Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
July 1, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Service Tax
Central Excise
Indian Laws
Highlights / Catch Notes
GST
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High Court ruled supplier must pay tax on full value due to not meeting GST law requirements for reversing Input Tax Credit.
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Court found tax assessment order lacked proper reasoning, setting it aside for reconsideration. Taxpayer to get fair opportunity and new order within 3 months. Bank attachment lifted.
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Court ruled in favor of refund claim due to inverted tax structure under CGST Rules. Refund orders quashed for fresh review.
Income Tax
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High Court rules in favor of taxpayer in reassessment case involving penny stocks. Lack of connection between info and transactions led to decision.
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High Court rules unsecured loan not income under IT Act sec 68 if repaid in FY. Explanation key to avoid tax.
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Court ruled against reopening assessment after 4 years. Assessee's disclosure was enough.
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High Court denies settlement for hiding income after original taxpayer's death. Lack of foreign account details and non-cooperation cited. Upholds Commission's decision.
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ITAT ruled in favor of taxpayer on 2 issues: 1) No addition for small diff in property value; 2) No double taxation for sale in diff years.
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Penalty: The tribunal ruled in favor of the taxpayer, citing a legal precedent. Penalties were not justified due to inadvertent errors.
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Co-op bank gets tax deduction for interest & dividend income, ITAT rules. Paddy business deduction restriction unjustified.
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Tribunal: Land sold keeps agricultural status for LTCG if used for farming. Check if it meets definition of agricultural land. Deductions u/s 54F/54B allowed.
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Exemption u/s 11: ITAT ruled in favor of a statutory body regarding grant utilization. Proper accounting methods were followed.
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The Tribunal emphasized the need for incriminating material for additions in search assessments. Ruled against addition for bogus purchases.
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ITAT reviewed set off of losses vs. profits due to shareholding change. Section 79 dispute clarified - not for unabsorbed depreciation. AO to verify for future set off.
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Computation of LTCG: ITAT rules bridge construction cost as capital expenditure for tax deduction. Enhances shop access, increases footfall & value.
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ITAT upheld disallowance of scientific research donation deduction due to forged docs. Trust ineligible, approval expired in 2006. Expenditure disallowed as unexplained.
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Tribunal allows appeal before CIT(A) after 335-day delay due to Covid-19 & Norway docs issue. No negligence found. Case sent back for fresh review.
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ITAT: Software license receipts not royalty under India-US Tax Treaty. End-users given non-exclusive license. Maintenance services not taxable.
Customs
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High Court rules in favor of refund claim for seized betelnuts under Customs Act. Respondent ordered to refund Rs. 60 Lakhs in 8 weeks or face 12% interest.
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High Court denies bail for smuggling Red Sanders, money laundering Rs. 51.12 crores. ED can probe ongoing crimes. No bail due to past smuggling.
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A ship agent's case on duty exemption for urgent repairs: No intent to evade duty found. Confiscation and penalties overturned. Eligibility of exemption to be verified.
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Gold smuggling penalties overturned due to lack of evidence. Statements without cross-examination not admissible. Burden of proof not met.
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Conversion of Ex-Bond Bill of Entry into Into-Bond Bill of Entry allowed if no revenue loss or fraud. Duty payable upon clearance, excess refundable.
Indian Laws
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Dishonour of cheque: Insolvency cheques, director liability, & IBC Section 14. Only corp debtors affected, no exoneration for individuals. Applicants innocent, complaint quashed.
Service Tax
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High Court clarified appeal process under Finance Act, 1994. Writ petition not maintainable if alternative remedy available. Follow statutory appeal route.
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Remuneration to Director: Reverse Charge (RCM) - VCMD as employee not service provider. Key managerial person under Companies Act.
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A subsidiary company not liable for service tax in US. Tribunal rules services provided by parent company.
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Educational services for medical qualifications not taxed! Appellate Tribunal rules in favor of appellant, citing precedent.
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Service tax paid on input services for output services like accommodation, restaurant, rent-a-cab, consultancy must be credited. Penalties deemed unjustified.
Central Excise
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Goods cleared for export without duty payment due to missing paperwork. Penalties revoked for procedural lapse.
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Related person - In a goods valuation dispute, Tribunal rules in favor of the appellant's declared price as 'Transaction Value.' No undervaluation found, demand deemed unsustainable.
Articles
Notifications
Circulars / Instructions / Orders
Case Laws:
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GST
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2024 (6) TMI 1385
Provisional attachment order u/s 83 of CGST Act, 2017 - violation of the provisions of Section 159 of the CGST Rules, 2017 - HELD THAT:- The present writ petition is disposed of with liberty to the petitioner to file objections to order dated 08.03.2024 with expedition, say within next two weeks. While filing objections it shall be open for the petitioner to take all the grounds including the ground of jurisdiction. The petition is disposed off.
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2024 (6) TMI 1384
Violation of principles of natural justice - petitioner did not have a reasonable opportunity to contest the tax demand on merits - inadvertent error was committed while filing the GSTR 3B returns for September 2018 - HELD THAT:- On perusal of the impugned order, it is evident that tax liability was imposed with regard to reverse charge liability. The petitioner has asserted that tax liability arose on account of an inadvertent error while filing the GSTR 3B return for the month of September 2018. Such return has been placed on record. Prima facie , it appears that there is merit in the contention of the petitioner. In these circumstances, the interest of justice warrants reconsideration subject to the petitioner being put on terms. The impugned order dated 18.01.2024 is set aside subject to the condition that the petitioner remits 10% of the disputed tax demand as agreed to within a period of two weeks from the date of receipt of a copy of this order - Petition disposed off.
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2024 (6) TMI 1383
Violation of principles of natural justice - petitioner did not have a reasonable opportunity to contest the tax demand on merits - SCN and other communications were uploaded in the View Additional Notices and Orders tab on the GST portal and not communicated to the petitioner through any other mode - mismatch between the petitioner's GSTR 3B return and the auto-populated GSTR 2A - HELD THAT:- The tax proposal related to a mismatch between the petitioner's GSTR 3B return and the auto-populated GSTR 2A in so far as Input Tax Credit (ITC) is concerned. Such tax proposal was confirmed on the ground that the petitioner did not reply to the show cause notice or attend the personal hearing. By taking into account the assertion that such non participation was on account of being unaware of proceedings, the interest of justice warrants that the petitioner be provided an opportunity to contest the tax demand on merits. The petitioner has placed on record evidence that sums of Rs. 2,25,106/- and Rs. 4,76,974/- were appropriated from the petitioner's bank account after the impugned order was issued. Since these amounts constitute more than 50% of the disputed tax demand, the revenue interest is protected to that extent. The impugned order dated 26.08.2023 is set aside. The petitioner is permitted to submit a reply to the show cause notice within 15 days from the date of receipt of a copy of this order. Upon receipt thereof, the respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within a period of three months from the date of receipt of the petitioner's reply. The petition is disposed off.
