TMI Tax Updates - e-Newsletter
June 30, 2023

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax

Articles

1. PROPOSED CHANGES ON THE ROLE OF AUTHORIZED REPRESENTATIVE UNDER CORPORATE INSOLVENCY RESOLUTION PROCESS

   By: DR.MARIAPPAN GOVINDARAJAN

2. Pre-condition of furnishing bank guarantee in case of bail not sustainable

   By: Bimal jain

3. Services of extending corporate guarantee without any consideration is not considered as a service

   By: Bimal jain

4. Accelerating Growth and Success: Unlocking the Power of Advisory Services for SMEs

   By: Sundaran Damodaran

5. Service Tax not levied on reimbursable expenses incurred by the Assessee

   By: Bimal jain

News

1. CGST Delhi West Commissionerate busts nexus of more than 30 fake firms and arrests a person in special drive against fake registrations

2. Shri Piyush Goyal asked bankers to ensure enhanced and affordable credit to MSMEs to achieve the target of 1 trillion dollar merchandise exports

3. Increased TCS rates to apply from 1st October, 2023 - Important changes w.r.t Liberalised Remittance Scheme (LRS) and Tax Collected at Source (TCS)

4. Air Cargo Export Delhi Commissionerate carries out destruction of drugs as part of drive to mark International Day against Drug Abuse and Illicit Trafficking

Notifications

DGFT

1. 15/2023 - dated 29-6-2023 - FTP

Amendment in import policy condition of Cigarette lighters Covered under CTH 9613 of Chapter 96 of Schedule -I (Import Policy) of ITC (HS) 2022

GST - States

2. FIN/REV-3/GST/1/08(Pt-1)(Vol.II)/222 - dated 10-5-2023 - Nagaland SGST

Seeks to implement e-invoicing for the taxpayers having aggregate turnover exceeding Rs 5 crore

3. FIN/REV-3/GST/1/08(Pt-1)(Vol.II)/221 - dated 9-5-2023 - Nagaland SGST

Seeks to amend Notification No. FIN/REV-3/GST/1/08(Pt-1) “N” dated the 30th June 2017

Circulars / Instructions / Orders

Income Tax

1. 09/2023 - dated 28-6-2023

Extension of time limits for submission of certain TDS/TCS Statements i.e. Form No. 26Q, 27Q and 27EQ - Date extended for the First Quarter of the FY 2023-24 to 30th September 2023 - CBDT issued an Order u/s 119

Customs

2. PUBLIC NOTICE NO. 02/2023 - dated 27-4-2023

Online filing of AEO – LO applications – Launch of Version 3.0 web-application for filing, real-time monitoring, and digital certification – reg.

Highlights / Catch Notes

GST

• Court Rules in Favor of Petitioner for GST Reimbursement Against Indian Railways, Upholding Payment Method u/s 49.

  Case-Laws - HC : Reimbursement of the GST from the recipient of goods i.e. Indian Railways - Merely because the Petitioner uses the input tax credit which is credited to his electronic credit ledger for payment of the output tax, which is a permissible mode of payment as per Section 49, it would be completely contrary to the frame work of the GST Act to accept the contention of the Railways that the Petitioner would not be entitled to the reimbursement of the Input Tax Credit which the Petitioner used for payment of the Output Tax Credit. - HC
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• GST Registration Canceled After Petitioner Misses Deadline for Show Cause Notice Response and Hearing Attendance.

  Case-Laws - HC : Cancellation of GST registration of petitioner - delay in submission of reply to SCN - the petitioner has neither appeared for personal hearing nor has filed reply within the timeline as stipulated by the officer. The mere fact that the reply has been filed at the will and pleasure of the petitioner, beyond the period granted by this officer would not entitle the petitioner to the relief sought. - HC
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• High Court Reduces 200% Penalty for e-Way Bill Violation to Rs. 50,000; Original Violation Not Severe Enough.

  Case-Laws - HC : Levy of 200% penalty - Failure to renew e-Way Bill - The appellants should have done since the goods were sold in transit. Therefore, there is a violation had committed by the appellants but the violation is not as grave enough to call for imposition of penalty at the rate of 200%. Since on the date when the vehicle was intercepted the goods were covered by a valid e- Way Bill which satisfies the requirement u/s 129 - Penalty reduced to Rs. 50,000 from 200% - HC
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• GST Not Applicable on Compensation for Pre-GST Contract Breach; Tribunal Award Exempt u/s 142(10) & 142(2)(a.

  Case-Laws - AAR : Levy of GST on receipt of compesation / award - amount for settling a dispute arising out of breach of contract - contract completed during the Pre-GST period - as no supply has happened during the GST regime as per Section 142(10) of the act ibid no GST shall be payable. Further the additional payment received by way of compensation through award by Hon’ble Tribunal for Arbitration is not falling under Section 142(2)(a) and hence not chargeable to GST. - AAR
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• Commercial Pilot Training Fees Not Exempt from CGST and UPGST, DGCA-Approved Curriculum Required.

  Case-Laws - AAR : Exemption from CGST and UPGST - supply of education and training services to commercial pilots in accordance with the training curriculum approved by the Directorate General of Civil Aviation for obtaining the extension of aircraft type ratings on their existing licenses - Not exempted from GST - AAR
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Income Tax

• Singapore Tax Resident Gains DTAA Benefits: India Cannot Tax Singapore's Capital Gains, Confirms Authorities on Article 13(4).

  Case-Laws - HC : Income taxable in India - Capital gain from Singapore - benefit of Article 13(4) DTAA - Tax resident of a Contracting State i.e. Singapore - Singapore authorities have themselves certified that the capital gain income would be brought to tax in Singapore without reference to the amount remitted or received in Singapore. The AO could not have come to a conclusion otherwise. - HC
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• High Court Confirms ITAT Ruling: Assessee's Exemption u/s 11 Valid, AO's Assumptions on Capitation Fees Incorrect.

  Case-Laws - HC : Exemption u/s 11 - Receipt of voluntary contributions/corpus fund or capitation fee - AO, based on assumption and surmise, has held that there was violation under the KEI (Prohibition of Capitation Fee) Act by the assessee and that incorrect assumption has been rightly reversed by the ITAT. - HC
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• Assessing Officer Must Specify Section 271(1)(c) Aspect for Accurate Penalty on Income Tax Infractions.

  Case-Laws - HC : Penalty u/s 271(1)(c) - Defective notice - In case the AO concludes, that a case is made out under Section 271(1)(c) of the Act, he needs to indicate, clearly, as to which limb of the said provision is attracted. The reason we say so is, that apart from anything else, the pecuniary burden may vary, depending on the infraction(s) committed by the respondent/assessee. In a given case, where concealment has taken place, a heavier burden may be imposed, than in a situation where an assessee is involved in furnishing inaccurate particulars. - HC
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• No TDS on Annual Rebates: Credit Notes and Gold Coins Not Considered Commission u/s 194H.

  Case-Laws - AT : TDS u/s 194H - Discount or Commission - credit notes and gold coins offered on annual rebate to selected dealers upon achieving targets - Fixed rebates are generally reduced from the invoice and only net sale consideration is shown in the financial statements. Variable rebates are based on sales quantity or on achievement of sales targets - No TDS liability - AT
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• Non-refundable security deposits for O&M services deemed financing mechanism, not revenue; additions deleted by CIT(Appeals).

  Case-Laws - AT : Nature of receipts - non-refundable security deposits - CIT(Appeals) has rightly concluded non-refundable security deposits received by appellant has nexus with O&M services provided to the clients. However, he failed to appreciate that in the hands of assessee the same were refundable and merely as means to finance O&M services. Thus, the same were not of revenue nature receipts. - Additions deleted - AT
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• Gujarat Trust's Urban Development Efforts Deemed Charitable, Secures Tax Exemption u/s 11 of Income Tax Act.

  Case-Laws - AT : Exemption u/s. 11 - Charitable activity u/s 2(15) - Assessee trust is an autonomous body which is established under 5/2 of the Gujarat Town Planning and Urban Development Act, 1976 made there under carrying Planned Development of areas as defined and designed by the Government of Gujarat and also infrastructural activities relating thereto - The activities are in the nature of advancement of any other object of ‘General Public Utility’ for charitable purpose - The assessee corporation shall be entitled to exemption u/s. 11 - AT
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• CBDT extends deadline for TDS/TCS statements Form 26Q, 27Q, 27EQ for Q1 FY 2023-24 to September 30.

  Circulars : Extension of time limits for submission of certain TDS/TCS Statements i.e. Form No. 26Q, 27Q and 27EQ - Date extended for the First Quarter of the FY 2023-24 to 30th September 2023 - CBDT issued an Order u/s 119 - Circular
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• Loan Waiver Settlement Taxed as Revenue Receipt u/s 41(1) of Income Tax Act.

  Case-Laws - AT : Nature of receipt - one time settlement arising out of waiver of dues of term loan by the lender - Revenue or capital receipt - The waiver of the principal amount which was taken for trading purpose and credited to the profit & loss account of the assessee, has been rightly taxed as Revenue receipt u/s 41(1) - AT
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• Depreciation Denied: No Asset Use Due to Business Cessation, No Revenue Generated, Says Assessing Officer.

