Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
July 2, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
GST
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High Court rules against seizing goods in transit due to lack of evidence on undervaluation. Revenue Appeal dismissed.
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High Court found lack of details in fake invoice claim, orders review of assessment order. Petitioner to pay 20% disputed tax for reconsideration.
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Court discussed late appeal filing due to physical re-filing date. Emphasized acknowledgment date's importance. Delay condoned, fresh review ordered.
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High Court examined refund claim for GST on healthcare services, emphasizing unjust enrichment principle. Writs under Article 226 discretionary. Alternative remedies available. Petition dismissed.
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Court dismisses petition challenging GST levy on Extra Neutral Alcohol for lack of explanation. Opportunity missed to clarify before court challenge.
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High Court ruled no intent to evade tax in e-way bill case. Rs. 25,000 penalty imposed. Petitioner wins refund.
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High Court rules GST registration can't be canceled arbitrarily. Reasons required for cancellation under GST Act.
Income Tax
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ITAT analyzed TP adjustments, excluding companies for functional differences. Working capital adjustment denied, interest calculated with LIBOR rates. Appeal partly allowed.
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The Tribunal ruled land sale proceeds as capital gains, not business receipts. Exemption u/s 54F applied for reinvested proceeds in flats.
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Levy of penalty against estimated income: ITAT rules penalty invalid due to inconsistent grounds for imposition. Precedents cited. Assessee's appeal allowed.
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Appellate Tribunal denied interest expense claim u/s 57(iii) as no direct link to income. Expenditure must be "wholly and exclusively" for earning income.
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ITAT said no late fee u/s 234E for old TDS returns! Assessing Officer can't charge late fee for 2012-13 and 2013-14.
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The tax tribunal ruled that payments for technical support are not taxable as royalty under India-US tax treaty.
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Appellate Tribunal upheld revenue loss due to default in property payment & rejected AO's valuation, dismissing Revenue's appeal.
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Appellate Tribunal overturns CIT(A) decision due to missed notices. Assessee gets chance to present case with evidence. Update contact info within 60 days.
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TP Adjustment - ITAT upheld cost allocation using 'headcount' for support services. Pricing at Arm's Length. No adjustments made for consistency.
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ITAT addressed undisclosed income, flat investment, and gold futures. Pending appeals reviewed. Evidence crucial for rebuttal.
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Appellate Tribunal upholds Income Tax Addition for unexplained cash credits. Lack of proof on individuals' investments led to the decision.
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The court allowed appeal despite 1100-day delay due to practitioner's misunderstanding. Justice prevails as ex-parte order set aside.
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ITAT rectified intimation denial for Form 10BB. Appellant's return deemed invalid, taxed without exemption. Ruling favors appellant citing court judgment.
Customs
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The Ministry of Finance updated Sea Cargo rules, extending deadline to 31st August 2024 for old form & reducing monetary amounts to Rs. 5 lakhs for furnishing of Bond and bank guarantee.
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New tariffs value effective June 29, 2024! Changes in values for goods like oils, scrap, nuts, gold, and silver. Stay updated!
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CESTAT overturned decision on Customs Broker's license revocation, security deposit forfeiture, and penalty imposition.
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Imported marble slabs underpriced, faced fines. Appeals Commissioner lessened penalty due to unintentional error. Tribunal reduced fines further, citing past cases.
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Dispute over imported goods value resolved by Tribunal. Declared value accepted after engineer examination. Customs must justify deviations.
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SEZ unit: Appellant challenges customs values, wins appeal due to lack of communication & violation of justice principles.
DGFT
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India extends Interest Equalisation Scheme for MSME exporters for 2 months beyond June 30, 2024. Rs. 750 Cr cap. Non-MSME claims not accepted.
SEZ
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New rule allows non-SEZ tech units in SEZs. Guidelines issued 9th April 2024 after Dec 6, 2023 amendment. Cert needed for duty refund proposals.
IBC
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Insolvency Pros: File forms electronically for voluntary liquidation process. Timely submission crucial to avoid penalties.
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Tribunal ruled against personal insolvency for guarantor due to forum shopping. Clean hands required.
SEBI
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New rules by SEBI aim to make investing easier! Small investors can now have a Basic Services Demat Account with up to Rs. 10 Lakhs in securities. Charges based on holdings value.
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New rules by SEBI: Crackdown on fraud and unfair trade practices in the securities market. Watch out for "mule accounts"! Effective from the Official Gazette.
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SEBI's new rules mandate stock brokers to prevent fraud and market abuse with surveillance, KYC, and whistleblower policies. Reports due within 48 hours.
Service Tax
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The tribunal ruled in favor of appellants on service tax issues. Collection for Visa/Passport not taxable. Charges retained not taxable. Trade margin not taxable. No proven failure to deposit.
Central Excise
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In a tax refund case, the CESTAT ruled interest should start from deposit date, not later.
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PVC flooring for railways classified under chapter 86 for exemption. Tribunal upholds appellant's classification.
VAT
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High Court reviewed interest levy challenge under AGST Act. No tax collection from consumers, no interest warranted.
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2024 (7) TMI 56
Violation of principles of natural justice - no opportunity of hearing given to the petitioner before passing of the order - imposition of tax with interest and penalty - HELD THAT:- This court is of the view hat all issues raised by the petitioner in the present writ petition can be adequately considered in appeal and accordingly the petitioner is relegated to his remedy of an appeal u/s 107 of the UPGST Act - It is provided, in case such an appeal is filed within the next two weeks along with an application for interim relief, the appellate authority shall duly consider the said application and pass appropriate orders thereon, within 10 days thereafter in accordance with law. Petition is disposed off.
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2024 (7) TMI 55
Levy of tax and penalty - Release of vehicle - transportation of goods without documents beyond the place of destination and also diversion of the goods to a place other than the destination point - Appeal against the Single Judge s order granted relief to the respondent - HELD THAT:- There are force in the contention of the learned advocate appearing for the petitioners that there cannot be any mechanical detention of a consignment in transit solely on the basis of the two reasons as stated by respondent No. 3 in the impugned notice - Merely the direction preferred by the petitioners for delivery of consignment to the place destined for, an inference cannot be drawn with regard to the intention of the petitioners to evade tax. So far as the second ground with regard to the goods being transported to be undervalue is concerned, no material has been placed on record. Even otherwise, as held by this court as well as other High Courts, it is a settled legal position that undervaluation cannot be a ground for seizure of goods in transit by the inspecting authority. In the instant case, there is no such indication. This Appeal being devoid of merits is liable to be and accordingly dismissed, costs having been made easy - Appeal dismissed.
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2024 (7) TMI 54
Challenge to assessment order - violation of principles of natural justice - entitlement to ITC - non-existent supplier - HELD THAT:- Without the respondent stating the basis for the conclusion that fake invoices were issued and submitting relevant documents, it is not possible for the petitioner to respond to the allegation. As regards the conclusion that the petitioner did not satisfy the requirements of Section 16(2)(b), it appears from the documents submitted by the petitioner that lorry receipts and weighment slips were not provided. In that respect, the petitioner failed to fulfill the obligation of establishing actual movement of goods in terms of Section 16(2)(b). Reconsideration is necessary subject to putting the petitioner on terms. On instructions, learned counsel for the petitioner states that the petitioner agrees to remit 20% of the disputed tax demand as a condition for remand, after giving credit to amounts, if any, already remitted by the petitioner. The impugned order dated 07.03.2024 is set aside subject to the condition that the petitioner remits 20% of the disputed tax demand, in the aggregate, after giving credit to amounts remitted earlier within three weeks from the date of receipt of a copy of this order.
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2024 (7) TMI 53
Time limitation - condonation of delay in filing appeal - appeal was filed beyond time and the delay - condonable delay or not - only ground which apparently has been taken note of, for rejecting the appeal was the date of physical re-filing of the appeal - HELD THAT:- It is not in dispute that the appeal was filed in online mode on 03.06.2022 though physical filing of the order impugned was made on 25.01.2023. Under Rule 108 (3) of CGST Rules, 2017, prior to its substitution provided that the date of filing of appeal would be the date when the certified copy of the decision or order is submitted where such order was submitted after seven days from the date of filing Form GST APL-01. The change effected by virtue of Rule 108 (3) is that the date of appeal would be the date of issuance of acknowledgment (which was on 03.06.2022 at Annexure-'G') and such change is in contradistinction to the earlier requirement which provided that the date of appeal would be the date of furnishing of certified copy of the order, if submitted after seven days. If that were to be so, the date of physical filing of the certified copy ought not to have been taken note of - Though appeal was filed prior to substitution of Rule 108 (3), in the present case, the matter having been decided after the amendment by way of substitution, the amended Rule wherein Rule 108 (3) ought to be taken note of. Further, it must be noticed that the substitution of sub-rule (3) ought to date back from the date when the Rule was introduced. The date of filing that was to be taken note of is 03.06.2022 which is the date of acknowledgement of filing of the appeal and not 25.01.2023 which was the date of physical filing of the impugned order which was wrongly taken by the Appellate Authority. Accordingly, as the delay requires to be condoned and there being no ambiguity in the position of law, the delay is condoned and the matter is remitted for consideration afresh. The petition is disposed off.
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2024 (7) TMI 52
Maintainability of alternative remedy of appeal - Refund claim - principles of unjust enrichment - exemption of GST available relating to health care services - rejection on the ground that even without charging the GST on the medicines and the consumable bills by the petitioners, the rate of medicines supplied to the in-house-patients was at the market price and therefore GST was included and the burden of tax has been shifted to the consumer - HELD THAT:- It is by now well settled that the power to issue prerogative writs under Article 226 of the Constitution of India is plenary in nature and is not limited by any other provision of the Constitution. It is equally well settled that under Article 226 of the Constitution of India, the High Court, is having discretion to entertain or not to entertain a writ petition, having regard to the facts and circumstances of the case. The availability of alternative remedy is a self-imposed restriction and normally High Court should not exercise its discretion under writ jurisdiction, when an effective and efficacious remedy is available. However, such alternative remedy shall not operate as a bar, where the writ petition has been filed for enforcement of any of the fundamental right or where there has been violation of the principle of natural justice or where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged. In the case in hand, it is clear that under the scheme of Act there is provision for appeal and revision under Section 107. Thus, rights of appeal and revision have statutorily been created. Such provision of appeal prescribes the remedy and procedure for enforcing right of an aggrieved party, who is aggrieved by an order passed by an adjudicating authority. In the case in hand, the impugned orders have been passed by the Assistant Commissioner, GST Central Excise, who is an adjudicating authority. That being the position, it is clear that the petitioners are having an alternative efficacious remedy which is statutorily been created. The petitioners have also not alleged that the orders are wholly without jurisdiction inasmuch it is the petitioners, who have raised the claim of refund before the adjudicating authority - There is also no challenge to the vires of any legislation in the present batch of writ petitions. Therefore, on this count also, this court is not inclined to exercise its discretion under Article 226 of the Constitution of India. Petition dismissed.
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2024 (7) TMI 51
Request for adjournment on the ground of illness of daughter - inability of petitioner to attend the personal hearing - petitioner had requested for time - HELD THAT:- It is clear that an opportunity of hearing shall be granted while request is received from the person chargeable with tax or penalty or when any adverse decision is contemplated against such person. When a request for adjournment is made on the ground of illness of the daughter of the assessee, the adjudicating officer has in a hyper-technical manner rejected such request while not noticing that this was the first request for adjournment at the stage of opportunity of personal hearing. In light of the same, it would meet the ends of justice in setting aside the order and remanding the matter at the stage of personal hearing as contemplated under Section 75 (4) and 75 (5) of the Act. The order at Annexure-G and the consequential demand notice at Annexure-H are set aside - petitioner to present himself to avail of the opportunity of personal hearing on 28.06.2024 - Petition disposed off.
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2024 (7) TMI 50
Cancellation of GST registration of petitioner - petitioner was unaware of the impugned order dated 04.05.2023 that was passed, since it was host in the GST common portal - HELD THAT:- The Court is of the view that this is a fit case for quashing the impugned order and remitting back the case to the respondent to pass fresh orders on merits and in accordance with law as admittedly the demand pertains to July 2017 to March 2018 and the impugned order has been passed after the death of the petitioner s father. Since the petitioner may be liable to be taxed as legal representative/heir of his father in terms of under Section 93 of the respective GST enactments, the Court is of the view that the petitioner should be given a proper opportunity to defend the tax liability. Petition allowed by way of remand.
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2024 (7) TMI 49
Seeking grant of bail - creation of fake firms for availing fraudulent credits - HELD THAT:- Considering the facts and circumstances of the case, submissions of the learned counsel for the applicant as well as learned counsel for the D.G.G.I., the nature of the offence, the punishment and the material on record and none availability of any device by using which fake firms are said to be created, the period applicant remained in jail and without expressing any opinion on the merits of the case, the Court is of the view that the applicant has made out a case for bail. The bail application is allowed subject to fulfilment of conditions imposed.