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2024 (6) TMI 1382
Validity of assessment order - failure to report correct tax liability while filing the annual returns in Form GSTR 9 - HELD THAT:- The petitioner has placed on record show cause notice dated 28.12.2023 and the reply dated 16.04.2024. By such reply, the petitioner asserts that both the GSTR 3B and 9 returns contained clerical errors. This reply was taken into consideration in the impugned order while confirming the tax proposal. In these circumstances, it cannot be said that principles of natural justice were violated. Consequently, discretionary jurisdiction not exercised. Petition disposed off.
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2024 (6) TMI 1381
Challenge to assessment order - reversal of Input Tax Credit in respect of credit notes issued by the supplier - HELD THAT:- Sub-section (3) of Section 15 of applicable GST statutes provides for a reduction in the value of supply, on account of a discount, if such discount has been duly recorded in the invoice issued in respect of such supply or if such discount is established in terms of an agreement entered into either before or at the time of supply although the supply may be subsequent to such agreement. In this case, the petitioner has prima facie established that neither of the requirements under sub-section (3) were satisfied. In such event, the supplier would be liable to pay tax on the full value of supply. The exercise of jurisdiction under Article 226 is discretionary and subject to self imposed fetters. One such fetter is when an efficacious alternative remedy is available. It should be borne in mind that the existence of an alternative remedy is a material consideration but not a bar to the exercise of jurisdiction. In the case at hand, on the basis that the other issues require reappraisal of evidence, the petitioner has approached the appellate authority in respect thereof - notwithstanding the fact that the petitioner had approached the appellate authority in respect of other issues, the jurisdiction is exercised. It is needless to say that a writ petition would not ordinarily be entertained once the person aggrieved has chosen to challenge other issues in an order before an appellate authority. The impugned order dated 12.03.2024 is set aside only insofar as defect no.3 relating to reversal of Input Tax Credit for the value of credit notes issued by the supplier is concerned - petition disposed off.
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2024 (6) TMI 1380
Challenge to assessment orders - petitioner were unaware of the notices that were posted in the GST common portal - HELD THAT:- This Court is of the view that the petitioners may have a case on merits and therefore, discretion is exercised in favour of the petitioners and quashed the impugned order, subject to the respective petitioners depositing 10% of disputed tax to the credit of the respective respondents from their Electronic Cash Register within a period of 30 days from the date of receipt of this order. The impugned orders, which stand quashed, shall be treated as addendum to the show cause notices that preceded the impugned orders. The petition is disposed off.
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2024 (6) TMI 1379
Cancellation of GST registration of petitioner - petitioner could not file returns in time on account of ill-health - HELD THAT:- The petitioner is directed to file returns for the period prior to the cancellation of registration, if not filed, together with tax dues along with interest thereon and the fee fixed for belated filing of returns within a period of forty five (45) days from the date of receipt of a copy of this order. Petition disposed off.
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2024 (6) TMI 1378
Validity of assessment order - challenge on the ground that it is unreasoned - HELD THAT:- On perusal of the impugned order, it is evident that the tax payer's reply was extracted and, thereafter, without assigning any reasons, the tax proposal was confirmed. In the absence of reasons in support thereof, the impugned order cannot be sustained. The impugned order dated 18.03.2024 is set aside and the matter is remanded for reconsideration. The respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within three months from the date of receipt of a copy of this order. In view of the assessment order being set aside, the bank attachment is raised. - Petition disposed off by way of remand.
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2024 (6) TMI 1377
Availing irregular ITC - misuse of GST number and credentials by some third party - challenge to demand against petitioner - HELD THAT:- Issue notice. Notice is accepted by learned counsel appearing for the respondents, who prays for time to take instructions. Respondents shall file an affidavit - Respondents shall also indicate as to what action was taken by the Proper Officer on the compliant made by the petitioner in October, 2019 - Respondent No. 4 shall also file an affidavit indicating the steps taken shall on the complaint made by the petitioner to the SHO, Police Station, Krishna Nagar on 05.10.2019 vide DD No. 42D and to the Deputy Commissioner of Police, Shahdara District, Delhi and delivered on 07.10.2019. List on 19.07.2024.
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2024 (6) TMI 1376
Maintainability of petition - time limitation - petitioner has approached this Court after the lapse of limitation for filing the appeal under Section 107 of the respective GST enactments - HELD THAT:- Having considered the submissions made by the learned counsel for the petitioner and the learned Additional Government Pleader for the respondent, The Appellate Deputy Commissioner (GST) Madurai, camp at Tirunelveli is suo motu impleaded by this Court as second respondent in this writ petition and this Court is inclined to dispose of this writ petition at the time of admission by condoning the delay in filing the appeal before the second respondent. The Writ Petition stands allowed.
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2024 (6) TMI 1374
Refund of the accumulated credit in account on account of inverted tax structure under Proviso of Section 54(3) read with Rule 89(5) of the Central Goods and Service Tax Rules, 2017 - accumulation of credit on the ground that the rate of tax on the inputs are higher than the rate of tax on output supply of goods - HELD THAT:- Without entering into the merits of the matter, the impugned order passed by the appellate authority as well as order of the adjudicating authority rejecting the refund claim of the petitioner in respect of ten refund applications as enumerated in the appellate order are hereby quashed and set aside and the matter is remanded back to the adjudicating authority respondent No. 2 for de novo consideration of refund claims made by the petitioner in accordance with law. Petition disposed off by way of remand.
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Income Tax
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2024 (6) TMI 1373
Reopening of assessment u/s 147 - Reason to believe - assessee involvement in penny share/stock transactions - borrowed satisfaction or independent application of mind by AO HELD THAT:- It is not in dispute that the petitioner acquired the shares of M/s. Monark Health Care Limited (New Name Looked Health Care) through initial public offer (IPO) by investing Rs. 21,60,000/- through banking transaction. The petitioner was allotted 54,000 equity shares of the said Company in IPO and the said shares were dematerilized and credited to the DEMAT Account of the petitioner. It also emerges from the record that during the course of the regular assessment, the Assessing Officer had called for information with regard to the long term capital gain which claimed as exempt and the requisite details was provided by the petitioner along with reply dated 09.11.2016. The petitioner also submitted bills of shares sold during the year under consideration and break up of the capital gain along with the ledger account of the said company. Thus on the basis of the information received from DDIT Investigation Unit-5(1), New Delhi, the respondent has formed a prima facie belief that there is escapement of income as the petitioner has earned substantial amount of long term capital claiming the same as exemption under section 10 (38) - However, reasons recorded do not disclose any live link or fresh material to connect the transaction entered into by the assessee with the information in possession of the Assessing Officer. Therefore, it is clear that the Assessing Officer has assumed the jurisdiction on the basis of the borrowed satisfaction without there being any live link between the information and the material on record. Decided in favour of assessee.
