Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 27, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
GST
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High Court rules for IGST refund valuation based on invoice value. Lower value of invoice and shipping bill is to be refunded.
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High Court finds tax recovery proceedings invalid due to missing DIN number. Proceedings set aside. Department to proceed lawfully.
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High Court rules on temporary GST registration issue due to missing e-way bill and transport docs. Petitioner misusing GST laws investigated further. Court orders inquiry and compliance.
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Court ruling: Late filing not reason enough to deny transition of credit extension u/s 140(5) of CGST Act.
Income Tax
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High Court: Assessment against dissolved company invalid post-Resolution Plan approval by NCLT. Claims in plan binding on debtor / tax authority.
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High Court ruled that reassessment under Income Tax Act must follow Finance Act, 2021. Respondent Dept's actions deemed illegal.
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Appellate Tribunal backs ex parte order against assessee, citing lack of evidence. Directs verification of TDS deductions.
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Appellate Tribunal cancels penalty for non-filing tax return, citing error by deductor as the TDS was deductible at source u/s 195.
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ITAT rules: 1. Proper notice issued for assessment 2. Upholds non-discrimination clause 3. Overseas fees not taxable 4. Interest not taxable under DTAA.
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ITAT accepts assessee's explanations and evidence, deletes AO's additions. Payment to retired partners justified. TDS discrepancy to be verified.
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ITAT rules no TDS for payments to foreign university for exam fees. No Permanent Establishment found. Decision consistent with tax treaty. Appeal allowed.
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Assessee switched from % of completion to project completion for revenue recognition. Legit change, no profit understatement found.
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ITAT ruled on TP adjustments: Selection of comparable companies on various criteria and exclusion of others. Directions issued.
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ITAT ruled in favor of taxpayer on various issues - Disallowed depreciation on unverified purchases deleted, goodwill depreciation allowed, TP Adjustment on LOC deleted
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Unexplained cash deposits in bank accounts opened by CA using fake documents not linked to assessee - Appellant wins case against wrongful additions
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Appellate Tribunal disallows effluent/waste disposal expenses & sales return provision. TDS liability on certain expenses to be examined. Bogus purchases deleted due to lack of response to notices.
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Income earned in India by Abu Dhabi Investment Authority is not taxable in India as per India-UAE treaty. Decision favors the Authority.
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Exemption: Application u/s 12A rejected as filed under wrong section. Reconsideration needed under correct section. Appeal allowed for future application.
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ITAT ruled in favor of the assessee, finding no prejudice to revenue due to revenue recognition and stock valuation methods.
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Appeal Tribunal found AO's assessment under limited scrutiny in compliance with CBDT instructions. Revision u/s 263 not justified.
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Tribunal ruled in favor of assessee on various tax issues including disallowance of expenses, foreign tax credit, & brand building expenses.
Customs
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CESTAT ruled in favor of customs broker - no penalty imposed for aiding in misclassification of goods. Unwarranted penalty of Rs.50,000/- overturned.
SEZ
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New guidelines for solar power panels in SEZs! Developers can now install panels for common areas. Let's go green!
FEMA
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New rules on foreign contribution reporting! Enhanced Form FC-4 needs asset details. Central Gov empowered. Stay compliant!
Indian Laws
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The court ruled that employees & Union of a Corporation can claim permanent status under Tamil Nadu law if they meet certain conditions.
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HC held that no proper investigation was conducted regarding the undeclared assets of the petitioner. No basis to proceed with trial.
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Court ruled notice of dishonoured cheque served, essential conditions met for proceeding. No illegality found. Onus to prove claim at trial.
PMLA
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Bail denied in money laundering case involving bribery & proceeds of crime. No anticipatory bail due to grave nature of offence.
SEBI
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The depository's committees handle key functions: MC manages membership; NRC oversees governance; SCOT ensures IT security; ROC monitors compliance; RMC handles risk; IC reviews investments.
Service Tax
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Court ruled in favor of Tata Steel Ltd. in a tax dispute. Companies Act can't override tax laws. Input service tax can be distributed among units.
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The court ruled that two units of the same company can't be taxed separately for services. No justification for extended limitation period.
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GST Era: Appellate Tribunal rules in favor of taxpayer for refund of service tax under reverse charge mechanism.
Central Excise
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HC: CENVAT Credit - Tax options switch in 2008-09 financial year. No record of Assessee exercising Rule 6(3)(i) option. Revenue appeal dismissed.
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CESTAT addressed refund issues on education cess and higher education cess. Court upheld part, set aside part.
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Rectification of mistake: Can't fix mistakes in certain final orders. Important to follow rulings.
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2024 (6) TMI 1168
Violation of principles of natural justice - petitioner did not have a reasonable opportunity to contest the tax demand on merits - rejection of petitioner's claim for ITC on the ground that the purchase falls within the scope of sub-section (5) of Section 17 of applicable GST enactments - HELD THAT:- On perusal of the impugned order, it is evident that the tax proposal was in relation to wrongful availment of ITC in respect of the purchase of a motor vehicle on 31.08.2018. In the affidavit, the petitioner asserts that such purchase was in furtherance of business. In these circumstances, it is just and necessary to provide an opportunity to the petitioner to contest the tax demand on merits by putting the petitioner on terms. The impugned order dated 12.09.2023 is set aside on condition that the petitioner remits 10% of the disputed tax demand within two weeks from the date of receipt of a copy of this order. Within the said period, the petitioner is permitted to submit a reply to the show cause notice - petition disposed off.
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2024 (6) TMI 1167
Refund of IGST paid - rejection order passed without giving any reasons and also without application of mind - violation of principles of natural justice - Rejection of the ground of time limitation - no sufficient cause for delay provided. Refund of IGST paid - rejection order passed without giving any reasons and also without application of mind - violation of principles of natural justice - HELD THAT:- The impugned order does not disclose why the refund application has been rejected. Further, the impugned order dated 21st September 2019 appears to be from a template used and though the amount of refund being allowed is Nil, the officer has not bothered to even delete the paragraph that the amount is to be paid to the bank account specified by applicant in his application. The officer, however, has deleted the other portions. Therefore, there has been even non application of mind by respondent no. 2 and on these grounds alone, the impugned order should be set aside. Rejection of the ground of time limitation - no sufficient cause for delay provided - HELD THAT:- Respondent no. 3 could not be blamed because he did not have the power to condone this delay Judicial conscience does not permit to reject this cause shown as bogus particularly in view of the fact that petitioner was an individual and the GST regime was at a nascent stage. Moreover, in both the orders impugned in the petitions there is no whisper about the merits of the application. The matter is remanded to respondent no. 2 for denovo consideration. Petitioner shall submit the deficient documents, which it says it attempted to submit on 18th September 2019 and again on 25th September 2019, within one week of this order being uploaded. Respondent no. 2 shall pass orders on the refund application in accordance with law but before passing any order, shall give a personal hearing to petitioner, notice whereof shall be communicated atleast five working days in advance. Petition disposed off.
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2024 (6) TMI 1166
Payment of interest for belated filing of returns - excess availment of ITC. Payment of interest for belated filing of returns - this issue was responded to by stating that the interest liability was discharged. The petitioner annexed evidence of discharge to the reply - HELD THAT:- A finding was recorded that the interest amount does not tally. On examining the petitioner's reply in comparison with the amounts indicated as payable towards interest, it appears that the amounts tally. Excess availment of ITC - the petitioner replied by asserting that excess ITC was not availed of, in support of such submission, the petitioner attached the GSTR 9 return and copies of invoices - HELD THAT:- The petitioner's reply has been completely disregarded and a finding recorded that the tax payer did not reply on this point. In these circumstances, the impugned order and recovery notice warrant interference. The impugned order in original dated 30.12.2023 and recovery notice dated 13.05.2024 are set aside and the matter is remanded for reconsideration - Petition disposed off by way of remand.
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2024 (6) TMI 1165
Violation of principles of natural justice - petitioner was not provided a reasonable opportunity to contest the tax demand on merits - petitioner was unaware of proceedings and therefore could not participate in the same - mismatch between the petitioner's GSTR 3B returns and the auto-populated GSTR 2A - HELD THAT:- On examining the impugned assessment order, it is evident that the tax proposal related to a mismatch between the petitioner's GSTR 3B returns and the auto-populated GSTR 2A. Such proposal was confirmed on account of the petitioner not filing the reply to the show cause notice. By taking into account the assertion that the petitioner could not participate in proceedings on account of being unaware of such proceedings, the interest of justice warrants that the petitioner be provided an opportunity to contest the tax demand on merits by putting the petitioner on terms. The impugned order dated 28.12.2023 is set aside on condition that the petitioner remits 10% of the disputed tax demand as agreed to within a period of two weeks from the date of receipt of a copy of this order. The petitioner is permitted to submit a reply to the show cause notice within the aforesaid period - petition disposed off.
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2024 (6) TMI 1164
Violation of principles of natural justice - petitioner did not have a reasonable opportunity to contest the tax demand on merits - reversal of Input Tax Credit to the extent of credit notes issued by the petitioner's suppliers - HELD THAT:- On examining the impugned order, it is evident that the tax proposal relates to the credit notes reflected in the auto populated GSTR 2A. Learned counsel for the petitioner submits that Input Tax Credit was not availed of for the value of such credit notes. By taking the said submission into account and the assertion that the petitioner did not participate in proceedings on account of not being aware of the same, the interest of justice warrants that the petitioner be provided an opportunity to contest the tax demand on merits. In this connection, it should be noticed that the petitioner remitted 12.5% of the disputed tax demand while filing the appeal. The impugned order dated 23.08.2023 is set aside and the matter is remanded for re-consideration. The petitioner is permitted to submit a reply to the show cause notice within fifteen days from the date of receipt of a copy of this order - petition disposed off by way of remand.
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2024 (6) TMI 1163
Valuation of goods for working out the refund of Integrated Goods and Services Tax (IGST) to be sanctioned - HELD THAT:- There is nothing in the rules to indicate nor the rules mention anywhere that it is only the net realisation value which has to be considered. The rule states the value of the goods declared in the GST Invoice. The value in the GST Invoice as declared by petitioner is FOB value of USD 224846.75 - the value of the goods that has to be considered for refund would be USD 224846.75 and if there is a discrepancy in the value in the corresponding shipping bill, the lower of the two values should be sanctioned as refund. The impugned order dated 25th August 2020 is set aside - matter is remanded to respondent no. 1 to process the refund application in accordance with law. Petition disposed off by way of remand.
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2024 (6) TMI 1162
Violation of principles of natural justice - SCN was uploaded on the portal but not communicated to the petitioner through any other mode - petitioner was unaware of such show cause notice and did not reply to the same - HELD THAT:- The petitioner's reply dated 29.07.2022 indicates that the sales turnover as per the return in Form CMP-08 was Rs. 6,37,595/-. In the impugned order, the turnover of Rs. 5,47,405/- was taken into account. It appears that this sum was compared with the purchase value as per the supplier's GSTR 1 statement. The tax proposal was confirmed on the basis that the tax payer did not respond to the show cause notice. In view of the assertion that the tax payer could not participate in proceedings on account of being unaware of the same, the interest of justice warrants that the petitioner be provided an opportunity by putting the petitioner on terms. The impugned order dated 18.08.2023 is set aside subject to the condition that the petitioner remits 10% of the disputed tax demand as agreed to within a period of 15 days from the date of receipt of a copy of this order. The petitioner is permitted to submit a reply to the show cause notice within the aforesaid period - Petition disposed off.
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2024 (6) TMI 1161
Extension of time in terms of the proviso to Section 140 (5) of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The impugned order in appeal dated 30th October 2023 passed by Respondent No. 3 is set aside and Respondent No. 3 is directed to denovo adjudicate petitioner s appeal within a period of four weeks from the date of the order passed by Respondent No. 2 in the Application dated 27th October 2017. Before passing any order, Respondent No. 3 will give an opportunity of being heard to petitioner with prior notice of atleast seven working days. Petition disposed off.
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2024 (6) TMI 1160
Detention of goods - levy of penalty - absence of the delivery challan - HELD THAT:- The petitioner has placed on record the Advance Authorisation Certificate. The said document specifies the name and address of the Karnataka Unit to which the goods were transported. The GST Registration Certificate of the petitioner specifies the list of additional places of business. This list includes the Karnataka Unit to which the goods were transported. The Bill of Entry is on record as also the E-way Bill. The E-way Bill indicates the name of the exporter. It is certainly arguable that the delivery challans are required to be sent directly by the principal to the job worker in cases wherein the goods moved directly to the job worker. When these facts and circumstances are considered cumulatively, this is an appropriate case to direct the 1st respondent to consider the petitioner's request for release of goods expeditiously subject to production of relevant delivery challans. The writ petition is disposed of by setting aside the order and directing the 1st respondent to reconsider the petitioner's request for release of goods.
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2024 (6) TMI 1159
Violation of principles of natural justice - Failure to provide a personal hearing to the petitioner - Imposition of liability for cess along with penalty - HELD THAT:- On perusal of the impugned order, it is evident that such order was preceded both by an intimation and a show cause notice. In reply to such show cause notice, the petitioner replied by submitting details of purchases made by him and outward supplies made by him. It is also clear from the impugned order that a personal hearing was not offered to the petitioner because the petitioner did not opt for the same. Sub-section (4) of Section 75 mandates that a personal hearing be provided if an order adverse to the tax payer is proposed to be issued. Interference is warranted but by taking into account the fact that the petitioner's liability for payment of cess, from the electronic credit ledger or otherwise, is not seriously disputed, the interest of justice warrants that the revenue interest be protected. The matter is remanded for reconsideration on condition that the petitioner remits 15% of the amounts payable towards cess under the impugned order within a period of two weeks from the date of receipt of a copy of this order - petition disposed off by way of remand.
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2024 (6) TMI 1158
Recovery of Tax dues - Challenging the proceedings of the 1 st respondent, requesting the 4 th respondent to stall the payment if any payable to the petitioner - Garnishee order - petitioner contends that the impugned proceedings do not contain Document Identification St Number (DIN), and without generating the DIN number - HELD THAT:- It is found from the impugned proceedings that they do not contain any DIN number. In view of the Circular issued by the Central Board of Indirect Taxes and Government of Andhra Pradesh, the impugned proceedings dated 10.05.2024 issued by the 1 st respondent, without generating the DIN number would have no legs to stand in the eye of law and the said proceedings are liable to be set aside. Accordingly, impugned proceedings dated 10.05.2024 are set aside. However, the Department is at liberty to proceed in accordance with law, and the petitioner shall cooperate with the Department in all respects in completion of the Assessment Order, which is stated to be pending for consideration before the 1 st respondent. The writ petition is allowed.
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2024 (6) TMI 1157
Violation of principles of natural justice - denial of a reasonable opportunity to contest the tax demand on merits - petitioner was unable to respond to the show cause notice or participate in personal hearings on account of various personal difficulties - mismatch between the petitioner's GSTR 1 statement and GSTR 3B returns - HELD THAT:- On perusal of the impugned order, it is evident that the tax proposal pertained to a mismatch between the petitioner's GSTR 1 statement and GSTR 3B returns. Such order records that the tax proposal is confirmed because the petitioner did not reply to the show cause notice. In the facts and circumstances outlined above, the interest of justice warrants that an opportunity be provided to the petitioner to contest the tax demand on merits, by putting the petitioner on terms. The order impugned dated 30.12.2023 is set aside subject to the condition that the petitioner remits 10% of the disputed tax demand as agreed to within a period of two weeks from the date of receipt of a copy of this order. In the said period, the petitioner is permitted to file a reply to the show cause notice - Petition disposed off.
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2024 (6) TMI 1156
Principles of natural justice - denial of reasonable opportunity to the petitioner to contest the tax demand on merits - notices and the impugned order were uploaded in the View Additional Notices and Orders tab on the GST portal - mismatch between the GSTR-3B and the auto-populated GSTR-2A - HELD THAT:- On examining the impugned order, it is evident that the tax proposal was confirmed because the petitioner did not reply to the show cause notice or attend the personal hearing. It is also clear that the tax proposal pertains to the mismatch between the returns filed by the petitioner and the auto-populated GSTR-2A. The impugned order dated 28.11.2023 is set aside and the matter is remanded to the respondent for reconsideration subject to the condition that the petitioner remits 10% of the disputed tax demand within two weeks from the date of receipt of a copy of this order - Petition disposed off by way of remand.
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2024 (6) TMI 1155
Violation of principles of natural justice - denial of a reasonable opportunity to contest the tax demand on merits - unaware of proceedings culminating in the impugned order - notice and orders were uploaded on the view additional notices and order tab of the GST portal and not communicated to the petitioner through any other mode - reversal of ITC - HELD THAT:- On perusal of the impugned order, it is evident that the tax proposal pertained exclusively to supplies received from Kiran Distributors. The petitioner has placed on record copies of relevant invoices issued by the said supplier, the bank statement relating to payments made to such supplier and the relevant ledger account. In these circumstances, the interest of justice warrants that the petitioner be provided an opportunity to contest the tax demand on merits, albeit by putting the petitioner on terms. The impugned order dated 27.09.2023 is set aside on condition that the petitioner remits 10% of the disputed tax demand as agreed to within a maximum period of two weeks from the date of receipt of a copy of this order - petition disposed off by way of remand.
