by the assessee should have been enquired into and verified by the authorities below. Therefore, we restore the issue related to the balance addition to the Assessing Officer for decision afresh after verifying the evidence filed by the assessee. Needless to say that AO would afford adequate opportunity to the assessee. The grounds raised by the assessee are partly allowed. 2022 (6) TMI 1102 Delayed deposit of employees contribution towards PF and ESI - Addition invoking the provisions of section 36(1) when the same was paid within the due date of filing the return of income - intimation u/s. 143(1) when adjustment on debatable issue - HELD THAT:- In the instant appeal regarding disallowance of employees' contribution towards Provident Fund and ESI belatedly payment without following the provisions of section 2(24)(x) read with section 36(1)(va) of the Act is squarely covered in favour of the assessee by the judgment of the Hon'ble Jurisdictional High Court, Kolkata in the case of Vijay Shree Ltd.[ 2011 (9) TMI 30 - CALCUTTA HIGH COURT] - Decided in favour of assessee. 2022 (6) TMI 1101 Disallowance of expenditure u/s 37 - HELD THAT:- AO has purely made addition by making ad-hoc disallowance out of the expenditure @ of 10%. AO has not been specified at what vouchers were not available and what was the amount of such vouchers, therefore, the finding of the AO is purely ad-hoc and based on conjectures and surmises. Such findings of the Assessing Officer cannot be sustained. Hence, the Assessing Officer is hereby directed to delete the disallowance. Appeal of assessee allowed. 2022 (6) TMI 1100 Entertainment tax subsidy - capital or revenue receipt - disallowance u/s. 37 - HELD THAT:- In the assessment order the AO has observed that since the entertainment subsidy has been claimed as capital receipt by the assessee, the assessee must have incurred certain administrative Operational expenditure for the said capital receipt. Therefore, AO made ad hoc disallowance u/s. 37 @ 10% of expenditure. However, the said disallowance was not added by AO in the assessment order because the AO has added entire entertainment subsidy as capital receipt. This is an ad hoc disallowance. AO has not pointed out any specific expenditure which was in the nature of revenue expenditure. AO cannot presume it. Therefore, the AO is directed to delete the said disallowance. Accordingly, the assessee's Ground No. 1, 2 and 3 are allowed. Disallowance of 10% of expenditure out of Travelling, Conveyance, repairs and maintenance - Addition on the ground that these expenditures were in cash, no evidence filed to prove it - HELD THAT:- It is important to understand here that the ld. CIT(A) has given a finding that many of these expenditures were not supported by bills. Before us also the Assessee has not claimed that all the expenditures were supported by bills. The onus is on the assessee to prove the genuineness of the expenditure and to prove that the expenditure were incurred wholly and exclusively for the purpose of business of the assessee, In this case the assessee has not filed any documents to prove that the expenditure were wholly and exclusively for the business and has also not filed bills. Therefore, we uphold the disallowance made by the AO. 2022 (6) TMI 1099 Revision u/s 263 - Reassessment proceedings - What is the material before the AO which led him to believe escapement of income from tax due to non-returning of capital gain on the sale of land by the assessee/s during the relevant year in the instant case? - HELD THAT:- As the instant are revision proceedings, separate and distinct from the reassessment proceedings, which can be said to have attained finality, and which cannot be lightly, if at all, disturbed. The present case would be covered by the principle of law enshrined in the legal maxim sublato fundamento cadit opus , i.e., when the cause (foundation) is removed, the effect (consequent action) ceases. As explained by the Apex Court in Kiran Singh vs. Chaman Paswan [ 1954 (4) TMI 48 - SUPREME COURT] an order passed by an authority without jurisdiction is a nullity, and its invalidity can be challenged whenever and wherever it is sought to be enforced or relied upon. It is this principle, it may be noted, that prevailed with the Tribunal in the cases cited by the assessee, as indeed with the Hon'ble High Court in Keshab Narayanan Banerjee vs. CIT [ 1998 (8) TMI 55 - CALCUTTA HIGH COURT] . It is to be noted that in the present case there was no occasion for the assessees to challenge the assessment proceedings inasmuch as there was acceptance of the returned income. The assessee s challenge to the reassessment proceedings in the instant, collateral proceedings is thus valid. We, in view of the foregoing, uphold the challenge to the revision of the assessments under reference and, further, hold the impugned revision/s as bad in law. The assessee/s succeeds. 