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2024 (6) TMI 1372
Validity of Reassessment proceedings against dead person - HELD THAT:- It would be apt to take note of decision in case of Pravinchandra A Shah [ 2023 (8) TMI 385 - GUJARAT HIGH COURT ] wherein as after referring to various provisions of the Income Tax Act, 1961 as well as the decisions of various High Courts as well as Hon ble Supreme Court has held that the proceedings initiated by the respondent authority against a dead person as well as the impugned orders passed by it, is nullity. Thus the proceedings were concluded against a dead person which has no legal legs to stand. Accordingly, the present petitions are allowed.
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2024 (6) TMI 1371
Unexplained cash credit u/s 68 - income of the assessee on account of unsecured loan - tax was charged at special rates as per section 115BBE - AR pointed out that the impugned advances have been re- paid by assessee company within the financial year(mostly within 30 days). HELD THAT:- As undisputed fact with regard to repayment of loan, at this juncture, it would be pertinent to take note of decision of this Court in case of Dy. CIT v. Rohini Builders [ 2001 (3) TMI 9 - GUJARAT HIGH COURT] phraseology of section 68 is clear. The Legislature has laid down that in the absence of a satisfactory explanation, the unexplained cash credit may be charged to income-tax as the income of the assessee of that previous year. In this, case the legislative mandate is not in terms of the words shall be charged to income- tax as the income of the assessee of that previous year . The Supreme Court while interpreting similar phraseology used in section 69 has held that in creating the legal fiction the phraseology employs the word may and not shall . Thus the unsatisfactoriness of the explanation does not and need not automatically result in deeming the amount credited in the books as the income of the assessee as held by the Supreme Court in the case of CIT v. Smt. P. K. Noorjahan [ 1997 (1) TMI 6 - SUPREME COURT] Thus, no merit in the appeal and therefore, same deserves to be dismissed.
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2024 (6) TMI 1370
Reopening of assessment - Disallowance of depreciation and reduced returned loss - notice issued after 4 years period - ITAT holding that reopening of assessment under section 147 is only change of opinion and hence bad in law - HELD THAT:- In the facts of the case reveals that the assessing officer reopened the assessment only on the basis of the details derived from the profit and loss account which is filed by the assessee and in absence of any tangible materials available on record and in absence of any failure on the part of assessee to disclose fully and truly all the material facts necessary for the purpose of assessment, the Tribunal has rightly relied upon the decision of Kelvinator of India [ 2010 (1) TMI 11 - SUPREME COURT] - Decided in favour of assessee.
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2024 (6) TMI 1369
Rejection of settlement applications by the Settlement Commission - appellants had suppressed the income - original assessee died with only son as his legal heir left behind - On intimation of the demise of the original assessee, notices issued under section 153A were withdrawn and fresh notices were issued to the legal heir of the deceased. Upon receipt of the same, the appellants preferred the settlement applications under Section 245-C HELD THAT:- We are not inspired by the submissions so made on behalf of the appellants. First of all, settlement applications must contain full and true disclosure of the income supported by documentary evidence. In the absence of such disclosure, the remedy by way of settlement cannot be availed. The Settlement Commission, in its orders has dealt with each and every opposition raised by the Principal Commissioner of Income Tax and the replies furnished by the appellants thereof. On going through the oppositions raised by the Principal Commissioner of Income Tax, which were narrated by the Settlement Commission extensively in its orders dated 16.11.2017, we find that there are several shortcomings in the particulars of income disclosed by the appellants in their settlement applications. As evident from the orders of the settlement commission that the first respondent, after considering Rule 9 reports of the PCIT and the replies submitted by the appellants, rejected the settlement applications filed by the appellants, by observing that the disclosure is not full and true and that, there is deficiency in explaining the manner in which the income has been earned. On a detailed analysis, it is also apparent that there is no disclosure of the facts in the applications or in the returns of income about the foreign bank accounts or deposits or investments and income from M/s. Universal Construction Supplies, FZE, Sharjah, UAE and flat at Dubai Marina, UAE of the original applicant late Dr.P.Anand. That apart, the business activities of the applicant and his company M/s.Anand Granite Exports Pvt Ltd. situated in Dubai, have not been mentioned in the applications or returns of income. Therefore, the settlement commission was of the view that there is concealment of facts, which require deeper investigation into the case of the applicants, particularly, with regard to the foreign accounts / assets. Though the applicant/ legal heir of the deceased/assessee, stated that he is not aware of the dealings of his father Dr.P.Anand, the same was not accepted by the settlement commission stating that he is also involved in the dealings of the original applicant, as evident from the documents received from the UAE authorities. First respondent / settlement commission has also observed in its orders which were impugned in the writ petitions that the original applicant late Dr.P.Anand was the Managing Director of Anand Granite Exports Private Limited during the period covered in the settlement applications; that, various foreign bank accounts in Dubai, China and UK have been found, and that the enquiry in relation to these accounts is in progress. It was specifically mentioned by the settlement commission in its order relating to M/s.Anand Granite Exports Pvt. Ltd, that as per the evidence furnished by UAE authority, the applicant company obtained licence on 28.10.2013 to do trading of building and constructions materials; but the business activities of the applicant company in Dubai and any income derived therefrom were not disclosed in the settlement applications or in the returns of income filed before the Department. That apart, the names of the maistries given for verification, do not tally with that of the name given in the sworn statements, settlement applications and during the course of hearing. In addition, the appellant failed to extend full co-operation to furnish and explain the true nature of entries / transactions with Bannari Amman Sugars Ltd. It is also pointed out in the order relating to M/s.Global Exports that the applicant has suppressed the export sales receipts for the AY 2008-09 which was admitted only at the time of final hearing after verification. Thus, it is clear that the appellants failed to disclose true and full particulars of the income earned and to explain the manner in which it was earned. In such circumstances, this Court cannot direct the Settlement Commission to entertain the settlement applications submitted by the appellants, notwithstanding the various shortcomings noticed by them. Pointing out the specific facts and circumstances to reach the conclusion that the settlement applications do not contain true and full particulars of the income to be subjected to tax under the Income Tax Act, the learned Judge has rightly held that such a finding of fact need not be interfered with by this Court under Article 226 of the Constitution of India, unless such facts are found to be error apparent. When there was an adjudication of facts and the Settlement Commission arrived at a finding that factually, the appellants could not establish while filing the settlement applications, then, this Court has to exercise restraint in entertaining the writ petitions as against the order of the Settlement Commission. Therefore, this court finds no reason to interfere with the order passed by the learned Judge in dismissing the writ petitions filed by the appellants.