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2024 (6) TMI 1154
Violation of principles of natural justice - amounts paid by the petitioner towards tax and interest were not taken into consideration - reasonable opportunity was not provided - Reversal of ITC - HELD THAT:- On perusal of the impugned order, it is evident that the respondent did not take into consideration the payment made by the petitioner under payment receipt dated 06.05.2023. Consequently, the impugned order requires reconsideration. The impugned order dated 19.07.2023 is set aside and the matter is remitted for reconsideration. The petitioner is permitted to submit a reply to the show cause notice dated 22.05.2023 within a period of two weeks from the date of receipt of a copy of this order - Petition disposed off by way of remand.
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2024 (6) TMI 1153
Violation of principles of natural justice - SCN and impugned order were uploaded on the View Additional Notices and Orders tab on the GST portal and not communicated to the petitioner through any other mode - mismatch between the GSTR 3B returns and GSTR 2A - HELD THAT:- On perusal of the impugned order, it is evident that the tax proposal was confirmed because the petitioner did not respond to the show cause notice or attend the personal hearing. The petitioner has placed on record proof that the petitioner's electronic credit ledger was debited to the extent of Rs. 90,000/-. Since learned Additional Government Pleader does not have instructions in this regard, the respondent may verify whether such payment was towards the tax liability under the impugned order. Subject to such verification, the interest of justice warrants that an opportunity be provided to the petitioner. The petition is disposed of by directing that the impugned order dated 31.08.2023 be treated as a show cause notice. The petitioner is permitted to submit a reply in respect thereof within a period of two weeks from the date of receipt of a copy of this order.
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2024 (6) TMI 1152
Validity of provisional attachment order passed under Section 83 of the Central Goods and Service Tax Act, 2017 - expiry of one year from the date the order is made - HELD THAT:- It is conceded by the respondent that provisional attachment order was issued on 27.01.2022 and thereafter no fresh attachment order has been issued. It is held that the provisional attachment of the Bank Account No. 1711210216080620 with AU Small Finance Bank in the name of petitioner has ceased to have effect - Petition allowed.
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2024 (6) TMI 1151
Deletion of temporary registration bearing registration - no e-way bill generated for the said vehicle - absence of the documents which are required along with the transport vehicle - HELD THAT:- On perusal of the Rule 16 of the GST Rules, sub-rule (1) provides that pursuant to survey, enquiry, inspection, search or any other proceedings under the Act, the proper officer finds that a person liable to be registered under the Act has failed to apply for such registration, the officer may register the said person on a temporary basis and issue an order in FORM GST REG-12. Sub-rule (3) provides that every person to whom temporary registration has been granted, shall, within a period of ninety days from the date of the grant of such registration, submit an application for registration in the form and manner provided in Rule 8 or Rule 12. Proviso to sub-rule (3) provides that the person may file an appeal against the grant of temporary registration, in such case, the application for registration shall be submitted within a period of thirty days from the date of the issuance of the order upholding the liability to registration by the Appellate Authority. As per clause (i), a person making any inter-State taxable supply is required to have compulsory registration notwithstanding anything contained in sub-section (1) of Section 22. The petitioner was not having the registration for inter-state supply from Unjha to Andhra Pradesh and accordingly, the respondent authority was justified in creating temporary registration. Considering the gross facts of the case where it is very apparent that the petitioner has indulged in misusing the provisions of the GST Act by issuing the bills for the goods which were loaded from Gujarat to be transported to Andhra Pradesh showing that the goods have been purchased from Jalore Sanchore at Rajasthan, further investigation is required to be made by the respondent authority along with the Rajasthan GST authority. The respondent authority is directed to conduct the thorough inquiry in the matter and find out the modus operandi adopted by the petitioner and take proper action under the provisions of the GST Act in accordance with law - petition dismissed.
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2024 (6) TMI 1150
Mainatianbility of petition - availability of statutory remedy of Appeal - appealable order u/s 112 of the CGST/OGST Act, 2017 - non-constitution of the Appellate Tribunal as required under section 109 of the said Acts - HELD THAT:- The petitioner is desirous of availing the statutory remedy of Appeal under the said provisions. Apparently, acknowledging the absence of constitution of Appellate Tribunal, in exercise of the power conferred under section 172 of the CGST Act, 2017, the Government of India based on the recommendation made by the G.S.T. Council, has issued Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 on 03.12.2019. In tune with the said Removal of Difficulties Order dated 03.12.2019, the Central Board of Indirect Taxes and Customs, GST Policy Wing vide Circular No. 132/2/2020-GST Dated 18th March, 2020 has come out with the clarification in respect of appeal having regard to non-constitution of the Appellate Tribunal where it was held that ' The appellate authority while passing order may mention in the preamble that appeal may be made to the appellate tribunal whenever it is constituted within three months from the President or the State President enters office. Accordingly, it is advised that the appellate authorities may dispose all pending appeals expeditiously without waiting for the constitution of the appellate tribunal.' Taking into account the aforesaid Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 dated 03.12.2019 issued by the Government of India and subsequent clarification issued by the Central Board of Indirect Taxes and Customs (GST Policy Wing) vide Circular No. 132/2/2020 dated 18th March, 2020, it is deemed proper in the interest of justice to dispose of this writ petition subject to compliance of conditions imposed - petition disposed off.
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2024 (6) TMI 1149
Mainatianbility of petition - availability of statutory remedy of Appeal - appealable order u/s 112 of the CGST/OGST Act, 2017 - non-constitution of the Appellate Tribunal as required under section 109 of the said Acts - HELD THAT:- The petitioner is desirous of availing the statutory remedy of Appeal under the said provisions. Apparently, acknowledging the absence of constitution of Appellate Tribunal, in exercise of the power conferred under section 172 of the CGST Act, 2017, the Government of India based on the recommendation made by the G.S.T. Council, has issued Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 on 03.12.2019. In tune with the said Removal of Difficulties Order dated 03.12.2019, the Central Board of Indirect Taxes and Customs, GST Policy Wing vide Circular No. 132/2/2020-GST Dated 18th March, 2020 has come out with the clarification in respect of appeal having regard to non-constitution of the Appellate Tribunal where it was held that ' The appellate authority while passing order may mention in the preamble that appeal may be made to the appellate tribunal whenever it is constituted within three months from the President or the State President enters office. Accordingly, it is advised that the appellate authorities may dispose all pending appeals expeditiously without waiting for the constitution of the appellate tribunal.' Taking into account the aforesaid Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 dated 03.12.2019 issued by the Government of India and subsequent clarification issued by the Central Board of Indirect Taxes and Customs (GST Policy Wing) vide Circular No. 132/2/2020 dated 18th March, 2020, it is deemed proper in the interest of justice to dispose of this writ petition subject to compliance of conditions imposed - petition disposed off.
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2024 (6) TMI 1097
Interpretation of statute - Section 140 (5) of the CGST Act - Transition of credit as per Section 140 (5) of the Central Goods and Services Tax Act, 2017 - rejection of application filed by petitioner seeking extension under the proviso to Section 140 (5) of the CGST Act - application not filed within time limitation - HELD THAT:- Section 140 (5) of the CGST Act provides that a registered person can take credit of eligible duties and taxes in respect of inputs or input services received on or after the appointed day on which duty or tax has been paid under the erstwhile regime, provided that the invoice is recorded in the books of accounts within a period of thirty days from the appointed day. First proviso to the said section provides that on sufficient cause being shown, the Commissioner may extend the period by a further period not exceeding thirty days - proviso to Section 140 (5) of the CGST Act permits the Commissioner to extend the time of recording the invoices in the books of account by a further period of thirty days, i.e., by 28th August 2017 provided the registered person shows a sufficient cause. Sub Section 5 of Section 140 of the CGST Act only requires the supplier of service to have paid before the appointed day and the invoice or the duty or tax paying document being recorded in the books of account of registered person within a period of thirty days from the appointed day, i.e., 1st July 2017, which period could be extended by a further period of thirty days on sufficient cause being shown - rejection of the application by the impugned order dated 1st November 2023 on the ground that it was filed only on 27th December 2017 is incorrect. The impugend order is set aside - appeal disposed off.
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Income Tax
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2024 (6) TMI 1148
Validity of assessment against company dissolved - demand /penalty Notices have been issued after the approval of the Resolution Plan for the revival and restructuring of the petitioner-company by NCLT - HELD THAT:- It is settled proposition of law that once a Resolution Plan is duly approved by the adjudicating authority under Section 31 (1) of IBC, 2016, the claims as provided in the Resolution Plan shall stand frozen and it will be binding on the corporate debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stake holders. On the date of approval of Resolution Plan by the adjudicating authority, all such claims, which are not part of the Resolution Plan, shall stand extinguished, and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the Resolution Plan. As to be noted that the principle of clean slate has been time and again reiterated and reaffirmed by the Supreme Court as well as by this Court. Thus, upon approval of a Resolution Plan or sale as going concern, is duly approved by the adjudicating authority, all the previous liabilities and claims of any person qua the corporate debtor, cease to exist and extinguish. The law is well settled that once a Resolution Plan is approved by the COC, it shall be binding on all the stakeholders. Thus, the successful Resolution Applicant starts running the business of the Corporate Debtor on a fresh slate. Considering the aforesaid, the impugned Assessment Order as well as the Notice cannot stand in the eyes of the law.
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2024 (6) TMI 1147
Validity of reopening of assessment - notices issued for reassessment required compliance with the substituted provisions of the Finance Act, 2021 - as argued in furtherance of Finance Act, 2021, reassessment process stood modified but the respondents have not taken care of it and therefore notices issued under Section 148 of the Income Tax Act, 1961 cannot sustain judicial scrutiny. HELD THAT:- During the course of hearing, learned counsel for the parties agreed that curtains on this issue are finally drawn by this Court in a batch of writ petitions decided by common order [ 2023 (9) TMI 951 - TELANGANA HIGH COURT] as held that the procedure to be followed by the respondent-Department upon treating the notices issued for reassessment being under Section 148A, the subsequent proceedings was mandatorily required to be undertaken under the substituted provisions as laid down under the Finance Act, 2021. In the absence of which, we are constrained to hold that the procedure adopted by the respondent- Department is in contravention to the statute i.e. the Finance Act, 2021, at the first instance. Secondly, it is also in direct contravention to the directives issued by the Hon ble Supreme Court in the case of Ashish Agarwal [ 2022 (5) TMI 240 - SUPREME COURT] For all the aforesaid reasons, the impugned notices issued and the proceedings drawn by the respondent-Department is neither tenable, nor sustainable. The notices so issued and the procedure adopted being per se illegal, deserves to be and are accordingly set aside/quashed. As a consequence, all the impugned orders getting quashed, the consequential orders passed by the respondent Department pursuant to the notices issued under Section 147 and 148 would also get quashed and it is ordered accordingly. The reason we are quashing the consequential order is on the principles that when the initiation of the proceedings itself was procedurally wrong, the subsequent orders also gets nullified automatically. In view of the consensus arrived, the impugned Show Cause notices and consequential orders passed in this batch of writ petitions are set aside. Liberty is reserved to both the parties to take respective stand and to proceed in accordance with law.
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2024 (6) TMI 1146
TP Adjustment - International Transaction in respect of Management Support services - whether Tribunal was justified in law in not appreciating the fact that the benefit test for intra group services ought to be evaluated every year and that reliance on subsequent years APA agreement to hold that the alleged services meet the benefit test criteria ? - whether the Tribunal was justified in law in not appreciating the fact that the assessee is making payment to its foreign AE for those alleged services which are stewardship in nature and therefore the arm s length price for such services should be Nil ? - functional comparability of the company as identified by the TPO and affirmed by DRP holding inter alia that the principle laid down in the APA for the subsequent year should be followed ? HELD THAT:- In the light of the certain subsequent developments, the substantial questions of law raised in this appeal are not required to be considered and answered. The order passed by the learned Tribunal in [ 2020 (12) TMI 551 - ITAT KOLKATA] have been given effect to and an order has been passed on the said effect. In the light of the same nothing further survives to adjudicate in this appeal. Accordingly, the appeal stands disposed of and substantial questions of law are left open.
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2024 (6) TMI 1145
Ex parte order - HELD THAT:- We find that the learned lower authorities have given enough opportunities to the assessee to present its case but on all the occasions the assessee has not presented the case before them and therefore there is nothing wrong in the orders passed by the lower authorities. They have also provided enough opportunities to the assessee and therefore the passing of the ex parte order by the learned lower authorities cannot be found fault with. Accordingly ground number 1 and 2 of the appeal is also dismissed. High-pitched assessment - As stated that the order passed by the learned lower authorities is illegal being high-pitched, the assessee has not given any evidence that why it is a high-pitched assessment the income of the assessee is assessed merely at Rs 256,184/ and therefore same is not high-pitched. Accordingly ground of the appeal is dismissed. Tax credit denial - All the persons who have paid manpower services to the assessee, has deducted tax at source. The ld. AO should verify from each of such person to confirm whether the TDS made by them is correct and such services are rendered by the assessee by issuing summons u/s 131 or by issue of notices u/s 133 (6) of the act. AO may also examine them. As huge TDS is outstanding which needs to be refunded to the assessee, AO may also issue summons to the parties u/s 131 based on the TDS details available in form no 26AS also. If those parties confirm that they have paid the amounts to the assessee and necessary services have been provided by the assessee, the assessee should be granted credit for such taxes paid. This direction is necessary in order to verify whether the claim of TDS refund of the assessee is genuine or not in view of allegation of the AO which were not disproved by the assessee. In case ld. AO finds that there are no services provided by the assessee then in those circumstances, AO may take any action against the beneficiaries of such bogus bills and also against the assessee company. As assessee failed to substantiate its return before ld AO and CIT (A), We direct the assessee to produce before ld AO the directors of the company along with books of accounts to show that TDS belongs to the company for rendering necessary services with all the TDS certificates , copies of the bills and nature of services and how those services are rendered, within 90 days of receipt of this order. If the ld. AO is satisfied with such a huge claim of TDS of the assessee, same should be granted to assessee along with interest. Accordingly ground number 4 of the appeal is allowed with above directions. Proof of transactions and services rendered - This is a conduit company operated by one accommodation entry provider. This is the finding of the fact arising on the basis of search. No contrary evidence is provided before us. However, in the interest of justice we set aside this ground of appeal back to the file of the AO with direction to the assessee to prove before the AO by producing directors of the company, necessary proof of services rendered, necessary proof of all kind of transactions entered by the assessee, along with the list of creditors, debtors stating their address PAN and where those are assessed.
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2024 (6) TMI 1144
Addition u/s 68 - unexplained share capital /share premium - AO during the assessment proceedings called for various documents and evidences qua the issue of share capital/ share premium which were accordingly filed comprising the copies of ITRs, audited accounts, share application forms, share allotment letters, bank statements, memorandum of articles of associations etc. in respect of each of the share holders - HELD THAT:- The assessee has justified the issuance of share capital at a premium as the money collected were to be invested in M/s Delsey India Pvt. Ltd. which was a joint venture between M/s Sapphire Trade Associates pvt. Ltd. and M/s Delsey India Pvt. Ltd. with 49% 51% share respectively. We find that the AO has made the addition on basis of observations that the assessee is a new company formed in AY 2014-15 as recorded in the assessment order wheresas is wrong as the assessee is an old company. Besides these the general observations given by the AO without pointing out any specific defect or deficiency on the evidences and explanation furnished by the assessee is wrong. We note that the AO has made detailed investigation/enquiry even by issuing notice u/s 133(6) and 131 of the Act which were duly responded and complied with by all the subscribers. As the assessee has proved the identity, creditworthiness and genuineness of the transactions besides the fact that the revenue itself has accepted the issuance of equity shares to these parties to be genuine in AY 2016-17. We are unable to agree with the conclusion drawn by the CIT(A) upholding the order of AO by completely ignoring the facts on record and consequently we set aside the order of CIT(A) and direct the AO to delete the addition. Appeal of the assessee is allowed.
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2024 (6) TMI 1143
Validity of reopening of assessment u/s 147/148 - proceedings initiated after the end of four years - assessee has claimed long term capital gain from sale of a scrip and claimed exemption u/s 10(38) - whether the AO had a reasons to believe and not merely reason to suspect that any income chargeable to tax has escaped from levy of tax for the reasons of failure on the part of the assessee? HELD THAT:- The records reveal that the assessee had already declared the transactions of purchase and sale of equity shares of VMS Industries Ltd., in its original return, it had earned short term capital gain of Rs. 57,46,787/- and duly offered tax u/s 112 of the Act. Further this return has already been scrutinised by the ld. Assessing Officer and all the details were available before him during the course of scrutiny proceedings. Now, examining these facts we find that firstly AO failed to record proper reasons to reopen the case as ld. Assessing Officer has not made any application of mind before issuing the notice and he ought to have examined the original return filed by the assessee before issuing the notice for reopening. No such exercise has been done at the end of the AO. The reasons to believe are not proper and it merely is a case of reason to support or merely change of opinion. Above all, the main allegation against the assessee as per the information received from the investigation wing that the assessee had claimed exemption u/s 10(38) of the Act is also incorrect. Since the AO failed to adhere to the conditions laid down u/s 147 for reopening of the proceedings, the assessment order in question is held to be void ab initio, illegal and, is hereby quashed. Accordingly, the re-opening proceedings carried out in the case of the assessee are quashed. Appeal of the assessee is allowed.