  Case-Laws - AT : Depreciation disallowance - asset were not used during the period - production and business activity of the assessee company was stopped - AO observed that, the assessee-company had no business and manufacturing activity from which revenue could be earned - Depreciation cannot be allowed - AT
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• Directors Cleared of Criminal Liability for TDS Deposit Delay; Proceedings Quashed Due to Lack of Specific Details.

  Case-Laws - DSC : Offence punishable u/s 276­B r/w section 278­B - Criminal liability of Directors of the Company - Failure to deposit TDS within prescribed time - The complaint does not disclose the how and in what manner the present applicants / were in-charge of and responsible to the company for the conduct of day ­to­ day business of the company including the deduction of TDS and depositing the same to the credit the Central Government, so as to initiate criminal prosecution for the commission of offence - Proceedings quashed - DSC
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Customs

• High Court dismisses petitioner's revision u/s 129DD of Customs Act for exceeding foreign currency baggage limit.

  Case-Laws - HC : Import of Accompanied Baggage - Carrying foreign currency beyond permissible limit - Rejection of revision application filed by the petitioner under Section 129DD of the Customs Act, 1962 - This Court in exercise of such jurisdiction would not re-appreciate evidence to come to a conclusion different from what has been arrived at by the authorities on appreciation of facts and/or on consideration of materials. - Petition dismissed - HC
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• Import Valuation Ruling: Declared Price Accepted for Old Ships Lacking Evidence of Additional Consideration.

  Case-Laws - AT : Valuation - import of old and used ships/vessels for breaking purpose - In the absence of any allegation or evidence of extra consideration having been made by the importer over and above the said price, transaction value as declared by the importer has to be accepted. - AT
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Indian Laws

• New TCS Rates for LRS Remittances Begin October 2023, Aiming to Enhance Tax Collection and Compliance in India.

  News : Increased TCS rates to apply from 1st October, 2023 - Important changes w.r.t Liberalised Remittance Scheme (LRS) and Tax Collected at Source (TCS)
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IBC

• CIRP Closed: No Claims Filed, CoC Not Formed, Corporate Debtor Struck Off from Registrar of Companies.

  Case-Laws - AT : CIRP - the Appellant has not received a single Claim from the date of initiation of the Corporate Debtor into CIRP. As the CoC itself is not constituted and in the light of the fact that not a single Claim was received by the IRP even after the public announcement, as well as the fact that the Corporate Debtor Company has been struck off from the Registrar of Companies, this Tribunal is of the considered view that the CIRP may be closed with respect to the subject company. - AT
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Service Tax

• Respondent Not a Body Corporate: No Banking Services u/s 65(105)(zm), Clarified by 2006 Board Circular.

  Case-Laws - AT : Body corporate - corporate guarantee commission - The respondent does not fit in the definition of body corporate because they are not engaged in providing banking services and this issue has been clarified by the board circular dated 04.07.2006 wherein it has been clarified that the word ‘any other person” in Section 65(105)(zm) has to be read with principle of ejusdem generis with the preceding words. - AT
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VAT

• Concessional Tax Rate Denied: Missing C Forms and Late Sales Return Hurt Taxpayer's Claim Under Strict Interpretation.

  Case-Laws - HC : Denial of claim for concessional rate of tax and claim for sales returns - no C Forms to support the claim for concessional rate of tax - sales return had not been made within the time contemplated under the statute - Well-settled principle in taxation is that a statutory provision providing for an exemption has to be strictly construed in favour of the revenue and against the assessee. - HC
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Case Laws:

• GST

• 2023 (6) TMI 1233
  Reimbursement of the GST from the recipient of goods i.e. Indian Railways - differential amount of price variation on steel - whether the Petitioner would be entitled to claim refund of the input tax credit availed on the purchase of steel which was used to pay the output tax while affecting the outward supply of steel to the Railway Authorities? - HELD THAT:- The GST legislation came into existence within the purview of a modern economy as a destination based tax. The idea which permeates GST legislation globally is to impose a multi-stage tax under which each point in supply chain is potentially taxed. As a result, the suppliers are entitled to avail credit of the tax paid at an anterior stage. In other words, GST fulfils the description of a tax which is based on value addition. The value addition is intended to achieve fiscal neutrality and to obviate a cascading effect of taxation which traditional tax regimes were liable to perpetuate. Therefore, the purpose of the tax on value addition is not dependent on the distribution or manufacturing model. The tax which is paid at an anterior stage of the supply chain is adjusted. The object therefore is to achieve both neutrality and equivalence by the grant of seamless credit of the duties paid at an anterior stage of the supply chain. It is seen from a perusal of Section 16(1) that every registered person, shall subject to such conditions and restrictions as may be prescribed and in the manner specified in Section 49 be entitled to take credit of the input tax charged on any supply of goods or service or both to him which are used or intended to be used in the course of furtherance of his business and the said amount will be credited in the electronic ledger of such person - Taxes on goods and services are identifiable but upon credit to the electronic ledger, they form a common pool for utilization. Section 16(1) indicates the manner in which input tax credit can be utilized is spelt out in Section 49. Whether the Petitioner would be entitled to the refund of the Input Tax Credit availed upon purchasing of steel which was used for the purpose of payment of the Output Tax in effecting the outward supply of steel to the Railways? - HELD THAT:- This question has arisen in view of the specific and categorical submission of the learned counsel for the Respondents inasmuch as, it was submitted that as the Petitioner is getting the benefit of the Input Tax Credit, the question of reimbursement of Input Tax Credit availed do not arise. It was submitted that the Petitioner would get double benefit, inasmuch as on one hand the Petitioner would get the benefit of Input Tax Credit and on the other hand would get the benefit of GST neutralization and as such hit by Section 171 of the CGST Act, 2017. In the previous segments of the instant judgment, this Court categorically observed the object and the frame work behind the Input Tax Credit. The GST legislation as observed earlier is a destination based tax meaning thereby GST is a consumption based tax and would effectively tax the consumer of such goods or services or both at the destination thereof or as the case may be at the point of consumption. The supply of steel by the Petitioner to the Railways makes the Railways the end user and therefore the Railways are required to bear the brunt of the final tax amount upon the supply of steel - It is relevant to note that the input tax credit is credited to the Petitioner s electronic credit ledger as the Petitioner had paid from its resources the input tax. Merely because the Petitioner uses the input tax credit which is credited to his electronic credit ledger for payment of the output tax, which is a permissible mode of payment as per Section 49, it would be completely contrary to the frame work of the GST Act to accept the contention of the Railways that the Petitioner would not be entitled to the reimbursement of the Input Tax Credit which the Petitioner used for payment of the Output Tax Credit. This Court is therefore of the opinion that the Petitioner herein would be entitled to his PVC claim in terms with the contract and GST paid by the Petitioner from its electronic credit ledger has to be taken into consideration while computing the PVC Claims of the Petitioner. The Petitioner would be well advised therefore to take steps in terms with the JPO dated 29/1/2021 for making its PVC claims, if not already done and the Respondent Railways shall pay the PVC claims on the basis of the contract. It is yet again reiterated that on the ground that the Petitioner had paid the output tax through its electronic credit ledger by using its input tax credit, the same shall not be a ground to deny the entitlement of the Petitioner to the reimbursement of the GST. The said exercise of the PVC Bills of the Petitioner be completed within one month from the date a certified copy of this judgment is served upon the Respondent No. 7. Petition disposed off.

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• 2023 (6) TMI 1232
  Cancellation of GST registration of petitioner - undue delay in submission of reply to SCN - non-speaking order - principles of violation of natural justice - HELD THAT:- This Court is really not required to look into this question since, quite apart from the fact that the basis of show-cause notice is well known to the petitioner as may be seen from reply dated 29.05.2023, the petitioner has admittedly not appeared before officer on 22.05.2023 despite receipt of the notice well in time. Thus, the petitioner has not cooperated in the proceedings leading to suspension of registration. This is a critical aspect of the matter which militates against the petitioner s prayer for intervention under Article 226 of the Constitution of India. The petitioner appears to be suggesting that the very fact of filing of a reply should be construed as an act of grace on its part and that the reply ought to have been taken note of by the assessing authority, and that this fact deserves intervention by the Court, since the order was passed subsequent to receipt of the order - In the present case, the petitioner has neither appeared for personal hearing nor has filed reply within the timeline as stipulated by the officer. The mere fact that the reply has been filed at the will and pleasure of the petitioner, beyond the period granted by this officer would not entitle the petitioner to the relief sought. Petition dismissed.

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• 2023 (6) TMI 1231
  Levy of 200% penalty - only mistake committed by the appellants is on not renewing the e-Way Bill which expired on 18.03.2022 - HELD THAT:- The appellants should have done since the goods were sold in transit. Therefore, there is a violation had committed by the appellants but the violation is not as grave enough to call for imposition of penalty at the rate of 200%. Since on the date when the vehicle was intercepted the goods were covered by a valid e- Way Bill which satisfies the requirement under Section 129 of the Act. However, that the mistake committed by the appellants in not renewing the earlier e-Way Bill which expired on 18.03.2022 the appellants should be put on terms. The appeal as well as the writ petition are allowed and the order of penalty passed by the adjudicating authority as affirmed by the appellate authority are set aside and modified with the direction to the appellants to pay a penalty of Rs.50,000/- which will include both CGST and WBGST instead of 200% penalty as imposed by the authorities.