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2024 (6) TMI 1368
Estimation of income - bogus purchases - CIT(A) reduced the addition to 12.5% - HELD THAT:- Undoubtedly, the assessee could not prove the genuineness of the purchases which are found in the information received from the DGIT Investigation. However, the purchase of ₹ 42,32,703, were shown by the assessee by a chart showing that the purchases from these parties have also gone into sales of the equal quantity. The assessee has also got his account tax audited where the quantitative details are available. In such circumstances, it is settled principle that only profit which is less than the profit shown on untained purchases should be compared and difference is required to be added to the total income of the assessee. Hon'ble Bombay High Court in M/s Mohd. Haji and Company [ 2019 (2) TMI 1632 - BOMBAY HIGH COURT] has also upheld the same principle. In the present case, the assessee has also shown one to one co-relation between the quantity of the alleged bogus purchases and consequent sales accounted there from. We direct the AO to work out the addition only to the extent of the difference in gross profit earned in such tainted purchases with gross profit earned in untainted purchases. The assessee is directed to furnish the requisite information before the AO demonstrate the gross profit of bogus purchases and gross profit of required basis. Appeal filed by AO is dismissed.
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2024 (6) TMI 1367
Denial of deduction u/s 57(iii) of interest expenditure - assessee has offered interest income under the head of interest from other sources - AO was of the view that as assessee agreed to charge interest at the rate of 15% but calculated interest only at the rate of 12% - assessee submitted that the assessee has paid interest to some of the parties at the rate of 12% and to the borrower the interest was paid at the rate of 15%. Due to economic slowdown the parties to whom the loans were provided the interest rates were negotiated at the rate of 12%. HELD THAT:- The fact shows that the assessee has earned interest income of ₹ 37,42,093/- and have incurred expenses of ₹ 30,84,320/- resulting into net interest income of ₹ 6,57,773/-. AO has assumed that assessee should have earned interest income from loans given at the rate of 15% and thereby made the addition at the rate of 3%. This is against the actual interest received by the assessee which are supported by loan confirmation and form no. 26AS. In response to reply under Section 133(6) of the Act also payer of interest confirmed interest as offered by assessee. The parties confirmed to have paid interest at the rate of 12% as the interest income amount what is accounted for. Therefore the amount of addition made by AO has neither accrued to the assessee nor received. AO also does not have any evidence that assessee received more interest than interest than what is shown. The addition made by AO is incorrect and hence, deleted. Assessee appeal allowed.
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2024 (6) TMI 1366
Disallowance of deduction claimed u/s 80P - interest income on by assessee from other cooperative banks - HELD THAT:- Cooperative banks are also a co-operative society. Only difference is that those cooperative societies are doing the business of banking as per the banking companies act 1949. Therefore, merely because these cooperative societies cooperative bank they do not lose their status as a co-operative society. The assessee s investment of earning interest income from such cooperative banks which are also cooperative societies whole of such income is deductible under this section. It is not in dispute that assessee is not a cooperative bank and therefore provisions of section 80P(4) of the act does not apply to it. Thus the assessee is eligible for deduction under section 80P(2)(D) of the act on its income received from all the above cooperative banks. Hence assessee is eligible for that deduction - Appeal of assessee allowed.
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2024 (6) TMI 1365
Addition due to difference in sale consideration and stamp duty - assessee sold 3 flats out of which there was a difference in sale consideration stamp value stated - AR on this issue stated that the first proviso to section 43C of the Act wherein leverage of 10% has been allowable - HELD THAT:- As perusing the material available on record find that the first proviso to section 43C of the Act wherein leverage of 10% is allowed by the statute and in the present case a difference of value of property of only 2.5%. Therefore, alleged addition made in the hands of assessee is not sustainable. Accordingly, the addition made in the hands of assessee is hereby deleted. Addition as entire sale value of two flats - assessee submitted that the assessee has included the sale consideration of both the flats in the next year in its books of account which fact is not in dispute - as argued when the income was duly included in the next year, the addition during the year will be taxed neutral - HELD THAT:- We after hearing the rival submissions of the parties and perusing the material available on record find that tax neutrality is essential to prevent double addition and ensure that income is tax fairly and equitable. In the context of Income-tax Act this principle is applying law consistent rules, adhering to judicial precedent and ensuring that income is added to the total income only once double addition is generally contrary to the principles of equity in taxation. The tax authorities must ensure that the same income is not taxed in different hands or periods. From the facts as stated by the parties, we find that assessee had shown the alleged income the next financial year as the income of assessee. Therefore, applying the principle of neutrality the addition cannot be sustained in the hands of assessee. Accordingly, we direct the AO to delete the alleged addition in the hands of assessee since assessee has already shown the alleged income in the next financial year for the purpose of calculating tax applying the analogy has held in the case of Realest Builders Services Ltd. [ 2008 (5) TMI 6 - SUPREME COURT] that when the addition is tax neutral than no double addition should be made. Accordingly, instant ground is allowed directing the AO to delete the addition in the hands of assessee. Appeal of the assessee is allowed.
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2024 (6) TMI 1364
Estimation of income - bogus purchases - CIT(A) restricted Addition to 12.5% - HELD THAT:- CIT(A) has considered the detailed submissions of the parties in very meticulous manner and has returned a well-reasoned and legally sustainable finding. The reason given by the Ld. CIT(A) are cogent and also appeals to the conscience of this Tribunal. Moreover, the Ld. DR on behalf of revenue has failed to produce any contrary material which may lead us to consider the material on record differently from the considering of it by the Ld. CIT(A). Nothing is brought before us as to why the present A.Y. should be dealt with separately from the two previous A.Y. 2009-10 and 2010-11, wherein the concerned Ld. CIT(A) as discussed in earlier part of this order, has restricted the additions to the extent of 12.5% on account of alleged bogus purchases. There is no illegality and perversity in the impugned order of the Ld. CIT(A) and we find no merit in the appeal and accordingly decides the grounds of appeal against the appellant by dismissing the same.