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2024 (6) TMI 1142
Addition u/s 68 - unexplained share capital/share premium - no compliance to the summons issued u/s 131 - AO upon examination of the details filed by the assessee observed that during the year the assessee has issued equity shares at a premium and there is no business activity or book value / EPS and therefore there is no justification for issue of shares at premium - HELD THAT:- AO has wrongly stated in the assessment order that there was no compliance to the summons issued u/s 131 of the Act. We also note that both the investors have good earnings and net worth and even the source of source was proved by the investing companies. Therefore the authorities below have not done any verification or conducted any enquiry into the evidences filed by the assessee and merely harped on the non compliance of summons issued u/s 131 of the Act. Even in case we accept the observation of the AO as to non compliance of the summons u/s 131 of the Act by the assessee and also non productions of the directors of the investing companies even then the AO cannot make addition on the sole basis of non compliance. The case of the assessee is also squarely covered by the decisions of Crystal Networks Pvt. Ltd. [ 2010 (7) TMI 841 - KOLKATA HIGH COURT] wherein it has held that where all the evidences were filed by the assessee proving the identity and creditworthiness of the loan transactions , the fact that summon issued were returned unserved or no body complied with them is of little significance to prove the genuineness of the transactions and identity and creditworthiness of the creditors. Similar ratio has been laid down in the case of CIT Vs Orchid Industries (P) Ltd [ 2017 (7) TMI 613 - BOMBAY HIGH COURT] by holding that provisions of section 68 cannot be invoked for the reasons that the person has not appeared before the AO where the assessee had produced on records documents to establish genuineness of the party such as PAN, financial and bank statements showing share application money. Decided in favour of assessee.
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2024 (6) TMI 1141
Penalty order passed u/s 271(1)(c) - bogus long term capital gain u/s 10(38) - Mandation to record specific charge against assessee before initiating penalty - HELD THAT:- We find that the assessee has disclosed all the facts of having earned long term capital gain from sale of shares. The case of the assessee was reopened by issuing notice u/s 148 for the reasons that the assessment has escaped due to claim by the assessee u/s 10(38) qua long term capital gain. In the assessment proceedings, the assessee offered the said income to tax by filing revised computation. Thereafter the AO simply brought the said capital gain to tax and initiated the penalty proceedings u/s 271(1)(c ) without recording any satisfaction framing the charge whether the initiation of penalty proceedings was for concealment of income or for filing inaccurate particulars of income though in the notice issued u/s 271(1)(c) the AO stated that It appears that you have concealed the particular income . Thus it clear from the above that the AO was himself not sure as to the charge of penalty. In our opinion, the said approach of the AO in making assessment without framing the charges and issuing notice without being sure as to levy of penalty on particular charge is not permissible under the Act. AO has failed to demonstrate that the claim of the assessee was false during the assessment proceedings or during the penalty proceedings. As in the case Chetan Kumar Tekriwal (HUF) [ 2023 (12) TMI 276 - ITAT KOLKATA] following the decision of Reliance Petroproducts Pvt. Ltd.. [ 2010 (3) TMI 80 - SUPREME COURT] wherein as held that the assessee has fully disclosed the particulars in the return of income, then the assessee is not liable for penalty proceedings on the ground that disclosures made by the assessee are not made as per the provisions of the Act or are not acceptable to the revenue. Therefore, we are inclined to set aside the order of Ld. CIT(A) and direct the AO to delete the penalty. Decided in favour of assessee.
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2024 (6) TMI 1140
Penalty leviable u/s 271(1)(C) - assessee has not filed the return of income under section 139 of the act despite having taxable income and having interest income from various investments - income offered consequent to reopening notice - as per revenue had the revenue not reopened the case, the total income would have remained untaxed, therefore he is satisfied that any person who has concealed the particulars of income or furnished inaccurate particulars of such income, the penalty is leviable HELD THAT:- In this case there is no dispute that assessee has earned income from one party on which tax is deductible at source u/s 195 of the act. The payer of the interest has deducted tax at the source at the rate of 10% instead of 12.5%. The assessee as soon as the notice under section 148 was received immediately offered the same income and also paid the balance tax due. Special provisions relating to certain income of non-resident as provided under Chapter XII A of the act is applicable to the assessee. According to provisions of section 115G non-resident assessee is not required to file her return of income u/s 139 (1) if total income in respect of which she is assessable under this act during the previous year consisted only of investment income or income by way of a long-term capital gain or both and tax deductible at source under the provisions of chapter XVII B has been deducted from such income. There is no dispute that assessee is a non-resident, she is deriving only investment income and tax is deductible at source on such income. Only dispute is that tax deductible at source is at the rate of 12.5% whereas the deductor has deducted tax at the rate of 10%, therefore, the return of income was not filed - On detection, on receipt of notice under section 148 of the act, assessee offered that income and also paid the balance tax of 2.5% on that income which is arising due to shortage of tax deducted at source. Therefore the assessment is made at the returned income. But AO considered that there is a concealment of income. We find that there is an error made by the deductor and not the deductee i.e. assessee. For this, the assessee could not have been penalized for levy of penalty under section 271(1)(C) of the act. Honourable Supreme Court in case of PRICE WATERHOUSE COOPERS (P.) LTD. [ 2012 (9) TMI 775 - SUPREME COURT] in reopened assessment proceedings on a genuine mistake or omission, reassessment order was passed on the assessee paid due tax thereon as along with the interest, it was held that absence of due care does not mean that assessee is guilty of either furnishing inaccurate particulars or attempting to conceal its income. In that case the contents of the income are already available in the tax audit report. In the present case also the details of the income and tax deducted thereon is already available with the assessing officer in form number 26AS based on which reopening of the assessment was made. Assessee also paid due tax immediately in response to notice under section 148 of the act. In the present case it is also not the error of the assessee but the error of the tax deductor from whom interest income is received. In the case the inadvertent error also gain be on account of the person who paid interest to the assessee of deducting tax at lower rate but not on part of the assessee. Similarly High Court in case of CIT versus Hans Christian Gass [ 2012 (8) TMI 146 - BOMBAY HIGH COURT] - Reliance by the lower authorities on the decision of Mak data[ 2013 (11) TMI 14 - SUPREME COURT] is misplaced because in that case The surrender of income on this case is not voluntary in the sense that the offer of surrender was made in view of detection made by the Assessing Officer in the search conducted in the sister concern of the assessee. In that situation, it cannot be said that the surrender of income was voluntary. Thus the facts in that case are distinguishable Thus we find that the learned lower authorities are incorrect in imposing penalty under section 271(1)(C) - Decided in favour of assessee.
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2024 (6) TMI 1139
Validity of the assessment - no notice issued u/s 143(2) by the prescribed authority - HELD THAT:- As decided in [ 2024 (6) TMI 673 - ITAT MUMBAI ] notice issued u/s 143(2) of the Act in the case of the assessee by the prescribed authority i.e NaFAC is in accordance with the provision of the Act , therefore, we don t find any merit in this ground of appeal of the assessee and the same stand dismissed. Rate of tax applicable to domestic companies - scope of non-discrimination clause of India-France Tax Treaty - This issue has recurring history and it is coming from A.Y. 2001-2002 to A.Y. 2020-2021 and in all these years this issue has been decided against the assessee and in favour of the Revenue. In [ 2024 (6) TMI 673 - ITAT MUMBAI ] as referred to the Explanation in the Section 90, inserted in the IT Act with retrospective effect from 01-04- 1962 as per which the higher tax rate in case of foreign company, should not be regarded as violation of non-discrimination clause. The Tribunal also referred to the judgment of the Hon'ble Supreme Court in the case of ACIT Vs. J.K. Synthetics [ 2001 (2) TMI 17 - SUPREME COURT ] Tribunal accordingly, rejected the ground raised by the assessee correctly. Taxability of data processing fees paid by the assessee to its overseas branch - This issue also of recurring issues coming from A.Y. 2005-2006 to A.Y.2020-2021 and the co-ordinate Bench in [ 2024 (6) TMI 673 - ITAT MUMBAI ] wherein as held that the department was not justified in taxing the data processing charges to the Singapore Branch of the assessee by applying the provisions of Article 13 of the India-France Tax Treaty. In effect thus, reversing the stand of the DRP, the coordinate bench has come to the conclusion that the payment on account of data processing charges paid to BNP Singapore cannot be taxed in the hands of the assessee. The conclusion arrived at by the coordinate bench, whatever may have been the path traversed by the coordinate bench to reach this point, are the same as arrived at by us. Decided in favour of assessee. Taxability of interest paid by branch office to Head Office / overseas branches - This is also a recurring issue coming from A.Y. 2001- 2002 to A.Y. 2020-2021 and the co-ordinate Bench has considered this issue as held clear from the provision of DTAA that interest income of the non-resident (head office) shall be taxable under Article 12 of the DTAA only when such head office shall not having any PE in India wherein branch (PE) is established in India then the provision of Article 7 only shall apply and Article 7 deal with taxability of only profit attributable to the PE branches of such overseas head office. Further, the debt regarding claim mean the some money due from one person to another. Since, in the case of the assessee branch has borrowed from the overseas head office, therefore, debt claim of the head office is connected to the PE branch in India, therefore, in the present case interest received by head office from its branches in India is not taxable in the hands of the head office in view of the provision of DTAA - Decided in favour of assessee .
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2024 (6) TMI 1138
Addition of income - difference between the turnover/receipts as per the Income-tax return ['ITR'] Form/ Financial Statements and service tax/ GST return - Assessee submitted that it follows cash system of accounting and therefore only the fees which is received during the year can be considered as income whereas service tax as well as GST are based on invoices issued and not on the basis of fees collected which gives rise to a difference - HELD THAT:- We note that in the assessment order itself, ld. Assessing Officer has stated that submission of the assessee is found satisfactory. He has also stated that assessee has explained the difference. Assessee has furnished the details with explanations and documentary evidence to reconcile the difference alleged by the ld. AO. Assessee had also moved an application u/s. 154 to rectify the mistake on a premise that ld. Assessing Officer had made the addition under a mistaken notion which is pending for disposal. From the details furnished and extracted above, we note that there are out of pocket expenses which has been subjected to service tax/GST, there are intra firm invoices which are disclosed in service tax returns and forms part of the aggregate turn over as per Service Tax law. However, in financials these intra-firm invoices are both income and expenses and are netted off in profit and loss account, since it is income and expense pertaining to same assessee firm. Assessee follows cash method of accounting and only the fees which is received during the year is considered as income whereas for the purpose of service tax and GST, the gross receipts/turnover is based on invoices issued and not on the basis of fees collected. Considering all these facts on record supported by documentary evidences, we find the reconciliation furnished by the assessee is justified. Accordingly, the difference between the gross receipts/turnover as per the ITR and service tax added by the ld. Assessing Officer is deleted. Ground no.1 alongwith with its sub grounds are allowed. Addition made for payments made to retired partners - HELD THAT:- The undisputed facts are that assessee firm made payment to retired partners in terms of its partnership deed where in the basis is that partner would have rendered their professional services during his tenure as a partner but could not enjoy the fruits thereof on account of work having remained incomplete and the concerned client could not be billed for the work already done. Considering all we delete the addition made in this respect by the ld. Assessing Officer. Also, with this finding of ours, the alternate plea taken by the assessee of allowing the claim u/s. 37(1) of the Act is rendered infructuous. Accordingly, grounds raised by the assessee in this respect are allowed. Short credit of TDS - CIT(A) has directed the ld. Assessing Officer to verify the records and allow the credits subject to verification - HELD THAT:- We concur with the directions given by the ld. CIT(A) and accordingly remit this matter to the file of ld. Assessing Officer in terms of the directions so given. Accordingly, ground allowed for statistical purposes.
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2024 (6) TMI 1137
TDS u/s 195 - income of the foreign university on account of payments for examination fee made by the Appellant - Income deemed to accrue or arise in India - Permanent Establishment of the foreign university in India - Addition u/s 40(a)(ia) for non deduction of TDS - any express written contract between the Appellant and University of Cambridge ('foreign university') or not? - foreign university has granted an affiliation certificate to the Appellant - DTAA between India and United Kingdom of Great Britain and Northern Ireland(Tax Treaty) - assessee filed its reply stating that assessee company s Ryan Global School are affiliated with University of Cambridge and the students who sits in the exam has to pay exam fee to the University of Cambridge and examination fee so collected from students by the assessee was transferred to University of Cambridge. As argued University of Cambridge is not a resident of India and it does not have any control over the assessee company and it also does not have unhindered and unlimited access to assessee premises. The arrangement between Assessee Company and University of Cambridge is simple that of affiliation - HELD THAT:- As decided in immediately preceding A.Y. 2011-12 on careful consideration of the arrangements between the appellant and the University of Cambridge, it is seen that the appellant was engaged by University of Cambridge for the limited purposes i.e. to conduct examination at various Indian educational institutions run by the appellant. There is no evidence on record that the said Cambridge University had any supervision or control over the appellant company, nor does it indicate that it had unlimited and unhindered access to the appellant s premises. The arrangements between the appellant and the University of Cambridge are plain and simple as the appellant was getting the examination carried out for the University of Cambridge. The appellant company s Ryan Global School, Mumbai is certified to be a Cambridge International Centre, which was eligible to conduct the examinations for University of Cambridge. However, in terms of share holding, managerial and professional control, University of Cambridge did not have any hold over the appellant company. Under the circumstances it cannot be held that there exists any PE of M/s. Cambridge University, in the form of various educational institutions owned by the appellant company. In the case of the appellant, evidently, the payment is made for getting the examination conducted based on academic system of University of Cambridge. No transfer of technical knowledge, etc. can be inferred to have been made available to the appellant. Moreover, in terms of Para 5 of Article 13, the payment by educational institutions does not get covered under the Fees for Technical Services. As the appellant is running educational institutions, evidently, payment for conduct of examination cannot be held as FTS. In view of the above, the appellant was not required to deduct TDS under Section 195 on such payments made to University of Cambridge. Principal of consistency - CIT(A) has failed to follow principal of consistency without pointing out any change in circumstances and this action of against the settled position in law that where an issue has been considered and decided consistently in a number of earlier assessment years in a particular manner, for the sake of consistency, the same view should continue to prevail in subsequent years unless there is some material change in the facts and this contention of assessee is supported by case of CIT Vs. Neo Poly Pack (P.) Ltd., [ 2000 (4) TMI 26 - DELHI HIGH COURT] Examination fee made by the assessee to University of Cambridge does not fall under the definition of fee for technical service as defined under explanation 2 to section 9(1) of the Act and as per Article 13(5)(c) of the India-UK DTAA and therefore not taxable in the hand of recipient in India is supported by case of M/s Hyderabad Educational Institutions Pvt. Ltd.[ 2023 (1) TMI 355 - ITAT HYDERABAD] Thus disallowance made by AO and confirmed by CIT(A), should be deleted. Appeal of the assessee is allowed.
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2024 (6) TMI 1136
Change in Accounting Policy - understatement of profit - determination of recognized method of accounting - change from the percentage of completion method (POCM) to the project completion method (PCM) for revenue recognition - HELD THAT:- We observed that assessee is consistently following the method of Revenue recognition by following percentage completion method till previous Financial Year i.e., 2016-17 and during the current Financial Year 2017-18, the assessee preferred to change the Revenue recognition method to Project Completion Method. The assessee has indicated the change of method in its note forming part of financial statement at Note No.27 During the year, assessee has disclosed income from other sources i.e., rental income, interest income and other incomes during the year and declared a net loss of Rs. 1.43 Lacs and disclosed the justification and the financial impact in its notes to financial statement. AO proceeded to make the addition the financial impact declared by the assessee due to change of method of accounting as profit for the current financial year. In our considered view by making above financial impact as addition along with other disallowances/additions, the percentage of profit determined by the Assessing Officer is quite abnormal way above the industry average. We are of the considered view that assessee should submit the financial impact in the financial years 2016-17, 2017-18 respectively and also impact in computation of taxable income declared under Income Tax Act before the AO. Accordingly, the AO is directed to verify the above impact in the financial statements and may verify the declared financial impact in both financial years as well as Income Tax computation, we direct him to verify the profit declared by the assessee in the earlier years as per old method of accounting and because of change of method of accounting, there may be under statement or over statement of declared profit, this under or over statement of profit in the earlier years has to be acknowledged as an impact on such change of profit and ultimately the correct profit alone has to be charged to tax. Merely because a understatement of profit during the current year due to change of method of accounting does not mean that the assessee has understated the profit and AO cannot proceed to make any adjustment based on such financial impact. It is only a declaration on such impact for selection of different method of accounting. This approach is approved method as per the accepted standard of accounting by ICAI and IAS. Therefore, the selection of method of accounting is the right of the respective assessee. AO cannot put any restriction on such selection of method and only thing is that it has to be verified whether the assessee has followed the new method of accounting and follows consistently, the impact declared by the assessee is as per the convention. If these details are proper, the AO cannot insist on to follow the old method of accounting. Therefore, with the above direction, we are remitting this issue back to the file of AO and also direct him to give proper opportunity of being heard to the assessee. Accordingly, the grounds raised by the assessee is allowed for statistical purpose.