2022 (6) TMI 1098 Assessment of trust - Intimation of the CPC by applying the maximum marginal rate of tax on the income which was below the taxable limit - HELD THAT:- This tribunal in the case of Jain Sangh Parabdi Khayu Trustee [ 2022 (6) TMI 1027 - ITAT AHMEDABAD] involving the identical facts and circumstances held that It is the admitted position that the members of the trustees are not entitled to any share in the income of the Association of persons. Accordingly, we are of the view that the circular issued by the CBDT as discussed above is squarely applicable in the given facts and circumstances. Thus we hold that the rate applicable as to an individual for charging the income tax after a lowing the basic exemption limit, shall be applicable to the assessee on hand. Hence the ground of appeal of the assessee is allowed - Decided in favour of the assessee 2022 (6) TMI 1097 Exemption u/s 11 - intimation u/s 143(1) from CPC Bengaluru making certain adjustment as regards deduction claimed under section 11(2) which according to the assessee have been incorrectly disallowed since assessee s case - HELD THAT:- As relying in own case [ 2022 (6) TMI 1079 - ITAT AHMEDABAD] disallowances were being made under section 143(1) of the Act, and similar disallowance is also made for the present year viz. Asst.Year 2016-17, we hold that debatable issue should not be done in an intimation under section 143(1)(a) of the Act. Therefore, we allow the appeal of the assessee and delete both the disallowances. Assessee appeal allowed. 2022 (6) TMI 1096 Source of Cash deposited into the Bank Account - Agricultural income - advances received from customers in land transactions - assessee is an individual engaged in the business of trading in land on very small scale, helping his father and mother who running a tea shop at Adgaon as conducting agricultural activity on land taken on rent - HELD THAT:- The net agricultural income is not possible in view of possession of agricultural land in 52R which is not sufficient. It is also noted the sale bills of agricultural produce were furnished before the AO but however the AO held the bills obtained from merchant who is non-existent. There is no dispute with regard to possession of agricultural land whether it is own or on rent by the assessee and the balance amount out of the addition made by the AO u/s. 68 are out of gross agricultural income or turnover on account of land transactions activity. The assessee also furnished bills substantiating production of agricultural produce. CIT(A) ought to have considered the agricultural activity. It is also noted it was claimed by the assessee that the advances received from customers were refunded before year end but we find no such verification done by both the authorities below to confirm whether such advances were refunded or not. AR also did not bring on record anything to show that the advances from customers refunded before year end either before the CIT(A) nor before us. We deem it proper to restrict the addition to an extent of Rs.12,90,000/- being 50% of Rs.25,80,000/- on account of non furnishing of requisite details regarding the refund made to customers on account of advances received on land transactions. Thus, the order of CIT(A) is modified as indicated above accordingly and grounds raised by the assessee are partly allowed. 2022 (6) TMI 1095 Deduction in respect of interest paid u/s 57(iii) - Interest expenditure on borrowings utilized for advancing loan to the partners not allowable u/s. 57(iii) - HELD THAT:- As relying on own case [ 2019 (2) TMI 2034 - ITAT MUMBAI] there exists nexus between borrowings of money from the partner M/S Godrej Properties Ltd and lending out of that to two partners. Therefore, in our opinion, while assessing interest income received on loans from two partners namely M/s. Repton landmarks LLP and Mr. Ramesh P. Bhatia as income from other sources, deduction has to be allowed in respect of interest payment on loan to M/s. Godrej Properties Ltd. to equal extent. In our opinion decision cited by CIT(A) in the case of Dr. V.P. Gopinathan [ 2001 (2) TMI 10 - SUPREME COURT ] is clearly distinguishable on fact and not applicable in the present case - the assessee has proved direct nexus between borrowings and lending. Therefore we are not in agreement with the conclusion of learned CIT(A). Accordingly we set aside the order of learned CIT(A) and direct the Assessing Officer to allow deduction in respect of interest paid u/s 57(iii) of the Act while assessing interest income as income from other sources. Assessee appeal allowed. Customs 2022 (6) TMI 1094 Seeking release of seized goods - Jurisdiction - violation of principles of natural justice - violation of articles 14 and 19(1)(g) of the Constitution of India and provisions of Customs Act, 1962, notifications thereof, and provisions of Foreign Trade Policy and allow the goods to be further exported - conduct of investigation against the petitioner - seeking defreezing of bank account of the petitioner - Section 110 of the Customs Act - HELD THAT:- It is evident that if the proper officer has reason to believe that any goods are liable to confiscation under the Customs