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• 2023 (6) TMI 1229
  Scope of assessment under GST Act, 2017 - contract completed during the Pre-GST period and demand based on the completed contract can be brought to assessment under GST Act, 2017 or not - liquidated damages, without any supply of materials and labor - arbitral award, in the nature of compensation, payable for delay in completion of the contract and agreed to be payable by the Applicant to DGAL without any supply of goods or services - ITC on the GST amount if any levied on the mutually agreed arbitral award amount received from the Applicant - taxability under GST on Interest payable on the liquidated damages? Whether a mutually agreed amount for settling a dispute arising out of breach of contract constitute a supply within the scope of Entry 5(e) of Schedule-II to the CGST Act, 2017 and hence taxable? HELD THAT:- Circular No. 178/10/2022-GST dated 03-08-2022 discusses the taxability of an activity on a transaction as supply of service of agreeing to the obligations to refrain from an act or to tolerate an act or a situation, or to do an act under the GST. This includes applicability of GST on payments in the nature of liquidated damage, compensation, penalty, cancellation charges, late payment surcharge, etc., arising out of breach of contract or otherwise and scope of entry at para-5(e) of schedule-II of Central Goods Service Tax Act, 2017. The flow of consideration in the instant case fall under para-7.1.3 and para-7.1.4 of circular No. 178/10/2022, dated: 03-08-2022, therefore such consideration as stipulated in the said circular are not taxable as there is no supply of service under entry-5(e) of Schedule-II of the CGST Act, 2017. In the instant case, as no supply has happened during the GST regime as per Section 142(10) of the act ibid no GST shall be payable. Further the additional payment received by way of compensation through award by Hon ble Tribunal for Arbitration is not falling under Section 142(2)(a) and hence not chargeable to GST.

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• 2023 (6) TMI 1228
  Exemption from CGST and UPGST - supply of education and training services to commercial pilots in accordance with the training curriculum approved by the Directorate General of Civil Aviation for obtaining the extension of aircraft type ratings on their existing licenses - to be covered under Si. No. 66 (a) of the Notification No. 12/2017-Central Tax (Rate) dated 28.6.2017 and Si. No. 66 (a) of the Notification No. A.NI-2-843/X1-9(47)/ 17- U.P. Act-1-2017-Order- (10) -2017 dated 30.6.2017 or not? - HELD THAT:- The applicant is engaged in the business of facilitating the training of commercial pilots on the Aircraft Simulators installed at its training facilities. Such training is provided in accordance with the training curriculum approved by the Directorate General of Civil Aviation (hereinafter referred to as DGCA ) for obtaining the extension of aircraft type ratings on their existing licenses. Whether the supply of education and training services to commercial pilots in accordance with the training curriculum approved by the Directorate General of Civil Aviation for obtaining the extension of aircraft type ratings on their existing licenses would be covered under Si. No. 66 (a) of the Notification No. 12/2017-Central Tax (Rate) dated 28.6.2017? - HELD THAT:- The applicant does not provide any licence to the pilots as they are not the competent authority. Issuance and granting of commercial pilot licenses falls under the exclusive domain of DGCA. The applicant is only conducting training courses which helps the trainees to increase/accumulate ratings for flying specific aircrafts. Moreover, the trainees will have to undergo skill test when they complete simulator training at the institute. It is based on the results of these tests and examination and after fulfillment of other parameters that the DGCA would endorse the type ratings of aircraft in the licenses of trainee pilots. Therefore merely conducting a course or its completion is not a qualification which is recognized by law. The fact that such a completion of course may be taken into account by the DGCA for the purpose of evaluating the experience and content of training, will not make it statutory in character. The applicant, during the course of personal hearing, accepted that they do not provide any licence, degree or diploma certificate to the trainees. It is just the completion of training course which is mentioned. It is observed that there is no statutory requirement for the course completion certificate which enables the trainee pilots to apply to DGCA for appearing in the examination conducted by it. It is the examination conducted by the DGCA which is the statutory requirement and not any examination by the applicant. The applicant is merely preparing the trainees for such Type Rating Examinations - Hence, it cannot be construed that the applicant is an educational institute which provides services by way of education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force. The applicant has declared that the training course conducted by them enables the pilots to get employment in the commercial airlines. This view of the applicant is not supported by the facts. Because the trainees after undergoing type rating training courses with the applicant will not be able to get employment with the airlines directly. As per Rule 6A of the Aircraft Rules, no person shall fly as pilot of an aircraft which is not included or entered in the Aircraft rating of the licence. Meaning thereby, a trainee can fly an aircraft and consequently seek employment with an airlines only after his or her licence has been endorsed with the aircraft rating for the specified aircraft by the DGCA - a commercial pilots licence holder cannot seek the job of flying an aircraft for which he has undergone Type Rating Training unless an endorsement to that effect is made in the licence of the CPL holder by the DGCA. It is the endorsement which makes him eligible to obtain employment with Airlines to fly the aircrafts for which he has been type rated and not the fact of having completed the training with the institute. The supply of education and training services to commercial pilots in accordance with the training curriculum approved by the Directorate General of Civil Aviation for obtaining the extension of aircraft type ratings on their existing licenses is not exempted under Si. No. 66 (a) of the Notification No. 12/2017-Central Tax (Rate) dated 28.6.2017.

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• 2023 (6) TMI 1227
  Seeking grant of anticipatory bail - territorial jurisdiction of this court for entertaining the present application - HELD THAT:- Similar question arose in Pritam Singh Vs. State of Punjab [ 1980 (12) TMI 201 - DELHI HIGH COURT ], it was held that cognizable offence was alleged to have been committed in the State of Punjab whereas the anticipatory bail was applied before the Delhi High Court as the accused had reasonable apprehension of arrest in Delhi - In that context, it was observed that there is nothing in Section 438 CrPC which restricts the jurisdiction of High Court or Court of Session. One need not mix up the jurisdiction relating to cognizance of an offence with that of granting of bails. Bails are against arrest and detention. Therefore, an appropriate court within whose jurisdiction the arrest takes place or is apprehended or is contemplated will also have jurisdiction to grant bail to the person concerned. This court has territorial jurisdiction to entertain the present application - Application disposed off.

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• Income Tax

• 2023 (6) TMI 1226
  Deduction u/s 10A in respect of provisions written back towards link charges and annual day expenses and the said claim was not derived by an undertaking from the export of article or thing or computer software - HELD THAT:- This Court is of the opinion that no interference is called for in the impugned judgment and order of the High Court [ 2021 (1) TMI 168 - MADRAS HIGH COURT] The question of law will be considered on its own merits in the pending CA No. 9175 of 2018 (appeal from CIT v. HEWLETT PACKARD GLOBAL SOFT LTD. 2017 (11) TMI 205 - KARNATAKA HIGH COURT . SLP is dismissed in the above terms.

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• 2023 (6) TMI 1225
  Nature of subsidy receipt - value of the MILIEV grant given by the Dutch government as a subsidy for purchase of wind turbine generator - transfer of right by the assessee to another company, no offset credit and electricity charges paid to Wescare as deduction - HC confirmed ITAT orders - HELD THAT:- Delay condoned. In view of the order passed by this Court in [ 2023 (6) TMI 1171 - SC ORDER] no case for interference under Article 136 of the Constitution is made out. Special Leave Petition is dismissed.

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• 2023 (6) TMI 1224
  Reopening of assessment u/s 147 - notice after a period of four years - disallowance of CSR expenditure - HELD THAT:- Explanation 1 will not be applicable as CSR expenditure was incurred as required by section 135 of the Companies Act, 2013 and its proposed disallowance would not constitute an offense. It appears that there was no tangible material available on record to conclude that income had escaped assessment. The Apex Court in case of M.M. Aqua Technologies Ltd. [ 2021 (8) TMI 520 - SUPREME COURT] has held that a provision in the Act, which is for removal of doubts cannot be presumed to be retrospective even where such language is used, if it alters the law as it earlier stood; and even if it is assumed that the said amendment is retrospective, it cannot give rise to a failure on the part of the Petitioner to disclose fully and truly material facts as held by this Court in the case of Voltas Ltd. [ 2013 (4) TMI 116 - BOMBAY HIGH COURT] AO has acted in excess of the limit of his jurisdiction to reopen the assessment in the exercise of powers under section 147 read with section 148 of the Act. Accordingly the Petitioner would be entitled to succeed.

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• 2023 (6) TMI 1223
  Addition u/s 14A - Expenditure incurred in relation to income not includible in total income - Mandation of recording satisfaction - AO should record his dis-satisfaction with the correctness of the claim of the assessee in respect of the expenditure and to arrive at such dis-satisfaction he should give cogent reasons - HELD THAT:- AO does not say he is not satisfied and why he was not satisfied. There are no reasons given. AO has relied upon some discussions and findings of some original assessment order passed, but the first assessment order ever to have been passed is the impugned order dated 28th March 2013 where the Assessing Officer has reduced the disallowance. Therefore, it only indicates clear non-application of mind by the Assessing Officer. We would agree with the submissions of Ms Jain since CIT(A) in his order dated 9th December 2014 records Though not mentioned in assessment order, admittedly a notice u/s 143(2) was issued and assessment proceedings were pending on the date of search which came to be abated. In response to notice u/s 153A dated 24.10.2011 appellant filed return of income on 29.1.2011 declaring Total income of Rs. 317,47,69,697/- and Book Profit u/s 115JB Rs. 666,76,27,404/- In the assessment order dated 28.3.2013 passed u/s 153A r.w.s. 143(3), the Assessing Officer has made certain additions/disallowance which are subject matter of this appeal . Assessment order dated 28th March 2013 is the order that was impugned before the CIT(A). Therefore it clearly indicates that the AO s finding in paragraph 5.2 of the assessment order is based relying upon a non-existent assessment order and that indicates clear non-application of mind.