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2024 (6) TMI 1363
Rejection exemption u/s 11 - as the assessee has not filed the registration certificate u/s 12A of the Act and observing that assessee is not a registered Trust - HELD THAT:- Even though the assessee has claimed exemption u/s 11 without proper documentation and it is admitted fact that assessee is not registered u/s 12A of the Act, therefore, the claim of the assessee in its return of income u/s 11 are rejected by the tax authorities. As per the records submitted before us, the assessee is a non profit-no loss company registered under the Companies Act, 1913. This institution is in existence since then and no records were filed before us relating to previous method of accounting and claim made by the assessee. However, as per the fact available on record, as observed that the AO has rejected the claim made by the assessee in return of income claiming exemption u/s 11 of the Act and proceeded to make the addition only the gross receipts earned by the assessee as their income, however, as per law the gain/profit earned by the assessee alone should be brought to tax and not the gross receipts. Thus we are inclined to remit this issue back to the file of Jurisdictional Assessing Officer to re-do the assessment denovo after giving proper opportunity of being heard. We direct the AO to bring on to tax only net profit/margin earned by the assessee from the operation and not the gross receipts. Even, the Assessing Officer may consider the concept of mutuality in this case as per law considering the fact that it is non profit-no loss entity, serving its own members. Accordingly, ground No.3 raised by the assessee is allowed for statistical purposes.
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2024 (6) TMI 1362
Levy of penalty u/s 271(1)(c) - disallowance of prior period expenditure, ad hoc disallowance of non filing of relevant documents in relation to valuation on costs of construction improvement and as per the statements of the assessee, assessee has inadvertently claimed the higher share of indexed costs of construction and improvement - HELD THAT:- As submitted that the assessee has not benefited by inadvertently claiming the excess indexed costs of improvement. In this regard, he brought to our notice that assessee has made investment in capital gain and whatsoever the additional interest earned by the assessee are being utilized only in purchasing new assets. As relying on RELIANCE PETROPRODUCTS PVT. LTD. [ 2010 (3) TMI 80 - SUPREME COURT] it is clear that mere claim does not sustainable in law by itself will not amount to furnishing of inaccurate particulars of income, therefore, additions made by the Assessing Officer relating to prior period and ad hoc disallowance are concern, it is merely claimed by the assessee as allowable expenses and, however, was rejected by the Assessing Officer, therefore, this cannot be a reason for levy of penalty. Additional construction indexed costs of improvement by the assessee - As noticed that assessee having 1/4th share in the property has claimed inadvertently and additional amount of Rs. 15,82,909/-. From the records, as observed that assessee has not availed any benefit by such inadvertent claim; therefore, no reason to levy of penalty by treating that as inaccurate particulars of income, Assessing Officer has to bring to record, how the assessee has benefited by such furnishing of inaccurate particulars. Accordingly, the appeal filed by the assessee is allowed.
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2024 (6) TMI 1361
Unexplained money u/s 69A - cash deposits in the bank account during the demonetization period - Additional documents were filed by the assessee before the Ld.CIT(A) rejected - HELD THAT:- From the findings of the Ld. CIT(A), it is transpired that the Ld. CIT(A), without applying his own mind and without exercising the power granted under the statue has dismissed the application for the admission of the additional evidence on the behest of the AO which is contrary to the provision of law. As such, we are of the view that the Ld. CIT(A) was to exercise his power within the provision of law for admission of the additional documents instead of getting guided by the comment of the AO in the remand report. Also perused the bank statement filed by the assessee and on verification of the bank entries of the demonetization period, we note that such cash deposits were primarily used for making payment to Gujarat Agro Industries which is a State Government Organization and dealing in the agricultural produce. Thus, prima facie it appears to us that the cash deposits during demonetization period was representing business transactions and therefore we are of the view that the same cannot be made subject to tax under the provisions of section 69A of the Act. We are making this observation that the cash deposits during demonetization period represent the business transaction to arrive at an opinion that the assessee has very meritorious case which could not be dismissed due to technical lapses as held in the case of S.R. Koshti [ 2004 (12) TMI 62 - GUJARAT HIGH COURT] as revealed that the income of the assessee should not be over assessed even there is a mistake of the assessee. As such the legitimate deduction for which the assessee is entitled should be allowed while determining the taxable income. Thus we deem it fit to direct the Ld. CIT(A), to admit the additional evidence filed by the assessee under rule 46A of the Income Tax Rule and adjudicate the issue on merit afresh as per the provisions of law. Hence, the ground of appeal of the assessee is allowed for the statistical purposes.
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2024 (6) TMI 1360
Deduction u/s. 80P(2)(a)(i) - deduction denied as the assessee co-operative society was carrying on the business of banking and providing credit facilities to its members, therefore, it being a co-operative bank was disentitled from claiming deduction as per mandate of Section 80P(4) - HELD THAT:- Tribunal in the case of Gramin Sewa Sahakari Samiti Maryadit Ors. [ 2022 (3) TMI 75 - ITAT RAIPUR ] had after drawing support from the judgment of Tumkur Merchants Souharda Cooperative Ltd. [ 2015 (2) TMI 995 - KARNATAKA HIGH COURT ] on the basis of its exhaustive deliberations concluded, that interest income earned on the surplus funds which were parked as deposits by the co-operative society in the normal course of the business of providing credit facilities to its members, i.e., at a point of time when there were no takers for the said funds was duly entitled for deduction under Sec. 80P(2)(a)(i). As stated by the Ld. AR, and rightly so, as the facts and the issue involved in the present appeal i.e, allowability of the assessee s claim for deduction under Sec. 80P(2)(a)(i) on the interest on bank deposits remains the same as were there in the aforesaid case we direct the AO to allow the assessee s claim for deduction under Sec. 80P(2)(a)(i). Decided in favour of assessee. Paddy Procurement Business - Tribunal while disposing off the appeal in the case of Gramin Sewa Sahakari Samiti Maryadit Ors [ 2022 (3) TMI 75 - ITAT RAIPUR ] while dealing with the assessee s claim for deduction of the income from paddy procurement business u/s.80P(2)(a)(iii) of the Act, had remanded the issue to the file of the A.O as held now when only a small fraction of the procurement of paddy was made by the assessee-society in the course of its paddy procurement business from non-members, therefore, restricting of its claim for deduction u/s. 80P(2)(a)(iii) of the Act to 35% of the profits earned from the said business activity was not justified. Be that as it may, we are of the considered view that as the compilation of the paddy procurement by the assessee-society has been filed before us as additional documentary evidence, and the same was not there before the lower authorities, therefore, the matter in all fairness requires to be re-visited by the Assessing Officer. Thus, in all fairness on the same terms be restored to the file of the AO for fresh adjudication. In the course of the set-aside proceedings the AO shall re-adjudicate the assessee s claim for deduction under Sec. 80P(2)(a)(iii) after verifying and determining as to what extent the assessee society had facilitated the marketing of the agricultural produce grown by non-members, and thus, restrict it s claim for deduction u/s. 80P(2)(a)(iii) only to the extent of the profit relatable thereto.Decided in favour of assessee for statistical purposes. Dividend Income - dividend income received on the investments declined for the reason that as the same was not a co-operative society, hence, the dividend income received therefrom would not be eligible for deduction under Sec. 80P(2)(d) - HELD THAT:- Admittedly, in the case of Gramin Sewa Sahakari Samiti Maryadit Ors. [ 2022 (3) TMI 75 - ITAT RAIPUR ] Tribunal, had observed, that the dividend income received by a co-operative society on the shares of a co- operative bank held by it would be eligible for deduction under Sec. 80P(2)(d) of the Act. Thus we vacate the disallowance of the assessee s claim for deduction of the dividend received on shares of a co-operative bank, viz. Jila Sahakari Bank u/s 80P(2)(d) . Decided in favour of assessee.