Act, he may seize such goods - Section 113 of the Customs Act mentions the instances when exportable goods can be confiscated. In the instant case, the seizure memo are not on record. However, the panchnama which has been placed on record along with the counteraffidavit says that officers of the Customs Department had informed that the exportable goods of the petitioner appear to be liable for confiscation and, therefore, they intended to seize the said goods. The expression appear to be liable for confiscation is clearly distinguishable from the expression reason to believe which are briefly analysed. Courts have held that section 110A provides a pragmatic mechanism to facilitate provisional release of seized goods, etc., to the owner, pending adjudication, but at the same time, protecting the interest of the Revenue - Insofar the present case is concerned, the petitioner had already made an application on January 18, 2022 before the respondent No. 1 for provisional release of the goods. At the time of making the application, the exportable goods of the petitioner were yet to be seized. Though initially the goods were detained by respondent No. 1, it is now stated that the goods were subsequently seized on February 9, 2022 by the Hyderabad Customs Commissionerate. Thus, a prima facie case is made out for provisional release of the goods under section 110A of the Customs Act, more particularly, considering the fact that the goods are not included in the prohibited list - provisional release of the exportable goods of the petitioner covered by the seven bills of export dated December 31, 2021, ordered, subject to the petitioner complying with the conditions imposed - let the petitioner furnish a bond for the total value of the export able goods - lhe petitioner shall also furnish bank guarantee to the extent of 20 per cent. of the duty drawbacks relatable to the exportable value of the goods - application disposed off. 2022 (6) TMI 1093 Confiscation - Imposition of redemption fine and penalty - valuation of goods which are not requiring BIS certifications - Confiscation and allowing of redemption of goods to which BIS specifications are applicable, for the purposes of export. Valuation of goods which are not requiring BIS certifications and confiscation of the same and allowing to be redeemed - HELD THAT:- Valuation of the goods was made in arbitrary manner without giving any cogent reasons whatsoever. The lower authorities have also not adhered to the principles of natural justice. The revaluation of goods was done at the back of the importer. Though the original authority cursorily states that he has gone through the various the sequential Customs Rules for valuation, there is no evidence to that effect to indicate such diligent application of rules by the lower authorities. The reason for rejection of the declared value is also not brought out clearly. The value adopted was arbitrary on the basis of report claimed to have been submitted by SIIB. Thus, it is found that revaluation of goods by the lower authorities do not show any application of own mind. The careless manner in which duty is confirmed on the appellants is evident from the fact that valuation of shoes and sandals was made at Rs.85 per pair and the Notification No.1/2017 prescribes a rate of 2.5% for the shoes and sandals which are priced below Rs.500/- or the Notification No.18/2018 which prescribes a rate of 2.5% for shoes and sandals which are priced less than Rs.1000/- was not followed - For these reasons and for the reason of non-adherence to the principles of natural justice, the impugned order to the extent of revaluation of goods which are not subjected to BIS specifications cannot be sustained. Request for issuance of a detention certificate - HELD THAT:- The impugned order does not show if the appellants have made any such request to the department and the Department has disallowed the same. In the absence of any order either permitting or rejecting the issuance of detention certificate, this Tribunal cannot entertain the request of the appellants. However, from the facts and circumstances of the case, it is evident that the detention of the goods was because at the instance of the Department and subsequent proceedings initiated by the Department. Therefore, the appellants are within their right to seek detention certificate from the Department. However, this Tribunal not be a writ court cannot suo motu direct the authorities to issue a detention certificate in respect of impugned goods. It is directed that the goods shall be assessed at the value declared by the appellants and the rate of duty shall be as applicable to such goods - order is modified to the extent that after the imposition of redemption fine, the department cannot put any conditions for re-export or whatsoever else. The condition is thus set aside - Appeal allowed in part. 2022 (6) TMI 1092 Seeking release of seized goods - section 110A of Customs Act, 1962 - memory cards of different specifications - 1826 nos. iPhone 13 Pro of different