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• 2023 (6) TMI 1222
  Income taxable in India - Capital gain from Singapore as exempted in India - benefit of Article 13(4) of the Double Taxation Avoidance Agreement (DTAA) between India and Singapore - assessee [tax resident of Singapore] Foreign Institutional Investor (FII) in debt segment with Securities and Exchange Board of India - HELD THAT:- The exemption or reduction of tax to be allowed under the DTAA in India shall only apply to so much of the income as is remitted to or received in Singapore where the laws in force in Singapore provides that the said income is subject to tax by reference to the amount which is remitted or received in Singapore. When under the laws in force in Singapore the income is subject to tax by reference to the full amount thereof, whether or not remitted to or received in Singapore, then in that case Article 24(1) would not apply. AO while framing the draft assessment order has disallowed the benefit of Article 13(4) of DTAA on capital gain earned in India holding that provisions of Article 24 of DTAA speaks about the restriction of exemption of such capital gain to the extent of repatriation of such income to Singapore. AO has held that the assessee has not produced any evidence to show such required repatriation as mandated by Article 24 of DTAA for entitlement of exempted income. This is an incorrect statement as rightly held by the ITAT. The assessee placed on record even before the AO a certificate dated 16th April 2012 from Singapore Tax Authorities certifying that the income derived by the assessee from buying and selling of Indian Debt Securities and from Foreign Exchange transactions in India would be considered under Singapore Taxes Law as accruing in or derived from Singapore and such income would be brought to tax in Singapore without reference to the amount remitted or received in Singapore. Singapore authorities have themselves certified that the capital gain income would be brought to tax in Singapore without reference to the amount remitted or received in Singapore. The AO could not have come to a conclusion otherwise. As stated in the circular No. 789 dated 13th April 2000, though it applied to Indo-Mauritius Double Tax Avoidance Convention with reference to certificate of residence, the purport and principle is clear. Such certificates issued by the Singapore Tax Authorities will constitute sufficient evidence for accepting the legal position. We see no reason to admit this appeal on this ground. No substantial questions of law arise

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• 2023 (6) TMI 1221
  Reopening of assessment - absence of jurisdiction with the issuing authority for reopening - as alleged approval as required u/s 151 had not been obtained - four years had expired - scope of provisions of Section 151 came to be amended with effect from 01/04/2021 - HELD THAT:- The impugned notice is liable to be set aside on the ground of absence of jurisdiction with the issuing authority. As decided in J M Financial and Investment Consultancy Services Private Limited [ 2022 (4) TMI 1446 - BOMBAY HIGH COURT] since four years had expired from the end of the relevant assessment year, as provided under Section 151(1) of the Act, it is only the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner who could have accorded the approval and not the Additional Commissioner of Income Tax. As the stand taken by the respondents that by virtue of provisions of the Act of 2020, the approval of Assistant/Joint Commissioner of Income Tax as granted was valid has been turned down. In view of Section 151(1) of the Act of 1961 prior to its amendment it was only the Principal Chief Commissioner or the Chief Commissioner of Income Tax who could have accorded the approval. Thus a case for interference has been made out. Decided in favour of assessee.

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• 2023 (6) TMI 1220
  Exemption u/s 11 - Receipt of voluntary contributions/corpus fund or capitation fee - AO held that there was violation under the KEI (Prohibition of Capitation Fee) Act, and accordingly, brought the money collected by the assessee to tax - ITAT deleted the additions - HELD THAT:- AO, based on assumption and surmise, has held that there was violation under the KEI (Prohibition of Capitation Fee) Act by the assessee and that incorrect assumption has been rightly reversed by the ITAT. So far as the authority in New Noble Educational Society is concerned, the Apex Court [ 2022 (10) TMI 855 - SUPREME COURT] has held that the registration under different statues is also a relevant consideration while deciding the application for approval under Section 10(23C) of the Act. In the case on hand, we are not dealing with a situation where the IT Department was considering any application for granting exemption. On the other hand, the department had issued the exemption certificate and the AO on an incorrect assumption has treated the money collected by the assessee as capitation fee under the KEI (Prohibition of Capitation Fee) Act. Therefore, the said authority does not lend any support to the Revenue. This court has already taken a view in Kammavari Sangham and the same is applicable to the facts of this case. Decided against revenue.

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• 2023 (6) TMI 1219
  Penalty u/s 271(1)(c) - Defective notice - cessation/remission of liability u/s 41(1) - HELD THAT:- Penalty proceedings entail civil consequences for the assessee. The AO is required to apply his mind to the material particulars, and indicate clearly, as to what is being put against the respondent/assessee when triggering the penalty proceedings. In case the AO concludes, that a case is made out under Section 271(1)(c) of the Act, he needs to indicate, clearly, as to which limb of the said provision is attracted. The reason we say so is, that apart from anything else, the pecuniary burden may vary, depending on the infraction(s) committed by the respondent/assessee. In a given case, where concealment has taken place, a heavier burden may be imposed, than in a situation where an assessee is involved in furnishing inaccurate particulars. Therefore, it is necessary for the AO to indicate, broadly, as to the provision/limb under which penalty proceedings are triggered against the assessee.Clearly, this has not happened in the instant case. As a matter of fact, even in the assessment order, whereby proceedings were triggered, there is no indication whatsoever, as to which limb of Section 271(1)(c) of the Act was triggered. Decided in favour of assessee.

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• 2023 (6) TMI 1218
  Territorial jurisdiction of this High Court - HELD THAT:- As since the AO who framed the assessment is located in Gurugram, of the Supreme Court rendered in CIT v. ABC Papers Ltd [ 2022 (8) TMI 863 - SUPREME COURT] the instant appeals will not lie in the present High Court. Accordingly, liberty is sought to withdraw the appeals and file the same before the Court which would have territorial jurisdiction in the matter. Leave in that behalf is granted. The appellant/revenue is given eight weeks to file the appeals. The time to file the appeals will commence from the date of receipt of a copy of the order.

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• 2023 (6) TMI 1217
  TDS u/s 194H - Discount or Commission - Demand u/s. 201(1) / 201(1A) - credit notes and gold coins offered on annual rebate to selected dealers upon achieving targets - assessee submitted that credit notes were given in order to promote the sales - AO held that such credits were in the nature of commission which would require TDS - HELD THAT:- For applicability of TDS obligation u/s 194H, there should exist agency relationship between the payer and the payee. The payee should act as on agent for the assessee. From the fact, it emerges that the assessee sells its products through network of dealers / distributors under a commercial agreement. As per the terms, the risk and rewards of sale transaction pass on to these dealers at the point of time of sale only. The assessee merely regulates business terms for the purpose of sale. Nevertheless, the sale happens on principal-to-principal basis only. Fixed rebates are generally reduced from the invoice and only net sale consideration is shown in the financial statements. Variable rebates are based on sales quantity or on achievement of sales targets - Dealers / distributors do not act on behalf of the assessee rather they act on independent basis subject to business terms laid down by the assessee. The risk and reward of goods get transferred at the time of sale by assessee to these dealers. The documents as placed on record substantiate all these facts. The decision in the case of CIT vs. Ahmedabad Stamp Vendors Association [ 2012 (9) TMI 298 - SC ORDER] supports the case of the assessee as held that discount given to stamp vendors for purchasing stamps in bulk quantity was in the nature of cash discount in transaction of sale and, therefore, section 194H would have no application to that transaction.There was no obligation on assessee to deduct TDS on rebates given on transaction of sale. Accordingly, impugned demand, for both the years, stands deleted. Decided in favour of assessee.

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• 2023 (6) TMI 1216
  Nature of receipts - non-refundable security deposits received by appellant - nature of security deposits - revenue or capital receipt - As per AO security deposits are not shown as advance receivables at the asset side nor shown as liability towards customers in the balance-sheet of M/s Silver Line Holdings Pvt. Ltd. and that without passing the amount through its account M/s Silver Line Holdings Pvt. Ltd. transferred the same to the assessee, thus has to be considered to be non-refundable - HELD THAT:- In the light of various clauses of Tripartite agreement and the agreement between the assessee and SHL discussed above it is established that both the companies were operating in different fields of the project. The rights in the land vested with SHL along with other subsidiaries and they were transferred in favour of any buyer of Villa/ Units and qua service or amenities of Gold Course, SHL was separately charging non-refundable deposits. It was responsibility of SHL to account for the same in books for which assessee cannot be faulted. Ld. tax authorities below have completely ignored the corrigendum agreement dated 29.09.2009, considering the same to be self serving ignoring that other clauses of tripartite Buyer s agreement and agreement between assessee and SHL dated 24.12.2008 were themselves clear of the fact that what assessee was getting was something in the form of refundable deposit . CIT(Appeals) has rightly concluded non-refundable security deposits received by appellant has nexus with O M services provided to the clients. However, he failed to appreciate that in the hands of assessee the same were refundable and merely as means to finance O M services. Thus, the same were not of revenue nature receipts. Apart from above, there is also force in the contention of learned AR that the Coordinate Bench in assessee s own case, [ 2019 (7) TMI 1434 - ITAT DELHI] , has considered the nature of deposits in the hands of assessee as refundable security deposits, as one of the possible view as decided in favour of assessee.