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2024 (6) TMI 1135
TP Adjustment - comparable selection - exclusion on account of high turnover - Larsen Toubro Infotech Ltd., (Segmental) Tata Elxsi Ltd. (Segmental), Persistent Systems Ltd.,Aspire Systems (India) Pvt. Ltd. And Infosys Ltd.- HELD THAT:- These companies are having huge turnover, whereas the turnover of the assessee is meagre as compared to these companies. The turnover of the assessee company was only Rs. 16.12 crores, whereas the turnover of these companies is more than Rs. 200 crores. Thus, these companies are not at all comparable with the assessee. Besides that the issue has already been dealt with by the Co-ordinate Bench of the Tribunal, wherein it was held that these companies are not comparable with the assessee company. Therefore, we direct the AO/TPO to delete these companies from the list of comparables. Infobeans Technologies Ltd. and Thirdware Solution Ltd.- The profile of these companies as produced by the TPO and as discussed by the DRP clearly shows that these companies are into software development services and are comparable with the profile of the assessee. Since we do not find any glaring dis-similarity in the functioning of these companies, we do not find any reason to exclude these companies. Thus, we direct the AO/TPO to take these companies as suitable companies. Cigniti Technologies Ltd. - As it has an export revenue of 53.16% of total revenue and hence it is to be rejected as comparable as it is not satisfying the export revenue filter adopted by the TPO - We have already upheld the export revenue filter adopted by the TPO vide detailed discussion made above. As a result, this objection is found to be acceptable. Thus we reiterate the direction issued by the DRP and accordingly direct the AO/TPO to exclude the said company from the list of comparables. Inclusion of SagarSoft (India) Ltd, Evoke Technologies Pvt. Ltd.,Sankhya Infotech Ltd., Harbinger Systems Pvt. Ltd.,Maverick Systems Ltd. and Agilisys IT Services India Pvt. Ltd. - The assessee has raised a specific ground before the DRP, seeking inclusion of these companies. In view of the above, the finding recorded by the DRP that there is no specific ground raised by the assessee is factually incorrect. Further, we note that the DRP have also mentioned that the assessee had included various comparables which were selected after passing of the draft assessment order and hence, cannot be considered. As the assessee has raised the inclusion of these companies, therefore, we deem it appropriate to remand the inclusion of the companies to the file of the Assessing Officer/TPO for considering afresh, subject to the assessee satisfies that the inclusion of these companies were sought by the assessee by filing the specific documents. Interest on Trade receivables - International transaction or not? - TPO adopted interest rate for 11 months i.e., 7.5% on outstanding receivables as on 31st March, 2016 - HELD THAT:- We have examined whether the interest on delayed outstanding payments is an international transaction or not. This issue has come up for our consideration in the decisions referred by the ld.DR in the case of M/s Zeta Interactive Systems (India) Pvt. Ltd [ 2022 (6) TMI 1383 - ITAT HYDERABAD] M/s. Satyam Ventures Engineering Services [ 2022 (6) TMI 1386 - ITAT HYDERABAD] and M/s. Apache Footware India Pvt. Ltd. [ 2023 (4) TMI 521 - ITAT HYDERABAD] . We have consistently held that the interest on delayed outstanding trade receivables is an international transaction and after holding so, we have benchmarked the international transactions at 6% SBI rate. However, while holding the outstanding trade receivables as international transactions, we have granted a credit period of 60 days in the case of Apache Footware India Pvt. Ltd. In the present case, the assessee could not file any evidence to prove that it has provided more than 60 days credit period to non-AEs. Thus we are of the opinion that the assessee is entitled to get some relief as against the interest computed by the TPO at SBI rate of 7.5%, we direct the AO/TPO to compute the interest @6% of the SBI rate. Appeal of the assessee is partly allowed for statistical purposes.
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2024 (6) TMI 1134
Disallowance for deduction of CSR expenses u/s. 80G - CIT(A) failed to consider the reply and judicial pronouncements submitted by the assessee company - AO based this disallowance on the grounds that the nature of CSR expenses, being a statutory obligation u/s135 of the Companies Act 2013, differs significantly from voluntary donations eligible for 80G deduction - HELD THAT:- The assessee company had uploaded its reply/submissions on the e-portal of the CIT(Appeals) pursuant to the notice of hearing that was issued by the latter on 18.01.2024. As the rar/zip pdfs that were uploaded by the assessee company were damaged, therefore, the CIT(Appeals) vide his letter directed the assessee company to upload simple PDF format files so that further necessary action could be taken. In compliance, the assessee company once again uploaded the PDF file of its earlier reply. On a perusal of the reply filed by the assessee company, it transpires that it had relied upon certain judicial pronouncements wherein it was held that the CSR expenses are eligible for deduction u/s. 80G of the Act. As the CIT(Appeals) had failed to consider both the aforesaid reply uploaded by the assessee company and also the judicial pronouncements that were pressed into service in support of its aforesaid claim, therefore, in our considered view, the matter in all fairness requires to be restored to the file of the CIT(Appeals) for fresh adjudication. CIT(Appeals) is directed to redecide the appeal after considering the reply of the assessee company along with the judicial pronouncements that it had pressed into service in support of its aforesaid claim, i.e. CSR expenses are eligible for deduction u/s. 80G of the Act. Appeal of the assessee company is allowed for statistical purposes.
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2024 (6) TMI 1133
Disallowance of Depreciation on unverified purchases and other expenses - HELD THAT:- In assessee's case depreciation on unverified purchases were disallowed for AY 2006-07 to AY 2012-13 and the Co-ordinate Bench has given relief to the assessee towards depreciation unverified purchases capitalized and the issue of depreciation on unverified purchases was remitted back to the AO for fresh examination. We notice, that the disallowance made by the AO towards unverified purchases and expenses is the consequential depreciation on the written down value of the assets. Thus we direct the AO to delete the disallowance of consequential depreciation on unverified expenses and the issue of consequential depreciation on unverified purchases is remitted back to the AO with similar directions. Needless to say that the assessee be given a reasonable opportunity of being heard. This ground of the assessee is partly allowed for statistical purposes. Disallowance of depreciation on goodwill on amalgamation - HELD THAT:- As decided in own case for 2010-11 [ 2024 (1) TMI 1295 - ITAT MUMBAI] on a careful perusal of the sixth proviso to sec. 32(1) of the Act, we noticed that the same is applicable only in a situation where the amalgamation takes place in the middle of the year i.e. the said proviso states that the aggregate amount of depreciation claimed by the amalgamating companies and amalgamated company for that year should not exceed eligible amount of depreciation of that year. In the instant case the amalgamation has taken place on 1.4.2009 and not in the middle of the year. Hence the sixth proviso to section 32(1) will not apply to the facts of the present case. Accordingly we set aside the reasoning given by the learned CIT(A) for confirming the disallowance of depreciation of goodwill. We noticed earlier that both the tax authorities have not examined the factual aspects relating to the goodwill amount of Rs.21.81 crores and also the depreciation claimed thereon. Hence the assessee also did not get opportunity to put forth its contentions before them - thus this claim of depreciation on good will requires examination at the end of the AO by duly considering all the relevant factual aspects. Accordingly, we set aside the order passed by the learned CIT(A) on this issue and restore the same to the file of the Assessing Officer for examining it afresh - This ground is allowed for statistical purposes. TP Adjustment on letter of comfort (LOC) - assessee has issued a letter of comfort towards credit facilities sanctioned by ANZ Banking Group Ltd. to assessee's subsidiaries -TPO treated the said transaction as international transaction and proceeded to bench mark the same - HELD THAT:- As from letter of comfort it is clear that the assessee is giving a comfort to the ANZ bank that the AE would be operated and maintained in such a way to be in a financial position to repay its obligations and not to take any action that would hinder the operations of the AE. The assessee also gives the commitment that assessee's stake in AE will not go below 51%. Therefore we see no merit in the contention that the assessed has to repay all outstanding to the bank if it reduces its capital below 51% in its AE. Our view is further strengthened by the relevant clauses in the letter of offer given by ANZ to the AE i.e.borrower as extracted by the CIT(A) in his order. Considering the terms agreed in the letter of comfort and the terms of the letter of offer we are inclined to hold that what the assessee has given to ANZ towards loan facility granted to its AE is only a letter of comfort and not a guarantee. We notice that Rule 10TA of Safe Harbour Rules for International Transactions defines corporate guarantee as explicit corporate guarantee extended by a company to its wholly owned subsidiary being a non-resident in respect of any short-term or long-term borrowing and does not include letter of comfort, implicit corporate guarantee, performance guarantee or any other guarantee of similar nature. In the facts and circumstances of the present case, we are of the considered view that the letter of comfort given by the assessee cannot be treated as letter of guarantee warranting any TP adjustment. Accordingly the adjustment made by the TPO is hereby deleted. This ground is allowed in favour of the assessee. Admission of additional ground for disposal on merits - Allowability of deduction u/s 10AA of 100% of profits derived from Export Oriented Unit before considering the additions/deletions - HELD THAT:- For the year under consideration the assessee has not raised this issue before the lower authorities and therefore respectfully following the above decision of the Tribunal we remit the issue back to AO for examination with a direction to decide keeping in mind the decision of coordinate bench in the case of Reliance Industries Ltd [ 2020 (12) TMI 165 - ITAT MUMBAI] and decide in accordance with law. This ground is allowed for statistical purposes. Allowability of mark to market (MTM) loss u/s 37(1) - AO rejected the assessee's alternate plea that since section 43(5) is not applicable the MTM losses should be allowed under section 28 or 37(1) of the Act - HELD THAT:- As in own case for AY 2012-13[ 2024 (1) TMI 1295 - ITAT MUMBAI] nature of these items is not clear and we notice that no tax authority has examined these items. If these transactions have been entered in the course of carrying on of regular business activities and the underlying assets are trading items, the loss arising on their revaluation at the year end is allowable as deduction. It is to be seen that the underlying assets having foreign currency exposure is also revalued as at the year end Accordingly, for the limited purpose of verifying these factual aspects, we restore this issue to the file of the AO for examining this issue in the light of principles laid down in the case of D Chetan Co [ 2016 (10) TMI 629 - BOMBAY HIGH COURT] Thus we restore the issue to the AO with similar directions. The ground raised by the Revenue is disposed of accordingly. Allowability of ESOP expenses - AO disallowed the same holding the said expenses to be notional - HELD THAT:- CIT(A) correctly allowed the deduction by placing reliance on the decision of the Special Bench in the case of Biocon Ltd [ 2013 (8) TMI 629 - ITAT BANGALORE] . Weighted deduction u/s 35(2AB) - HELD THAT:- As per assessee's own case for AY 2010-11 [ 2024 (1) TMI 1295 - ITAT MUMBAI] we uphold the decision of the CIT(A) in allowing weighted deduction towards clinical trial expenses outside the in- house facility. This ground of the revenue is dismissed. Pre-commencement Expenses - assessee while filing the revised return of income claimed pre- production commencement revenue expenditure - HELD THAT:- CIT(A) correctly gave relief to the assessee by directing the AO to allow the expenditure as revenue expenditure as per in assessee's own case for AY 2010-11 [ 2024 (1) TMI 1295 - ITAT MUMBAI] wherein as held uncontroverted fact is that the business of the assessee in Pithampur SEZ has been set up and further it is an extension of existing business. We notice that the Ld CIT(A) has allowed the claim following the legal principles pronounced by the Courts. Hence, we do not find any infirmity in the decision rendered by Ld CIT(A) on this issue.
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2024 (6) TMI 1132
Unexplained cash deposits - bank accounts opened by CA misusing KYC documents - HELD THAT:- The brief facts of the case is that the assessee was working as salaried employee. CA Shri Bharat Bomb was filling the return of income of the assessee. Shri Bharat Bomb misused the ID proof of assessee, opened various bank account, various trading concern and obtained loan and brought properties in his name. In the month of Feb-March 2016 big fraud of Rs. 2000 cr was unearthed and several persons including the DGM, Branch Manager and officers of Syndicate Bank and one CA named Mr. Bharat Bomb were arrested by CBI and ED. Large number of bank accounts operated by these persons were attached. Shri Bharat Bomb was the key person and master mind of this fraud Mr. Bharat Bomb operated these account and additions cannot be sustained in the hands of the assessee this decision has been given by ld. CIT(A)/NFAC vide order dated 08.09.2023(APB311). Wherein accepted the fact that addition cannot be made in the hands of the assessee when he has in a statement recorded that he has not done this transaction - AO is not justified in holding that bank account belonged to the appellant. The AO has not done dud diligence to cross verify the 15CA/CB forms, allegedly issued by the appellant. This forms involves three parties who are (i) The remitter, (ii) The Chartered Accountant (iii) The Bank officer. Once the appellant denied these forms all together, the AO must have summonded the Bank officer and CA who have signed these forms which AO failed. Appellant has satisfactorily proved that these bank accounts were not opened by him and only his name and KYC were used by Mr. Bharat Bomb for opening these bank accounts. Thus, financial, transactions appearing / credited in these bank accounts do not represent the appellant, the additions made on account on peak Balance.AO while re- opening the case of Shri Bharat Bomb wherein it has been accepted that the cash deposited in the case of the assessee [ Shri Pradeep Nimawat ] is done by Shri Bharat Bomb and not by the assessee. Decided in favour of assessee.
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2024 (6) TMI 1131
Validity of re-opening u/s. 147 - notice based on the information that assessee has borrowed cash loans - HELD THAT:- First of all, it is not a case of deemed income taxable u/s. 68 that it has some kind of unexplained loan credit in the books of the assessee. The information is based on the fact that the assessee has received cash loans which in turn is based on certain documents seized in search and survey action u/s. 132 carried out at M/s. Evergreen Enterprises. If it is a cash loan, ostensibly it cannot be treated as income of the assessee unless conditions specified in Section 68 are satisfied. Also it is not the case of ld. AO that cash loans are added u/s. 68 and that is for the reason that he has not made any addition on amount of cash loan. Once the very basis on which reasons have been recorded, i.e., cash loan which has been stated to be chargeable to tax in the hands of assessee is not found to be taxable by the ld. AO, then the entire basis of re-opening gets vitiated. Thus we hold that once the ld. AO has accepted cash loans, which is not been considered as income, there can be escapement of income. Accordingly, the reasons recorded by the ld. AO are quashed. Consequently, the entire addition made by the ld. AO is also quashed. Decided in favour of assessee.
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2024 (6) TMI 1130
Disallowance of provisions for effluent/waste disposal expenses and processing charges - Provision for likely expenses - AO noted that the assessee has not furnished any documentary evidences to prove that provision has been written back in the subsequent year and these provisions are not ascertained liabilities and therefore they are not allowable expenses - HELD THAT:- It is seen that assessee has created a provision for likely incurring of expenses for treatment of disposal of effluent waste generated out of manufacturing carried out during the year. The assessee might have incurred expenditure in the earlier years under this head but those were actual expenses and paid to the third parties. From this year, assessee has installed its own plant. However, neither any details of expenses incurred prior 31st March, 2010 were filed nor any expenses which have been actually booked and have been shown to be paid immediately thereafter. Even there is no proper scientific basis for estimate for such an expense. Here, the provision made was not based on any scientific basis but on likely future event that also was not demonstrated that it was accounted for on some reasonable estimate, therefore even according to accounting standard AS-29 same cannot be allowed. Thus, the ld. CIT (A) was correct while upholding the disallowance on account of the provision made by the A.O. We find that the amount has been credited back in the subsequent assessment year for which copy of profit and loss account and other details have been filed which show that this amount has been credited back as income. Thus, even if the provision is to be disallowed in A.Y. 2010-11, then in the subsequent year once assessee has credited back and offered as income then same cannot be taxed again in A.Y.2011-12. Accordingly, the Assessing Officer is directed to verify the said account and if assessee has written back and credited to income then he should give consequential relief in the A.Y. 2011-12 and not to tax the same amount in next year. With these directions, ground no. 1 raised by the assessee is partly allowed for statistical purposes. Non-allowance of provision made for sales return - The brief facts are that the assessee has created a provision for sales return on estimate basis of Rs. 5,40,000/- on some perceived loss of sales return and some hypothetical assumption of principles of prudence. In the earlier year similar disallowance has been upheld by the Tribunal in A.Y. 2008-09 [ 2020 (5) TMI 20 - ITAT MUMBAI] wherein as evident, the amount in dispute is a provision made for likely loss on sales return. Therefore, it is quite clear that the expenditure has not crystallized during the year and is an anticipated loss. That being the case, it cannot be allowed. However, if such loss has actually arisen in the subsequent assessment year due to sales return, the AO is directed to verify and grant consequential relief. Decided against assessee. TDS u/s 195 - tds liability on expenses of advertisement, sales promotion and clinical trial incurred - HELD THAT:- We find in some case, the limit for TDS is less and in case of one party with regard to advertisement expenditure incurred in chemical magazine of foreign country paid to a foreign entity which it has been stated that it does not have any business connection in India, then ostensibly same cannot be subjected to TDS and therefore same should have removed from the disallowance. Regarding these details of expenses and also whether these parties have offered it for tax, the assessee has to comply with the conditions provided in proviso 201(1). Accordingly, entire matter of disallowance made u/s 40(a)(ia) is remanded back to the file of A.O. to examine applicability of proviso to section 201(1) and whether in few cases TDS was required to be deducted or not. Assessee shall substantiate its claim before the A.O. Accordingly, ground nos. 1 to 6 is set aside to the file of A.O. Bogus purchases - purchases made from all the 10 parties which included the four parties based in Jammu and Kashmir- notices sent u/s. 133(6) through ITBA portal was not responded - HELD THAT:- We find before the A.O., the assessee has given the details of addresses, GST No. PAN No., amount of purchases (Net of VAT), etc. These bill/voucher/challan issued by the parties mentions the details of the assessee, excise duty paid, details of truck/challan no., order No. etc. from all these parties. Further, all the items purchased were subjected to excise duty and assessee had given entire details of the parties and their ledger account and that payment has been made through cheques. Further, it is seen from these invoices that the goods purchased have been delivered to various depots of the assessee across the country along with the delivery details. Once, assessee has submitted all these details, simply based on that notice u/s. 133(6) only on ITBA portal has not been responded cannot be the basis for disallowing the entire purchases when book results and trading account/ sales has not been disturbed. The assessee had submitted that that these notices were sent in December, 2019 and at that time there was no internet and communication was break down following revocation of Article 370 on 4th August, 2019. Thus, these parties were not aware of any such notices nor through ITBA portal. Till January, 2020 2G services were also not working, thus it was impossible for these parties to respond. Further, the assessee has purchase transaction from these parties in the past and subsequent years and all the assessment were completed u/s. 143(3) and no adverse inference has been drawn. Thus no reason to treat entire purchases as non-genuine simply because notices sent u/s. 133(6) through ITBA portal was not responded ignoring the other evidences and details available on record. Accordingly, entire addition is deleted. Decided in favour of assessee.