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2024 (7) TMI 48
Maintainability of petition - availability of alternative remedy - Levy of tax and interest along with recommendation of prosecution under Section 132(1) of the Goods and Services Tax Act, 2017 - HELD THAT:- The petitioner/company is having registered office at Agra and respondent No.3-Additional Commissioner, CGST Central Excise, Agra Commissionerate, Agra (Uttar Pradesh) has passed the impugned order. Therefore, appeal would lie to the Additional Commissioner (Appeals), GST, 3/194, Vishal Khand-3, Gomti Nagar, Lucknow (U.P.) as advised in the impugned order. The present Writ Petition stands dismissed as withdrawn with the aforesaid liberty.
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2024 (7) TMI 47
Grant of Regular bail - ineligible input tax credit - offence under Section 132 (1) (c) of the Gujarat Goods and Services Tax Act, 2017 - HELD THAT:- The role attributed to the present applicant is to the effect that present applicant has availed ineligible input tax credit on the basis of purchases made from several registered entities, which according to the revenue are found to be non-existing. This Court has also considered punishment prescribed for the offence in question and also considered the fact that the applicant is in custody since 12.02.2024. Considering the nature of the allegations made against the applicant in the FIR, without discussing the evidence in detail, prima facie, this Court is of the opinion that this is a fit case to exercise the discretion and enlarge the applicant on regular bail. The applicant is ordered to be released subject to fulfilment of conditions imposed - application allowed.
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2024 (7) TMI 46
Maintainability of petition - availability of alternative remedy - Constitutional validity of Section 16 (4) of CGST/SGST Act, 2017 read with Rule 61 (5) of Karnataka Goods and Services Tax Rules, 2017 - HELD THAT:- It is not in dispute that the petitioner is having remedy under CGST and KGST Act after issuing the reply, if he deems appropriate. Therefore the writ petition is liable to be dismissed without expressing any opinion on the merits with liberty to the petitioner to take recourse to the law. The writ petition is dismissed.
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2024 (7) TMI 45
Levy of GST - Extra Neutral Alcohol (ENA) supplied by the petitioner - HELD THAT:- The petitioner was called upon to submit his written explanation for not making demand along with the interest. It is also stated that petitioner can seek personal hearing while filing the written explanation. It is made clear that no such written explanation was submitted nor the opportunity to have the personal hearing is sought for by the petitioner. No reasonable explanation is given by the petitioner as to why he has not chosen to file written explanation, seeking personal hearing. As rightly contended by the learned counsel for the respondents, it is only a show-cause notice issued by respondent No. 1 calling upon the petitioner to submit his explanation. An option was also given to seek personal hearing. Even though, there is no explanation by the petitioner for the reasons best known to him, the petitioner has rushed to this court seeking to quash the show-cause notice on several grounds and such grounds could have been raised by the petitioner in his written explanation as to why said show-cause notice could not have been issued. The petitioner has rushed to this court to challenge the show-cause notice without availing the opportunity given to him to submit his written explanation. Therefore, the writ petition is not maintainable. Petition dismissed.
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2024 (7) TMI 44
Validity of impugned SCN and impugned assessment order - levy of penalty upon the petitioner u/s 129 of the CGST Act - non-updation of the e-way bill - Goods were transferred / shifted to another vehicle - HELD THAT:- The material on record does not disclose that there was any intention on the part of the petitioner to either contravene the provisions of the CGST Act or avoid / evade payment of tax and on account of non-extension of the validity of the e-way bill by the petitioner due to breakdown of the vehicle, no presumption or inference can be drawn against the petitioner as regards its intent to avoid / evade payment of tax. Consequently, the facts of the instant case make it just and proper to impose general penalty of Rs. 25,000/- on the petitioner by invoking Section 125 of the CGST Act by setting aside the impugned order and notice and by directing the respondents to refund the tax paid by the petitioner by deducting Rs. 25,000/- from the said amount. The impugned Notice and the impugned order are hereby set aside - it is deemed just and proper to invoke Section 125 of CGST Act and impose maximum penalty of Rs. 25,000/- on the petitioner - petition allowed.
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2024 (7) TMI 43
Cancellation of GST registration of petitioner - failure to file returns for more than six months as stated under section 29 of the GST Act - HELD THAT:- Section 29 of the GST Act, 2017 deals with cancellation or suspension of registration, and clause (c) of sub-section (2) of section 29 states that the competent authority may cancel the registration of a person if he has not furnished returns for a continuous period of six months. Therefore, reading of the said provision indicates that the competent authority before cancelling the registration certificate should assign reasons for cancellation of the registration. In the instant case the 2nd respondent has not assigned reasons except stating that the petitioner has not filed returns for six months and the order cancelling the registration certificate issued in favour of the petitioner is one without application of mind and adversely affects the right of the petitioner to carryon a business as guaranteed under Article 19(1)(g) of the Constitution of India. The petitioner after cancellation of the registration certificate has tendered the entire arrears of tax including interest, penalty and late fees for filing the returns belatedly. Such being the case, the cancellation of the registration certificate granted in favour of the petitioner would be arbitrary and discriminatory. The impugned order passed by the 1st respondent cancelling registration of the petitioner, produced at Annexure-F are hereby quashed - petition allowed.
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Income Tax
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2024 (7) TMI 42
Notice received u/s 226 (3) - calling upon the petitioner to deposit the tax due as per the assessment order as also a penalty order passed against the petitioner - petitioner sought a stay on the impugned notice demanding 20% of the tax demand - petitioner has also moved an application before the Local Committee constituted for recovery in cases identified as high pitched by the local committee. HELD THAT:- Having heard learned counsel for the parties and having perused the record and the relevant orders, we find that although the petitioner has filed an appeal challenging the assessment orders before the CIT(A), the petitioner had not moved any stay application before CIT(A). In the present circumstances, it is appropriate that the petitioner moves a stay application before the CIT(A) and seek appropriate orders on such application. Insofar as the petitioner s application pending before the Local Committee is concerned, as the application is pending for quite sometime, in our opinion, it would be appropriate that the Local Committee is directed to consider the petitioner s application and take a decision on the same including on any directions to be issued in terms of paragraph E(i)(b), if the petitioner makes out the case to that effect. Let such order be passed by the Local Committee as expeditiously as possible and within a period of 10 days from the date of order of this Court being placed with the office of Local Committee. We keep open all contentions of the petitioner in regard to the proceeding before the CIT(A) as also before the Local Committee.
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2024 (7) TMI 41
TP Adjustment - comparable selection - suitability of the entities, namely, Eclerx Services Limited, Infosys BPO Limited, and TCS E-Serve Limited to be compared with the assesse - HELD THAT:- As in assessee s own case for the assessment year 2007-08 these three entities were rejected to be suitable comparables. For the assessment year 2008-09 also, E-clerx Services Ltd., and Infosys BPO Ltd., were excluded on the grounds of functional dis-similarity and huge turnover, in assessee s own case. Cross domain Solutions Pvt. Ltd., was considered in the assessment year 2008-09 by a Co-ordinate Bench of the Tribunal and excluded on the ground of dissimilarity of the functions. So also the learned DRP excluded all the four entities for the assessment year 2010-11; whereas E-clerx Services Ltd., Infosys BPO Ltd. and TCS E-Serve Ltd., were excluded by the learned DRP for the assessment year 2011-12 also. No change of facts and circumstances is either pleaded or proved to take a different view for this year and, therefore, while respectfully following the view taken for the earlier assessment years, we deem it just and proper to exclude these four comparables for this year also. R Systems International Limited (segmental) was rejected as it has different accounting year - As decided in Mckinsey Knowledge Centre India Pvt. Ltd [ 2015 (3) TMI 1226 - DELHI HIGH COURT] if the comparable is functionally same as that of tested party then same cannot be rejected merely on the ground that data for entire financial year is not available - If from the available data on record, the results for financial year can reasonably be extrapolated then the comparable cannot be excluded solely on the ground that the comparables have different financial year endings. Following this dictum respectfully, we direct the learned Assessing Officer to permit the assessee to extrapolate the results for the relevant financial year and consider the same as a good comparable. ACE BPO Services Private Limited and Crystal Voxx Ltd. - Though the learned DR submitted that these two entities satisfy all the filters applied by the learned TPO and 100% of revenue is earned from BPO services, there is no material placed before us to dispel the obscurities found in the observations of the learned DRP. We, therefore, find it difficult to accept the prayer of the assessee to include these two entities. Grounds are accordingly allowed in part. Negative working capital adjustment - As in assessee s own case for the assessment year 2010-11, learned DRP while following its decision in the case of Cordys Software India P. Ltd [ 2018 (5) TMI 1381 - ITAT HYDERABAD] directed that negative working capital adjustment to the arithmetic mean margin of the comparables shall not be made. On a perusal of the same, we do not find any reason not to apply the same for this assessment year also because there are no factors which suggest a contrary view for this year, are brought to our notice by the Revenue. We, therefore, direct that negative working capital adjustment to the arithmetic mean margin of the comparables shall not be made. Ground is allowed accordingly. Interest on outstanding receivables - We have gone through the record and also the in the light of the submissions made on either side. In the case of PCIT vs. Tecnimont (P.) Ltd. [ 2018 (7) TMI 490 - BOMBAY HIGH COURT] held that interest chargeable on delayed recovery of export receivables from AEs should be taken at LIBOR rates for determining ALP of notional interest on delayed recovery. Respectfully following the same, we are of the considered opinion that the ends of justice would be met by accepting the interest rate at LIBOR+200 points. We direct the learned Assessing Officer / learned TPO to adopt the same. Appeal of assessee partly allowed.
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2024 (7) TMI 40
Penalty u/s 271(1)(c) - furnishing of inaccurate particulars of income - Additions made by the AO have been deleted in quantum appeal - HELD THAT:- In view of the above admitted factual position, since the additions made by the AO have been deleted in quantum proceedings, the very base for initiation of penalty proceedings u/s 271(1)(c) of the Act, has gone. Therefore, the impugned penalty levied u/s 271(1)(c) of the Act has no legs to stand in the eye of law and the same is hereby deleted. Grounds are allowed.
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2024 (7) TMI 39
Correct head of income - sale proceed of residential units - Capital gain or business receipts - Addition made of sale proceed of residential units as per section 28(iv) - HELD THAT:- As we find that the assessee has never acted upon the agreement and the residential project, namely, Vishwamohini Complex was initiated and completed by the builder M/s. KHPL and assessee only received seven flats as consideration against giving land for developing to M/s. KHPL. We also note that a tripartite supplementary agreement was entered into on 12/03/2014 it was again stated that the agreement dated 28/04/2010 was not executed and all the activity for developing the project has been made as per the agreement dated 09/06/2011. Thus, we fail to find any infirmity in the finding of the ld. CIT(A) holding that the assessee is just one of the three parties of the transactions and it was merely transfer of land for the purpose of developing a project but it was not a business activity carried out by the assessee because the activity relating to development of land and constructing the project was the sole responsibility of M/s KHPL and, therefore, the transactions of transferring the land, receiving the flats in consideration and subsequent sale of two flats would be taxed as per the capital gain provisions under the Income Tax Act. We find that on 09/06/2011 vide agreement with M/s. KHPL, the land was given to M/s. KHPL for developing it into a residential complex. The cost of acquisition of the land is undisputedly at Rs. 21,07,504/- and for the purpose of calculating long-term capital gain the index cost of acquisition of the plot of land as on 09/06/2011 comes to Rs. 33,18,220/-. The fair market value of the land as on the date of transfer of land i.e., 09/06/2011 as per the prevailing circle rate comes to Rs. 1,36,82,490/- which thus finally gives rise to net long-term capital gain at Rs. 1,03,64,270/-. Whether the assessee is liable to pay any capital gain on long term capital gain? - The assessee has claimed that he is eligible for exemption u/s 54F for seven units of residential flats received from the developer. In view of the judgement of the Hon ble Delhi High Court in the case of Geeta Duggal [ 2013 (3) TMI 101 - DELHI HIGH COURT] , we find merit in the finding of the ld. CIT(A) that long-term capital gain from transfer of land as on 09/06/2011, has been applied for purchasing the residential house at Vishwamohini Complex and since the total sale consideration i.e., the FMV of the land has been applied for getting the seven flats, the assessee is entitled to deduction u/s 54F of the Act at Rs. 1,03,64,270/-. This finding of the ld. CIT(A) needs no interference. Two flats bearing no. 401 403 sold during the year, the date of acquisition of flats can be considered as 09/06/2011 because it is on this date on which the agreement was entered into with the developer. Now, flat no. 401 has been sold on 31/05/2014 and since the date of acquisition of flat is 09/06/2011, the assessee has held this flat for less than 36 months and, therefore, it will attract short-term capital gain, for which necessary directions have already been given by the ld. CIT(A) to the ld. AO for calculating the short term capital gain from sale of flat no. 401 after giving deduction for cost of acquisition as per the square feet rate of land taking the FMV at Rs. 1,36,82,490/-. So, this finding of the ld. CIT(A) also needs no interference. Sale of flat no. 403 which is held by the assessee for more than 36 months, the capital gain would fall under the category of long-term capital gain . Further since the assessee made investment in the residential house at Rupam Tower, within the parameters prescribed u/s 54 of the Act, it deserves the benefit u/s 54 of the Act for the cost of investment in the residential portion of the 5th floor of Rupam Towers which also needs to be calculated by the ld. Assessing Officer based on the valuation report of Rupam Towers. Thus, with these directions as given by the ld. CIT(A) we are inclined to hold that the ld. CIT(A) made no error in deleting the addition by not treating it as a business receipt liable for addition u/s 28(iv) of the Act and has rightly held it to be falling under the category of capital gain. Thus, Ground No.1 and additional Ground No. 1 2 of the revenue are dismissed. Addition for alleged investment in construction of Rupam Tower from undisclosed sources - CIT(A) after considering the valuation report of the estimated cost incurred for the construction of Rupam Towers and also taking into account the sale consideration received from sale of Flat no. 401 and 403 at Vishwamohini Complex, held that the ld. Assessing Officer has grossly erred in calculating the cost at circle rate - HELD THAT:- Valuation report has been done by a Government registered valuer who has valued the construction cost of Rupam Tower having basement+ground+4 Floors as commercial and top floor as residential and vide report dt. 10/04/2018, the total cost is estimated to be Rs. 1,66,25,000/- of which some part has been spent during the financial year 2013-14 at Rs. 9,00,000/-, Rs. 37,25,000/- having been incurred for financial year 2015-16 and Rs. 1.20 Crores during financial year 2014-15. The assessee had already shown the investment in construction during the year at Rs. 1,28,63,311/-. The source of the same is available in the regular financial statement filed by the assessee and major source of the sum is from sale of flat no. 401 and 403 during the year. Therefore, since the cost incurred by the assessee is marginally higher than the cost estimated by the registered valuer, we fail to find any justification in the imaginary value adopted by the ld. Assessing Officer at Rs. 10,32,40,650/- and that too without any basis, and not conducting any enquiry and without referring to any other record. Therefore, since the addition made by the ld. Assessing Officer is on account of alleged unaccounted investment made in construction of Rupam Tower is on surmises and conjectures and without any logic, ld. CIT(A) has rightly held in favour of the assessee and deleted the addition of Rs. 10,32,40,650/-. Thus, finding of the ld. CIT(A) needs no interference. Accordingly, Ground No. 2 raised by the assessee is dismissed.