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• 2023 (6) TMI 1215
  Estimation of income - Bogus purchases - communication received from the DDIT(Inv) with regard to the information received from sales-tax department, as per which, the assessee is involved in taking bogus entries towards purchases - CIT(A) given partial relief only to the extent of 50% of the amount reflected in the stock register - HELD THAT:- We notice that there are certain discrepancies in the figures considered by the CIT(A) for the purpose of disallowance and the figures as per assessee s stock register. CIT(A) did not call for any remand report from the AO with regard to the additional evidences submitted by the assessee and there is per se violation of Rule 46A of the Income-tax Rules, 1962. The issue should go back to the AO for fresh verification of the evidences submitted by the assessee. Accordingly we remit the issue for a fresh verification to the AO with a direction to consider the reconciliation statement of the stock register prepared by the assessee and also to keep in mind the decision of Mohammed Haji Adam Co [ 2019 (2) TMI 1632 - BOMBAY HIGH COURT] as held that profit embedded in the sale of bogus purchases can only be added since the AO in the instant case as noted has not disturbed the sales figures shown by the assessee and decide accordingly. Needless to say that the assessee be given an opportunity of being heard. Appeal is allowed for statistical purpose.

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• 2023 (6) TMI 1214
  Assessment u/s 153A - belated filing of returns - statutory time limit provided for filing the returns of income in response to notice under section 153A - HELD THAT:- When a search is initiated, the assessee is not required to file his return till such time he receives notice u/s 153A of the Act. Once such notice is received, the liability fastens on the assessee to file the return within the reasonable time specified in the relevant notice. As the revised return filed by the assessee for the assessment years 2011-12 to 2016-17 are invalid returns and have to be declared non-est, for the reason that these are nothing but revising of belated returns filed on 13.06.2018. Hence, the entire additional incomes offered by the assessee in the revised returns filed on 13.12.2018 for assessment years 2011-12 to 2016-17 cannot be taxed at all in the relevant assessment years as it had been offered in the invalid and non-est revised return. Addition made towards unsecured loans u/s 68 and consequential disallowance of interest on such loans - Admittedly, there is absolutely no incriminating material found during the course of search for assessment years 2011-12 to 2015-16 in respect of making addition made towards unsecured loans under section 68 of the Act and consequential disallowance of interest on such loans. Hence, the earlier assessment years for assessment years 2011-12 to 2015-16 cannot be disturbed at all by learned AO while framing the search assessments under section 153A of the Act. This issue is no longer res integra in view of the recent decision of the Hon ble Supreme Court in case of PCIT Vs. Abhisar Buildwell Pvt. Ltd [ 2023 (4) TMI 1056 - SUPREME COURT] wherein the decision of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] has been upheld by the Hon ble Apex Court. Hence, in view of the same, all the additions made by learned AO in the search assessments for assessment years 2011- 12 to 2015-16 are hereby directed to be deleted. In view of our earlier observations made that the revised returns filed by the assessee for the assessment years 2011-12 to 2015-16 on 13.12.2018 are invalid and non-est, the income to be determined for assessment years 2011-12 to 2015-16.

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• 2023 (6) TMI 1213
  Unexplained cash credits u/s. 68 - share application money received by the assessee - Assessee failed to establish the genuineness and creditworthiness of the investing companies - CIT-A deleted the addition - HELD THAT:- Apart from making bald allegations, the Revenue did not bring any such material on record to substantiate its claim. As in respect of all the 5 companies the Revenue has conducted scrutiny assessment in the preceding years. A mere isolated transaction by one of the alleged entry operators in one of the investor companies does not taint the entire share transaction in the assessee company in the absence of any corroborative material being brought on record. Further, we find that the funds were received, inter-alia, from the sale of equity shares of some other companies by these investors or from the refund of advances for the purchase of shares. Thus,we find no merit in the aforesaid submission of the learned DR. Therefore, from the above it is evident that the assessee has also proved the source of source of the investors in the present case to satisfy the test of creditworthiness of the investor and genuineness of the transaction, against which no contrary material has been brought on record. - Decided against revenue.

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• 2023 (6) TMI 1212
  Exemption u/s. 11 - Charitable activity u/s 2(15) - Assessee trust is an autonomous body which is established under 5/2 of the Gujarat Town Planning and Urban Development Act, 1976 made there under carrying Planned Development of areas as defined and designed by the Government of Gujarat and also infrastructural activities relating thereto such as construction of roads, bridges, drainage system, water connection for the benefit of public at large - HELD THAT:- We hold that the activities of the assessee for advancement of any other object of General Public Utility for charitable purpose and therefore the assessee corporation shall be entitled to exemption u/s. 11 of the Act. Hon ble Supreme Court in ACIT vs. Ahmedabad Urban Development Authority [ 2022 (11) TMI 255 - SUPREME COURT ] wherein it has been clearly held that the Revenues Appeals are dismissed as far as statutory Corporations/Boards - Decided in favour of assessee.

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• 2023 (6) TMI 1211
  TP adjustment - ALP of the international transactions relating to merchanting trades - what should be the PLI of the assessee qua the PLI of the comparables? - only variation made by the TPO to the PLI of the assessee is to add the cost of goods to the denominator - HELD THAT:- Admittedly, in the TP study report, the assessee had furnished segmental information regarding both the merchanting trades segment and physical trade segment. TPO has also accepted the segmental analysis of the assessee. In fact, he has accepted the transactions in trading segment to be at ALP. As discussed earlier, the only variation, he has made in merchanting trades segment, is in relation to PLI of the assessee. Thus, neither the TPO nor DRP have made any adverse comment regarding the merchanting trades segment. When there is no allegation either by RBI or any other regulatory authority regarding merchanting trades segment of the assessee, in our view, DR cannot give a new dimension to the entire issue by making allegations which are not borne out on record. DR cannot improve upon the case of the TPO or learned DRP by enlarging the scope of the appeal. Thus, considering the fact that in the PLI of the comparables, cost of goods is not included in the denominator, in our view, the same would also apply to the assessee. Hence, cost of goods cannot form part of the denominator of PLI. Accordingly, we direct the Assessing Officer to compute the ALP by applying PLI of operating profit to value added cost, excluding the cost of goods. Grounds are allowed.

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• 2023 (6) TMI 1210
  Reopening of assessment - Period of limitation - time limit for passing the assessment order - HELD THAT:- We find that case of assessee for assessment year 2012-13 was reopened under section 147 of the Act. The notice u/s 148 was served upon the assessee on 29.03.2019 as recorded in para-2 of the assessment order. In response to notice u/s 148 of the Act, the assessee filed its return of income on 27.04.2019 and assessment was completed on 21.06.2021. We find that time period for passing the re-assessment was up to 31.12.2019. Thus, the assessment order, is passed beyond the time period prescribed u/s 153(2) - Decided in favour of assessee.

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• 2023 (6) TMI 1209
  Nature of receipt - one time settlement arising out of waiver of dues of term loan by the lender - Revenue or capital receipt - HELD THAT:- We find the Hon ble Supreme Court in the case of T.V. Sundaram Iyengar Sons Ltd[ 1996 (9) TMI 1 - SUPREME COURT] while holding that if an amount is received in the course of trading transaction, even though it is not taxable in the year of receipt being of revenue character, the amount changes its character when the amount becomes the assessee s own money because of limitation or by any other statutory or contractual right. When such a thing happens, commonsense demands that the amount should be treated as income of the assessee. Assessee itself has credited the waiver of the amount to the Profit Loss A/c and offered only the interest component to tax and did not offer the amount treating the same as capital in nature. The waiver of the principal amount which was taken for trading purpose and credited to the profit loss account of the assessee, results in income in the hands of the assessee and therefore, the learned CIT (A) is fully justified in upholding the action of the AO in bringing the same amount to tax in the hands of the assessee. The grounds raised by the assessee are accordingly dismissed.