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2024 (6) TMI 1359
Nature of land sold - LTCG - land was converted into non-agriculture prior to date of sale but assessee has been carrying on agricultural activities right the date of sale of land - DR submitted that as per revenue records, the land was a non-agricultural land as on the date of sale, hence, AO had correctly invoked the provisions of Section 50C - as argued land qualified as agricultural land since it was situated beyond the prescribed municipal limits HELD THAT:- Firstly, the Department has not disputed/contested the claim of the assessee that the assessee has been carrying on agricultural activities right the date of sale of land. Secondly, we agree with the argument of the assessee that once the assessee is carrying on agricultural activities right up to the date of sale, then the land continues to be agricultural land respective of conversion of such land into non-agriculture land. The mere fact that land use was converted to non-agricultural prior to date of sale would not convert the land as agricultural land, as held by the VAJULAL CHUNILAL (HUF) [ 1979 (2) TMI 45 - GUJARAT HIGH COURT] Whether the land sold qualifies as agricultural land within the meaning of Section 2(14) of the Act has not been analysed by the Tax Department. AO has made a reference at page 2 of the assessment order that the land sold by the assessee is situated at the distance of 4 km from Deesa and hence the land should be taxed at Jantri value of Rs.3,73, 32,000/-. Therefore, it is not clear from the facts available on record whether land qualified as an agricultural land within the meaning of Section 2(14) of the Act. Accordingly, in the interest of justice, the issue is being set aside to the file of AO with the view to verify whether the conditions of Section 2(14) of the Act are being met in the instant set of facts. The assessee would be at liberty to produce all supporting documents to show that land is situated as per prescribed limits given under Income Tax Act so as to qualify as agriculture land and also file copies of any notification etc. in respect of this land which support the fact that the land is an agriculture land and is situated as per the prescribed municipal limits under Section 2(14) of the Act. Claim of deduction and Section 54F/54B - As we observe that Ld. CIT(Appeals) had already directed the Assessing Officer to allow the claim of deduction under Section 54B/54F after due verification about the fulfillment of conditions, contained therein. Accordingly, to that extent, we find no infirmity in the order of Ld. CIT(Appeals) to call for interfere. Appeal of the assessee is party allowed for statistical purposes.
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2024 (6) TMI 1358
Exemption u/s 11 - non utilization of 85% of the total grants-in-aid received during the year - assessee invested an amount in the equity shares and continuing the investment so made, and thereby contravened the provisions of section 13(1)(d) read with section 11(5) - HELD THAT:- Assessee is a statutory body and a registered society assessee is a statutory body and a registered society AND has been following the accounting procedure as defined in GFR 230(5) of the Government of India and the directions of the Integrated Financial Division of Ministry of Agriculture, Government of India (IFD) over the years and treating all the grans as liabilities and only when the grants are utilised by the implementing agencies they are treated as income and when utilisation certificates are received, they are treated as expenditure. Case of AO that the claim of expenses incurred out of grant released in earlier years and the corresponding claim of receipt cannot be allowed in the current year failed to appreciate what exactly the amount the assessee has been treating as income and what the amount the assessee is treating as expenditure. Assessee has been treating only such part of grants that are utilized by the implementing agencies as income and only such part of the funds released to the implementing agencies in respect of which the utilization certificates are received as expenditure. This method of accountancy followed by the assessee in treating the income and expenditure irrespective of the year of receipt of grant has not been appreciated or referred to by the learned Assessing Officer so as to find out any defects or reasons to reject the same. No illegality or irregularity in the method of accountancy followed by the assessee in treating the funds utilized by the implementing agencies as income and the funds covered by the utilization certificate as expenditure. According to us, learned CIT(A) was right in his approach in holding that on an incorrect appreciation of the accounting policies followed by the assessee, the learned Assessing Officer rejected the books, without actually bringing on record any defect in the audited accounts of the assessee. Principle of Res judicata - It is true that the principle of res judicata is not applicable to the income tax proceedings and every year is a separate and independent, and merely because the learned Assessing Officer has not made any addition or rejected the claim of exemption under section 11 of the Act, preferred by the assessee in the earlier years, such an erroneous order of the learned Assessing Officer cannot be made to be perpetuated. Since the assessee, in the instant case, is consistently treating the grants received from the Government of India and utilised by the implementing agencies as income and the grants released to the State Government, as and when the utilization certificates are received as expenditure, in compliance with the accounting procedure defined in GFR 230(5) of Government of India and the directions of IFD, we are of the considered opinion that the assessee in the instant case has spent 85% of the income in the current assessment year also. Investment in equity shares contravenes the provisions of section 13(1)(d) - As aspect of 13(1)(d) of the Act, there is no contradiction to the plea taken by the assessee that such an investment was made in Sasoon Dock Matsya Shakari Samstha Ltd., in the financial year 2008-09 and not during the current year and never in the earlier years any objection on that aspect is taken. It is also not in dispute that registration u/s 12AA granted by the authorities in favour of assessee is continuing. In these circumstances, the ground raised by the Revenue cannot be countenanced and is liable to be rejected. Appeal of the Revenue is dismissed.