specifications - prohibited/restricted goods or not - failure to disclose these phones was the bone of contention in the investigation as well as in the show cause notice issued thereafter - HELD THAT:- Both confiscation and provisional release arise in the aftermath of seizure under section 110 of Customs Act, 1962. The scope for, and limits on, confiscation under section 111 of Customs Act, 1962, and, thereby, of redemption fine, stands settled by the decision of the Hon ble Supreme Court in WESTON COMPONENTS LTD. VERSUS COMMISSIONER OF CUSTOMS, NEW DELHI [ 2000 (1) TMI 45 - SC ORDER] and of the Hon ble High Court of Bombay in COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI VERSUS FINESSE CREATION INC. [ 2009 (8) TMI 115 - BOMBAY HIGH COURT] . Provisional release under section 110A of Customs Act, 1962 does not, in any way, impede completion of adjudication proceedings commenced under section 124 of Customs Act, 1962 and is to be invoked upon seizure with due acknowledgement of legislative intent to which we may now bring our attention to bear. Disposal by the empowered officer under the authority of section 110(1A) of Customs Act, 1962 is not restricted to sale and it is trite that such sale does not erase the taint of prohibition that attaches to seized goods; therefore, it is abundantly clear that the impugned goods are not prohibited, or even restricted, for import and that it is compliance with section 47 of Customs Act, 1962 that is in dispute here. The power to seize goods, and, that too, only in the reasonable belief of liability to confiscation under section 111 of Customs Act, 1962, is accorded by section 110 of Customs Act, 1962 - The denial of provisional release appears not to have considered the legal framework for exercise of authority laid down in section 110 to section 126 of Customs Act, 1962 and, instead, has been sought to be justified in terms of section 150 of Customs Act, 1962. A perusal of this provision leaves no room for doubt that section 150 of Customs Act, 1962 is a procedural enablement for distribution of sale proceeds of goods that are permitted by law to be sold; in any case, section 150 of Customs Act, 1962 does not empower sale or disposal and justification for denial of provisional release is acceptable only if in accord with the legislative intent of section 110A of Customs Act, 1962. It is on record that section 110(1A) of Customs Act, 1962 has been invoked for undertaking disposal of seized goods before even being vested, under the authority of section 126 of Customs Act, 1962, in the Central Government by confiscation. The substitution of the merchant-importer by the Central Government cannot legalize a beach of restrictions imposed for the security of the State or the safety of those who reside within its territorial confines; the commencement of pre-trial disposal by sale admits that breach by the importer of the impugned goods has only commercial implications. There is no suggestion that any policy has been contravened in the import. The sum and substance of the alleged breach is the failure to declare the goods with intent to evade duty for which restitution lies in section 28 of Customs Act, 1962 - Before section 110A was incorporated in Customs Act, 1962, seized goods offered for repossession, by operation of common practice , could be saddled with fine in lieu thereof by retention of confiscatory interest. Over the years, the quantification of fine has been placed within the practical framework of offsetting the potential for windfall deriving from the breach for which the goods are confiscated. Rarely would it be the value of goods; some proportion thereof suffices. There can be no golden formula for it and it is here that the discretion of the authority is called for. The goods have been seized under section 110 of Customs Act, 1962 and the seizure itself is not in dispute. Therefore, it does not lie in the jurisdiction to set aside the seizure. However, appellant has claimed that the goods were wrongly despatched to the importers and must, therefore, be returned to the owners. It is on record that the goods are not configured for use in India. In any case, no harm would be caused to the interests of Revenue by export of goods that have not been cleared for home consumption or even after such clearance. Provisional release under section 110A of Customs Act, 1962, by adjudicatory determination or on appellate intervention, does not stand in the way of disposition as the owner deems fit. Shipping bills, filed for declaration of intent to export, is to be dealt in accordance with section 51 of Customs Act, 1962 for which responsibility vests with the supervisory establishment of the customs administration. This advisory is enunciated as a reminder that legislative intent must be adhered to at all times. The impugned order declining provisional release is modified to allow provisional release upon execution of bond for value of impugned goods and furnishing revenue deposit of ₹ 5,00,00,000 not later than seven days of service of this