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• 2023 (6) TMI 1208
  Addition on account of difference in Gross Profit Rate - method of accounting - AO noticed that the assessee company, in its trading account, is showing gross sales including trade discount as total sales which are, in fact, not being credited into its books of accounts - HELD THAT:- GP rate adopted by the AO for A.Y 2010-11 is not comparable with the GP rate of A.Y 2011-12 and 2012-13 under the consideration because the sales is a predominant determinative factor and the same is not comparable as the assessee has accounted the sale at DLP during the A.Y 2010-11 as against the accounting of turnover at MRP during the year under consideration. Sale is prime component to determine the GP ratio and if the sale factor is not comparable, resulting GP cannot be considered comparable. On totality of facts, we do not find any reason to interfere with the findings of the ld. CIT(A). The common grounds relating to GP addition in A.Y 2011-12 and 2012-13 are dismissed. Addition on account of Scheme Expenses - as per AO though the assessee has given details of scheme but not furnished details of beneficiaries to whom these gift items were distributed - whether the expenses have been incurred for the purpose of the business and is not of capital in nature? - HELD THAT:- As there is no dispute that the expenses were incurred for the purpose of business and were not of capital expenditure, the same has to be allowed. But, at the same time, the quantum can be questioned for want of supporting evidences as the same were not justified by production of books of account. Therefore, in the interest of justice and fair play, we deem it fit to restrict the disallowance to 10% of the expenditure claimed under this head. Thus direct the AO to restrict the disallowance. Addition of overriding commission - justification of claim of expenditure and explain the basis of payment asked - as per AO justification for payment given by the assessee is too general and no specific information has been given justifying payment - CIT-A deleted the addition - HELD THAT:- It is true that in A.Y 2010-11 also, similar disallowance has been made and it is equally true that while making the disallowance for A.Y 2011-12, the AO has simply followed the findings given in A.Y 2010-11. Since in A.Y 2010-11 addition was deleted by the ld. CIT(A) and though the revenue was in appeal before this Tribunal but deletion of this addition was not challenged. Therefore, the same has attained finality. Finding parity of facts, we do not find any error or infirmity in the deletion made by the ld. CIT(A). Deletion stands confirmed.

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• 2023 (6) TMI 1207
  Adjustment u/s 143(1)(a) - Addition u/s u/s.36(1)(va) - disallowance made for late deposit of employees share of PF/ESI contribution to the relevant funds beyond the date prescribed under the respective Acts - HELD THAT:- From the material available on the record, find that the matter is squarely covered by the decision of Emson Tools Mfg. Corp. [ 2023 (4) TMI 626 - ITAT CHANDIGARH] as CIT(A) was justified in sustaining the adjustment u/s 143(1)(a) by means of disallowance made for late deposit of employees share of PF/ESI contribution to the relevant funds beyond the date prescribed under the respective Acts. CIT(A) was justified in sustaining the adjustments u/s 143(1)(a) by means of disallowances made for late deposit of employees share of PF/ESI contributions to the relevant funds beyond the date prescribed under the respective Acts. Decided in favour of assessee.

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• 2023 (6) TMI 1206
  Scope of limited scrutiny assessment - Addition made on account of interest income not returned to tax by the assessee - HELD THAT:- As the addition made on account of interest earned from bank by the assessee is set aside as the same is beyond the scope of limited scrutiny assessment. The said action could not have been made in the present limited scrutiny assessment by the AO. The addition is therefore is not sustainable in law, and directed to be deleted, and the ground of the assessee is allowed. Denial of deduction u/s 80P(2)(a)(i) - income earned from activities of providing bills collection facilities to its members - HELD THAT:- The said clause of section 80P allows deduction only of income earned by cooperative societies from the business of providing banking or credit facilities. Assessee has been unable to demonstrate as to how this income qualifies for deduction under clause (a) of section 80 P(2) of the Act. Therefore agree with the ld.CIT(A) that the assessee is not entitled to deduction of income earned from the activities of providing bills collection services to its members under section 80P(2)(a)(i) of the Act and, the ld.CIT(A) hold has rightly disallowed the same. Set off expenses incurred for earning of incomes to which the assessee was denied deduction under section 80P(2) at the rate of 5% thereof - contention of assessee was that the estimation ought to have been done on reasonable basis and for such purpose, he requested the matter to be restored back - HELD THAT:-As find merit in the contentions of assessee that there has to be a reasonable basis for arriving at any estimation, and in the absence of any such basis being provided by the ld.CIT(A),restore this issue back to the ld.CIT(A) to estimate the expenses to be allowed against the income from other sources liable to tax on a reasonable basis. Ground of appeal is allowed for statistical purposes.

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• 2023 (6) TMI 1205
  Assessment u/s 153A - Addition u/s 68 - unexplained cash credit - Burden of proof - HELD THAT:- As assessee has filed all the bank statements and ledger account of creditors, evidencing receipts and refund of unsecured loans. The factual matrix of the case indicates that the assessee has discharged its initial onus to prove the identity, creditworthiness and the genuineness of transaction by filing necessary details as an additional evidences which have been duly accepted by the CIT(A) and necessary remand reports have been called for in accordance with the laid down procedure of law. No incriminating material was brought on record by the AO during the opportunity provided to him to examine and investigate based on the additional evidences. Admittedly, loans were repaid, during this relevant assessment year itself. The date of receipt of the loan was 06/2013 and the date of repayment was 03/2014 which is much before the date of search i.e. 13.09.2015. Due interest has been paid and tax on payment of interest was also deducted as per law. Thus, it can be held that the requirement of law like identity, credit capacity and genuineness of transaction is satisfied by the assessee. Hence, the addition made by the Assessing Officer is deleted and the ground of appeal of the Revenue is dismissed.

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• 2023 (6) TMI 1204
  Depreciation disallowance - non use of asset - production and business activity of the assessee company was stopped since the year 2003 - HELD THAT:- In the present case of assessee, the production and business activity was stopped since the year 2003 and profit loss account of the assessee company had revealed that the total revenue earned by the assessee in previous year mainly comprised of revenue from operation and other income which included interest income and miscellaneous income and the assessee company had no business and manufacturing activity from which revenue could be earned and machinery was not put to use as there was admittedly no manufacturing activity. In such a situation, depreciation could not be allowed on such non-use in view of the clear verdict given in Oriental Coal Co. Ltd. [ 1994 (1) TMI 82 - CALCUTTA HIGH COURT ] and which is directly on the present issue involved as held that as there was strike, lockout in the factory for two years and the plant and machinery has not been actually used, then assessee would not be entitled for depreciation - Decided against assessee.

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• 2023 (6) TMI 1203
  Offence punishable u/s 276 B r/w section 278 B - Criminal liability of Directors of the Company - Failure to deposit TDS within prescribed time - Person in charge of the business of the firm when the offence was committed - HELD THAT:- As complaint does not disclose the necessary particulars as to how and in what manner the present applicants /original accused No. 2 to 4 were in-charge of and responsible to the accused No. 1 company for the conduct of day to day business of the company including the deduction of TDS and depositing the same to the credit the Central Government, so as to initiate criminal prosecution for the commission of offence under section 276 B r/w section 278 B of the Income Tax Act. Hence, the impugned order which does not disclose the application of mind while issuing process against the applicants /original accused No. 2 to 4, cannot be said to be legal, correct and proper so as to sustain it. Ultimately, I would agree with the submissions advanced by Advocate Poonam Ankleshwaria appearing for the present applicants /original accused No. 2 to 4 to quash and set aside the impugned order.

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• Customs

• 2023 (6) TMI 1202
  Import of Accompanied Baggage - Carrying foreign currency beyond permissible limit - Rejection of revision application filed by the petitioner under Section 129DD of the Customs Act, 1962 - petitioner had failed to substantiate his claim by submitting any evidence in support of the grounds in appeal or not - petitioner was put to notice as per the provisions of Section 102 of the Customs Act or not - HELD THAT:- The petition deserves to be dismissed as this is a case of concurrent findings of all the authorities below, and that the findings of the facts ought not to be interfered by this Court in exercise of its jurisdiction under Articles 226 and 227 of the Constitution. Having perused the record, none of the contentions as urged on behalf of the petitioner are accepted. The jurisdiction of this Court under Articles 226 and 227 of the Constitution to interfere in the impugned orders would be very limited namely to examine whether there is any patent perversity and illegality in the orders passed by the authorities below. This Court in exercise of such jurisdiction would not re-appreciate evidence to come to a conclusion different from what has been arrived at by the authorities on appreciation of facts and/or on consideration of materials. Petition dismissed.

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• 2023 (6) TMI 1201
  Amendment of shipping bill - joint meeting had taken between the officers of the Customs Department and Director General of Foreign Trade and not only the issue regarding the petitioner therein has been resolved but the changes in the software system have been brought about - HELD THAT:- The learned Counsel who appears for Respondent Nos. 1 and 2 states that the Customs Department has amended the shipping bill and the same is forwarded to the Director General of Foreign Trade (DGFT) and the necessary action will be taken by the DGFT. The learned Counsel for the Petitioner states that, in view of this development, the cause raised in this Petition stands redressed. The Writ Petition is accordingly disposed of.

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• 2023 (6) TMI 1200
  Finalization of provisional assessment (at higher side) - Valuation - import of old and used ships/vessels for breaking purpose - existence of allegation or evidence of extra consideration having been paid to the seller over and above the declared value or not - HELD THAT:- It can be seen from clause 1 of the MOA dated 28.7.2011, that parties have agreed a lump sum purchase price of USD 5,815,747; there is no reference to LDT made for arriving at the purchase price by the parties to the agreement, in other words purchase price agreed between the parties is not in proportion to the LDT. Further, it is not the case of revenue that any consideration over and above the agreed purchase price has been paid by the importer to the foreign seller. Revenue has sought to assess higher duty only on the basis of commercial invoice submitted vide letter dated 4.7.2011 wherein details of additional LDT of 401.323 MT is mentioned. There is otherwise no corroboration whether LDT mentioned in the MOA and survey report is inclusive of 401.323 MT or otherwise. It is observed that parties have agreed upon a lump sum price of USD 5,815,747 for the ship as a whole and absent any allegation or evidence of extra consideration having been made by the importer over and above the said price, transaction value as declared by the importer has to be accepted. Lower authorities clearly erred in loading the assessable value entirely based on the LDT when the LDT is irrelevant for assessment of duty. The said issue is already decided by this Tribunal in the decision of JRD. INDUSTRIES VERSUS COMMISSIONER OF CUSTOMS, JAMNAGAR [ 2010 (8) TMI 437 - CESTAT, AHMEDABAD ], where it has been held that LDT gained importance for the period prior to 2003 and was required to be correctly arrived at, as duty was ad valorem + Rs 1400/- per Light Displacement Tonnage. In the present case the duty is not relatable to LDT. The memo of agreement arrived at between the two parties also does not refer to any fact showing that the price of the ship is proportionate to LDT of the said ship. The impugned order cannot be sustained and appeal of the appellant is required to be allowed.