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2024 (6) TMI 1129
Income taxable in India of not? - Denial of benefit under DTAA' between India-UAE ('treaty') with respect to income earned by the Appellant in India - interest income which has been claimed as exempt by virtue of benefit provided under Article 24 of the DTAA as per Article 24(1), and especially Article 24(2)(b)(ii) of India UAE-DTAA provides any income including material gain earned from India is not taxable in India - CIT(A) has denied the benefit of Article 24 disbelieving the assessee is not Abu Dhabi Investment Authority as mentioned in Article 24(2)(b)(ii) on a very flimsy ground as reason given by him is that mobile number was mentioned 9999999999 which he tried to find it from True Caller that it is a fraud number and therefore the Abu Dhabi Investment Authority is a fraud company rather it is not company belonging to Abu Dhabi Government. HELD THAT:- Once, all the other details have been provided, and if that is doubted, then, he should have verified the PAN and the address provided in the return to see whether it is an Abu Dhabi Government owned company i.e. Abu Dhabi Investment Authority. If he was incapable of himself verifying then, he should have asked from the assessee itself. It is really surprising that first appellate authority will deny the status of the Government owned authority simply by looking the mobile number in the true caller. Such an approach is to be frowned upon and is liable to be rejected at the threshold. If the assessee i.e. Abu Dhabi Investment Authority had shown its valid registration as category of foreign portfolio investor obtained with SEBI and holds a valid residency certificate and given the particulars of income, then, we do not find any reason to doubt that it is not authority as mentioned in Article 24. Accordingly, we hold Abu Dhabi Investment Authority is liable to benefit provided u/s 24 which provides that Government of one contracting state shall be exempt from tax in other contracting states in respect of any income derived by such income from that other contracting states. Since Abu Dhabi Investment Authority has been specifically mentioned in Article 24(2)(b)(ii), therefore, none of its income is taxable in India. In the result, charging of interest is held to be non- taxable in India. Appeal of the assessee is allowed.
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2024 (6) TMI 1128
Rejection of the application filed in Form No.10A u/s.12A(1)(ac)(ii) - application should have been filed under a different section of the Act - CIT(Exemption) rejected the assessee s application treating it as infructuous and non-maintainable by stating the reason that the assessee ought to have applied u/s.12A(1)(ac)(iii) of the Act instead of 12A(1)(ac)(ii) - HELD THAT:-After hearing both the sides and going through the facts, it is noted that the assessee has simpliciter made a technical mistake in applying u/s.12A(1)(ac)(ii) instead of 12A(1)(ac)(iii) of the Act. It was informed to the Bench by the ld.counsel for the assessee that even now the assessee has filed fresh Form No.10AB seeking registration u/s.12A(1)(ac)(iii) of the Act, which can also be considered. In our view, the same purpose will be served by adjudicating the same application. Hence, we set aside the order of CIT(Exemption) and remand the matter back to his file for fresh adjudication, either considering the subsequent application of assessee u/s.12A(1)(ac)(iii) of the Act or he can call a fresh application from the assessee. In term of the above, matter restored back to the file of the CIT(Exemption). Appeal filed by the assessee is allowed for statistical purposes.
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2024 (6) TMI 1127
Revision u/s 263 - error in revenue recognition Methods - as per CIT AO has not made inquiry regarding the method of revenue recognition and the method of valuation of closing stock employed by the assessee - AO has passed the assessment order u/s 143(3) without proper inquiry and application of mind which makes the assessment order as erroneous insofar prejudicial to the interest of the revenue - HELD THAT:- The provision of section 263 of the Act empowered the ld. Commissioner of income tax to call for the records of any proceeding under the Act and examine the same. If the ld. Commissioner considers that the order passed by the AO in any such proceeding is erroneous and prejudicial to the interest of the revenue, then he/she may pass such order as circumstances justify which may include enhancing or modifying the assessment, canceling the assessment, and directing the AO to make fresh assessment. The Hon ble Supreme Court in the landmark judgment in the case of Malabar Industrial Co. Ltd [ 2000 (2) TMI 10 - SUPREME COURT] has analyzed the provisions of section 263 and held that to invoke the provision of section 263 Commissioner has to satisfy two conditions, the first being order passed by the AO is erroneous and second being the order is prejudicious to the interest of the revenue. In the absence of any one of the conditions, the provision of section 263 of the Act cannot be invoked. Determination of method of revenue recognition and method of valuation of closing stock - There is no dispute or allegation about genuineness of sale value of the bungalow or cost of the project, or any other expenditure incurred by the assessee. Accordingly, we are of the considered opinion that there is no prejudice to the revenue caused due to the method adopted by the assessee. As such, the assessee has offered income from the project over the period and paid due taxes. The only difference here may arise as per the method adopted by assessee, the income which should have offered in the year by employing percentage completion method (PCIT method) was deferred in subsequent year but in such a scenario the assessee should have offered less income in subsequent year. Thus, it is a tax natural exercise. See M/S BILAHARI INVESTMENT (P) LTD [ 2008 (2) TMI 23 - SUPREME COURT] Likewise, the value of closing stock becomes the opening stock in the next year, hence the same is also a tax natural exercise. Hence there is no loss of tax, causing prejudice to the revenue due to the method adopted by the assessee which was accepted by the AO in the assessment order. Even if the AO has not properly inquired about the same and assuming that the Action of the AO is erroneous. But in view of the above discussion, there is no prejudice against the revenue. Therefore, the twin conditions to exercise the power under section 263 of the Act have not been satisfied. Hence, we hereby restore the assessment order and set aside the order of learned PCIT. Thus, the grounds of appeal of the assessee is hereby allowed.
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2024 (6) TMI 1126
Revision u/s 263 - allowability of deduction of interest claimed u/s 57 - submission made by the Ld. A.R. is this that the PCIT is not justified in invoking jurisdiction u/s 263 of the Act by directing the fresh assessment when the earlier assessment as assessed u/s 143(3) of the Act has been covered under limited scrutiny category and AO has passed the order in conformity with the CBDT instructions applicable for limited scrutiny considering all the relevant facts available on the matter HELD THAT:- We find that the assessment was finalised u/s 143(3) by AO under limited scrutiny scheme wherein the assessment was related to allowability of deduction of interest, claimed u/s 57 and the AO while conducting limited scrutiny in accordance with the above mentioned CBDT circular as argued by the AR and relied upon, considered all facts and only thereafter disallowed the deduction u/s 57 as claimed by the assessee. In that view of the matter, the order passed by the AO cannot be said to be erroneous so as to prejudicial to the interest of Revenue. We note that when the Ld. AO has exercised its jurisdiction within the boundary of the CBDT circular, verified the issues raised in a limited scrutiny and only upon due application of mind finalised the issue upon making disallowance u/s 57, PCIT cannot exercise the revisional jurisdiction conferred upon him u/s 263 of the Act beyond the issues which were raised and finalised under such limited scrutiny. On this aspect we have considered the judgement passed by different coordinate benches and the higher forums as relied upon by the Ld. A.R. It is a settled principle of law the PCIT cannot exercise the power of revision to look into any other issue which the assessing officer himself could not look into under the limited scrutiny proceeding. In other words the powers of the PCIT for revision u/s 263 of the Act would be limited to the issues which has been considered in the limited scrutiny assessment; the revisionary powers u/s 263 cannot frame beyond the issues considered in the limited scrutiny. In that view of the matter as observed by the PCIT that since the agricultural receipts and the issue of adequacy of agricultural expenditure were not verified by the assessing officer, the order passed u/s 143(3) of the Act is erroneous insofar as prejudicial to the interest of Revenue is palpably bad, not sustainable in the eye of law and therefore quashed. Appeal of the assessee is allowed.
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2024 (6) TMI 1125
Violation of principles of natural justice by the CIT(Exemption) - not allowing the assessee an opportunity to be heard - Notices not issued on the registered e-mail id of the assessee - HELD THAT:- We noted that the assessee was issued notices on 27.05.2023 and 06.06.2023 but there is no evidence that these were issued on the registered e-mail id of the assessee. In our view, the assessee was not allowed reasonable opportunity of being heard and hence, we set aside the order of CIT(Exemption) dated 15.06.2023 and remand the matter back to his file for fresh adjudication. Needless to say that the CIT(E) will issue notices to the registered e-mail id of the assessee and assessee is also directed to give one dedicated e-mail id to CIT(Exemption), so that he can serve the notices there. In term of the above, order of CIT(Exemption) is set aside and matter remanded back to his file for fresh adjudication. Appeal filed by the assessee is allowed for statistical purposes.
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2024 (6) TMI 1124
Unexplained cash deposits u/s 69A - cash deposits during the demonetization period - CIT(A)-NFAC dismissed the appeal of the assessee by holding that the availability of so called cash balance in the books of account is only evidence on paper and the said amount must have been utilized for some other purposes which are not brought on record HELD THAT:- As an undisputed facts that the assessee has disclosed the investment in his books of account and also shown the same in the computation of income which was offered for taxation. Therefore, the Ld. AR s contention that the provisions of section 69A are not applicable in the present case of the assessee as the cash deposits during the demonetization period are duly recorded in the assessee s books of accounts holds good. Also decided in the case of Sri Tatiparti Satyanarayana [ 2022 (3) TMI 896 - ITAT VISAKHAPATNAM] wherein the Tribunal held that the provisions of section 69 cannot be invoked when the assessee has disclosed investment in the books of account and in the computation of income which was offered for taxation. Thus we direct the Ld. AO to delete the addition made on account of unexplained money since the provisions of section 69A are not applicable in the case of the assessee. Assessee appeal allowed.
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2024 (6) TMI 1123
Unexplained cash deposited in bank u/s 69 - During the demonetization period all cash In hand in denomination of Rs. 500 and Rs. 100 deposited in bank - as per DR assessee has not given the details as to fees received/elective income/loan as well as the buildthon fund and study tour fund including the cash book from the bank from 01-04-2016 to 08-11-2016 and the date of cash deposits in bank from 01-04-2016 to 08- 11-2016 - HELD THAT: - It is pertinent to note that the books of accounts of the assessee trust were never rejected at any point of time by the Assessing Officer. Besides this, the evidences produced by the assessee before the Assessing Officer as well as before the CIT(A) clearly shows that the assessee has received fees from students related to the event as well as study tour including the buildthon event fund. The assessee has given the cash bills from bank from 01-04-2016 to 08-11-2016. Hence, the assessee has given the expenses for the said period. Thus, the assessee has given all the details as to how the assessee has that much cash in hand during the demonetization period. This was never doubted by the Revenue. In fact, the bank statements clearly show including the details given of the students from which the fees and the money has been received. The bank slip cannot be crucial evidence to reject the other direct evidence produced by the assessee before the AO. AO as well as the CIT(A) was not right in making the addition of cash deposits in bank account during the demonetization period by invoking section 69A as the assessee has fully explained the cash deposits and thus the same cannot be treated as unexplained money. Thus, the appeal of the assessee is allowed.