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2024 (7) TMI 38
Assessment u/s 153A - Unexplained advance u/s 68 - Whether any incriminating material found during the course of search? - CIT(A) deleted addition - HELD THAT:- Perusal of the order of the CIT(A) reveals that remand report was called out by the CIT(A) and on the basis of remand report the Ld. CIT(A) passed the impugned order and deleted the additions made by the AO as no incriminating material was found during the search and seizure operation. The Hon ble Supreme Court in the case of ACIT Vs. Abhisar Buildwell Pvt. Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT] held that without any incriminating material no addition can be made u/s. 68 of the Act, therefore, we do not find any reason to interfere with the findings of the CIT(A). The appeal is liable to be dismissed. Appeal of the revenue is dismissed.
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2024 (7) TMI 37
Unexplained money u/s 69A - As per assessee cash deposits were from earlier cash withdrawals - HELD THAT:- As observed that the assessee is no more and the appeal is being represented by the late assessee s wife, who has no knowledge of the activities of the late assessee. We considered the option of remitting the issue back to the file of AO or Ld. CIT(A). However, the assessee has already filed the relevant bank statements before the Ld. CIT(A) and none of the activities of late assessee are known to the assessee s wife, therefore, it will not serve any purpose to remit this issue back to the file of lower authorities It is not clear from the record that why assessee has kept such huge cash after withdrawal from the bank. When there is a huge cash withdrawal and subsequently assessee makes certain deposits there is a possibility that excess cash may have been re-deposited by the assessee. As relying on Baldev Raj Charla [ 2008 (12) TMI 241 - ITAT DELHI-C] we are inclined to give the benefit of doubt to the assessee and time gap may be ignored. Accordingly, ground raised by the assessee are allowed.
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2024 (7) TMI 36
Penalty u/s 271(1)(c) v/s 271(1B) - additions towards estimated income arising from share trading transactions - assessment order that while making additions towards estimated share trading income, the assessee has formed satisfaction u/s 271(1B) holding that the assessee has furnished inaccurate particulars of income towards such additions - as argued penalty has been imposed on a different premise than the original satisfaction derived for imposition of penalty - HELD THAT:- The ground for initiation of action by the AO under Section 271(1)(c) was allegation of furnishing of inaccurate particulars of income . This ground has been substituted by the AO himself while passing the penalty order. Thus, in the absence of continuity of the satisfaction of the AO, the penalty order passed by the AO is liable to struck down on this ground alone. We usefully refer to the decision of New Sorathia Engineering Company [ 2006 (1) TMI 71 - GUJARAT HIGH COURT ] and CIT vs. Manu Engineering Works [ 1978 (9) TMI 18 - GUJARAT HIGH COURT ] Similar view has been taken by the Co-ordinate Bench of the Tribunal in Gian Chand Batia [ 1996 (11) TMI 97 - ITAT ALLAHABAD-B ] Therefore, where the AO is not sure about the nature of default and has confirmed the penalty on an altogether different ground than for which satisfaction under Section 271(1B) was formed, the penal action under Section 271(1)(c) of the Act is not sustainable in law. Appeal of the assessee is allowed.
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2024 (7) TMI 35
Income From other sources - Disallowance of interest expenses u/s 57(iii) - interest paid to depositors or to banks was incurred for the purpose of earning interest income on FDR and interest on saving bank account - Claim denied in absence of any direct nexus between the Income from Other Sources and interest expenditure - assessee submitted that the amount which was borrowed has been invested in the firms, in which the assessee is a partner from whom the assessee earned interest income and the borrowed amount was also invested in immoveable properties. HELD THAT:- On a bare perusal of section 57(iii) of the Act, it is evident that for claiming under this section such expenditure has to be incurred wholly and exclusively for earning such income. In this case, it is apparent that there is no nexus between incurring of interest expenditure and Income from Other Sources earned by the assessee which are mainly from interest on fixed deposits and interest on saving bank accounts and therefore, clearly in absence of any correlation between incurring of expenditure and earning of interest income, in our view, CIT(A) has correctly held that such interest expenditure cannot be allowed in the hands of the assessee, since for such expenditure to be allowed as a deduction, the same has to be incurred wholly and exclusively for earning such income. However, as is evident from the facts of the case before us, since no part of the interest expenditure has been incurred wholly and exclusively for earning such income, the same cannot be allowed as an expenditure u/s. 57(iii) of the Act - Appeal of the assessee is dismissed.
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2024 (7) TMI 34
Deduction u/s 80P - Deduction on Interest Income earned from Co-operative Banks/Banks - assessee is a Credit Co-operative Society registered under Maharashtra Co-operative Societies Act. The prime function of the society is accepting deposits and advancing loans to the members - HELD THAT:- As clear from the submission of the assessee that the assessee had claimed deduction u/sec. 80P(2)(a)(i) of the Act. However, the assessee without prejudice had also claimed deduction u/sec. 80P(2)(d) of the Act. In these facts, we have to understand the case of the assessee. Thus, the issue before us is whether the impugned interest earned by the Assessee is eligible for deduction u/sec. 80P(2)(a)(i) of the Act or u/s 80P(2)(d) of the Act. In this case, admittedly assessee is a Co-operative Society registered under the Co-operative Societies Act, and it is engaged in providing credit facility to its members. Assessee had earned interest by depositing surplus funds which were not immediately required. Hon ble High Court in the case of Vavveru Co-operative Rural Bank Ltd [ 2017 (4) TMI 663 - ANDHRA PRADESH HIGH COURT] succinctly distinguished the decision of the Hon ble Supreme Court in the case of Totagar Cooperative Sale Society [ 2010 (2) TMI 3 - SUPREME COURT] held that Interest Income earned by investing Income derived from Business and Profession by a Co-Operative Society was eligible for deduction u/s.80P(2)(a) of the Act. Thus, as held that the Interest earned by the assessee is eligible for deduction u/sec. 80P(2)(a) of the Act. Accordingly, Grounds of appeal raised by the assessee are allowed.
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2024 (7) TMI 33
Levy of late fee under section 234E - belated filing of quarterly TDS returns beyond prescribed date - Scope of amendment to section 200A by Finance Act, 2015 w.e.f. 01.06.2015 - HELD THAT:- As we find that the assessment years involved are prior to 01.06.2015. Therefore, we are of the considered view that the late fee charged by the Assessing Officer under section 234E of the Act, while processing quarterly TDS return under section 200A of the Act, is without any authority and invalid. Hence, respectfully following the decisions of True Blue Voice India Private Limited [ 2023 (10) TMI 1141 - MADRAS HIGH COURT ] and M/s. M.F. Textiles Pvt. Ltd. [ 2022 (2) TMI 1340 - ITAT CHENNAI ] we are of the considered view that the Assessing Officer cannot levy late fee while processing of TDS return under section 200A of the Act upto the financial year 2014-15. Since, late fee charged in the present case pertaining to the financial years 2012-2013 and 2013-14, we direct the Assessing Officer to delete the late fee charged under section 234E of the Act in the intimation issued under section 200A of the Act for the processing of quarterly TDS return filed by the assessee. Decided in favour of assessee.
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2024 (7) TMI 32
Deduction u/s. 80P(2)(d) - interest income earned on its investments amount made with District co-operative banks - HELD THAT:- Section 80P(2)(d) describes that if the assessee has received interest from the co-operative society, then the assessee is eligible for claim of deduction on such interest derived under the said provision. In the judgment of Hon ble Apex Court in the case of Kerala State Co-operative Agricultural and Rural Development Bank Ltd. (KSCARDB) [ 2023 (9) TMI 761 - SUPREME COURT] it has been discussed in detail the definition of co-operative banks and co-operative society. If the payer bank falls under the definition of co-operative bank/ bank in the light of the judgment of Hon ble Apex Court then the assessee is not eligible to get deduction u/s. 80P(2)(d) on such interest income received from co-operative banks. We note that the assessee has also received interest from co-operative banks which is governed by the Banking Regulation Act of 1949 and this argument of the ld. DR has not been denied by the ld. AR of the assessee. However, it is not clear whether the interest payer (co-operative bank) is a bank and registered with Reserve Bank of India and holding licence from RBI for carrying out banking business as per RBI Act. If the payer bank falls under the definition of co-operative bank in the light of the judgment of Hon ble Apex Court then the assessee is not eligible to get deduction u/s. 80P(2)(d) on such interest income received from co-operative banks, therefore this issue is also remitted back to the AO for verification of interest received from co-operative bank in above terms. If AO finds that the co-operative bank is carrying its banking business activities in the light of the above judgment, the deduction u/s. 80P(2)(d) on such interest income should not be granted. Assessee has received interest from other co-operative banks/commercial banks on its investments - The revenue authorities have considered the entire interest as income from other sources u/s. 56 including the interest received from co-operative bank and expenses u/s. 57(iii) has been allowed to the assessee for earning of such income . While calculating the income, the net income should be considered as taxable income after reducing the expenditure incurred towards earning of such income. Before us, assessee has produced a computation sheet in which he has calculated cost of funds showing loss from investments but this has not been examined. Therefore relying on the judgment of Totgars Co-operative Sales Society Ltd. [ 2017 (7) TMI 1049 - KARNATAKA HIGH COURT] , the assessee is eligible for claim of its cost of funds on the interest income received from banks. Since in the case on hand the assessee has been allowed cost of funds to the extent of Rs. 86,79,382 and taxable income under the head income from other sources is Rs. 31,67,724, but the assessee has computed taxable income from investments of (-) 14.67,949. Therefore, we are remitting this issue to the file of AO for fresh computation of cost of funds. Appeal of the assessee is partly allowed for statistical purposes.
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2024 (7) TMI 31
Income deemed to accrue or arise in India - Royalty/FIS - provision of services of on-going technical support and on-demand professional support satisfies the criteria technical support - scope of make available clause - India-USA DTAA - services provided by the assessee which are customized and differentiated in its services to different customers - HELD THAT:- We find that the facts of the assessee are covered by the decision of Engineering Analysis Centre of Excellence Private Limited [ 2021 (3) TMI 138 - SUPREME COURT] after determining various clauses of EULA/ Distribution agreement held that payments made by the Appellant to non-resident vendors shall not be taxable as Royalty under the relevant DTAA. Hence, we hold that the receipt from subscription of cloud based services is not taxable under Article 12(4)(b) of India-US DTAA. Decided in favour - Decided n favour of assessee.