order. Entry for export under section 50 of Customs Act, 1962, as and when filed, shall be disposed off expeditiously in accordance with section 51 of Customs Act, 1962 - Appeal disposed off. 2022 (6) TMI 1091 Refusal of SAD - rejection of refund pertaining to 6 bills of entry on the sole ground that Audit objected those 6 Bills of entry as allegedly not tallying with the sale invoices - HELD THAT:- The goods imported and goods sold, though are of different brand names are one and same which is verifiable from the item code and item description and such infraction of procedural technically cannot defeat the very object and purpose of exemption Notification [reliance was placed on the judgment of Hon'ble Supreme Court in MANGALORE CHEMICALS FERTILIZERS LTD. VERSUS DEPUTY COMMISSIONER [ 1991 (8) TMI 83 - SUPREME COURT] . Further, he had asked the adjudicating authority to verify the claim of refund with reference to requisite documents and pass an appropriate order. With this limited purpose matter went back to the adjudicating authority once again, whose primary duty was to verify if through documentary proof concerning import and sale of imported goods in the local market could be established and then sanction the refund as per Notification No. 102/2007. However, he had exceeded his jurisdiction in starting a de novo proceeding - Though Appellant claims that even there is no change of description of the goods imported and goods sold in the local market, which it has substantiated demonstratively during hearing of this case through documents annexed to the appeal memo from page 80 to page 95 and beyond. Further, as could be noticed from the adjudicating authority s order that unless imported goods are sold in the same condition, benefit of exemption Notification would be denied to the importer and change in the nature of goods would disentitle the importer from seeking SAD refund. On perusal of Notification No. 102/2007 no such conditionality is noticeable. Refund of SAD is primarily governed by Notification No. 102/2007 and guided by its clarificatory Circular issued from time to time. Learned Commissioner (Appeals) in the first round of litigation had already given a finding that claim of refund of applicant survives and thereafter review of the said order by the adjudicating authority in the limited remand for verification of documents so as to ascertain that the same is in conformity to law, is beyond the power of the adjudicating authority, as it can only be exercised by the appellate authority. Judicial president has been set by the Hon'ble Madras High Court in the case of JOHNSON LIFTS PVT. LTD. VERSUS ASSTT. COMMR. OF CUS. (REFUNDS) , CHENNAI [ 2021 (2) TMI 401 - MADRAS HIGH COURT] in which it was clearly stipulated that the respondent-department is bound to accept the description of goods in the import documents as well as sale invoice to be one and the same, on the strength of the certificate/correlation statement issued by the Statutory Auditor (Chartered Accountant). Appeal allowed. 2022 (6) TMI 1090 Delay in filing of appeal before Commissioner (Appeal) - Period of limitation for date of assessment of Bill of entry - to tbe counted from the date of communication of order or from the date of upload on the website - rejection of appeal on the ground that the same is hit by period of limitation prescribed under Section 128 of the Customs Act - HELD THAT:- The provisions of Section 128 of the Customs Act, would clearly indicate that limitation would be counted from the date of communication to him (person aggrieved) of such decision or order. Secondly, the ratio of the referred judgment also indicates that order of assessment/re-assessment is an appealable order - Reliance can be placed in the case of ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV [ 2019 (9) TMI 802 - SUPREME COURT] - This being the facts on record and the provision of law, the service of copy of the order on dated 12.01.2018 is supposed to be taken as the date of communication of the order, in which event the delay was only of 18 days concerning which satisfactory explanation in the delay condonation petition was afford by the Appellant as has been noted by the Commissioner (Appeals) in para 7 of his order i.e. Order-in-Appeal under challenge. Additionally the order passed by the First Appellate Authority under RTI Act, 2005 on dated 22.10.2021, being taken as additional piece of evidence since in the nature of public documents, clearly reveal that date of communication of order was 12.01.2018 and the Respondent- Department had never been in the practice of issuing copy of finally/provisionally assessed bill of entry to anyone, as the same has been uploaded in their website link (para 4 of the order of the appellate authority). This being the facts on record, it is opined that communication of the decision/order was made on 12.01.2018 and the date of uploading in the link provided by the Respondent- Department, cannot be taken as date of communication of the order besides the fact that dispute concerning non-availability of the order in the said link is also noticeable in the RTI order dated 22.10.2021. Moreover, no Court would presume such a document uploaded in the website as genuine unless it is a public document containing seal and signature of the public authority or its certified copy that would meet the requirement of Section 79 of the Indian Evidence Act. It is considered appropriate to allow the appeal and the matter remanded back to the Commissioner of Customs (Appeals), Mumbai-I to pass an order in conformity to the dictate of Section 128A(4) of the Customs Act - appeal allowed by way of remand. 