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2024 (6) TMI 1122
Disallowance u/s 40(a)(ia) for year end provision made - assessee explained that assessee company s account were finalized in 2nd week of April every year. In order to reflect its expenses in the books of account as per the applicable accounting standard and accounting policy, the company was required who merely provide for the expenses because the bills from the vendors were not received and these provisions were made on reasonable estimate basis and were debited to expense account and credited the provision account - HELD THAT:- As decided in own case for assessment year 2013-14 [ 2022 (4) TMI 1558 - ITAT MUMBAI] AO has not examined the issue about year-end payments. There is a difference between the payments that are made during the year and the payments made at the fag-end of the year. In our humble opinion in 2nd category of payments tax has been detected in the subsequent year when Bills are booked. In this regard we have also considered the amendment made to Sec.40(a)(ia) by the finance act, 2008, with retrospective effect from 1.4.2005. We have also perused the case laws relied upon by the AR GE India Technology Centre Private Ltd.( 2010 (9) TMI 7 - SUPREME COURT ) and Industrial Development Bank of India [ 2006 (7) TMI 248 - ITAT BOMBAY-H] . Principles discussed in the said judgement is also support our view that provisions of tax deducted at source were not applicable in case consideration Ground number is decided in favour of the assessee. Claim of deduction u/s 10AA in respect of interest income - HELD THAT:- As decided the case of the assessee for assessment year 2014-15 [ 2023 (9) TMI 1114 - ITAT MUMBAI] wherein as held a similar view is expressed in the case of Symantee Software India P Ltd [ 2015 (1) TMI 110 - BOMBAY HIGH COURT] while considering the deduction under section 10A of the Act. It is relevant to mention here that the manner of computing deduction under section 10A as per the provisions of subsection (4) of the said section is similar to subsection (7) of section 10AA and therefore the ratio of the above decisions rendered in the context of deduction under section 10A would equally be applicable to deduction claimed under section 10AA. Accordingly we hold that interest income is also to be considered for the purpose of arriving at the profits eligible for deduction under section 10AA. The Assessing Officer is directed to re-compute the deduction under section 10AA accordingly. Decided in favour of the assessee. TDS u/s 195 - Disallowance of expenses incurred on payment of subscription fees u/s 40(a)(i) - assessee has made payment towards subscription services to various non-resident without deducting withholding taxes - HELD THAT:- We have perused the decision of Dun Bradstreet Information Services India Pvt. Ltd [ 2011 (7) TMI 957 - BOMBAY HIGH COURT] wherein held that payment to non-resident for import of business information reports from an American company were not liable to deduction of tax at source u/s 195 of the Act. Also perused the decision of American Chemical Society [ 2024 (3) TMI 1258 - ITAT MUMBAI] wherein held that subscription fees received by assessee, a corporation based in USA from providing access to its online chemistry database and online authorise the independent customers would not qualify as royalty in terms of Sec. 9(1)(vi) and Article 12(3) of India USA DTAA. We have also considered the submission of the assessee that subscription was paid for the services pertaining to publication and same were not an information or advice given individually. The subscription services were not of the nature of transfer of right in the copyright in the article etc - AO has not contrary disproved the material fact that subscription was made for use of a copyrighted article and not for transfer of right in the copyright in the article and assessee had not received any licence for commercial exploitation of the copyright - CIT(A) is not justified in sustaining such disallowance - Decided in favour of the assessee . Disallowance of foreign tax credit in respect of income pertaining to Sec. 10A/10AA eligible units in India - HELD THAT:- As perused the decision of ITAT for the assessment year 2009-10 [ 2019 (11) TMI 408 - ITAT MUMBAI] wherein as held where the respective tax treaty provides for benefit for foreign tax paid even in respect of income on which the assessee has not paid tax in India, still, it would be eligible for tax credit under section 90 of the Act. Like Article 25 of the Indo USA treaty, treaties with various other countries such as Indo Denmark, Indo Hungary, Indo Norway, Indo Oman, Indo US, Indo Saudi Arabia, Indo Taiwan also have similar provision providing for benefit of foreign tax credit even in respect of income not subjected to tax in India. However, Indo Canada and Indo Finland treaties do not provide for such benefit unless the income is subjected to tax in both the countries. Therefore, the foreign tax credit would be available to the assessee in all cases except the foreign tax paid in Finland and Canada. The Assessing Officer is directed to grant credit accordingly. Thus we direct the assessing officer to allow foreign tax credit subject to the terms and conditions as directed in the above referred order of the ITAT therefore, this ground of appeal of the assessee is allowed for statistical purposes. MAT computation on Addition of Provision for Diminution in value of Investment - Counsel contended that diminution in the value of investment charged to profit and loss account was in the nature of write off loss due to diminution in the value of investment and not the amount retained/provision set aside for diminution in value of investment - HELD THAT:- We have perused the decision of ITAT Mumbai in the case of ACIT Vs. Reliance Welfare Association [ 2018 (1) TMI 855 - ITAT MUMBAI] wherein held a debit appearing in Profit Loss Account is not a provisions set aside for diminution in value of investment but a actual charge to the Profit Loss account which has been written off against the value of the current asset. Therefore, we are of the considered view that debit appearing in Profit Loss Account is not a provision of set aside for diminution in value of investment but the actual charged for the loss in the diminution in value of investment. Therefore, we are of the view that for the book profit purpose of section 115JB is not required to be increased as the same is not in the nature of provision. Decided in favour of assessee. Deduction u/s 10AA on commercial profits instead of income from business and profession - HELD THAT:- As in the case of assessee for assessment year 2014-15 [ 2023 (9) TMI 1114 - ITAT MUMBAI] held that the expression profits and gains derived was subject matter of adjudication by the Hon ble Supreme Court in the case of Vijay Industries Ltd. [ 2019 (3) TMI 171 - SUPREME COURT] wherein the Hon ble Apex Court observed that the profits and gains referred to commercial profits without deducting depreciation and investment allowance as per the Act. Since this aspect was not raised by the assessee before the lower authorities, accordingly, the lower authorities did not have an occasion to give their finding on the same. Hence, in the interest of justice and fair play, we deem it fit and appropriate to remand this issue raised in the additional ground to the file of the ld. AO for denovo adjudication - This ground is allowed for statistical purpose. Disallowance of taxes paid in overseas countries - assessee has paid the state taxes in the USA on its USA sourced income - same was claimed as a deductible expenses in the return of income - AO held that such claim was not allowable as deduction either u/s 37(1) or Sec. 40(a)(ii) - HELD THAT:- As for assessment year 2009-10 [ 2019 (11) TMI 408 - ITAT MUMBAI] the tax which has been paid abroad would not be covered within the meaning of section 40(a)(ii) of the Act, since, the meaning of the word tax as defined under section 2(43) of the Act would mean only the tax chargeable under the Act. Thus, as per the aforesaid decision of the Hon'ble Jurisdictional High Court, taxes levied overseas which are not eligible for relief either under section 90 or 91 of the Act, would not come within the purview of section 40(a)(ii) of the Act. It is the specific plea of the assessee that the State tax is not covered either under Indo US or Indo Canada tax treaty, hence, not eligible for any relief under section 90 of the Act. Pertinently, unlike section 91 read with Explanation (iv), section 90 does not provide for inclusion of tax levied by any State/ local authority of that country within the expression income tax . In view of the aforesaid, we direct the Assessing Officer to verify whether the State taxes paid by the assessee overseas are eligible for any relief under section 90 of the Act and if it is not found to be so, assessee s claim of deduction should be allowed. In view of our decision above, no separate adjudication of grounds no.1.2 is required. TDS u/s 195 - Disallowance of expenditure on imported software on account of non-deduction of TDS - HELD THAT:- We have perused the decision of ITAT for assessment year 2012-13 [ 2022 (4) TMI 1558 - ITAT MUMBAI] ground of appeal of the revenue stand dismissed. Disallowance u/s 14A r.w.Rule 8D(ii) - mandation of recording of objective satisfaction with cogent reasons - HELD THAT:- As decided in own case assessment year 2014-15, [ 2023 (9) TMI 1114 - ITAT MUMBAI] it is the settled position that the Assessing Officer cannot invoke the provisions of disallowance under section 14A read with rule 8D without recording any cogent reasons as to why he is not satisfied with the correctness of the claim of the assessee. Mere recording that the amounts being meager compared to the exempt income earned, cannot be construed as recording of satisfaction. Therefore, we hold that the CIT(A) has correctly deleted the addition made by the Assessing Officer for want of recording of objective satisfaction with cogent reasons. Nature of expenses - disallowance of advertisement expenses (Brand building expenses) - HELD THAT:- As it is evident from the details of expenditure mentioned in the aforesaid paragraphs, the expenditures were incurred by the assessee for the purpose of advertisement in newspaper, magazine, events, seminar, conferences, exhibition, advertisement at Airport, etc. We find that on identical issue, the Co ordinate Bench of the Tribunal [ 2019 (11) TMI 408 - ITAT MUMBAI] , passed in assessee s own case in Tata Consultancy Services Ltd. v/s ACIT, for the assessment year 2009 10 held that AO has brought no material on record to establish that the expenditure is for brand building. As observed earlier, the expenditure relates to advertisement in newspaper, magazine, events, seminars, conferences, exhibitions, etc. Thus, the nature of expenditure incurred by the assessee clearly indicates that it was for promoting its own business. Further, considering the turnover of the assessee, the expenditure incurred on advertisement does not appear to be unusually high. That being the case, the expenditure incurred on advertisement cannot be treated to be in the nature of capital expenditure and amortized over a period of five years. Disallowance of payment towards Tata Brand Equity subscription - HELD THAT:- We have perused the decision of ITAT for AY. 2011-12 [ 2022 (4) TMI 544 - ITAT MUMBAI] following the judicial precedence in case of sister concerns, we direct the Assessing Officer to delete the disallowance on account of subscription fees paid by the assessee to Tata Sons Limited. Disallowance of expenditure of commission to non-resident is allowable as deduction (disallowance u/s 40(a)(i) on account of non-deduction of TDS - HELD THAT:- We have perused the decision of ITAT for assessment year 2009-10 in the case of the assessee [ 2019 (11) TMI 408 - ITAT MUMBAI] facts on record clearly reveal that commission has been paid to non resident agents located in their respective countries towards services rendered by them in those countries in relation to obtaining export contracts for the assessee. No material has been brought on record by the Assessing Officer to demonstrate that the non resident agents either have any business connection in India or have PE in India so as to bring the commission payment within the tax net. The factual finding recorded by learned Commissioner (Appeals) that the non resident agents have rendered the services in their respective countries and do not have either any business connection in India or any PE in India has not been controverted by the Revenue. Further, the nature of payment viz. commission has also not been disputed by the Revenue. That being the case, since the commission paid to the non resident agents is not chargeable to tax in India at their hands, there is no necessity for the assessee to withhold tax under section 195(1) of the Act on such payment. - Decided in favour of assessee.
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2024 (6) TMI 1096
Deduction u/s 80P(2)(a)(i) - Assessee is an agricultural credit Cooperative Society which is engaged in the business of acceptance of deposits from members and lending the same to its members - HELD THAT:- The Hon ble Apex Court in the case of Mavilayi Service Co-operative Bank Ltd. Ors. [ 2021 (1) TMI 488 - SUPREME COURT] had held that the co-operative societies providing credit facilities to its members is entitled to deduction u/s 80P(2)(a)(i). The Hon ble Apex Court after considering the judicial pronouncements on the subject, had stated the term member has not been defined under the Income-tax Act. It was, therefore, stated by the Hon ble Apex Court that the term member in the respective State Co-operative Societies Acts under which the societies are registered have to be taken into consideration. The Hon ble Apex Court held that if nominal / associate member is not prohibited under the said Act, for being taken as a member, the income earned on account of providing credit facilities to such member also qualify for deduction u/s 80P(2)(a)(i) of the Act. It was further held by the Hon ble Apex Court that section 80P(4) of the I.T. Act is to be read as a proviso. As stated by the Hon ble Apex Court that section 80P(4) of the Act now specifically excludes only co-operative banks which are co-operative societies engaged in the business of banking i.e. engaged in lending money to members of the public, which have a license in this behalf from the RBI. The Hon ble Apex Court had enunciated various principles in regard to deduction u/s 80P of the Act. On identical factual situation, in the case of M/s. Ravindra Multipurpose Cooperative Society Ltd. [ 2021 (9) TMI 342 - ITAT BANGALORE] had remanded the issue to the files of the A.O. for de novo consideration. Thus we restore the issue of claim of deduction u/s 80P(2)(a)(i) of the Act to the file of the A.O. for de novo consideration. Deduction u/s 80P(2)(d) - appellant earned interest income from funds invested in Co-operative banks other than Cooperative societies - As regards the claim of deduction u/s 80P(2)(d) of the I.T. Act, we direct the A.O. to verify whether interest / dividend is received by the assessee out of investments made with Cooperative Societies. If the assessee earns interest / dividend income out of investments with co-operative society, as observed in the case of Kerala State Co-operative Agricultural and Rural Development Bank Ltd. [ 2023 (9) TMI 761 - SUPREME COURT] the same is entitled to deduction u/s 80P(2)(d) of the I.T. Act. Deduction u/s 57 - We make it clear that if the interest earned by assessee from the banks is considered under the head Income from other sources , relief to be granted to the assessee u/s 57 of the Act in accordance with law. Accordingly, the issue is restored to the file of ld. AO for de-novo consideration with the above observations.
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Customs
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2024 (6) TMI 1121
Seeking provisional release of the seized goods, pending adjudication under Section 110A of the Customs Act, 1962 - Circular No. 35/2017-CUS dated 16.08.2017 - HELD THAT:- In terms of Clause 2.1 of the circular, the provisional release can be resorted to upon the request of the owner of the seized goods, subject to executing a Bond for the full value / estimated value of the seized goods. The other condition imposed at Clause 2.2 includes furnishing of Bank Guarantee or security deposit to cover the entire amount of duty / differential duty leviable on the seized goods being provisionally released - the conditions imposed as per Annexure-D are at variance with the circular and guidelines of the Board itself. The provisional release order imposing conditions contrary to the Circular requires to be modified - Petitioner to execute a Bond for the value / estimated value of the seized goods - Petitioner to furnish Bank Guarantee or Security Deposit for the differential duty which admittedly is Rs. 5,55,060/-. In terms of the conditions for release stipulated above, which would substitute the conditions of provisional release at Annexure-D, the writ petition is disposed off - If the petitioner complies with the requirements of the modified conditions referred to above, the respondents to take note of it and take immediate steps for provisional release of the goods.
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2024 (6) TMI 1120
Levy of penalty on the appellant in terms of regulation 18 of Customs Brokers Licensing Regulation 2013 - aiding and abetting on the part of the appellant in mis-classification of the goods rendering the same liable for confiscation under section 111 (m) of the Customs Act, 1962 - HELD THAT:- It is noted that no case of imposition of penalty subsists in the matter as there is nothing to impute any misdemeanour, commission, or omission of an act clearly attributable on part of the appellant attributable to them as their role and responsibilities of a customs broker. It is duly recorded by the Commissioner that the customs broker had requested for second appraisement of the subject bills of entry by way of examination of the goods. While the department choose to enhance the value of the imported goods, no change to the classification of the goods under import was carried out. Under the circumstances, it is most improper to allude any misdemeanor on the part of the customs, broker or to hold them responsible for any misdeclaration, when they have themselves solicited first check examination of import cargo. The order records that the custom broker had also called for the previous Bills of Entry of subject imports from the importer in order to substantiate their case for filing of the classification of the imported goods described as Spruce Rough Sawn . The Commissioner has also noted that the importer had diligently carried out his responsibilities and also undertaken address and IEC verification of the importer. In fact, it is noted in the order that the Customs Broker had sent his employee to the office of the importer for purpose of verification. It is found most improper and unwarranted on the part of the department to impose a penalty of Rs.50,000/- on the appellant - there is no case for invocation and imposing of penalty on the appellant in the present case - the Order-in-Original passed by the adjudicating authority is set aside - appeal allowed.
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PMLA
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2024 (6) TMI 1119
Seeking grant of bail - Money Laundering - proceeds of crime - irregularities in framing and implementation of Excise Policy of GNCTD for the year 2021-22 - proper consideration of submissions not done by Vacation Judge - it is argued that the Impugned Order is perverse as the Vacation Judge has not given an opportunity of being heard to ED to oppose the bail application filed by the respondent as per mandate of section 45 (1) (i) of PMLA - violation of principles of natural justice - HELD THAT:- The Vacation Judge while passing the Impugned Order did not appropriately appreciate the material/documents submitted on record and pleas taken by ED and the averments/grounds as raised in the petition under section 439 (2) of the Code require serious consideration while dealing with said petition. Accordingly, the present application is allowed and the operation of the Impugned Order is stayed.
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2024 (6) TMI 1118
Seeking grant of bail - Money Laundering - bribery - proceeds of crime acquired in the form of commission/bribe in lieu of allotment of tenders by the accused Veerendra Kumar Ram, a public servant - fulfilment of parameter fixed u/s45 (ii) of the PMLA - HELD THAT:- It prima-facie appears that the petitioner knowingly assisted to her husband who is co-accused to purchase immovable properties at New Delhi in her name and the purchase consideration was paid from the proceeds of crime generated by her husband Veerendra Kumar Ram. The petitioner knowingly tried to directly conceal the proceeds of crime acquired by her husband and claimed it to be untainted in the guise of taking entries in her bank accounts from the companies providing entries by charging commission. The materials on record reflects that bank account statements of the petitioner, there are huge credits from M/s RP Investment and Consultancy, Manoj Kumar Singh and M/s RK Investment Consultancy - There are materials against the present petitioner regarding her specific role in the offence of the prosecution complaint that she committed the offence of money laundering with respect to the proceeds of crime. It appears that the petitioner knowingly assisted his son who is co-accused to purchase immovable properties at New Delhi in his own name to the tune of Rs 22.5 Crore from the commission/bribe amount, which was acquired by his son Veerendra Kumar Ram. Further, the bank account statements of the petitioner reflect huge credits to the tune of Rs 4.525 crores. There are materials against the petitioner regarding his specific role in the offence which is mentioned in Para-11.4 of the prosecution complaint that he committed the offence of money laundering with respect to the proceeds of crime. It has been settled by Hon ble Apex Court time and again in its various pronouncements that the powers under Section 438 Cr.P.C., is of extra-ordinary character and must be exercised sparingly in exceptional cases only and therefore, the anticipatory bail can be granted only in exceptional circumstances where the court is prima facie of the view that the applicant has falsely been implicated in the crime, as grant of anticipatory bail to some extent, is interference in the sphere of investigation of an offence and hence, the court must be cautious while exercising such powers - It is also settled connotation of law that the grant or refusal of the application should necessarily depend on the facts and circumstance of each case and there is no hard and fast rule and no inflexible principles governing such exercise by the Court. In SUSHILA AGGARWAL AND OTHERS VERSUS STATE (NCT OF DELHI) AND ANOTHER [ 2020 (1) TMI 1193 - SUPREME COURT ] the Constitution Bench of the Hon ble Apex Court has reiterated that while deciding applications for anticipatory bail, Courts should be guided by factors like the nature and gravity of the offences and the role attributed to the applicant and the facts of the case - The Hon ble Supreme Court, in catena of decisions, has categorically held that the judicial discretion of the Court while considering the anticipatory bail shall be guided by various relevant factors and largely it will depend upon the facts and circumstances of each case. Further, it is evident by taking into consideration the provision of Section 19 (1), 45 (1), 45 (2), the conditions which is required to be considered while granting the benefit of bail in exercise of power conferred under Section 438 or 439 of Cr.P.C., apart from the twin conditions which has been provided under Section 45 (1) of the Act, 2002, the conditions or the requirement which has been followed while granting the bail under Section 439 or 438, as the case may be, is required to be considered. Now coming to the facts of instant case, this Court, based upon the imputations as referred in preceding paragraphs which has been discovered in course of investigation, is of prima-facie view that what has been argued on behalf of the learned counsel for the petitioner that proceeds cannot be said to be proceeds of crime but as would appear from the imputations , money which has been obtained by the accused person Veerendra Kumar Ram has been obtained in the form of the commission and same was utilized and concealed by the petitioners despite knowing that it is the proceeds of crime. In the instant case, there is sufficient evidence collected by the respondent Enforcement Directorate to prima facie come to the conclusion that the petitioners were actively involved in the offence of Money Laundering as defined in Section 3 of the PMLA. As against that there is nothing on record to satisfy the conscience of the Court that the petitioners are not guilty of the said offence and the special benefit as contemplated in the proviso to Section 45 should be granted to the petitioners who are the lady and sick person respectively - on the basis of aforesaid discussion the Court does not find any substance in the submission of the learned counsel for the petitioners. This Court, in view of the aforesaid material available against the petitioners, is of the view that in such a grave nature of offence, which is available on the face of the material, applying the principle of grant of anticipatory bail wherein the principle of having prima facie case is to be followed, this Court is of the view that the nature of allegation since is grave and as such, it is not a fit case of grant of anticipatory bail. This Court is of the view that the instant applications are fit to be dismissed and as such, stand dismissed.