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2024 (7) TMI 30
Addition u/s 37(1) - assessee failed to submit the details of broker on assurance of whom the assessee has entered into the deal - HELD THAT:- We observed that the assessee has entered into an agreement of purchase of property for the total value of 95 Crs. and as per the schedule of payment assessee has paid 49.5 lacs at the time of execution of the agreement and further payment of 14 Crs. and balance amount of Rs. 78.50 Crs. was remained unpaid. The seller has given several opportunities to the assessee for making the payment, however, due to financial exigencies assessee could not keep up the payment schedule and defaulted the same. The seller issued legal notice for forfeiture of the payment made by the assessee of Rs. 14.5 Crs. and the matter was referred to the arbitrator, based on the award of the arbitrator dated 25/03/2014, the seller was asked to refund Rs. 2.25 Crs. to the assessee and balance was treated as forfeited amount. The same was claimed by the assessee as the Revenue loss in the profit and loss account. The loss claimed by the assessee is a business loss incurred by the assessee during execution of a contract, therefore, by considering the above facts on record, CIT(A) has allowed the claim made by the assessee as Revenue loss u/s 37 of the Act. After considering the detailed findings of the Ld. CIT(A), we do not see any reason to disturb the same. Accordingly, the grounds raised by the Revenue is dismissed. Non-referral of property valuation to the District Valuation Officer (DVO) under Section 43CA - CIT(A) deleted the additions made by the AO for not referring the matter to the DVO even though assessee has made specific objections - HELD THAT:- As we observed that the assessee has sold the property for the sale consideration of Rs. 17.93 Crs. whereas the stamp valuation of the property was 19.73 Crs. In issue before us, assessee itself submitted that the assessee sold the only plot reserved for making the Hotel in township measuring 10545.46 sq. mtr. to First Choice Hotels (P) Ltd. at the then prevailing market price in the area for Rs. 17.93 Crs. The stamp valuation for this plot was enhanced by 10% for preferential location charges. Therefore, the net difference of both are at Rs. 1.8 Crs.. The issue before us is, the assessee has made specific objection before the AO for adopting the above value, however, it is fact on record that the Assessing Officer failed to refer to the DVO. At the time of hearing, the Ld. DR relied on the decision of the A.T.E Enterprises Pvt. Ltd. [ 2013 (2) TMI 324 - ITAT MUMBAI] , which is a case outside our jurisdiction, therefore, we are not inclined to rely on the findings of the above decision. Accordingly, appeal filed by the Revenue is dismissed.
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2024 (7) TMI 29
Ex-parte order - notices could not be served upon the assessee during the appellate proceedings because of the change of address of the assessee - Assessee has further changed its address and the assessee is required to duly brought to the knowledge of the AO/CIT(A) regarding the change in address - HELD THAT:- As considering the fact that the assessee could not present its case before the CIT(A) for want of service of notice and further considering the principles of natural justice that nobody should be condemned unheard, we set aside the order of the CIT(A) with a direction to decide the appeal of the assessee afresh on merits. CIT(A) will give proper opportunity to the assessee to present its case before him including the explanations and evidences relating to the issue under consideration. CIT(A) may call upon a remand report from the AO in respect of evidences/explanations furnished by the assessee and thereafter, to pass a speaking order in accordance with law. It is also directed that the assessee will furnish its correct address before the competent authority i.e. AO as well as CIT(A) along with email-id, phone no. etc. upon which the notice will be duly served by the CIT(A) or the AO, as the case may be. The assessee will make an application for change of address in the PAN Database as per rules. The assessee will comply with the aforesaid directions of providing correct address, email-id, phone no. etc. to the CIT(A) as well as to the AO within 60 days of the receipt of the copy of this order, thereafter, CIT(A) will fix the appeal for fresh hearing. If the assessee fails to furnish correct address as directed above, CIT(A) will proceed to decide the appeal by serving notice at the address, email-id as mentioned in Form 36 filed before us as reproduced above and in that event, the assessee will be estopped from saying that the notices have not been served at the correct address. Appeal of the assessee is treated as allowed for statistical purposes.
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2024 (7) TMI 28
Delayed payment of Provident Fund ( PF ) and Employees State Insurance ( ESI ) - Addition invoking section 36(1)(va) r.w.s. 2(24)(x) and 43B - HELD THAT:- AO is directed to verify the contentions of the assessee and if the employer s contribution has been deposited before the due date of filing of return of income as per the provisions of section 43B read with section 36 of the Act, the Assessing Officer will allow the same accordingly. So far as the delayed deposit of employees contribution to PF/ESI is concerned, the ld. Counsel has not pressed the issue in view of the decision of the Hon ble Supreme Court in Checkmate Services Pvt. Ltd [ 2022 (10) TMI 617 - SUPREME COURT] wherein, it has been held that deduction u/s 36(1)(va) in respect of delayed deposit of amount collected towards employees contribution to PF cannot be claimed even though deposited within the due date of filing of return even when read with Section 43B of the Income-tax Act, 1961. Appeal of the assessee is treated as partly allowed for statistical purposes.
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2024 (7) TMI 27
Depreciation on goodwill - assessee has taken over the business of (DICEIPL) vide transfer agreement - DR contended that there were no tangible or intangible assets with the assessee and hence the claim of the assessee i.e depreciation on goodwill is not allowable - HELD THAT:- AO has basically gone by the presumption that the share holding pattern of the assessee company and of the seller company DICEIPL is same. It observed that this observation of the AO is factually incorrect as evident from the share holding pattern, submitted by assessee. Perusal of the above chart would show that both the parties are not related parties and hence the AO has erred in making adverse comments. Observation of the AO that there was no intangible asset transferred to the assessee by the seller company is also not correct because law in this regard has already been settled in the case of CIT Vs. SIMS securities [ 2012 (8) TMI 713 - SUPREME COURT] wherein the Hon ble Supreme Court has held that excess amount paid over and above to the net asset value would be treated as goodwill. Hon ble Supreme Court in this case has further held that goodwill is in the nature of any other commercial or business right under the category of intangible assets. Recipient company has offered the excess amount as short-term capital gain and the same has been accepted by the Revenue and in such a situation the ratio laid down by the coordinate bench in the case of I B seeds [ 2022 (6) TMI 1295 - ITAT BANGALORE] Thus we are of the view that the authorities below are not correct in disallowing the claim of the assessee on depreciation. We hold accordingly and direct the AO to allow appreciation on goodwill.
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2024 (7) TMI 26
TP Adjustment - disallowances of cost of support services - HELD THAT:- The cost allocation Key on headcount basis has been duly examined and accepted by the ld TPO to be at ALP in the transfer pricing proceedings u/s 92CA(3) of the Act. The same cannot be subjected to retest by the ld AO in the peculiar facts and circumstances of the instant case , under the garb of examining the same in the context of allowability of deduction u/s 37 of the Act as argued by the ld DR before us. No doubt, the scope of ld TPO is only to ensure whether the pricing of services is at arm s-length or not. But for that purpose, the cost sharing agreement, cost allocation keys used thereon and reasons for such usage of allocation keys are very much material for the ld TPO to examine and conclude whether the pricing thereon is at ALP or not. In the instant case, all these documents were duly placed on record before the ld TPO and the same was accepted to be at ALP by the ld TPO. It is also pertinent to note that the reference u/s 92CA(1) of the Act to the ld TPO was made by the ld AO after the survey proceedings. Hence, even the findings of the survey team were very much available before the ld TPO. We find that the cost allocation on the basis of headcount has been affirmed to be an appropriate allocation key by the Hon ble jurisdictional High Court in the case of CIT Vs. EHPT India Private Limited. [ 2011 (12) TMI 49 - DELHI HIGH COURT] It is also pertinent to note that no adjustment has been made on the impugned transactions in the hands of Genpact India Private Limited in AYs 2017-18 and 2018-19 in the scrutiny assessments framed u/s 143(3) read with section 144C(13) read which section 144B. Thus following the principle of consistency, we hold that the cost allocation key on the basis of headcount should not be disturbed for the year under consideration. Accordingly, the ground Nos. 2 and 3 raised by the assessee are allowed. Non granting the depreciation allowance towards the intangible assets (being customer contracts as well as assembled workforce - HELD THAT:- We find that in AY 2010-11 [ 2023 (3) TMI 83 - ITAT DELHI] this Tribunal in assessee s own case had held that the cost of intangible assets to be capital expenditure and accordingly granted depreciation at the rate of 25%. Thus we direct the AO to grant depreciation consequent to the order of the tribunal in AY 2010-11 and allow the additional ground raised by the assessee.
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2024 (7) TMI 25
Additions against Investment in bank accounts - income from undisclosed sources - A.O. concluded that the assessee s own money has been routed through layering in the bank accounts located in ICICI Bank, Junagadh and Dena Bank, Mangrol - HELD THAT:- Assessee submitted that a statement u/s. 131 of the Act was recorded wherein he was questioned as who operated the list of seven bank accounts. In reply, the assessee stated that all such accounts were operated on his advice and suggestions to the respective persons. The assessee further submitted that Shri Amarbhai Bijalbhai Shamra and Shri Varjangbhai Meshurbhai Shamra names appeared in the seven entities. Their respective AO while making assessments u/s. 143(3) r.w.s. 144A and 147 made an addition respectively in their hands. Against the reassessment orders the respective assessee appeals are still pending before Ld. CIT(A), NFAC. Thus the addition made will make double addition on the very same transactions in all the assessees case, which is not permissible in law. As the appeals filed by Shri Amarbhai Bijalbhai Shamra and Shri Varjangbhai Meshurbhai Shamra are pending in Faceless Appeal presently before NFAC, this issue may be set aside back to the file of Ld. CIT(A) along with the pending appeals, thereby correct assessment of additions to be made in the hands of the respective assessee. CIT-DR has no objection in setting aside this issue back to the file of Ld. CIT(A), NFAC along with the other appeals pending before NFAC and also undertaken that necessary appeal details will be furnished from the NFAC portal for disposal of the present appeal. This issue is set aside to the file of Ld. CIT(A), NFAC, Delhi to take a final call along with the pending appeals in the case of the Shri Amarbhai Bijalbhai Shamra and Shri Varjangbhai Meshurbhai Shamra. Thus the grounds of appeal raised by the Revenue is allowed for statistical purpose. Addition made on account of investment in flat - CIT(A) deleted the addition made by the A.O. based on presumption and assumption, without verification of factual evidences and also against the provision of law. We do not find any infirmity in the order passed by the Ld. CIT(A) and the findings arrived was not distinguished by the Revenue with necessary evidence. Thus this ground no. 2 raised by the Revenue is devoid of merits and the same is hereby dismissed. Investment in gold future contracts - The method of trading in MCX Ltd. is one have to deposit/invest, the amount of quantity traded and to settle the contract periodically at the end of the contract credit or debit of difference is made in the account of the respective party. The assessee in this case has not disputed the settlement amount is the amount not invested by the assessee. However the copy of the ledger account provided by MCX Ltd on 25.02.2013 has never been given to the assessee for his rebuttal. Whereas the trading made by the assessee, resulted in a loss. Further the Revenue could not place on record any contra findings or evidences as recorded by the Ld. CIT(A). Therefore the findings arrived by Ld. CIT(A) does not require any interference and the grounds raised by the Revenue is hereby dismissed.
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2024 (7) TMI 24
Denial of Exemption claimed U/s 11 12 - assessee violated the provision of section 17 of FCRA (Foreign Contribution Regulation Act) 2010 - as argued no provision of Income Tax Laws related to the Trust can exemption be denied alleging violation of the provision of FCRA 2010 HELD THAT:- The provisions of section 13 of the Act nowhere stated that the AO can deny the exemption to any assessee s claim u/s 11 12 of the Act. AO has in any case finds that section 13(1) of the Act was violated. In such a case only that appropriate remedy before the AO is to disallow such proportionate expenses from application of income. See case of Kammavari Sangham vs DDI (Exemptions) [ 2022 (11) TMI 672 - KARNATAKA HIGH COURT ] wherein it has been held that the AO has no jurisdiction to deny the benefits of section 11 12 until the certificate u/s 12A was in force. Similarly, in the case of CIT vs Mullers Charitable Institutions [ 2014 (2) TMI 1033 - KARNATAKA HIGH COURT ] has held that perusal of section 13(1)(d) of the Act makes it clear that it is only the income from such investment or deposit which has been made in violation of section 11(5) of the Act that is liable to be taxed and violation of section 13(1)(d) does not result in denial of exemption under section 11 to the total income of the assessee trust. Thus AO could not have denied the benefit u/s 11 of the Act. In the case of assessee certificate was continued in force, therefore, the view taken by the ld. AO is not correct. However, we after examining the facts of the case and direct the AO to allow the claim of assessee u/s 11 12 of the Act and the expenditure which could not be treated as an application income is in violation u/s 13 of the Act can be assessed to the income of the assessee. In terms of the above, the appeal of the assessee is partly allowed.