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• Insolvency & Bankruptcy

• 2023 (6) TMI 1199
  Constitution of CoC with a single Operational Creditor (can be done or not) - Seeking dismissal of the CIRP - the Company struck off for non-filing of the financial statements - HELD THAT:- This Tribunal is of the earnest view that there is no provision in the Code for the Corporate Debtor to constitute the CoC with a single Operational Creditor, when it is seen from the record that despite the public announcement being made inviting claims from its stakeholders, the Appellant has not received a single Claim from the date of initiation of the Corporate Debtor into CIRP. As the CoC itself is not constituted and in the light of the fact that not a single Claim was received by the IRP even after the public announcement, as well as the fact that the Corporate Debtor Company has been struck off from the Registrar of Companies, this Tribunal is of the considered view that the CIRP may be closed with respect to the subject company. The order of the Adjudicating Authority is set aside and the Company is released from all rigors of CIRP - Appeal allowed.

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• Service Tax

• 2023 (6) TMI 1198
  Levy of Service Tax - IPR Service - royalty paid by the appellant-assessee under the agreement - HELD THAT:- The only issue involved in the present case relates to levy of service tax on payment of royalty/fee on transfer of technical know-how and the same has been considered by the Tribunal in various cases and has consistently held that know-how is not an IPR within the meaning of service tax law and consequently its transfer is not liable to service tax. Further, Circular No. 80/10/2004- ST dated 17.09.2004 have clarified the scope of taxable entry. In M/S. MUNJAL SHOWA LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST, DELHI (GURGAON) AND (VICE-VERSA) [ 2017 (6) TMI 819 - CESTAT CHANDIGARH] it was held that Revenue as it has been clarified that the taxable service include only such Intellectual Property Rights except Copyright that are prescribed under the law for the time being in force, as the term time being in force implies that, as are applicable in India, and Intellectual Property rights covered under Indian law in force alone are chargeable to service tax and Intellectual Property Rights like Integrated Circuits or Undisclosed Information would not cover under the taxable services. Admittedly, Trade Mark rights which have been used by the appellant-assessee are not registered in India, therefore, the same are not liable to tax under IPR service. After taking into consideration, the ratios of various decisions and also the Circular dated 17.09.2004, it is held that the appellant assessee is not liable to pay service tax under IPR service, under Section 65 (105) (zzr) of the Finance Act, 1994. Further, it is found that the findings in the impugned order holding that deduction under Notification No. 17/2004-ST dated 10.09.2004 is available only to service tax paid under Section 66 and not as reverse charge under Section 66A is also contrary to the decision of the Tribunal in the case of M/S ROCHEM SEPARATION SYSTEMS (INDIA) PVT LTD VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI-I [ 2015 (1) TMI 1052 - CESTAT MUMBAI] . Extended period of limitation - HELD THAT:- The extended period cannot be invoked as the appellant-assessee has a bonafide belief that they are not liable to pay service tax on acquisition of know-how. Moreover, the issue relates to interpretation and hence intention to evade tax cannot be inferred. Appeal allowed.

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• 2023 (6) TMI 1197
  Levy of Service Tax - banking and other financial services (BOFS) - Body corporate - corporate guarantee commission received by the respondent for providing corporate guarantees for their subsidiary company PT Jindal Stainless Indonesia (Jindal Indonesia) - export of services or not - HELD THAT:- The respondent does not fit in the definition of body corporate because they are not engaged in providing banking services and this issue has been clarified by the board circular dated 04.07.2006 wherein it has been clarified that the word any other person in Section 65(105)(zm) has to be read with principle of ejusdem generis with the preceding words. Further, in the case of M/S BANSWARA SYNTEX VERSUS CCE, JAIPUR [ 2009 (7) TMI 85 - CESTAT, NEW DELHI] , the Tribunal while considering the similar issue of whether release of land building as well as machinery would only come under banking and other financial services or otherwise it was held that such amount received as lease rent would not be covered under Section 105 of banking and other Financial Services in the Finance Act, 1994. Since the services in question has been rendered outside India, the same is not taxable as they qualify as export of services in terms of rule 3 of export of service Rules, 2004. Extended period of Limitation - HELD THAT:- The whole issue relates to interpretation of the law because the Department was not certain of the taxability of the impugned services and the definition of banking and financial service was changed from time to time. Hence the extended period cannot be invoked and by that entire demand is barred by limitation as the demand pertains to the period 2005-2008 whereas the show cause notice was issued on 24.09.2010 which is beyond the normal period of limitation. There is no infirmity in the impugned order passed by the Ld. Commissioner - Appeal dismissed.

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• 2023 (6) TMI 1196
  Refund of the service tax paid - export of goods - agreement/contract or any other documents with Commission Agents located outside India not provided - Services of Inland Transportation. Rejection of refund on the ground that the appellant has not provided any agreement/contract or any other documents with Commission Agents located outside India - exemption under N/N. 41/2007 - HELD THAT:- The appellant has produced the confirmation of the contract which clearly shows the payment of commission at a fixed rate on the FOB Value of the export and this issue has been settled by the Tribunal in the case of MITTAL INTERNATIONAL VERSUS CCE, ROHTAK/GURGAON [ 2017 (3) TMI 1512 - CESTAT CHANDIGARH ], where it was held that if the invoice of the commission agent is on record, in that circumstance, the appellants have complied with condition of the notification and the appellant is entitled for availing the refund - refund allowed. Rejection of refund in relation to the claim for Service Tax paid on Services of Inland Transportation - HELD THAT:- This issue has also been considered by the Tribunal in the case of M/S. CAP SEAL (INDORE) PVT. LTD. VERSUS CCE, INDORE [ 2016 (12) TMI 1132 - CESTAT NEW DELHI ] wherein the Tribunal has specifically held that the service tax paid on transportation of empty container from port to factory is admissible as refund - refund allowed on this issue. Refund also rejected on the ground that the service providers are not registered for the Services such as CHA/Port Services - HELD THAT:- This issue has also been considered by the Hon ble Rajasthan High Court in the case of UNION OF INDIA THROUGH THE COMMISSIONER, CENTRAL EXCISE AND SERVICE TAX, UDAIPUR VERSUS M/S. ARIHANT TILES AND MARBLES (P) LTD. [ 2019 (1) TMI 73 - RAJASTHAN HIGH COURT ] wherein it has been held that the Registration under a particular service is not necessary for the purpose of exemption under Notification No. 41/2007 - refund allowed. The impugned order is not sustainable in law - Appeal allowed.

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• 2023 (6) TMI 1195
  Non-payment of Service Tax - providing Custom House Agent (CHA) and freight forwarding services - Air freight commission - Sea freight commission - Service Charges - Documentation charges - airport/port truck charges - other direct reimbursements - reverse charge mechanism - extended period of limitation. Air Freight Commission - It is the contention of the Appellant that this service was rendered in connection with export of goods and therefore, no service tax will be leviable on such services - HELD THAT:- The services rendered by the Appellant were related to export of goods and hence there is no liability of service tax on the commission received from the airlines in connection with the goods exported - this view has been held in Robinson Air Services Vs. CCE, Delhi [ 2016 (10) TMI 680 - CESTAT NEW DELHI ] that demand will not be upheld in such issue - the demand confirmed in the impugned order on this count is not sustainable. Service charges - HELD THAT:- Even though the Appellant has contested the issue earlier, they are not contesting it now and paid the service tax on these service charges collected. Hence, the demand confirmed in the impugned order on this count is upheld. Documentation charges - handling charges - DO charges and other direct reimbursements - HELD THAT:- The Appellant had produced sample invoices and after verifying the same the adjudicating authority has accepted their contention in respect of those 40 entries in the order-in-original. The appellant stated that since the data is huge and bulky, from the year 2002-03 to 2006-07, they requested the Adjudicating Authority to depute an officer to the Appellant s premises to verify the remaining invoices, in case he has any doubt about the nature of reimbursements in respect of the remaining entries and submitted a worksheet containg all reimbursements. This fact has been recorded in the impugned order by the adjudicating authority . Therefore, it is not open to the Adjudicating Authority to confirm the demand on the ground that all invoices have not been produced. The issue as to whether reimbursable expenses are liable to be taxed or not is settled by the decision of the Hon ble Supreme Court in the case of UOI Vs. Intercontinental Consultants and Technocrats Pvt. Ltd., [ 2018 (3) TMI 357 - SUPREME COURT ] wherein the Hon ble Apex Court has affirmed the decision of the Delhi High Court striking down Rule 5(1) of the Valuation Rules, 2006, which provides for inclusion of expenditure or costs incurred by the service provider in the course of providing taxable service in the value, as ultra vires - As the issue has already been settled by the decision of the Hon ble Apex Court, the demand confirmed on the reimbursable expenses in the impugned order is not sustainable. Pickup charges - HELD THAT:- It is observed from the Show Cause Notice that the transportation charges and loading unloading charges were referred to as pick up charges in the Notice. In the earlier Order-in-Original dated 31.01.2009, the adjudicating authority has dropped the demand for the period prior to 01.01.2005 and has allowed abatement of 75% under GTA services - the demand of service tax on these charges have been made in the Notice under CHA service. There is no liability of service tax under CHA service on these charges. Accordingly, the demand confirmed in the impugned order is beyond the scope of the Notice and accordingly hold that the demand on this count is not sustainable. Income from M/s GE Industrial Ltd. - amounts recovered from GE Industrial Ltd., for clearing and forwarding - HELD THAT:- The Notice has proposed to levy service tax on these charges under the category of C F agency services. The OIO has confirmed the levy under CHA services. Thus, the impugned order has travelled beyond the Show Cause Notice and hence the demand confirmed on this count is not sustainable. Time limitation - HELD THAT:- The Notice was issued on 17.10.2017, by invoking the extended period. As there was no suppression involved, the demands confirmed by invoking the extended period not sustainable, the Appellant has been discharging service tax with respect to the service charges received - There is no suppression involved in this case and hence extended period not in-vocable. Hence, the demands confirmed by invoking the extended period in the impugned order are not sustainable. Appeal allowed in part.