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Service Tax
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2024 (6) TMI 1117
Condonation of delay in filing of Appeal - Time limitation - Writ Petition has been filed long after the order was passed was communicated to the petitioner - HELD THAT:- The petitioner failed to file statutory appeal in time before the first respondent and thus, the first respondent has dismissed the Appeal on the ground of limitation in view of the decision of Hon ble Supreme Court in SINGH ENTERPRISES VERSUS COMMISSIONER OF C. EX., JAMSHEDPUR [ 2007 (12) TMI 11 - SUPREME COURT] . The decision of the Appellate Commissioner cannot be found faulted as the Appellate Commissioner is bound by the limitation prescribed under Section 85 of the Finance Act, 1994. At the same time, it is noticed that the petitioner may have a case on merits. It is noticed that the petitioner has deposited 7.5% of the disputed tax at the time of filing of Appeal in No.40/2023-ST (Madurai) before the first respondent. The petitioner is directed to deposit another 17.5% (Rs. 1,22,317.50/-) of the disputed tax, within a period of 30 days from the date of receipt of a copy of this order, as a condition, for the first respondent to entertain the Appeal and dispose of the same on merits without reference to the limitation - Petition disposed off.
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2024 (6) TMI 1116
Levy of penalty - Respondent had discharged the Service Tax Liability and even paid the interest thereon before issuance of SCN - HELD THAT:- It is well settled principle that an Appellate Court ought not to interfere with exercise of discretion except where such exercise has been shown to be arbitrary, capricious or perverse. Further, the Appellate Court ought not to reassess the material and seek to reach a different conclusion from the one reached by the Tribunal if one reached by the Tribunal was reasonably possible on the material - If the discretion exercised by the Tribunal is reasonable and in a judicial manner, the fact that the Appellate Court would have taken a different view may not justify interference with the Tribunal's exercise of discretion. Once it is a discretion to be exercised there can be no substantial questions of law arising thereof. Tribunal has given reasons in the impugned order why imposition of penalty is not merited. There are no perversity in the exercise of discretion - there are no substantial questions of law arising - appeal dismissed.
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2024 (6) TMI 1115
CENVAT Credit - linking of services provided by M/s Tata Sons Limited to the separate registered units of Tata Steel Division with the production and business activities of M/s TSL, Jamshedpur as per the condition laid down in Rule 2(1) of Cenvat Credit Rules, 2004 - can Companies Act, 1956 may supersede the provisions of Central Excise Act, 1944/Finance Act, 1994 and the rules made there under in respect of laws and procedure of taxation? HELD THAT:- The law mandates that the manufacturer who wants to avail benefit of this service tax, if he has more than one unit, should also get registered itself as a service provider, whereupon it would be able to collect the input service tax paid in all the units and accumulate them at its Head Office and thereafter distribute the said credit to its various units in the manner specified in Rule 7 of the CENVAT Credit Rules, which provide for only two limitations, viz., firstly it cannot exceed the amount of service tax paid and secondly the credit of service tax attributable to services used shall not be distributed in a unit exclusively engaged in the manufacture of exempted goods or providing of exempted service. No provision of the CENVAT Credit Rules, including Rule 7, prohibits input service tax paid at a particular unit being sought to be availed in another unit. Once the manufacturer is registered as an input service distributor in terms of Rule 7, it is entitled to distribute the credit of duty paid on such inputs in the manner prescribed to any of its unit keeping into account the limitations imposed by Rule 7. The extraneous reasonings of the adjudicating authority contained in the said order are irrelevant and have no substance or merit whatsoever, particularly in view of the settled proposition of law in this respect. In the instant case, the company Tata Steel Limited, which is duly incorporated and registered under the Companies Act, 1956 as a public limited company has various divisions/units situated in various parts of the country. The registered and Head Office of the company, including of the said divisions/units, is at Mumbai, the ISD in the instant case. It is settled proposition of law that divisions and units of a company are not separate legal entities/persons. It is also well settled, that once the decision of Tribunal has been accepted by the department in any other case; it cannot reagitate the same issue in another case. Neither Section 11A(1) of the Central Excise Act nor Section 73(1) of the Finance Act, 1994, as amended, provided, during the material period, for issuance of a show cause notice in respect of duty of excise or service tax, credit whereof had been availed wrongly but which was reversed or paid back prior to issuance of the show cause notice. The instant appeal is decided against the Revenue - Appeal of Revenue dismissed.
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2024 (6) TMI 1114
Invocation of extended period of limitation - non-payment of service tax in respect of the services rendered in the premises of TSL s Steelworks - recovery of service tax with interest and penalties - HELD THAT:- The finding of the learned Tribunal that no documentary evidence was submitted to indicate that the service rendered by TGS to TSL was service to self is patently erroneous and perverse - There is no provision in law under which service tax is levied providing that two units of a public limited company, registered under the Companies Act, because of being separately registered, as required, under the Service Tax Rules, 1994, can and are to be treated as two distinct persons and services provided by one unit to another shall be deemed to be taxable supply. In the absence of such specific provision, transaction between two units of the same company cannot be held as service rendered by one unit to the other within the meaning of the Act. Two separate service tax registration of the two units is wholly irrelevant in this regard. It is settled law that one unit of the company does not and cannot render service to another unit of the same company, as this would amount to service rendered to self, which is not a taxable service under the Act. It is a principle, settled by the Hon ble Apex Court in CCE, Navi Mumbai Vs Amar Bitumen Allied Products Pvt. Ltd. [ 2006 (8) TMI 187 - SUPREME COURT] , that it is necessary that judicial precedent is followed and in the event a Bench of the same strength of the Tribunal seeking to differ with the decision of another Bench, the matter has to be referred to the President of the Tribunal for reference to a larger bench for deciding the matter. Without assigning any reason or basis, this judicial principle laid down by the Hon ble Apex Court, has also been violated by the Tribunal in passing the impugned order. The law is no more res integra that a company incorporated under the Companies Act, 1956 is a single person/entity in the eye of law and cannot reconstitute itself to several legal entities. Divisions/branches thereof cannot have identity different and distinct from the company. Reference in this regard may be made to Section 3(42) of the General Clauses Act, 1897 - thus, separate registration of each factory/premises of manufacturer/service provider does not and cannot render each one of such factory/premises of the manufacturer/service provider a separate legal entity. In fact, there is no such provision in either the Central Excise Act or the Act or in any other law of the land. It is well settled that credit of input service is to be utilized for payment of service tax towards, inter alia, output service. There is, or can be no dispute with this legal position and this is what the representatives of TGS and TSL agreed with, during the course of personal hearing - TGS had rightly availed the subject CENVAT credits of service tax paid, without there being any concomitant obligation to make payment of service tax on the services rendered to another unit of TSL. Contrary finding of the Tribunal is also erroneous and untenable. The Department s appeal is unsustainable and is rejected. The impugned order of the CESTAT being contrary to law and unsustainable in its entirety; the issue of whether the normal period or the extended period of limitation is sustainable in the instant case, is irrelevant. Appeal of Revenue dismissed.
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2024 (6) TMI 1113
Levy of service tax - Manpower Recruitment and Supply Agency Services - secondment of employees by the Appellant to its associated/related Company at United Kingdom on reverse charge mechanism - extended period of limitation - HELD THAT:- Argument is led by both sides with reference to provision of law and judicial decisions on the point but ultimately the consensus that emerged is that in view of Hon'ble Supreme Court judgment on the issue, as passed in the case of C.C.,C.E. S.T. BANGALORE (ADJUDICATION) ETC. VERSUS M/S NORTHERN OPERATING SYSTEMS PVT LTD. [ 2022 (5) TMI 967 - SUPREME COURT] , secondment of employees by overseas entity for the purpose of completion of Assessee s job amounts to manpower supply and Assessee was service recipient for the same and, therefore, demand was sustainable but invocation of extended period was impermissible as Assessee had bonafide believe that it was not liable to pay any Service Tax, apparently for the reason that judicial decision on the similar line till pronouncement of Northern Operating Systems Pvt. Ltd. judgement by the Hon'ble Supreme Court was holding the field. But in the present case it could be noticed that show-cause notice was issued on 14.10.2014 up to the end of financial year 2011-12 and in view of clear provision contained in Section 73(1) read with 73(6), the normal period for making demand through show-cause notice was 18 months from the relevant date unless any fraud, collusion, wilful misstatement, suppression of facts, contravention of any of the provisions of this Chapter or the Rules made thereunder with intent to evade payment of Service Tax is noticed, Central Excise Officer can serve notice for demand that could be extended up to 5 years. This being the statutory provision, the notice of demand being signed on 14.10.2014 and dispatched thereafter cannot be considered to have been sent within 18 months of the end of financial years up to which demand is made i.e. up to 31st March 2012, against which Service Tax Return was filed on 24.04.2012 - the show-cause notice is not issued in conformity to the law and, therefore, it was required to be quashed before initiation of adjudication proceeding. The demand, apart from being barred by the period of limitation, is also unsustainable for the extended period and since no demand is due for the normal period - the order passed by the Commissioner of Service Tax Commissionerate, Pune is hereby set aside - Appeal allowed.
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2024 (6) TMI 1112
Denial of CENVAT Credit - input service or not - duty paid on re-insuring motor vehicle while providing General Insurance Service - HELD THAT:- From the bare reading of Sub-Clause (BA) of Rule 2(l) of the CENVAT Credit Rules, 2004, it can be said that Sub-Clause (BA) would apply to the Appellant s case and presence of two negatives namely but excludes in Clause 1 and except when used by in Sub-Clause (BA) would bring a positive meaning to the fact that the said input service is available to the provider of output service who are specified in Sub-Clause (D) of Clause 105 of Section 65 of the Finance Act, 1994 who is by definition the insurer carrying on general insurance business in relation to General Insurance and providing service to a policy holder or to any other person. It has to be interpreted and understood in the manner two negatively worded statutes are to be understood. By definition itself General Insurance Company has been exclusively granted the right to use CENVAT Credit in relation to motor vehicles insured by them or reinsured by them but the learned Commissioner had committed a blunder in reproducing the section wrongly in his order and replacing provider of output service with provider of input service to reach at his findings that credit are not admissible. Therefore, by definition available in the CENVAT Credit Rules, 2004 under Rule 2(l) and to meet the statutory requirement in making itself eligible to provide insurance service as General Insurance Company, Appellant is entitled to avail CENVAT Credit on re-insurance of motor vehicles and the credit availed by it during the relevant period from April, 2011 to March, 2012 on this score were all admissible credit. The order passed by the Commissioner of Service Tax-V, Mumbai is hereby set aside - Appeal allowed.
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2024 (6) TMI 1111
Refund of service tax paid under reverse charge mechanism, under the erstwhile law - Applicability of Section 11B of the Central Excise Act, 1944 and Section 142(3) of the CGST Act, 2017 - HELD THAT:- Section 142(3) of CGST Act, 2017 provides that claim for refund under the erstwhile CENVAT Credit Rules or Central Excise Act, 1944 etc. must be disposed in accordance with the existing law and the amount has to be paid in cash. Section 2(48) of CGST Act, 2017 states that the existing law means any law, notification, order, rule or regulation etc. which is made or passed before the commencement of CGST Act, 2017 - Further Section 174(2)(c) of CGST Act, 2017, talks about rights and liabilities which have accrued or have been incurred under the erstwhile legislations. Thus, when this section provides for the department to issue Show Cause Notice for any violations of the erstwhile law, reciprocally the assessee can file refund claims for the rights accrued under the erstwhile legislations under the provision of section 142(3) of CGST Act, 2017. In the case of ADFERT TECHNOLOGIES PVT. LTD. VERSUS UNION OF INDIA AND ORS. [ 2019 (11) TMI 282 - PUNJAB AND HARYANA HIGH COURT] , it is held that transitional credit being vested right cannot be taken away on procedural or technical ground. The appellant has paid the tax under the erstwhile law. In the present case, the claim is only for refund and not proceedings for assessment or adjudication. In such a scenario, sub-section (3) of section 142 gets attracted. Rejection of the refund claim is not legally valid and merits to be set aside. The impugned order is et aside - appeal allowed.
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2024 (6) TMI 1110
Non-payment of service tax - Classification of service - Works Contract Service or not - services to educational institutions during the period from March 2008 to March 2011 - building s constructed for the said educational institutions can be regarded as intended for commerce or industry or not - demand alongwith interest and penalties - extended period of limitation. Classification of service - HELD THAT:- Classification of services is a matter relating to chargeability and the burden of proof is squarely upon the Revenue. If the Department intends to classify a service under a particular category, the Department must adduce proper evidence and discharge the burden of proof. The judgments of the Hon ble Supreme Court in UNION OF INDIA VERSUS GARWARE NYLONS LTD. [ 1996 (9) TMI 123 - SUPREME COURT] , HPL CHEMICALS LTD. VERSUS CCE, CHANDIGARH [ 2006 (4) TMI 1 - SUPREME COURT] , PUMA AYURVEDIC HERBAL (P) LTD. VERSUS COMMISSIONER OF C. EX., NAGPUR [ 2006 (3) TMI 141 - SUPREME COURT] , although rendered in the case of classification under the Central Excise Act is also relevant for classification of a service under the FA 1994. Interpretation of phrase primarily for the purposes of commerce or industry - HELD THAT:- The statutory definition of a service given for a particular activity (commercial training or coaching) cannot be taken to understand the term commerce or industry used for another service (WCS) when no ambiguity is involved. As a general principle of interpretation, where the words of a statutory provision are plain, and unambiguous, the intention of the Legislature is to be gathered from the language of the provision itself. The term commerce or industry are commonly understood terms and do not require the aid of another definition from the statute to gather its intention. Commercial activities, relate to activities having profit as the primary aim - The department has not discharged the initial burden in establishing chargeability of the service falling under WCS. Merely because the institutions are collecting a fee will not make the institution primarily for the purposes of commerce or industry. The demand must hence fail. Extended period of limitation - HELD THAT:- It is settled law that mere failure to register and pay duty does not amount to willful suppression. The Act contemplates a positive action which betrays a negative intention of willful default. There must be some positive act from the side of the assessee to bring a charge of fraud, willful suppression etc with intention to evade payment of duty. No such allegation is found either in the SCN or in the findings of the Original Authority - Normal audit objection based on legal reasoning does not lead to a charge of suppression. Something more is required. In any case the demand having failed on merits the issue of any demand, interest and penalty does not arise. The impugned order is set aside - appeal allowed.
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Central Excise
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2024 (6) TMI 1109
Input service or not - Rent-a-Cab services - Outdoor Catering services - Club or Association services - CENVAT Credit on Service tax paid (though on its own volition without providing any output service and without any authority of law). Whether in the facts and circumstances of the case, the respondent assessee is entitled to avail credit on services i.e. Rent-a-Cab services, Outdoor Catering services and Club or Association services which have been specifically excluded from the definition of input services as defined under Rule 2 (l) of Cenvat Credit Rules, 2004, w.e.f. 01.07.2012? - HELD THAT:- Admittedly there is no material on record to show that these services were utilised for personal consumption to deny credit. Respondent/Assessee is a company and therefore issue of personal consumption does not arise. These expenses are admittedly incurred for its employees who are working for the respondent/assessee in the course of its business to render output services - Whether any service is used for personal consumption or not is certainly question of fact. Furthermore, on other services, the appellant / revenue has not disputed this position. In view thereof, this being question of fact, no substantial question of law arises from the impugned order of the Tribunal. Whether in the facts and circumstances of the case, the CESTAT was right in holding that because the respondent assessee has paid the Service tax (though on its own volition without providing any output service and without any authority of law), such a payment of service tax will entitle them to take cenvat credit of the service paid on input service? - HELD THAT:- Respondent / Assessee discharges service tax liability on various amount collected from sale of time slot, subscription charges etc. before remitting the money to Singapore. Respondent / Assessee takes input tax credit on the aforesaid service tax paid and same has been accepted and admitted by appellant / revenue. Appellant / Revenue has also admitted that respondent/assessee is entitled to input tax credit of the said service tax liability paid - The Tribunal has given a finding that appellant / revenue has not disputed that the provider of broadcasting service is entitled to CENVAT credit of the service tax paid on specified services - the contention of appellant / revenue that respondent / assessee does not have the physical establishment for rendering the Broadcasting service is misconceived since the retrospective amendment itself deems that respondent / assessee has having rendered broadcasting services. Even if the contention as raised by appellant / revenue is to be accepted then they would be required to refund the CENVAT credit which they propose to disallow since there is no dispute that the said CENVAT credit is taken on input services and the services on which the service tax has been discharged were exported. Therefore the effect of denial of credit would be that the appellant / revenue will have to refund the said credit amount resulting into whole exercise being tax neutral. Thus, no substantial question of law arises in as much as on account of retrospective amendment, respondent/assessee is deemed to have rendered the broadcasting services and in the alternative based on the admission of appellant /revenue, the amount of input tax credit of which is taken has been collected without any authority of law and therefore would be required to be refunded. Since no substantial question of law arises from the impugned order, the present appeal is dismissed.