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2024 (7) TMI 23
Addition u/s 68 - share application money received from six persons - assessee failed to establish the identity, creditworthiness, and genuineness of the transactions - HELD THAT:-Amount claimed to have been received by the assessee company from Shri Munesh Kumar Pandey as the assessee company despite specific direction by the A.O had neither produced the said person nor substantiated the investment made by him as per requirement of Section 68 of the Act, therefore, the sum so received by the assessee company from the said person had rightly been held by the A.O as unexplained cash credit u/s. 68 of the Act. Amount received from Shri Mahavir Prasad Agrawal aforementioned person in his statement recorded u/s. 131 had admitted of having purchased 500 shares @Rs.100/- per shares, from his relative, viz. Shri Manoj Agrawal, director of the assessee company and the said investment is found to have been disclosed by the investor in his balance sheet (unsigned) for the year under consideration i.e. A.Y.2015-16 but there is nothing discernible from the record to substantiate to hilt the authenticity of the aforesaid investment as well as source from where the same was made by the said investor. Accordingly, as the investment claimed by the assessee company to have been made by the aforementioned person does not satisfy the statutory obligation cast u/s. 68 of the Act, therefore, we find no infirmity in the view taken by the A.O who had rightly held the same as unexplained cash credit. Amount received from Smt. Shanti Devi Agrawal as observed by the A.O, and rightly so, the return of income of the aforementioned person reveals meagre income and does not inspire any confidence as regards the investment claimed by the assessee to have been received from her. Also, the unsigned balance sheet of the aforementioned person as had been placed on record, Page 12 of APB does on the said stand alone basis either fortify the creditworthiness of the aforementioned person or the nature of income therein disclosed. Amount received from Shri Ajay Kumar Agrawal the assessee company had placed on record copies of return of income of the aforementioned person which reveals meagre income a/w. unsigned balance sheet, which, thus, does not inspire any confidence as regards the authenticity of the assessee s claim of having received investment towards share application money of Rs. 5 lacs from the aforementioned person. Also, we find that the aforesaid person had in his statement recorded u/s. 131 on being queried about the investment made in the assessee company, had stated that though the director of the aforementioned company, viz. Shri Manoj Bansal was son of his aunt Smt. Mohini Agrawal but he was not sure about the investment made towards purchase of shares of the said company. In fact, he expressed his total unawareness about the transaction of investment in the assessee company. Amount received from Shri Vikash Agrawal we are of the view that though the aforementioned person had admitted the investment made by him towards share application money of Rs. 5 lacs with the assessee company and had also, come forth with an explanation as regards the source of the said investment, i.e., accumulated savings garnered over the last 4/5 years from the trading of paddy husk that was carried out by him, but we cannot remain oblivion of the fact that the said claim of the assessee is not substantiated on the basis of any clinching documentary evidence. We, thus, in terms of our aforesaid observations are of the considered view that the matter, in all fairness, requires to be restored to the file of the A.O who shall carry out necessary verification as regards the satisfaction of the requisite condition contemplated u/s. 68. Amount received from Shri Dinesh Kumar Agrawal assessee company had failed to discharge the onus that was cast upon it as per the 1st proviso to Section 68 of the Act, i.e., the source out of which the aforesaid investment of Rs. 10 lacs was made by the aforementioned persons towards share application money (including premium) with it, therefore, the said amount had rightly been held by the A.O as unexplained cash credit u/s. 68 of the Act. Amount received from Smt. Mani Devi Kedia thus considering the meagre income as disclosed in the return of income by the aforementioned person a/w. no clear source of income out of which cash deposit of Rs. 10 lacs was made in her bank account clearly rules out any genuine investment made with the assessee company. We are unable to concur with the claim of the Ld. AR that as the aforementioned person had admitted to have made investment with the assessee company, no adverse inference with respect to the same could have been drawn by the A.O. We are of the view that as there is clear lack of any material which would substantiate the source from where the aforementioned person had made investment of Rs. 10 lacs with the assessee company, therefore, onus that was cast upon the assessee company as per 1st proviso to Section 68 of the Act had not been discharged. Considering the aforesaid facts, we find no infirmity in the view taken by the A.O who had rightly held the amount of Rs. 10 lacs received from the aforementioned person as unexplained cash credit u/s. 68 of the Act.
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2024 (7) TMI 22
Validity of Assessment u/s 153C - assessment for impugned A.Y is beyond the block of six A.Ys, as per provisions of the Act - HELD THAT:- It is a settled proposition of law that as per provisions of section 153C of the Act, for taking action u/s 153C of the Act, date of search in the case of the other person would be date of receiving books of account or documents or assets allegedly belonging to the other person and seized in the course of search of the searched person. Date of recording of the satisfaction in the case of the searched person qua the other person becomes date of search in the case of other person [the assessee in the present case]. Hon'ble Supreme Court in the case of CIT Vs. Jasjit Singh [ 2023 (10) TMI 572 - SUPREME COURT ] date of search would be 22.02.2021 and the impugned A.Y 2014-15 is beyond the block of six A.Ys starting from A.Y 2015-16. Thus, we have no hesitation in quashing the impugned assessment order. Ground No. 1 is allowed.
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2024 (7) TMI 21
Condonation of delay - delay in filing this appeal is 1100 days - HELD THAT:- We note that in assessee`s case under consideration, the appeal was filed late, as the income tax practitioner (Shri Sanjay Gandhi) of assessee, did not advise the assessee to file appeal against the order u/s 263 of the Act, under the bona fide belief that the order u/s 263, was not appealable. We note that the power to condone the delay is discretionary and the discretion must be judicially exercised. The words sufficient cause should receive a liberal construction so as to advance substantial justice where no negligence nor inaction nor want of bona- fide is imputable to the applicant. Thus, mistake of the lawyer or accountant may be a good reason for condoning delay. In the case of Radha Krishna Rai v. Allahabad Bank [ 1999 (8) TMI 975 - SUPREME COURT ] as it has been held that though the period of delay (1418 days) is unduly long for condonation of delay in preferring the appeal, the circumstances are also very unusual. The petitioner has been a victim of misrepresentation of facts by his own advocate and was kept under the impression that the appeal is pending before the High Court whereas no appeal was in fact filed by the advocate. It cannot be said that the appellant has not been vigilant in prosecuting the appeal. The cause shown by the petitioner is sufficient to justify condoning the delay in filing the appeal. Therefore, having regard to the reasons given in the petition, we condone the delay and admit the appeal for hearing. Ex-parte order passed by CIT u/s 263 is an ex parte order and non-speaking order - violation of principle of natural justice - HELD THAT:- The above facts, we note that assessee has not given sufficient opportunity of being heard and could not plead his case successfully before the PCIT. Therefore, we deem it fit and proper to set aside the order of the ld. PCIT and remit the matter back to the file of the ld. PCIT to adjudicate the issue afresh on merits. For statistical purposes, the appeal of the assessee is treated as allowed.
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2024 (7) TMI 20
Rectification Intimation u/s. 154 - denying the claim u/s 10(23C)(iiiad on the ground that Form 10BB has not been filed - as noted return of income filed by the appellant was not a valid one and hence, the CPC was correct in processing the same and determining taxable income without giving benefit of exemption that was available to the appellant either u/s. 10[23c][iiiad] or for that matter u/s. 11 of the Act - HELD THAT:- The assessee is having 12 units and gross receipts at Rs. 2,50,44,219/- is already on assessment records. Now the assessee counsel s plea is that the assessee s case is to be examined in the light of judgement of Children s Education Society [ 2013 (7) TMI 519 - KARNATAKA HIGH COURT] wherein held that the Tribunal was correct in holding that the exemption in terms of the provisions of section 10(23C)(iiiad) was available to the assessee as annual receipts of each of the institutions of the assessee was less than the prescribed limit under the provision. The mistake pointed out by the assessee in its petition filed u/s 154 of the Act on 5.2.2019 cannot be said to be debatable issue as this was covered by the judgement of jurisdictional High Court and the ratio laid down by that judgement to be applied to the facts of the case and ld. AO is directed to give effect to the petition filed by the assessee u/s 154
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2024 (6) TMI 1387
Deduction u/s 80P(2)(a)(i) and 80P(2)(d) in respect of bank interest and dividend income - DR submitted that from the assessment order it is not clear whether assessee had given loans exclusively to the members or no, therefore, case may kindly be set-aside to the Assessing Officer for de-novo adjudication - HELD THAT:- Admittedly, the Assessee is a Co-Operative Society registered under the Maharashtra State Co-Operative Society Act 1960 vide registration certificate dated 12/03/1986. AO has held assessee to be a Co-Operative Bank based on the Capital and Reserve of the assessee and based on the activities of the Assessee. No where neither the AO nor the CIT(A) has stated that the Assessee has received Banking License from RBI under the Banking Regulation Act. As decided in MAVILAYI SERVICE COOPERATIVE BANK LTD. ORS. [ 2021 (1) TMI 488 - SUPREME COURT] a Co-Operative Society will be treated as a Co-Operative Bank only if it has received License from RBI. In the case of the Assessee neither the AO nor the CIT(A) has stated that the Assessee is in receipt of License from RBI. Therefore, in the absence of Banking License, respectfully following the Hon ble Supreme Court (Supra), it is held that the assessee is not a Co- Operative Bank as envisaged in section 80P(4) of the Income Tax Act. Hence, provisions of Section 80P(4) will not be applicable in the case of the Assessee. As specifically mentioned in the Assessment Order that Assessee has invested Surplus funds in the PDCC and other banks and earned Interest Income. Thus, it is an admitted fact by the Assessing officer that the investment is of the income derived from the Business of the assessee. As per Assessment Order the main object of the assessee society is to provide credit facility to its members and also accept deposits from members. Thus, admittedly the assessee is providing credit facility to its members. Thus, the investments made by the assessee are from the Surplus generated by assessee during the course of providing credit facility to its members and the assessee has earned Interest Income by investing these surplus funds in PDCC Bank. Therefore, the section 80P(2)(a) is applicable in the case of the assessee. As decided in THE VAVVERU CO-OPERATIVE RURAL BANK LTD. [ 2017 (4) TMI 663 - ANDHRA PRADESH HIGH COURT] interest Income earned by investing Income derived from Business of providing credit facility by a Co-Operative Society was eligible for deduction u/sec.80P(2)(a) of the Act. Thus we are of the considered view that the Interest earned by the assessee is eligible for deduction u/s 80P(2) of the Act. Accordingly, the AO is directed to delete the addition made by AO of the Interest Income. Assessee has also earned Dividend - The assessee has claimed deduction u/sec.80P(2)(d) of the Act. For all the reasons discussed in earlier paras, we hold that the assessee is eligible for deduction u/s 80P(2)(d) of the Act for the dividend earned from investments made in PDCC Bank. Assessee appeal allowed.