2022 (6) TMI 1089 Classification of imported goods - Controller Assembly - Bolt - Nut - Screw - Rivet - goods declared as Components for Suzuki Vehicles, correct or not - whether the Controlled Assembly CVT imported by the appellant is classifiable under CTH 9032 and other items imported are classifiable under CTH 7318 as declared by the appellant or under CTH 8708 as parts and accessories of motor vehicles of heading 8701 to 8705 as assessed by the Customs? - HELD THAT:- The Commissioner (Appeals) while deciding the classification of the disputed goods, in question, under heading 8708, has not given any finding as to whether all the above conditions which are very important for deciding the classification of goods, satisfy / comply in respect of the disputed goods. The Commissioner (Appeals) findings are silent on this vital aspect of the relevant provisions - It is also found that Learned Commissioner (Appeals) in impugned order not given his finding related to classification of goods individually item wise. Whereas Appellant produced the list of 14 items imported vide above Bills of Entry. The lower authorities have not examined the legal aspects properly to come to conclusion for correct classification of the goods in question. Hence in our considered view the matter needs to be remitted back to the Commissioner (Appeals) - Appeal allowed by way of remand. 2022 (6) TMI 1088 Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - requirement to pass Final Order after considering the Inquiry Report and representation of the CB, within a period of ninety days from the date of submission of the report by the Inquiry Officer - period of fifty nine days from the date of issuance of copy of Inquiry Report to the Appellant/CB has already expired - HELD THAT:- It is found that after the impugned order dated 02.11.2021 confirming the suspension of CB Licence under Regulation 16(2) of CBLR, 2018, the department has duly issued Show Cause Notice under Regulation 17(1) of CBLR, 2018 appointing the Inquiry Officer who has also culminated his inquiry into the Inquiry Report as submitted before the Respondent Principal Commissioner and copy thereof has also been duly provided to the Appellant/CB under letter dated 29.01.2022 - In terms of Regulation 17(7) of CBLR, 2018, the Principal Commissioner is required to pass his Final Order after considering the Inquiry Report and representation of the CB, within a period of 90(ninety) days from the date of submission of the report by the Inquiry Officer. A period of 59 (fifty nine) days from the date of issuance of copy of Inquiry Report to the Appellant/CB has already expired and as such, at all probability, the respondent Principal Commissioner is in process of passing the Final Order under Regulation 17(7) ibid in accordance with law and hence at this stage, no fruitful purpose shall serve in deciding the present Appeal on merit by this Tribunal. It is found that substantial justice shall be done by directing the respondent Principal Commissioner of Customs (A A), Customs House, Kolkata to pass the order under Regulation 17(7) of CBLR, 2018 in connection to Show Cause Notice No.08/2021 Commr.(A A) dated 02.11.2021 within a period of 30(thirty) days from today positively after granting reasonable opportunity of representation and hearing to the Appellant/CB in accordance with law. Appeal disposed off. Insolvency & Bankruptcy 2022 (6) TMI 1087 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- The Corporate Debtor has raised issue that the Financial Creditor is itself undergoing resolution process. In this regard, it is submitted by the Financial Creditor that at the time of initiation of the present case, the Corporate Debtor was not under CIRP and hence the Corporate Debtor does not fall within the purview of the provisions of Section 11 of the IBC. In any event, explanation II of Section 11 of the IBC categorically clarifies that nothing in this Section shall prevent the Corporate Debtor, referred to in Clauses (a) to (d) of the said Section from initiating CIRP against another Corporate Debtor. Therefore, it is clear from the statute itself that the fact that the Financial Creditor herein is undergoing resolution process itself, is not a bar to maintain the instant application against the Corporate Debtor. In the present case, the Corporate Debtor was and is unable to show that there was no default and on the contrary, the Corporate Debtor has admitted the default in repayment of loan on its part. It is apparent that the Corporate Debtor is unable to repay the loan amount and has committed default and the present petition is, therefore, deserves to be admitted for CIRP. Petition admitted - moratorium declared. 