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2024 (6) TMI 1108
CENVAT Credit - duty paid on input materials and input services are used both in or in relation to the manufacture of dutiable and exempted goods respectively - correctness of switching the options from Rule 6(3)(i) to 6(3)(ii) of the Cenvat Credit Rules, 2004 in the same financial year 2008-2009 despite Explanation-I to the Rule 6(3) of Cenvat Credit Rules, 2004 which prohibits the switching of option in the same financial year - error in not considering the exercise of option under Rule 6(3)(i) of Cenvat Credit Rules, 2004 by M/s Tata Steel Limited as they have self-assessed their tax liability in statutory Returns ER-1. HELD THAT:- The restriction provided under Explanation-I of not being able to withdraw the option during the remaining part of the financial year can arise only when a manufacturer has exercised such option with due intimation to the jurisdictional Central Excise authority. This is evident from Rule 6(3A)(a) of the CENVAT Credit Rules itself, inasmuch as, this provision specifically requires that while exercising the option to pay in terms of Rule 6(3)(ii) of the CENVAT Credit Rules a manufacturer has to provide/intimate in writing to the Range Superintendent the particulars as detailed in the said sub-clause (a) of Rule 6(3A). The particulars detailed in the said sub-clause (a) of Rule 6(3A) of the CENVAT Credit Rules includes intimation of the date from which the option is being exercised or is proposed to be exercised. As a matter of fact, the requirement under Rule 6(3A)(a)(ii) of the CENVAT Credit Rules in clear terms indicate that a manufacturer can opt for the option under Rule 6(3)(ii) of the CENVAT Credit Rules at any point of time during a financial year, upon intimation to the Range Superintendent. Once such option is exercised by a manufacturer, the restriction as provided in Explanation-I of Rule 6(3) would become applicable and the manufacturer cannot withdraw from such option during the remaining part of the financial year - The correspondence on record of the Assessee with Range Superintendent exchanged during the period May 2008 to June 2008, clearly establishes that the Assessee had never exercised at any point of time during the period 2008-09 the option in terms of Rule 6(3)(i) of the CENVAT Credit Rules prior to May 2008. There are no hesitation in holding that the Commissioner has erred in holding that it is on record that the Assessee had exercised the option under Rule 6(3)(i) of the CENVAT Credit Rules in the instant case. There is no document disclosed either in the show cause notice or in the OIO which evidences exercising of such option by the Assessee - Further, exercising an option is a positive act and cannot be inferred as has been sought to be done by the Commissioner. The learned Tribunal has not committed any error and had rightly allowed the appeal of the Assessee and quashed the Order-in-Original - Appeal dismissed.
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2024 (6) TMI 1107
Refund of the Cenvat duty on education cess and secondary higher education cess paid through Cenvat Credit account of BED in terms of the provisions of Notification No. 56/2002-CE dated 14.11.2002 as amended - part rejection of refund on account of education cess and secondary higher education cess paid through Cenvat Credit account of BED - appropriation of amount from sanctioned refund. Rejection of refund on account of education cess and S H education cess - HELD THAT:- The appellant is registered in the state of Jammu Kashmir and were availing benefit of area based exemption under N/N. 56/2002-CE dated 14.11.2002. The said notification provides mechanism to give effect to aforesaid exemption by way of refund of duty paid through PLA. As per the procedure, the manufacturer avails Cenvat Credit of duty/cess paid by them on inputs and utilizes whole of the CENVAT credit available with them on last day of the month for payment of Central Excise duty and Cess. The balance amount of duty is paid in cash and on application of refund, the refund is granted for payment of Central Excise made in cash only. The above said issue is no more res-integra and stands finally decided by the decision of the Hon'ble Supreme Court in the case of M/S. UNICORN INDUSTRIES VERSUS UNION OF INDIA OTHERS [ 2019 (12) TMI 286 - SUPREME COURT] , wherein the Hon'ble Apex Court, after considering the provisions of Notification No. 71/2003-CE dated 09.09.2003 has held that a notification has to be issued for providing exemption under the said source of power and that in the absence of notification containing an exemption to such additional duties in the nature of education cess and secondary higher education cess, they cannot be said to have been exempted. Appropriation of an amount of Rs.4,61,315/- - HELD THAT:- The impugned order is not sustainable because appropriation cannot be done without issuing any show cause notice and without granting personal hearing to the appellant. This issue was considered by the various benches of this Tribunal in M/S DEPOSIT INSURANCE AND CREDIT GUARANTEE CORPORATION VERSUS COMMISSIONER, CENTRAL EXCISE SERVICE TAX (LTU) , MUMBAI (VICE-VERSA) [ 2023 (5) TMI 339 - CESTAT MUMBAI] - The Tribunal has held that the refund cannot be appropriated when there is no confirmed demand at the time of adjudication and recovery provisions of Central Excise Act are not applicable to service tax. The rejection of refund of Rs.62,842/- on account of education cess and S H education cess is upheld - Appropriation of an amount of Rs.4,61,315/- from the sanctioned refund amount is set aside - appeal allowed in part.
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2024 (6) TMI 1106
Input service credit - consultancy service availed from EVIPL for trading carbon credit points - denial of credit on the ground being neither connected with the manufacture or for providing any output service - Rule 2(l) of the CCR - HELD THAT:- It is not the case of the Revenue that the appellant was using separate establishment for the manufacture of R-23. It is the admitted position that the R-23 gas is the most natural by-product generated during the manufacture of R-22, which is destroyed without releasing into the atmosphere for which the manufacturer becomes eligible to earn CC towards CER norms of the Kyoto protocol. The order of Delhi Bench in the case of SHREE BHAWANI PAPER MILLS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE. LUCKNOW [ 2012 (12) TMI 741 - CESTAT NEW DELHI] would apply to the facts of the present case as well, where it was held that ' I fully agree with the learned advocate that the above contention of the Revenue that the amount earned as a result of consultancy must be either subject to excise duty or should be taxable under the Service Tax is nothing but a fallacy. The amount earned as a result of such service availed by the party is the income of the appellant and is not required to be leviable to Service Tax.' Thus, the credit claimed and availed by the taxpayer is in accordance with law as applicable during the year under dispute and therefore the denial of the same was uncalled for - the impugned order is set aside - appeal allowed.
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2024 (6) TMI 1105
Refund of the reversed / payment of CENVAT credit amount and interest - final products in question that attracted nil rate of duty were exported and thus they become eligible for CENVAT credit of duty paid by them on the inputs used in the manufacture of such final products - HELD THAT:- The issue in the present appeal is no more res integra, since the same issue stands settled in their favour in JOLLY BOARD LTD VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2014 (3) TMI 124 - CESTAT MUMBAI] where it was held that ' In this case, appellant has not executed any bond for export of the goods. If the goods are exempted, execution of bond was not required.' There are no merit in the impugned order of the first appellate authority and the same is set aside - appeal allowed.
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2024 (6) TMI 1104
Clandestine removal - clearances made beyond the period mentioned in Annexure-I certificate - case of the Department is that the Appellants have received the Annexure 1 Certificates from buyers only for the financial year 2007-2008, however, the goods have been cleared beyond the said financial year thereby violating the conditions stipulated in the Impugned Notification r/w with the 2001 Rules - extended period of limitation - HELD THAT:- On verification of invoices it was seen that the goods cleared on the basis of the Annexure-I certificates included goods of invoices for the period beyond financial year mentioned. Thus, duty has been demanded alleging that clearances of the Annexure-I certificates do not cover the clearances of goods and thus the benefit of notification is not available. It is to be noted that the manufacturer buyer has used the goods for export and there is no dispute raised in this regard. The allegation of the department revolves around the wrong financial year mentioned in Annexure-I certificate - There is no allegation that excess goods have been cleared. The only allegation is that the financial year mentioned does not match with the invoices. The same financial year has been copied continuously in most of the Certificates. The notification or Rules does not put forward any condition to mention financial year. In the present case, it is the manufacturer buyer who has to make the application before the AC/DC of his jurisdiction. The said application is forwarded to the appellant who has to mention the details of clearances and submit a copy of this application to the Range Superintendent of his jurisdiction - The said application having been verified by the concerned officers of his jurisdiction, the financial year for the specified quantity of goods is not a relevant criteria for the reason that all these clearances are supported by invoices and detailed description of the goods cleared. So, also verified by the jurisdictional authorities of the manufacturer buyer. The demand of duty has been made on a minor infraction of wrongly stating the financial year in the application. Such a procedural lapse has to be condoned. The demand of duty alleging that the appellant has violated the conditions of the Notification r/w Rules 2001 cannot sustain. Extended period of limitation - Suppression of facts or not - HELD THAT:- Though it is alleged in the show cause notice that the appellant has suppressed facts with intent to evade payment of duty there is no positive act of suppression established against the appellant. It is also seen that all the certificates are endorsed by the jurisdiction officers at the time of clearance as well as receiving the goods by the manufacturer buyer. The appellant has filed ER1 returns declaring the exemption availed by them and also furnished copies of the relevant certificates. In such circumstances, the demand raised alleging suppression of facts with intent to evade payment of duty cannot sustain. The issue on limitation is answered in favour of the appellant. The impugned order is set aside - Appeal allowed.
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2024 (6) TMI 1103
Rejection of sanction of refund - duty paid in regard to paper wrapper which was later set aside by the order of Commissioner (Appeals) - HELD THAT:- The said issue has attained finality when the Tribunal dismissed the department appeal by Final order [ 2019 (12) TMI 470 - CESTAT CHENNAI] . The Commissioner (Appeals) has observed in the order impugned herein that the order of Tribunal would be only of persuasive value which is totally erroneous. The decision passed by the Commissioner (Appeals) when appealed before the Tribunal and having decided by passing Final order has become final. In such circumstances, the impugned order interfering with the classification and the demand of duty which has been already decided in favour of assessee cannot be disturbed. There are no grounds to reject the refund claim sanctioned by the original authority. The impugned order set aside. The order passed by the original authority is restored - Appeal allowed.
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2024 (6) TMI 1102
Maintainability of application of rectification of mistake - Section 35C of the Central Excise Act - HELD THAT:- The decision of the Larger Bench of the Tribunal in Lal Chand Anand [ 1985 (7) TMI 118 - CEGAT, NEW DELHI-LB] would apply to the facts of the present case. Section 35C of the Central Excise Act is identical to section 35C of the Central Excises and Salt Act, 1944. The Larger Bench construed that the order passed under 35C of the said Act is a final order and not an order deciding the reference. In this view of the matter if an application for rectification of mistake of any order passed under sub-section (1) of section 35C of the Central Excise Act can only be filed, the present application filed for rectification of mistake of an interim order of the Larger Bench deciding the reference, would not be maintainable. The same position was reiterated by a Larger Bench of the Tribunal consisting of Three Members in Hico Enterprises [ 2005 (11) TMI 104 - CESTAT, MUMBAI ]. This was a case where the rectification of mistake application was filed under sub-section (2) of section 129B of the Customs Act 1962 [the Customs Act]. Sub-section (2) of section 129B, which deals with rectification of mistake, refers to an order passed under sub-section (1) and sub-section (1) of section 129B is identical to sub-section (1) section 35C of the Central Excise Act. The Larger Bench of the Tribunal held that the order answering the reference is not a final order and so the application filed for rectification of mistake in this order would not be maintainable. The contention advanced by the learned special counsel for the department that the order passed by the Larger Bench of the Tribunal deciding the reference should be treated as a final order for the purposes of section 35C(1) of the Central Excise Act as the Division Bench would ultimately be bound by the order of the Larger Bench cannot also be accepted in view of the decision of the Larger Bench of the Tribunal consisting of Five Members in Lal Chand Anand. The inevitable conclusion that flows from the aforesaid discussion is that the present applications filed by the department for rectification of mistakes in the interim order dated 06.06.2023 passed by the Larger Bench of the Tribunal answering the reference made by a Division Bench of the Tribunal, are not maintainable. The five applications filed for rectification of mistakes are, accordingly, rejected.
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CST, VAT & Sales Tax
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2024 (6) TMI 1101
Correction of mistake in filing annual returns for the year 2014-15 - existence of provision to enable the filing of a revised copy of stock inventory as on 31-03- 2015 - HELD THAT:- The petitioner is entitled to an order permitting him to file / upload a revised stock statement as of 31-03- 2015. Sub-rule (4A) of Rule 22 of the 2005 Rules contemplate the filing of a revised return where the dealer detects any omission or mistake in the return submitted by him under sub rule (1) of Rule 22. Sub-rule (3) of Rule 22 deals with the documents that have to be uploaded by the dealer along with the return filed under sub-rule (1) of Rule 22. In the facts of the present case the mistake on the part of the petitioner was that she uploaded the stock inventory as on 28-05-2015 instead of the stock inventory as on 31-03-2015 [which is the requirement under Rule 22 (3)(v) of the 2005 Rules]. This writ petition will stand disposed of directing the 2nd respondent to permit the petitioner to correct the copy of stock inventory (closing stock) as on 31-03- 2015 which was filed along with the annual returns submitted by the petitioner for the year 2014-15. Thereafter, the petitioner shall suitably reply to Exts. P6 to P8 notices.
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Indian Laws
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2024 (6) TMI 1100
Applicability of Tamil Nadu Industrial Establishments (Conferment of Permanent Status to Workmen) Act, 1981 to the Corporation qua the employees and their Union - suggestion to institute an Industrial Disputes Claim questioning non-employment was sustainable or not, given that the Inspector of Labour had already passed orders in that regard. Whether the Corporation can be termed as an industrial establishment as per the provisions reproduced supra and whether the members of the Union would qualify as workmen and therefore would be eligible for permanent status under Section 3 of the Act? - HELD THAT:- For any establishment to be commercial, it has to be established that the activities undertaken by it are for making some monetary gain. Commercial in the most rudimentary sense means buying or selling of goods in exchange of money - this act shall not apply to those workmen who are engaged in the construction of buildings and the like or other construction work be it structural, mechanical, or electrical. Therefore, those establishments and their workmen shall be exempt, who are engaged exclusively, in the work of construction. Both requirements, of the establishment being covered under the definition of industrial establishment as provided and that of the employee having uninterruptedly continued in service for 480 days or more for 24 months, having been met there are no hesitation in holding that the Act would apply to the parties to the present dispute. Whether the High Court on remand, could have ignored the order of the Inspector of Labour and suggested that the employees raise an industrial dispute questioning their non-employment? - HELD THAT:- Since the High Court concluded that the Act would apply, there was no reason for it to disturb the finding of the Inspector of Labour and, therefore, it ought to have simply ordered that the order of Inspector of Labour which concluded that the members of the respondent-Union be given permanent employment, be complied with. When an issue stands already decided and such decision does not suffer from any vice of authority or jurisdiction then, putting those who enjoy an order in their favour through the wringer once more of having to re-establish their claim, this time before the authority under the Industrial Disputes Act, 1947, would be unjustified. The appeal filed by the Corporation is dismissed.
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2024 (6) TMI 1099
Cognizance of the offences punishable under Sections 13 (1) (d), 13 (1) (e) read with 13 (2) of the PC Act and under Section 109 of IPC - challenge to charge sheet and taking cognizance of the offence - undeclared assets and income of the petitioner - no preliminary enquiry conducted to verify about the disproportionate assets said to be in possession of the petitioner - HELD THAT:- It is well settled by the Hon'ble Supreme Court in order to calculate the disproportionate asset, it is necessary to place the assets and liabilities held by the petitioner or a public servant during joining of the public service and subsequently what was the assets held by him and what was the income earned and expenditure, then only they should ascertain. After ascertaining the same, only then they should come to the conclusion regarding prima facie case or register the FIR and then schedule property is required to pass an order under Section 17 of the PC Act for investigation. Herein this case, the income tax authorities not concluded the investigation and sent letter to the Chief Secretary, in turn the Chief Secretary forwarded the letter to the ACB and ACB immediately registered FIR by preparing alleged source report, which does not contain any details of the property. There is no basic foundation in this case to say that the petitioner was having so much assets and liabilities at the time of joining the service and Subsequently he has amassed the assets, absolutely there is no material place either in the source report or in the FIR or in the charge sheet. Totally blank regarding the assets and liabilities which were declared by the petitioner while joining the service. The prosecution blindly stated, he has amassed the property between 1987 to till date but there is no details in the case records. Therefore, continuing proceedings is nothing but abuse of process of law. Such being the case absolutely there is no ground for framing of charge and proceeding the trial against the petitioner - this petition is allowed.
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2024 (6) TMI 1098
Dishonour of Cheque - service of notice - failure to produce an evidence that in fact the notice was served - non-fulfilment of essential condition for taking cognizance, as provided under Section 138 clause (c) read with section 142(1)(b) of the NI Act - whether non-filing of track report or acknowledgement due card would illegal to proceed with the case filed under Section 138 of the Negotiable Instruments Act, 1881 or not? - HELD THAT:- The complainant issued and sent a demand notice on 28.01.2021 to the address of the accused person in terms of Section 138(b) of the Negotiable Instruments Act, 1881 and amendment thereto asking the accused person to pay the said amount within a period of 15 days from the date of receipt of the said notice. But the accused person has failed and neglected to pay the said amount covered by the said cheques and when he failed to pay the payment of the same amount covered by the aforesaid cheques, the complainant filed this case on 16th March, 2021 - it appears from the complaint itself the requirements as provided under Section 138 of the Negotiable Instruments Act, 1881 have been fulfilled by the complainant. In the instant case, the trial Court seems to have drawn a presumption of law with regards to service of demand notice. Furthermore, onus lies upon the claimant to prove his case at the time of trial. At the same time, accused person also gets opportunity to contest the same during trial. This Court does not find any illegality or infirmity in taking cognizance by the learned Magistrate and issue summon upon the accused person. Accordingly, CRR 1708 of 2021 is devoid on merit and required to be dismissed - application dismissed.
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