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2024 (6) TMI 1386
Deduction u/s 80P(2)(a)(i) - claim denied as that assessee was dealing with nominal / associate members who are not regular members of assessee society and has violated the principles of mutuality - HELD THAT:- In respect of associate / nominal members, the Hon ble Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd., Ors. [ 2021 (1) TMI 488 - SUPREME COURT] had held that the expression members is not defined under the Income Tax Act, 1961. Hence, it is necessary to construe the expression members in section 80P(2)(a)(i) of the Act light of the definition of the expression as contained in the concerned Co-operative Societies Act under which the assessee is constituted. Both the AO and the CIT(A) has not considered the latest judgment of Mavilayi Service Co-operative Bank Ltd., Ors. Vs. CIT (supra) in correct perspective. Even assuming that assessee is dealing with non-members, only to such extent there shall be a denial of deduction u/s 80P(2)(a)(i) of the Act. We deem it appropriate to restore the matter to the AO. AO is directed to examine whether assessee has been dealing with non-members, and if so, only to that extent there shall be denial of deduction under section 80P(2)(a)(i) of the Act. Assessee would be entitled to proportionate deduction in respect of its dealing with members - ground Nos. 2 and 3 are allowed for statistical purposes. Interest received by the Appellant from co-operative banks is not eligible for deduction u/s 80P(2)(d) - The wording of section 80P(2)(d) of the Act is very clear. If the assessee co-operative society is in receipt of interest from investments with another co-operative society, the same is eligible for deduction under section 80P(2)(d) of the Act. It is a claim of the assessee that the entire interest receipts received from scheduled bank, central co-operative bank and co-operative societies has been aggregated by the AO and has denied the benefit the deduction under section 80P - Section 80P(2)(d) of the Act, the issue raised in ground No. 4 needs to be re-examined by the AO. The assessee is directed to furnish the bifurcation of the interest receipts and necessary details before the AO. The AO shall examine the claim of the assessee and shall grant deduction under section 80P(2)(d) of the Act in respect of interest income received from co-operative societies Disallowance of deduction u/s 80P(2)(d) on interest income earned from other co-operative banks, as the definition co-operative society includes co-operative banks as well - The Hon ble Apex Court in the case of Kerala State Co-Operative Agricultural Rural Development Bank Ltd. [ 2023 (9) TMI 761 - SUPREME COURT] had held that although the assessee society in that case is an apex co-operative society within the meaning of State Act, 1985, it is not a cooperative bank within the meaning of section 5(b) r.w.s. 56 of the RBI Act, 1949. It was concluded by the Hon ble Apex Court that if a co-operative bank does not have a banking licence under the RBI Act, the said co-operative bank would be entitled to deduction under section 80P of the Act - certain categories of co-operative banks which does not have RBI licence to do a banking business would in essence be a co-operative society. Hence, any interest income received from such co-operative banks should also be entitled to deduction under section 80P(2)(d) of the Act. Therefore, with the aforesaid observation, the matter is restored to the files of the AO. Eligibility to claim deduction in respect of interest earned on compulsory deposit with co-operative banks which is a statutory requirement after deduction u/s 80P(2)(d) of the Act is disallowed - As relying on M/S. KACHUR CREDIT CO-OPERATIVE SOCIETY LTD. [ 2023 (9) TMI 1487 - ITAT BANGALORE] we direct the AO to examine whether the interest income received on investments with central co-operative banks is out of compulsion compulsions under the Karnataka Co-operative Societies Act, 1959, and the relevant Rules. If so, the same may be considered as business income and entitled to deduction under section 80P(2)(a)(i) - Therefore, if the investments are out of compulsions under the relevant Rules, necessarily it forms part of assessee s business which would entail the benefit of deduction under section 80P(2)(a)(i) of the Act. For the aforesaid examination of the matter, the issue raised in ground No. 6 is restored to the files of the AO. Even interest earned on deposits with cooperative banks is taxed u/s 56 of the Act under 'income from other sources', the Appellant must be eligible to claim deduction u/s 57(iii) of the Act in respect of cost of funds and proportionate administrative and other expenses - We find that this contention of the assessee is covered by the Order of M/s. Deepa Credit Co-operative Society Ltd. [ 2023 (12) TMI 1326 - ITAT BANGALORE] as followed the dictum laid down in the case of Totgars Co-operative Sale Society Ltd., [ 2015 (4) TMI 829 - KARNATAKA HIGH COURT] wherein restored the matter to the AO. The AO is directed to calculate the cost of funds for earning the interest income which has to be assessed under section 56 of the Act and allow the same as deduction under section 57 - thus we restore the matter to the AO. The AO is directed to follow the dictum laid down in the judicial pronouncement cited supra and take a decision in accordance with law - ground No. 7 is allowed for statistical purposes.
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Customs
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2024 (7) TMI 19
Revocation of Customs Broker Licence - forfeiture of security deposit - levy of penalty - execution of frauds - violation of Regulation 10(n) of CBLR, 2018 - appellant had filed shipping Bills in the name of some exporters who the DGARM found suspicious - HELD THAT:- The entire verification report is based on the GSTIN. Further, IECs issued by the DGFT also show the address. There is nothing on record to show that either of these documents were fake or forged. Therefore, they are authentic and reliable and we have no reason to believe that the officers who issued them were not independent and neither has the Customs Broker any reason to believe that they were not independent. The responsibility of the Customs Broker under Regulation 10(n) does not include keeping a continuous surveillance on the client to ensure that he continues to operate from that address and has not changed his operations. Therefore, once verification of the address is completed as discussed in the above paragraph, if the client moves to a new premises and does not inform the authorities or does not get his documents amended, such act or omission of the client cannot be held against the Customs Broker. It is found that the Customs Broker had not failed in discharging his responsibilities under Regulation 10(n). The impugned order is not correct in concluding that the Customs Broker violated Regulation 10(n) because the exporters were found to not exist during subsequent verification by the officers. The Commissioner was not correct in holding that the appellant Customs Broker has violated Regulation 10(n) of CBLR, 2018 - the impugned order cannot be sustained and hence set it aside - appeal allowed.
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2024 (7) TMI 18
Confiscation and imposition of fine and penalty on the imported polished marble slab of different varieties - violation of condition of the Policy - enhancement of value without conducting market survey - quantum of fine and penalty arrived at by the learned Commissioner(Appeals) is justified or not - HELD THAT:- Undisputedly the appellant had imported two consignments against Bill of Entry No.6575026 dated 27.08.2014 and Bill of Entry No.7112079 dated 18.10.2014 of marble slabs of different varieties declaring various rates per sq.m. which is lesser than 60 USD per sq.m. Consequently, on their request, the adjudicating authority enhanced the value to 60 USD per sq.m. and allowed clearances of the goods after imposition of fine and penalty. The learned Commissioner(Appeals), considering the circumstances of the case and taking note of the fact that it was unintentional mistake on the part of the appellant, reduced the fine and penalty. The learned advocate ahad submitted that while directing confiscation and allowing redemption on payment of fine and penalty, no market survey has been carried out; therefore such action is not sustainable in law. There are no merit in the contention of the learned advocate as on their request only, the value of the imported marble slabs was enhanced to 60 USD and thereafter clearance was allowed subject to payment of redemption fine and penalty on adjudication by the concerned authority. However, considering the facts and circumstances of the case, direction of payment of redemption fine to the extent of 22% and imposition of penalty around 6%, is harsh and deserve to be reduced as consistently held by this Tribunal in a series of cases including the case of Sri Sai Graphics (supra) that in case of import of items like MFDs in similar circumstances without a valid licence, when the value has been enhanced on the basis of Chartered Engineer s Certificate, imposition of redemption fine to the extent of 10% and 5% as penalty of the enhanced value would meet the ends of justice. The interest of justice would be met if the redemption fine and penalty is reduced to 10% and 5% respectively of the enhanced value in each of the appeal. Accordingly, the order is modified to this extent and fine and penalty are reduced in each of the appeal to 10% / 5% of the enhanced value - appeal disposed off.
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2024 (7) TMI 17
Valuation/undervaluation of imported goods - rejection of declared value - redetermination of value based on the Chartered Engineer examination - retraction of statements - HELD THAT:- There is no dispute about the description or quantity of the items declared. The value is also declared as per the commercial invoice filed along with the Bill of Entry. On verification, the only objection seems to be that the commercial invoice filed along with the Bill of Entry was from the supplier M/s. Masaki Corporation (Hong Kong) Ltd. but was signed by M/s. REEM International (Hong Kong) Ltd; based on which investigations were conducted and statements were taken - there was nothing on record to prove that the amount paid to the buyer was more the value declared in the commercial invoice filed by the appellant along with the Bill of Entry. The statements have been retracted and the cross-examination of the Chartered Engineer has been denied, which is against the principles of natural justice. The Hon ble Supreme Court in the case of EICHER TRACTORS LTD. VERSUS COMMISSIONER OF CUSTOMS, MUMBAI [ 2000 (11) TMI 139 - SUPREME COURT] has held ' production of the price list did not discharge the onus cast on the Customs authorities to prove that the value of the 1989 bearings in 1993 as declared by the appellant was not the ordinary sale price of the bearings imported .' Section 14 of the Customs Act, 1962 clearly stipulates that the transaction value has to be accepted unless there are compelling reasons to reject the same. Moreover, any transaction value to be rejected has to be done as per the Customs Valuation Rules. In the instant case, none of these has been followed. The goods have been examined by the Chartered Engineer and value is being redetermined without giving any reason of the methodology that was followed - the emails and the statements do not suggest that that any extra payment was made to the buyer by the appellant in excess of what has been declared in their commercial value; therefore, the question of enhancing the value based on some random emails and statements without any corroboration has no evidentiary value. There are no reason to uphold redetermination of the value - the impugned order is set aside - appeal allowed.
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2024 (7) TMI 16
Principle of Res Judicata - determination of value to be adopted for the clearances made to the DTA Unit - rejection of declared transaction value - enhancement of declared values by the specified officer, MEPZ-SEZ in respect of DTA clearances - payments done under protest or not - violation of the Principle of Natural Justice. Determination of value - HELD THAT:- Before July 2018, the Appellant supplied the imported chemicals to its branch in DTA. However, from July 2018 onwards, the Appellant supplied the goods to its wholly owned subsidiary Viz. Tokyo Chemical Industry (India) Private Limited, a DTA unit. The SVB vide Order-in-Original No.22881/2013 dated 11.12.2013 held that the declared value could be accepted as transaction value under Rule 3(3)(a) of CVR, 2007 for the purpose of assessment of duty in respect of imports up to December 2011 and since January 2012, declared value could be adopted as transaction value with usual additions under Rule 10(2) ibid. The appellant s declared values have been accepted as the transaction value under Rule 3(3)(a) of Customs Valuation Rules, 2007 for the purpose of assessment of duty. It was also observed that the exporting company in Japan was selling to unrelated buyers in India prior to January 2012 at a slightly lower side than the prices at which these were sold to the appellant. The above decision will be valid if there is no change in the present method of invoicing or terms of the agreement and their relationship with the foreign supplier. Whenever, if it is noticed that contemporary imports at higher prices, the SVB, Chennai Customs has to be informed by the assessing groups to review the decision taken. The Assessing Authority has ordered for enhancement of the transaction value w.e.f. 05.10.2016. It appears that the enhancement in the values was based on the Cost Sheet provided by the Appellant - the SVB have not communicated to the Appellant the outcome of filing of Annexure-I to Circular dated 46/2016 for renewal of SVB order. Payment under protest or not - HELD THAT:- The specified officer of MEPZ-SEZ vide letter dated 04.09.2018 informed the Appellant that no speaking order could be issued as the assessment was already complete as per the self-declaration and the payment under Protest Option was not exercised - The conduct of specified officer, MEPZ-SEZ in not issuing any speaking order while ordering enhancement of the values for clearances to DTA though repeatedly the appellant has made such a request is to be critically viewed. In respect of related parties transaction, it is the practice to refer it to SVB section for carrying out specialised investigation. At the relevant period, the Assessing Officer in MEPZ-SEZ is required to comply with the directions issued in SVB order dated 11.12.2013 - the Appellant filed an appeal before the Appellate authority who, instead of delving into the merits of the case, preferred to dismiss the appeal vide impugned order dated 22.06.2020 on the principle of res judicata, being aware that the appeal preferred previously was with reference to clearances to the branch Unit on 05.10.2016 whereas the subject clearances against which appeal was filed before the authority was in respect of clearances during 24th to 29th January 2020 to their subsidiary company. Hence, we find that the impugned order is not legal or logical and requires to be set aside. The impugned order dated 22.06.2020 of Commissioner of Customs (Appeals), Chennai deserves to be set aside, as there was no discussion in regard to blatant violation of principles of natural justice by the specified officer, MEPZ-SEZ in enhancement of the value unilaterally without intimating the reasons therefor. The appellant was forced to clear the goods to their DTA Unit at enhanced rates where the Special Valuation Branch, Chennai Customs after detailed investigation accepted the declared value as the transaction value. In case, there is any change in the method of invoicing or if any contemporary goods are imported at higher prices or for any other reason, the specified officer must have taken it up with the SVB, Chennai for review. The impugned order dated 22.06.2020 issue by the Lower Appellate Authority is devoid of any merits and is required to be set aside - the entire issue of enhancement of the values of clearances to the DTA Unit by the appellant is required to be looked into afresh, and so, ordered to be remanded to the Original Authority for issuing a well-reasoned Speaking Order for determination of the values in terms of Section 14 of the Customs Act, 1962 read with Customs Valuation Rules, 2007. The appeal is allowed by way of remand.
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Insolvency & Bankruptcy
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2024 (7) TMI 15
Maintainability of application - forum shopping - Personal Guarantor to the Corporate Debtor failed to make repayment of its dues - Personal Guarantor or a Co-Borrower - HELD THAT:- The Respondent in the loan application form dated 12.08.2016 has been described as the Co-Borrower and not the Personal Guarantor. It is also observed that the applicant, has approached other legal forums including this Adjudicating Authority. The Applicant had initiated Arbitration proceedings under the Arbitration and Conciliation Act, 1996. The Applicant has also initiated the proceedings under Section 138 of Negotiable Instrument Act, 1881 which evidences that applicant has approached all the possible forums for remedy therefore the applicant is indulging in the forum shopping and hence the applicant has not approached this Adjudicating Authority with clean hands. The Application seeking initiation of the Personal Insolvency Resolution Process against the Personal Guarantor is rejected.
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PMLA
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2024 (7) TMI 14
Seeking grant of bail - Money Laundering - twin conditions as per Section 45 of the PMLA 2002 satisfied or not - HELD THAT:- The contention of the learned counsel for the petitioners that Section 45 of the PMLA 2022, post-judgment of the Hon'ble Supreme Court in Nikesh Tarachand Shah's case [ 2017 (11) TMI 1336 - SUPREME COURT ] cannot operate retrospectively, is also without any basis. Bail cannot be granted to the petitioners at this stage, as the earlier finding of this Court that the twin conditions have not been satisfied still holds good. Hence, the Criminal Original Petitions are dismissed.