2022 (6) TMI 1086 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- It is seen that the present application has been filed on 17.05.2021 and the account of corporate debtor was declared NPA on 29.09.2017. However, a recovery certificate of Hon'ble DRT was issued in favour of the financial creditor vide order 04.02.2020, which has given rise to a fresh cause of action to the financial creditor to initiate proceeding under Section 7 of IBC within 3 years from the date of the order. Accordingly, the present application is not barred by limitation. Establishment of 'default' on part of the Corporate Debtor - HELD THAT:- It is clearly established that the corporate debtor had approached the applicant for taking loan facility, which was sanctioned by the financial creditor and relevant documents were executed. However, the corporate debtor failed to adhere to terms of the sanction letter and defaulted in repayment of the outstanding financial debt. Therefore their account was declared NPA and from the documentary evidence it is proved that the financial creditor is entitled to recover the outstanding dues from the corporate debtor. It is added that in terms of Section 4 of IBC the corporate debtor has defaulted in payment of more than One Lakh and Hence CIRP must be initiated. The claim of the financial creditor has also been confirmed by the Hon'ble Debt Recovery Tribunal vide order dated 04.02.2020. It is pertinent to mention that the corporate debtor has failed to appear and present its defence; accordingly the present matter has been proceeded ex-parte. On perusal of Form-I filed under Section 7 of the Code read with Rule 4 of the Rules shows that the form is complete and there is no infirmity in the same. It is also seen that there is no disciplinary proceeding pending against the proposed Interim Resolution Professional - the present application is complete in all respect. The financial creditor is entitled to move the application against the corporate debtor in view of admitted outstanding financial debt and default of the same by the corporate debtor and the financial debt has also not been refuted by the Corporate Debtor. Application admitted - moratorium declared. Service Tax 2022 (6) TMI 1128 Levy of Service Tax - Chitty business - effect of amendment in the definition of the word service from 15.06.2015 onwards, retrospective or prospective? - HELD THAT:- The question whether companies like the petitioners who are engaged in Chitty business are exigible to service tax was considered by the Hon ble Supreme Court in UNION OF INDIA AND ORS. VERSUS M/S. MARGADARSHI CHIT FUNDS (P) LTD. ETC [ 2017 (7) TMI 224 - SUPREME COURT] . It was laid down in the said decision that after the amendment brought about to the definition of the word service from 15.06.2015 onwards, service tax is payable on Chit Fund. Relying on the aforesaid decision, a Division Bench of this Court, in its judgment in ALL KERALA ASSOCIATION OF CHIT FUNDS VERSUS UNION OF INDIA AND OTHERS [ 2018 (4) TMI 73 - KERLA HIGH COURT] held that the amendment brought about to the definition of service cannot be said to be clarificatory and there can be no retrospective operation given to such amendment. As a corollary it has to be understood that service tax cannot be levied on Chit Funds prior to the amendment, i.e. 15.06.2015. In the light of the undisputed fact that the demand under Ext.P1 to Ext.P22 takes in demands for the period 2012-13 and 2013-14 and is hence unsustainable in law. In the circumstances, it is only appropriate to remand the matter to the adjudicating authority for fresh adjudication in the light of the law as laid down by the Hon ble Supreme Court and followed by the Division Bench of this Hon ble Court. For the purpose of such adjudication, necessarily an opportunity of hearing should be offered to the petitioner. Petition allowed by way of remand. 2022 (6) TMI 1085 Levy of service tax - Ocean Freight - Department was of the view that the appellant is liable to pay Service Tax on the ocean freight charges collected by them as these fall under Business Support Services - eligibility for benefit of Notification No. 04/2004 - input services / approved services have not been consumed within the SEZ unit itself. Whether the charges collected by the appellant from its customers in the nature of ocean freight are subject to levy of Service Tax under Business Support Services? - HELD THAT:- This issue has been considered in various decisions of the Tribunal wherein the Tribunal has held that ocean freight charges are not subject to levy of Service Tax under Business Support Services or Business Auxiliary Services. The relevant discussion in the case of GREENWICH MERIDIAN LOGISTICS (INDIA) PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX MUMBAI [ 2016 (4) TMI 547 - CESTAT MUMBAI ] has held that The notional surplus earned thereby arises from purchases and sale of space and not by acting for a client who has space or slot on a vessel. Section 65(19) ibid will not address these independent principal-to-principal transactions of the appellant and, with the space so purchased being allocable only by the appellant, the shipping line fails in description as client whose services are promoted or marketed. Therefore, the demands, with interest thereon, and penalties are set aside - Following the same, there are no hesitation to hold that the demand of Service Tax on ocean freight charges cannot sustain and requires to be set aside. Demand of Service Tax - benefit of exemption as per Notification No. 04/2004 dated 31.03.2004 denied on the ground that the input services / approved services have not been consumed within the SEZ unit itself - HELD THAT:- The very same issue was considered by the Tribunal in the case of M/S. VISION PRO EVENT MANAGEMENT VERSUS CCE ST, CHENNAI [ 2018 (7) TMI 334 - CESTAT CHENNAI ] where it was held that Even if the event is held outside, since the services were for advertisement of product of SEZ, the services provided is to be considered as consumed within SEZ. It also needs to be mentioned that for availing the services, the SEZ has to get these services approved by the Development Commissioner - thus, it can be safely concluded that the demand of Service Tax alleging that the appellant has wrongly availed the benefit of Notification No. 04/2004 cannot sustain and requires to be set aside. Both the issues are found to be in favour of the assessee-appellant and against the Revenue - Appeal allowed - decided in favor of appellant. 2022 (6) TMI 1084 Levy of service tax - drilling machine - contention of petitioner is that the provisions of Finance Act, 1994 excluded their area of operations as per the jurisdictional reach of Finance Act, 1994 - Demand of interest and penalty as well - HELD THAT:- In view of the settled finding of the Hon ble High Court of Bombay in M/S. GREATSHIP (INDIA) LTD. VERSUS COMMISSIONER OF SERVICE TAX, OIL AND NATURAL GAS COMPANY LTD. [ 2015 (4) TMI 1006 - BOMBAY HIGH COURT] , of non-taxability between July 2009 and February 2010, insofar as the drilling undertaken by the appellant herein for oil exploration, the impugned order is set aside. Demand of Interest - HELD THAT:- It is on record that the appellant had voluntarily reversed CENVAT credit alleged to have been taken without authority of law. Insofar as the leviability of interest arise, the decision of the Hon ble High Court of Karnataka in COMMISSIONER OF CENTRAL EXCISE SERVICE TAX LARGE TAXPAYER UNIT, BANGALORE VERSUS M/S BILL FORGE PVT LTD, BANGALORE [ 2011 (4) TMI 969 - KARNATAKA HIGH COURT] has held that Without the liability to pay duty, the liability to pay interest would not arise. The liability to pay interest would arise only when the duty is not paid on the due date. If duty is not payable, the liability to pay interest would not arise. Penalty - HELD THAT:- The liability for interest does not merit approval and, consequently, the penalty too is unwarranted. Appeal allowed - decided in favor of appellant. Central Excise 2022 (6) TMI 1083 Clandestine removal - shortage of stock - removal of inputs without payment of duty - appellant have strongly submitted that since they are maintaining the stock of inputs in respect of trading as well as manufacturing, the stock taking was not properly done and therefore, the alleged removal of inputs and the shortage found in the factory was considered one sided as manufacturing stock - HELD THAT:- From the reconciliation chart given by the appellant, it appears that after reconciliation of trading and manufacturing stock the difference is not such which was alleged by the department therefore this fact needs to be reconsidered after proper verification. Accordingly, the appeal in case of M/s. CITIZEN UMBRELLA MANUFACTURES LTD. is disposed by way of remand to the adjudicating authority to decide afresh considering the above reconciliation of their stock. Confiscation, redemption fine and penalty imposed by the lower authorities on M/s. S.L. Banthia Textile Industries Pvt. Ltd. and its Director - HELD THAT:- Since unit is exempted under SSI and it is not registered, no Central Excise provision is applicable such as maintaining the stock, etc therefore, it cannot be alleged that the appellant have violated any provision of Central Excise Act. Accordingly, the confiscation, redemption fine and penalty imposed by the lower authorities on M/s. S.L. Banthia Textile Industries Pvt. Ltd. and its Director are not sustainable accordingly the same is set aside. The appeal of M/s. CITIZEN UMBRELLA MANUFACTURES LTD. is remanded to the adjudicating authority - Appeals filed by M/s. S.L. Banthia Textile Industries Pvt. Ltd. and its Director Shri Naresh Banthia are allowed - appeal allowed in part and part matter on remand.
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