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2024 (6) TMI 1357
Assessment u/s 153A OR 153C - As argued adjustments in the instant appeal is either subject matter of regular assessment or probably can be assessed u/s 153C with no reference to any incriminating material found in the course of search from the premises of the assessee with reference to impugned additions. Whether, while making assessment u/s153A, the Revenue is entitled to interfere with unabated assessment which stood concluded either under section 143(1) or under section 143(3) and not pending at the time of search in the absence of any incriminating material unearthed as a result of search in the case of assessee? - HELD THAT:- It is manifest that additions/disallowances have been made without reference to any specific incriminating material/document found as a result of search and seizure action under section 132 of the Act and such additions are solely based on appraisal report against the subscribers of the assessee in the course of search in that case. Some additions have been made in the course of routine inquiry at the time of assessment u/s 153A without showing any correction to the incriminating material unearthed in the course of search. Guided by the principles laid down in Abhisar Buildwell (P.) Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT] as followed by the Co-ordinate Benches in numerous cases, we find force in the legal plea raised on behalf of the assessee. Hence, in the absence of any incriminating material in an unabated assessment additions / disallowances made by AO in the captioned appeal require to be quashed. Assessee appeal allowed. Addition u/s 69C - disallowance towards bogus purchases - HELD THAT:- We take notice of the fact that the expenditure incurred in the instant case are capital expenditure and therefore, no addition as proposed could be made to the taxable income towards such capital expenditure. Secondly, as pointed out on behalf of the assessee and corroborated by the copy of invoices and the ledger account, it is evident that the impugned purchases relate to financial year other than F.Y. 2011-12 relevant to A.Y. 2012-13 in question. Therefore, disallowance if any is not permissible in the A.Y. 2013-14 under adjudication. Inapplicability of Section 69C as well as Section 68 - A bare reading of Section 68 suggests that there has to be credit of amounts in the books maintained by the assessee and such credit has to be of sum during the year for which the assessee either offers no explanation about the nature of source of such credit or the explanation offered towards source of such credit is not found to be satisfactory in the opinion of the AO. When objectively seen with reference to material available on record, it is evident that the present case relates to outgo or payment on account of expenditure which is squarely opposite to the credit in the books of account. Apparently, Section 68 would not apply in the absence of any credit in the books of account in relation to impugned additions. On the similar footings, Section 69C also do not apply since Section 69C is confined to a situation where source of expenditure incurred could not be objectively explained to the satisfaction of the AO. In the instant case, what being disallowed is the expenditure incurred and not the source of payment towards such expenditure. Neither Section 68 nor Section 69C is applicable in the present case. CIT(A) has modified and broadened the charge to encompass application of Section 68 of the Act. While doing so, no opportunity was given to the assessee to counter such proposal. The exercise of purported coterminus power in such manner is not permissible in law. On this ground also, the action of CIT(A) needs to be set aside. In summation, the impugned additions cannot be countenanced where neither the expenditure has been claimed as revenue expenditure nor such expenditure relates to assessment year in question and such action is impermissible on the contours of Section 68 as well as Section 69C invoked by the Revenue Authorities. Assessee appeal allowed.
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2024 (6) TMI 1356
Revision u/s 263 - Deduction u/s 80P on interest income from company- operative banks should be disallowed - HELD THAT:- An inquiry made by the AO, considered inadequate by the CIT, cannot make the order of the Assessing Officer erroneous. In our view, the order can be erroneous if the AO fails to apply the law rightly on the facts of the case. As far as adequacy of inquiry is considered, there is no law which provides the extent of inquiries to be made by the AO. It is AO s prerogative to make inquiry to the extent he feels proper. The CIT by invoking revisionary powers under Section 263 of the Act cannot impose his own understanding of the extent of inquiry. There were a number of judgments by various High Courts in this regard. This is not a fit case for invocation of provisions of Section 263 of the Act. This is for the reason that firstly, we observe that the assessing officer had examined the issue in detail during the course of assessment proceedings, and it is not a case where there was any apparent lack of enquiry on this aspect by the assessing officer. Secondly, the assessing officer had taken a view which is a legally plausible view and it is a well settled law that 263 proceedings cannot be resorted to by the PCIT only with the view to supplant his own view with the view taken by the assessing officer. Further, the decision of Katlary Kariana [ 2022 (1) TMI 1309 - GUJARAT HIGH COURT] was on the aspect of reopening of assessment under Section 147 of the Act and not directly on the issue of claim of reduction under Section 80P of the Act. Therefore, once it is seen from the records that the assessing officer had made due enquiries during the course of assessment proceedings on this aspect and had taken a view, which is a legally possible view, then, in our considered view PCIT cannot resort to 263 proceedings only to supplant his own view with the view taken by the Assessing Officer. Decided in favour of assessee.
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2024 (6) TMI 1355
Unexplained cash credit u/s 68 - Bogus share capital and share premium received - onus to prove - HELD THAT:- AO simply issued notice u/s 131 of the Act to the assessee requiring to appear personally along with all the Principal Officers, directors of all the investor companies and individual investors, as the case may be, to verify the transactions without going through the details, evidences furnished by the assessee which included the details of the share subscribers, their creditworthiness and also the books of account and bank statements etc. furnished by the assessee to prove the genuineness of the transaction. AO without examining any of the documents, simply made the addition on account of failure of the assessee to produce share subscribers and has not pointed out in the Assessment Order as to what were the discrepancies in the documents furnished by the assessee and what further enquiries he wanted to make from the directors of the subscribers to insist for their personal presence. Assessee, on the other hand, has explained that the observation of the Assessing Officer that there was very high premium received by the assessee as compared to the market value of the shares was wrong. He has submitted that the book value on the date of issue of shares was Rs. 191/- per each share and the shares were sold at Rs. 200/- each and therefore, the observation of the Assessing Officer simply on the basis of assumptions and presumptions was not justified. AO has not pointed out any specific doubt about the identity and creditworthiness of any of the share subscribers. Also further submitted that the assessee was having share subscription from the said subscribers for the last 10 years and all the details were furnished before the Assessing Officer. That it was beyond the control of the assessee to produce all the shareholders/directors of the corporate entities before the AO. The Assessee in this case, as noted above, explained about the identity, creditworthiness and financials etc. of each of the share subscriber company. AO, in our view, could have taken an adverse inference, only if, he would have pointed out the discrepancies or insufficiency in the evidences and details received in his office and pointed out as to on what account further investigation was needed by way of recording of statement of the directors of the subscriber companies. Even if the assessee could not produce the directors of the subscriber companies before the Assessing Officer, even then, in our view, adverse inference cannot be taken against the assessee solely on this ground as it is not under control of the assessee to compel the personal presence of the directors of the shareholders before the AO. As decided in Paradise Inland Shipping Pvt. Ltd. [ 2017 (11) TMI 1554 - BOMBAY HIGH COURT] that once the assessee has produced documentary evidence to establish the existence of the subscriber companies, the burden would shift on the revenue to establish their case. Assessee having discharged initial burden upon him to furnish the evidences to prove the identity and creditworthiness of the share subscribers and genuineness of the transaction, the burden shifted upon the Assessing Officer to examine the evidences furnished and even made independent inquiries and thereafter to state that on what account he was not satisfied with the details and evidences furnished by the assessee and confronting with the same to the assessee. In view of this, even applying the ratio laid down in the case of PCIT vs. NRA Iron and Steel Pvt. Ltd. [ 2019 (3) TMI 323 - SUPREME COURT] impugned additions are not warranted in this case. - Decided in favour of assessee.