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Service Tax
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2024 (7) TMI 13
Levy of service tax - income shown in the income tax returns from Sale of Services - exemption under Mega Exemption N/N. 25/2012 - HELD THAT:- The transporters provided the service of transportation of goods by road to the consigners/consignees and the charges have been collected by the appellant from those GTA in respect of those vehicles owned by the appellant. The said service provided by the appellant is covered under exemption vide Mega Exemption N/N. 25/2012-ST dated 20.06.2012. It is found that since the appellant did not facilitate the department in verifying the correctness of their averment till the order under challenge dated 31.03.2023 was passed, the appellant had failed to provide any fresh document with respect to the amount received for which the service tax liability has been confirmed. Pursuant to the directions of remand that bills, invoices and bilties raised by the appellant and recipient of service should have been received and fresh speaking order to be passed thereafter. There is no other document for the purpose. The fresh plea of seeking exemption of Mega Notification cannot be adjudicated in the absence of the requisite and sufficient documents. Accordingly, there are no infirmity in the findings of the adjudicating authority below - appeal dismissed.
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2024 (7) TMI 12
Levy of service tax - services provided by an agent residing outside India from 01.01.2005 or from 18.04.2006 - reverse charge mechanism - HELD THAT:- It is found that the charging section was introduced by insertion of Section 66A vide Finance Act, 2006 into Finance Act, 1994. Prior to the insertion of Section 66A service tax was demanded under Rule 2(1)(d)(iv) of the Service Tax Rules, 1994, however with the insertion of Section 66A in the Finance Act, 1994 this is the charging section under the Act. The service tax on commission paid to the foreign commission agents is payable under reverse charge only from 18.04.2006 and not from 01.01.2005 - It is found that in this case the appellant has discharged the service tax for the period from 18.04.2006 to 27.12.2008 and also intimated the same to the Department to consider the intimation as intimation under Section 73(3) of the Finance Act, 1994. Further, in the facts and circumstances of the case, the invocation of the penal provisions under Section 77 78 of the Finance Act, 1994 is not tenable. The appeal filed by the appellant is sustainable - the demand for the period 01.01.2005 to 18.04.2006 is not sustainable and also the penalties imposed under Section 77 78 are also not tenable - Appeal allowed.
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2024 (7) TMI 11
Classification of services - Business Auxiliary Service (BAS) or not - GDS Commission, incentive, cancellation charges etc., received by the appellants - Levy of service tax - collection of certain amounts from the clients for Visa/Passport Processing charges with management fees, emigration charges collection etc. - amount collected/retained/received by the Appellants as ORC (Over Riding Commission)/ RAF (Retaining Refund Administrative Fees) - Air Ticket purchased by the appellants from Airline consolidators and sold to customers at higher price - Amount representing Service tax recovered from their sub-agent but the same was not deposited to the Government exchequer - extended period of limitation. Classification of services - Business Auxiliary Service (BAS) or not - GDS Commission, incentive, cancellation charges etc., received by the appellants - HELD THAT:- The Air Travel Agents are using the portals of the same CRS service providers for booking of air tickets. The CRS is computerized system used to store and retrieve information and conduct transaction related to Air Travel. Major CRS operators that book and sell tickets for multiple Airlines are known as Global Distribution Systems (GDS). On perusal of the statutory provisions vis- -vis the activities undertaken by the appellants, the appellants is not an agent, working on behalf of the customers for facilitating purchase of tickets from the CRS. The customers approaching the appellants for booking of tickets are not aware about the particular CRS, who issues the ticket through the appellants. In order to fall under the purview of BAS, there must be involvement of three parties namely, the service provider, service receiver and the agent facilitating procurement of service for and on behalf of the service provider - A passenger is not aware of the CRS Company being utilized by the travel agent for booking the segment nor can a passenger influence appellants /travel agent to avail the services of a particular CRS Company. The passenger cannot directly use the CRS software provided by the Company to book an airline ticket. It cannot, therefore, be said that the appellants are promoting any activity for the passenger or they are providing services on behalf of CRS. The commission, incentives, cancellation charges etc., received by the appellants cannot be subjected to levy of service tax under BAS. Moreover, it is on record that during the disputed period, the appellants were paying service tax under Rule 6(7) ibid and since, payment of service tax under air travel service was accepted by the department, contrary stand cannot be taken to fasten the tax liability on the appellants under a different category of service namely, BAS. The subject disputed issue herein is squarely covered by the ruling of Larger Bench of Tribunal in the case of Kafila Hospitality Travels Pvt. Ltd. [ 2021 (3) TMI 773 - CESTAT NEW DELHI (LB) ]. It has been held that the incentive/commission is not subject to levy of service tax - the demand cannot be sustained in the present disputed matter. Levy of service tax - collection of certain amounts from the clients for Visa/Passport Processing charges with management fees, emigration charges collection etc. - HELD THAT:- The learned adjudicating authority in the present case, has wrongly conceived the CBEC circular dated 20.04.2011, inasmuch as all the taxable services are defined in sub-clauses of clause 105 of the Section 65 ibid at that relevant point of time. This statutory provision is still existing even from 01.07.2012 onwards. The CBEC Circular clarifies that the assistance for processing of visa application does not fall within the scope of services defined under Section 65(105) (k) ibid, 65(105) (zzb) ibid and Section (105) (zzzq) ibid - When the learned adjudicating authority could not determine the nature of taxable service provided by the appellants in this case, it is absolutely improper on the part of the department to confirm the service tax demand on such ground. It is well settled position of law that lack of clarity in the show cause notice/order and omission to indicate the specific category of service, under which the tax is proposed to be demanded will vitiate the proceedings ab initio. In such circumstances, the demand of service tax cannot survive. Levy of service tax - amount collected/retained/received by the Appellants as ORC (Over Riding Commission)/ RAF (Retaining Refund Administrative Fees) - HELD THAT:- Appellants render the services of Air Travel Agent by booking of passage for travel by air for the clients/ customers. If the Airlines do not provide any commission to them, they recover the cancellation charges/booking overhead charges/ cost of booking tickets in the name of ORC/RAF from their customers - It is not disputed that in respect of cancelled tickets, the airlines/CRS do not give any commission whatsoever to the appellants. In view of this, no service tax would be payable under Section 65(105)(l) ibid on the said charges, which are a part of the airfare received by the appellants from the persons booking the air ticket(s); who, subsequently, had cancelled the same. Therefore, this activity is not taxable under BAS during the period of dispute and thus, the said disputed charges which are recovered/ retained by the appellants are not liable to Service tax under BAS. Levy of service tax - Air Ticket purchased by the appellants from Airline consolidators and sold to customers at higher price - HELD THAT:- The appellants are purchasing ticket from Consolidator/General Sale Agents/other agents on discounted price and thereafter, they are selling at a higher price to the customers. The trade margin earned for such purpose is not taxable as held by the Tribunal in the case of Commissioner of Service tax, Ahmedabad Vs. Om Air Travels Pvt. Ltd [ 2019 (6) TMI 1022 - CESTAT AHMEDABAD ] where it was held that In the fact that the appellants is purchasing the ticket on discounted price and selling the same at higher price to the customer, the difference, in our view, is a trade margin during the process of sale and purchase of the tickets. Therefore, we do agree with the contention given by the Ld. Commissioner (Appeals). Accordingly, the demand raised on trade margin of purchase and sale of the tickets shall not be taxable - From the documentary evidences provided by the appellants, it is found that wherever tickets were purchased from consolidators, they had started paying Service tax on the basic fare from 01.04.2014. In these circumstances, the service tax demand confirmed against ticket booked through consolidators, is legally not correct and there are no merits in the impugned order, insofar as it has confirmed the adjudged demands on the appellants. Amount representing Service tax recovered from their sub-agent but the same was not deposited to the Government exchequer - HELD THAT:- Any person who has collected any amount, which is not required to be collected, from any other person, in any manner as representing service tax, shall forthwith pay the amount so collected to the credit of the Central Government. A correct reading of the provisions indicates that the amount representing service tax would necessarily mean the service Tax not paid. There is no provision to say that service tax which has already been paid should not be recovered from anyone. Such an understanding is contrary to the principles of indirect taxation. The provisions would apply only in cases where service tax is recovered, by the person liable to pay tax from their customers and is not paid to the Government. The incidence of an indirect tax is bound to be passed on - the allegation of the department that what the appellants deposited with the government was the Service tax collected by them from consolidators in the commission and not the Service tax collected from the Appellant s customers is factually incorrect and without any evidences. Hence, there is no question of depositing the same amount again to the government under Section 73(2) ibid. Extended period of limitation - HELD THAT:- The Department had alleged that the fact of receipt of said amount/charges was not disclosed in any manner. To this effect, we find that all the disputed amounts/charges received by them are duly accounted for in their books of accounts and also disclosed in Annual Report viz. Profit and loss account and the Balance Sheet, which is a public document and also known to the Department. Having disclosed the receipts of said disputed amount in the Annual Report coupled with the bona fide belief of the appellants, we find that there is no suppression of facts in the instant case with an intention to evade payment of Service tax. Hence, we hold that the proviso to section 73(1) ibid i.e., extended period of time cannot be invoked in this case and the demand of service tax is hit by limitation of time. There are no merits in the impugned order, in so far as it has confirmed the adjudged demands on the appellants. Therefore, the impugned order is set aside - appeal allowed.
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2024 (7) TMI 10
Levy of service tax - construction of complex service - demand for various periods. Demand for the period from November 2008 to 30.06.2012 - HELD THAT:- It is an undisputed fact that the appellant being a builder / promoter / developer has provided complex services which are composite in nature. Further, for the period upto 1.7.2010 as per the Board s Circular No.108/02/2009-ST dt. 21.09.2009 has clarified the liability of a promoter / builder / developer prior to 1.7.2010. The Tribunal in the case of M/S KRISHNA HOMES VERSUS CCE, BHOPAL AND CCE, BHOPAL VERSUS M/S RAJ HOMES [ 2014 (3) TMI 694 - CESTAT AHMEDABAD] after referring the Board circular and the Explanation added to Section 65 (105) (zzzh) w.e.f. 1.7.2010 has held that promoter / developer / builder is not liable to pay service tax prior to 1.7.2010. The appellant is not liable to pay service tax upto 1.7.2010. Demand for the period after 1.7.2010 upto 30.06.2012 - HELD THAT:- The demand raised under construction of complex service [65 (105) (zzzh)] cannot sustain for the reason that the contracts are composite in nature involving supply of goods as well as rendition of services. The decision rendered by the Tribunal in the case of REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI [ 2018 (9) TMI 1149 - CESTAT CHENNAI] would squarely apply - The said decision was followed in the case of M/S. JAIN HOUSING CONSTRUCTION LIMITED VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI [ 2023 (2) TMI 1044 - CESTAT CHENNAI] which has been sustained by the Hon ble Apex Court by dismissing the appeal filed by the Department. The other decisions relied by the learned consultant also apply to the issue under consideration. For these reasons, the demand upto period 30.06.2012 cannot sustain and requires to be set aside. Demand for the period from 1.7.2012 to 31.3.2013 - HELD THAT:- The appellant has put forward the argument with regard to quantification of the service tax for this period. Taking note of the fact that Rule 2A has undergone an amendment retrospectively w.e.f 2017, it is opined that this issue needs to be remanded to the adjudicating authority who is directed to quantify the service tax for the period from 1.7.2012 to 31.3.2013 by applying the amended provisions of Rule 2A. The confirmation of demand under MMRS is not contested by the appellant. Consequently, the demand, interest and penalties are sustained on this issue. Appeal allowed in part and part matter remanded.
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2024 (7) TMI 9
Erroneous availment of CENVAT credit of the input services used for providing taxable service - composite contracts - Erection, Commissioning or Installation services or not - service provided to American Power Corporation of India Ltd (APC). Demand of duty prior to March 2007, during the first period of dispute viz., October 2005 to March 2007 - HELD THAT:- This activity was composite involving both supply of goods and materials and erection, commissioning and installation of the same. Since the activity involved is execution of works contract (being composite), the Appellant paid service tax only on the service tax element computed as 33% of the total invoice value/contract value, since 67% of the value was subject to payment of VAT and the appellant had paid VAT on the said 67% value - Honourable Supreme Court in COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] held that service category of 'Erection, Commissioning or Installation' as defined in section 65(105) (zzd) did not apply to composite contracts/works prior to 01.06.2007 - demand for the said period is unsustainable. Demand for the period 2007-2008 and 2008-2009 - HELD THAT:- Appellant has only provided labour/service of erection and commission to APC and from 2009 they have discontinued the activity. Appellant paid service tax on full value of the invoice raised for labour service charge and as per the letter dated 11.02.2011 and 19.12.2011, these facts were brought to the notice of concerned authorities. In the absence of any contrary finding in this regard, the demand is unsustainable. Demand against Cenvat credit for the period viz., 2006 to 2008 - HELD THAT:- After collecting service tax paid by APC, which was charged in the invoices raised on the Appellant, the Respondent could not have turned around to hold that the Appellant is not entitled for credit, since no service was received. Moreover, when the service provider was not before the Tribunal, Tribunal cannot go into the question as to whether the said service provider had provided service to appellant or not, when that is the admitted position, then denial of the benefit of such tax amount as Cenvat credit to the appellants as the recipient of such service, cannot be questioned by the jurisdictional service tax authorities. Further, since the demand under proviso to Section 73(1) of the Finance Act, is not sustainable penalty under Rule 15(4) of Cenvat Credit Rules, 2004 read with Section 78 of Finance Act, 1994 is not sustainable. Appeal allowed.