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• Central Excise

• 2023 (6) TMI 1194
  Reversal of pro-rata CENVAT Credit - short receipt of the processed inputs from the premises of the job workers - Rule 4(5)(a) of the CCR - HELD THAT:- The wastage/scrap generated in the course of job work, being less than 10% for PP Granules and 5% for LLDPE Granules was within the prescribed SION norms and the existence of such wastage/scrap in the process of conversion is provided for not only in the Work Orders but also in the permission conferred by the Jurisdictional Commissioner under Rule 4(6) of the CCR. Further, the claim of the Appellant that the job worker had discharged duty on the waste/scrap at the time of his clearance is also supported by job work Challans, excise Invoice besides the Order dated 9 June 2006 passed by the Assistant Commissioner in the connected proceedings. The issue involved herein is also covered by the decision of this Tribunal in EMCO LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI-III [ 2007 (11) TMI 108 - CESTAT, MUMBAI] where it was held that supplier can not be held liable on the ground that the worker had not discharged duty liability on impugned waste and scrap. Irrespective of whether the job worker had discharged the duty liability on the scrap generated at hisend, the duty liability cannot be fastened on the principal manufacturer/supplier of inputs. Appeal allowed.

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• 2023 (6) TMI 1193
  Default in making fortnightly payment - facility of paying duty fortnightly under the provisions of Rule 173G(1) was withdrawn from the Appellant - duty not paid in terms of Rule 8 of Central Excise Rules, 2002 - revenue neutrality - HELD THAT:- The impugned orders were passed by the Ld. Adjudicating authority on 28.02.2013. Whereas the Hon ble Gujarat High Court decision in the matter of INDSUR GLOBAL LTD. VERSUS UNION OF INDIA 2 [ 2014 (12) TMI 585 - GUJARAT HIGH COURT] decided on 27.11.2014. Therefore, the matter is remanded to the adjudicating authority to decide the case afresh in view of the Hon ble Gujarat High Court s decision in the case of Indsur Global Limited after giving an opportunity of personal hearing to the appellant - All the appeals are allowed by way of remand to the adjudicating authority.

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• 2023 (6) TMI 1192
  Excisability - RFG, an intermediate excisable goods - cleared without payment of duty for job work under Rule 4(5)(a) of the CCR for conversion into electricity/steam and return thereof for use in the manufacture of dutiable final products or not - HELD THAT:- This Tribunal in the Appellant s own case in HALDIA PETROCHEMICALS LTD. VERSUS COMMISSIONER OF C. EX., HALDIA [ 2005 (1) TMI 306 - CESTAT, NEW DELHI ] had dropped the demand of duty on the removal of another intermediate product i.e. CLS cleared to M/s. HPLCL during the period November 2000 to October 2002 under Rule 4(5)(a) of the CCR for generation of steam and electricity which were received back by the Appellant and used in the manufacture of final products. The issue involved in the present case is on the same lines and the only difference is that in the said case the partially processed goods was CLS whereas in the instant case we are concerned with RFG but both RFG and CLS were generated on cracking of Naphtha and were sent to M/s. HPLCL for generation of electricity and steam with an intention to bring back electricity and steam for use in the manufacture of final products. To the same effect is the decision of the Tribunal in Maharashtra Aldehydes Chemicals case [ 2017 (2) TMI 367 - CESTAT MUMBAI] wherein the duty demand on the intermediate product cleared under Rule 4(5)(a) of the CCR was dropped. Since the issue is squarely covered in favour of the Appellant by the decision of the Tribunal in the Appellant s own case, the appeal of the Appellant allowed on merits. Extended period of limitation - HELD THAT:- The same also does not survive in view of the communications dated 16 November 1999 15 December 2000 intimating the Jurisdictional Superintendent about clearance, inter alia, of RFG to M/s. HPLCL for job work. Appeal allowed.

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• CST, VAT & Sales Tax

• 2023 (6) TMI 1230
  Issuance of Suspension proceedings - Action on enquiry report - petitioner were put under suspension without any basis and without following the procedure prescribed under the A.P. Civil Services (Classification, Control and Appeal) Rules, 1991 - HELD THAT:- It is manifest that the respondent authorities already conducted detailed enquiries on two occasions i.e., on 16.04.2021 and 19.12.2022, and by relying the said enquiry reports and without observing the principles of natural justice and without providing any opportunity to the petitioner to submit an explanation, the present impugned orders came to be passed by de horsing the procedure as contemplated under Rules 21 and 22 (1) of the CCA Rules, 1991. On a perusal of the Rule 8 (1), this Court is of the opinion that Rule 8(1) is not applicable, since the enquiry was already completed twice in the present case and the enquiry reports were submitted by the Inquiry Officers on 16.04.2021 and 19.12.2022. As per service jurisprudence, as stated by the respondents, that the notice is contemplated under Rule 8(1) of CCA Rules before issuing impugned proceedings is misconception, but in the given facts and circumstances and also as per the circular issued by the Central Vigilance Commission (CVC), if any enquiry or anyaction is proceeded by the disciplinary authority basing upon anonymous letters/complaints by third parties or news reports, the authority under obligation to issue prior notice to concerned delinquents before any enquiry/action. The detailed enquiries were already conducted and basing upon the enquiry reports, the present impugned orders were passed. As seen from the impugned order, it is crystal clear that no show cause notice and no charge memo were issued to the petitioner to submit his explanation and no opportunity was given to him to participate in the enquiries said to have been conducted by the respondents. The fact remains that the enquiries were not conducted as per the CCA Rules, 1991 without complying the procedure as contemplated under Rule 20 of CCA Rules, 1991 - It is also settled principle of law that, basing upon anonymous letter or complaint from the public and news reports, neither the disciplinary proceedings nor punishment can be proceeded/imposed/awarded. The enquiry reports dated 16.04.2021 and 19.12.2022 cannot be relied upon. Therefore, the power of suspension is only to be used to achieve the object to keep the delinquent away from the records and witnesses at the time of enquiry, but here enquiry was already completed, and the power cannot be used as a means of punishment. In fact, the present impugned proceedings does not speak any administrative exigencies, but due to the enquiry reports which are unknown to the petitioner, the impugned proceedings were issued for other reasons particularly as punitive measure only. The respondents did not follow due process of law before issuing the impugned orders, which would attract the principle of malice in law as the impugned order was not based on any real factor germane and it was based upon the allegations made against a unit of Department in a news item published in a Telugu Newspaper on 04.04.2021. Admittedly, the petitioner never discharged his duties at the subject unit and his duties do not at all relate to collection of tax as alleged - Petition allowed.

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• 2023 (6) TMI 1191
  Denial of claim for concessional rate of tax and claim for sales returns - no C Forms to support the claim for concessional rate of tax - claim of the petitioner rejected on the ground that the claim for sales return had not been made within the time contemplated under the statute - differential demand of tax on the petitioner - HELD THAT:- While considering claims for exemption from tax, the burden of proof is strictly on the petitioner to demonstrate that he fulfils the conditions for claiming the exemption, and the statutory provisions in that regard must be strictly construed in favour of the revenue and against the assessee - In the instant case, it is found that the statutory provision mandates that any claim for sales return be made within a period of six months from the date of the sale transaction, and admittedly, in the instant case, the claim for sales returns was made beyond that period. There are no reason to interfere with the order passed by the Appellate Tribunal, which conforms to the well-settled principle in taxation that a statutory provision providing for an exemption has to be strictly construed in favour of the revenue and against the assessee. The questions of law raised in this revision petition have to be answered in favour of the revenue and against the assessee - Petition dismissed.

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