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2024 (7) TMI 8
Levy of service tax - notice period pay/bond enforcement pay received by the appellant from the employees, who quit employment or resign from service without serving the stipulated notice period - consideration received for service of tolerating the act of employees or not - HELD THAT:- The issue is settled as per the Circular No. 214/1/2023-Service Tax dated 28.02.2023 and the decision in the matter of M/S RAJASTHAN RAJYA VIDHYUT PRASARAN NIGAM LTD. VERSUS COMMISSIONER OF CENTRAL GOODS AND SERVICES TAX, CUSTOMS AND CENTRAL EXCISE, JODHPUR I [ 2022 (1) TMI 909 - CESTAT NEW DELHI] , where it was held that ' compensation for failure under a cannot is NOT consideration for service under the contract and also following the law laid down by Madras High Court in GE T D that notice pay, in lieu of termination, however, does not give rise to the rendition of service either by the employer or the employee, the impugned order upholding confirmation of a demand of service tax on the notice pay received/recovered by the appellant from its employees for premature resignation cannot be sustained and needs to be set aside.' Considering the above facts, the amounts received by the appellant from the employees, who quit employment before the period of service without complying with the condition cannot be considered for a service and hence not liable for service tax as a declared service under clause (e) of Section 66E of the Finance Act, 1994. Appeal allowed.
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Central Excise
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2024 (7) TMI 7
Interest on refund claim u/s 11BB of Central Excise Act, 1944 - relevant time - interest on refund has to be calculated from expiry of three months after passing of the Tribunal s final order or it has to be calculated from the date of final order of the Tribunal - rate of interest - rate of interest should be 6% or 15% or any other rate - entitlement for interest on interest. Whether the appellant is entitled to get interest under Section 11BB of Central Excise Act, 1944? - HELD THAT:- Hon ble Supreme Court also in the case of COMMISSIONER OF CUSTOMS (IMPORT) , RAIGAD VERSUS M/S. FINACORD CHEMICALS (P) LTD OTHERS [ 2015 (5) TMI 371 - SUPREME COURT] while discussing the liability of the department to pay the interest has referred to Departments' own circular dated 02.01.2002 wherein the Board clarified that the matters of refund other than the amount of duty would not be covered under the provisions of Section 11B of Customs Act or Section 35FF of Central Excise Act. It was held by the Hon'ble Apex Court that in such cases of refund even the concept of unjust enrichment is not applicable. Once it is clear that Section 11B and 11BB of Central Excise Act will not be applicable to the amount in question, the denial of the interest on the appellant s amount is held to be unjustified. As per the Article 300A of Constitution of India also, no person shall be deprived of his property, save by authority of law. He cannot be deprived of the same and is entitled for benefits arising out of said property. Hence interest accrued on the amount in question during the period it remained deposited with the department is the property of the owner of the amount i.e. the appellant herein - the appellants are entitled to claim the interest on the amount as has been refunded in their favour that too to be paid from the date of payment of initial amount till the date of its refund. Rate at which the such interest has to be awarded - HELD THAT:- The amount in question was an amount in the form of pre-deposit. Hence, it is the refund in terms of Section 35FF. However, the interest on sanctioned amount of refund has been denied on the ground that refund has been sanctioned within three months from the date of communication of the order of appellate authority in terms of the pre amended Section 35FF of Central Excise Act, 1944. The findings of the order under challenge are hereby set aside. The appellant is held entitled to have interest on the amount of refund sanctioned at the rate of 12% per annum since the amount was got deposited after denying the substantial benefit of MODVAT - the appellant is eligible for interest at the rate of 12% from the date of the deposit of the amount till the date of refund thereof - appeal allowed.
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2024 (7) TMI 6
Classification of goods supplied to railways - PVC Flooring Covering under Tariff Head No 39181090 or under Tariff Head No. 86079910? - exemption under N/N. 12/2016-CE dated 01-03-2016 - benefit of exemption under the N/N 12/2016-CE dated 01-03-2016 - HELD THAT:- Issue whether the goods will be classified under the specific tariff entry of the goods cleared or under chapter 86 has been settled by the Hon ble Supreme Court in the case of WESTINGHOUSE SAXBY FARMER LTD. VERSUS COMMR. OF CENTRAL EXCISE CALCUTTA [ 2021 (3) TMI 291 - SUPREME COURT ] - Hon ble Supreme Court has held that end use of the goods should be a determinative factor for deciding the classification of goods. In case of the goods supplied to railway for being used in the rolling stock, the goods get classified as part of the rolling stock under chapter 86. That being so the classification claimed by the appellant at the instance of Railways under 86079910 cannot be faulted with. Accordingly the duty paid by the appellant claiming exemption under N/N. 12/2016-CE dated 01.03.2016 needs to be upheld. There are no merits in the impugned order to this extent - appeal allowed.
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2024 (7) TMI 5
CENVAT Credit - inputs lying in stock as on 30.06.2017 and which have been used in manufacture of finished goods which have been cleared on payment of GST post 30.06.2017 - capital goods in terms of Rule 6(4) of CCR, 2004, used in manufacture of exempted goods after a period of two years from the date of commencement of commercial production - benefit of exemption N/N. 30/2004-CE. CENVAT Credit on inputs - Rule 6 (1) of Cenvat Credit Rules, 2004 - HELD THAT:- As per the facts, the respondent has claimed the cenvat credit on the inputs lying in stock as on 30.06.2017 which shows that the inputs on which the cenvat credit was claimed have not been used in manufacture of goods cleared under Notification No. 30/2004-CE, therefore, such credit cannot be denied. As per the condition of the N/N. 30/2004-CE, it is clear that the said condition is applicable only in respect of those inputs which were used in the manufacture of excisable goods which is cleared under N/N. 30/2004-CE - In the present case the inputs lying in stock as on 30.06.2017 were not used in the manufacture of excisable goods which were cleared under N/N. 30/2004-CE. For the obvious reason that those inputs were used in the manufacture of goods on which GST was applicable. Therefore, the entire basis of the Revenue that only due to availing the exemption N/N. 30/2004-CE, the cenvat credit is not admissible, is devoid of merit and without any legal basis. Therefore, the cenvat credit on inputs was rightly allowed by the Learned Commissioner. CENVAT Credit on capital goods - Rule 6 (4) of Cenvat Credit Rules, 2004 - HELD THAT:- Though the appellant is eligible for cenvat credit but availment of credit is deferred for 2 years from the date of commencement of production or installation of capital goods. Though the cenvat credit was accrued to the Respondent but the respondent in a case is entitled to avail the same after 2 years due to the reason that the respondent have been availing exemption N/N. 30/2004-CE - this restriction was only because the respondent have been availing the exemption notification however the exemption notification was rescinded on 30.06.2017 and immediately thereupon the respondent became entitled for the cenvat credit on capital goods. Therefore, the said cenvat credit is admissible to the respondent. Moreover, thereafter the capital goods has been used for the manufacture of goods which is not exempted and liable for payment of GST. The respondent is entitled for the cenvat credit on inputs as well as on capital goods - the impugned ordeer is sustained - appeal of Revenue dismissed.
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CST, VAT & Sales Tax
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2024 (7) TMI 4
Interest from the date of refund order in terms of Sec. 13A of Karnataka Sales Tax Act, 1957 - HELD THAT:- No question of law would arise for consideration in terms of Sec. 23 (1) of the Act. U/s 23 (1) of the Act, it is open for the petitioner to prefer petition to the High Court against the order of the Tribunal on the ground that the Tribunal has either failed to decide or decided erroneously any question of law. Admittedly, appeal filed against collection of excess tax is allowed by the first appellate authority under order dated 24.03.2012 and in terms of the said order, voucher is raised for refund on 20.09.2013. In terms of Sec. 13A of the Act the petitioner herein would be entitled for interest in terms of Sec. 13A (b). The Tribunal where the petitioner had prayed to read down Sec. 13A of the Act, has rightly answered stating that it is outside the purview of the jurisdiction of the Tribunal and it was also outside the scope of the appeal. There is no merit in any of the contentions raised by the petitioner - Petition dismissed.
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2024 (7) TMI 3
Challenge to assessment order - levy of interest in terms of the Section 22 of the AGST Act, 1993 - HELD THAT:- The Hon ble Apex court in [ 2006 (11) TMI 323 - SUPREME COURT] remanded the matter to the assessing authority to resolve the factual controversy whether the appellate company had collected sales tax from consumers through various dealers on entire resale price and if the answer is yes, the appellant company would liable to deposit entire sales tax amount collected from the consumers along with 9% interest from the date of collecting the amount towards the sales tax. It is apposite to mention herein that the earlier assessments as well as the notices of demand were set aside by the Hon ble Apex Court. The initial notices were issued in the year 1996 in all the cases including the earlier litigations to produce books of accounts and records in connection with the purchase and sale of their products. Subsequently in the month of March 1996, the petitioner company was asked to show cause as to why penal action should not be initiated. Subsequently, assessment order was passed in the month of July 2001 and appeal challenging such assessment order by the appellate company were dismissed in the month of April 2002. In the case in hand, the impugned assessment order shows that after the order of the Hon ble Apex court, the balance due was nil. However, taking recourse to sub-section 3 of section 22, the interest was imposed on the ground that amount due was paid subsequent to its due date. To summarise it is the contention of the assessing authority that though after the order of the Hon ble Apex court there was no balance due however, the entire due was paid subsequent to the date it has fallen due and therefore, interest was leviable under section 22(3) of the Act. The impugned decisions to impose interest by the tax authorities are interfered with - petition disposed off.
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2024 (7) TMI 2
Validity of impugned Notice and impugned Endorsement - It is the grievance of the petitioner that despite non-expiry of the appeal period of three months ending on 22.04.2024, the respondent issued the impugned Notice dated 23.01.2024 followed by the impugned Endorsement dated 09.02.2024, which are illegal, arbitrary and same deserves to be quashed - Section 107 of the Karnataka Goods and Services Tax Act, 1971 - HELD THAT:- The impugned Notice dated 23.01.2024 and the impugned Endorsement dated 09.02.2024 issued by the respondent within the appeal period is clearly illegal and arbitrary and the same deserves to be quashed and necessary directions be issued to the petitioner and the appellate authority for the purposes of the appeal to be preferred by the petitioner. It is also relevant to state that waiver of the period of three (4) months from the date of the order to prefer an appeal is permissible only under Section 78 of the KGST Act and that too for the reasons to be recorded in writing by the proper Officer as to why said period of three (3) months is to be dispensed with and by assigning reasons that the respondent would not be in a position to recover the said amount from the petitioner. In the instant case, the impugned Notice and Endorsement do not contain any such reasons for invocation of Section 78 of the KGST Act in the facts of the instant case and on this ground, also impugned Notice and Endorsement deserves to be quashed. The impugned Notice dated 23.01.2024 -Annexure-A and the impugned Endorsement dated 09.02.2024 - Annexure-B issued by the respondent, are hereby quashed - Petition allowed.
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Indian Laws
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2024 (7) TMI 1
Proceedings against retired Sales Tax Officer post superannuation - GST default by the company in which he was appointed post retirement - Dismissal of writ petition as premature - Single Judge has proceeded to non-suit the relief - no opportunity given for preliminary enquiry - violation of principles of natural justice - HELD THAT:- It is not in dispute that the appellant-petitioner had already retired in the year 2016 and during his service tenure, no departmental proceeding was initiated against him. After more than six years, the respondent authority had proceeded against the appellant and held the preliminary enquiry on 21.12.2023 that to an ex-parte even without taking any comment from a retired employee. In administrative action, which also entails civil consequences for a person, the principles of natural justice should be adhered to. Admittedly, no opportunity was given to the appellant before holding the preliminary enquiry and such a decision taken in violation of the principle of natural justice would be void. In the interest of justice, the matter is to be heard on merit before learned Single Judge and accordingly, the order impugned dated 13.3.2024 is set aside - the matter is relegated to the learned Single Judge to consider the matter on merits. The Special Appeal stands partly allowed.
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