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2024 (6) TMI 1354
Set off of the carried forward losses against current year profit in view of the change in the shareholding pattern of the assessee - Applicability of section 79 - HELD THAT:- It could be seen from the impugned order that the assessee had taken the plea that section 79 of the Act has no application to the facts of this case and it had taken a specific plea by way of additional grounds that section 79 of the Act refers to business loss only and it has nothing to do with the giving the credit for set off of carry forward unabsorbed depreciation loss. Whether or not section 79 of the Act applies to the carry forward of unabsorbed depreciation loss is only a question of law, and would have been decided by the learned CIT(A) even in the absence of the assessee, because the decision of the higher forum equally binds the learned CIT(A) as it binds all the authorities before that forum. The Hon ble Apex Court in Subhulaxmi Mills Ltd.[ 1995 (9) TMI 2 - SUPREME COURT ] is clear on this aspect and in the case of Shri Subhlaxmi Mills Ltd. [ 1976 (1) TMI 2 - GUJARAT HIGH COURT] expressly approved the view taken by the Hon ble Gujarat High Court that when section 79 of the Act speaks of loss, it does not include unabsorbed depreciation or unabsorbed development rebate. Since it is neither a pure nor mixed question of fact, it does not admit of any further factual findings of the learned CIT(A), but involves only interpretation of the provision by the learned CIT(A). When the Hon ble Supreme Court speaks on the non-applicability of section 79 of the Act to the unabsorbed depreciation loss, any opinion of learned CIT(A) on this aspect is immaterial, and suffice it to cause verification whether the carry forward losses of assessment year 2012-13 sought to be set off against the future losses by the assessee including the assessment year 2013-14, include any unabsorbed depreciation. If it is so, it is eligible for set off against the profits of the future years. We direct the Assessing Officer to verify whether the carry forward losses of assessment year 2012-13 sought to be set off against the future losses by the assessee including the assessment year 2013 -14, include any unabsorbed depreciation, and if it is so allowed, it to be set off against the profits of the future years. Subject to this observation, appeal is allowed.
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2024 (6) TMI 1353
Penalty levied u/s 271(1)(c) - Defective notice on non specification of clear charge - Estimation of income on bogus purchases - HELD THAT:- The assessee after reading the notice was guessing as to what fault it has committed for which the AO proposed to levy penalty; and since both faults figured in the notice, as such the assessee was handicapped in defending/explaining against the proposed penalty. Therefore, since show-cause notice itself does not spell out clearly as to what fault assessee is being proceeded against for levy of penalty, the notice itself is bad in law, and consequently the penalty levied is vitiated. Same issue has come up for consideration before the Full bench of Mohd. Farhan A. Shaikh [ 2021 (3) TMI 608 - BOMBAY HIGH COURT (LB)] wherein their Lordships has held that the show cause notice issued prior to levy of penalty without specifying the fault/charge against which the assessee would vitiate the penalty itself. Also we find that in the quantum assessment estimated addition of 100% of purchases was made by AO, which was reduced to 30% of purchase by the Ld. CIT(A). In such a scenario, penalty u/s 271(1)(c) of the Act was not warranted because estimated addition has inherent subjectivity involved. Therefore, no penalty is warranted. Therefore, we direct the deletion of penalty. Refund of the excess fees paid bonafide by the assessee - assessee claims to have inadvertently remitted fees of Rs.10,000/- towards fees of this penalty appeal, whereas according to assessee, the correct fees was only Rs.500/- - HELD THAT:- As noted that Section 253 of the Act, prescribes the appeal fees an assessee has to remit while filing an appeal before the Tribunal. The assessee s submission is that since the captioned appeal is penalty appeal, fees need to be deposited as per sub-clause (d) of sub-section (6) of section 253 of the Act. As per sub-clause (d) of sub-section (6) of section 253 of the Act, while filing the penalty appeal before the Tribunal, the assessee need to have remitted Rs.500/- for an appeal. In the light of the aforesaid discussion, the AO is directed to refund this amount either by way of adjusting the same against the outstanding demand, if any, or by way of grant of refund within a reasonable period. Appeal of the assessee is allowed.
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2024 (6) TMI 1352
Re-computation of long term capital gain - Determination of cost of improvement for construction of a concrete bridge on the rivulet in front of the shop for the purpose of providing more accessibility to the shop from the road - HELD THAT:- From the record, it is evident that the Ld. CIT(A) ignored the fact that the disputed cost was used for construction of bridge/rivulet in front of the shop for improvement of the shop and that the CIT(A) failed to appreciate the vital fact that the amount spent for construction of the bridge was a capital expenditure and was essential to provide access to the shop from the road and to provide improved accessibility to the shop to facilitate greater footfall and capital value addition in turn. We appreciate the contention of the Ld. AR that there is no bar to incur the capital expenditure while the business is running. In the present case, the capital expenditure would not become revenue expenditure merely for the reason that it was incurred in connection with cost of improvement to promotion of business activities which ultimately resulted in efficiently carrying on day-to-day business. The facts of cost of construction of bridge have been supported with the site plan and the photograph which is a matter of record, which has never been controverted either by the AO or by the CIT(A) or the CIT(DR), to disprove that the cost of improvement/construction incurred in 2009-10 has never been incurred by him. Such, disallowance, of the cost of construction by the AO, merely based on presumption is not tenable in the eyes of laws. Considering the factual matrix, and judicial precedents, we accept the grievance of the appellant as genuine. Accordingly, we hold that the cost of improvement to shop by construction of rivulet was capital expenditure and the cost of in taxation of rivulet would be allowable deduction as claimed by the appellant. We, therefore, delete the addition. Appeal filed by the assessee is allowed.
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2024 (6) TMI 1351
Rejecting the application for registration u/s 12A(1)(ac)(iii)- mismatch in name as per PAN database/Form No. 10AB vis- -vis Certificate of Registration, PTR and audited accounts - HELD THAT:- It was wholly erroneous on the part of the ld CIT(E) to reject the assessee`s application on account of mismatch of name. The mismatch in name may be rectified and corrected and the corrected name may be accepted. It should not be a reason to deny registration of the assessee-trust. As Counsel submitted before us, the correct name, which is to be adopted as SURAT HALAI MEMON JAMAT AND HALAI MEMON JAMAT KABARSHATN . We have also noted that the assessee has already taken steps to correct the above name in the PAN database, therefore above name should be treated as a correct name. Hence, we direct the ld. CIT(E) to consider the above stated name of assessee-trust and registration should not be denied to the assessee - trust, on this ground. So far objects and activities are concerned, we note that assessee-trust is now ready to submit the entire list of objects and genuineness of its activities and these objects and activities may be verified by ld CIT(E). In these circumstances, we are of the view that one more opportunity should be given to the assessee to plead its case and to explain all documents and evidences before ld CIT(E). Appeal is allowed for statistical purposes.
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2024 (6) TMI 1350
Admission of additional evidence by CIT(A) - Test of enquiries in assessment proceedings - Procedures in accepting the additional evidences by CIT(A) - CIT(A) erred in not allowing the A.O. to examine the additional evidence admitted by him as per the provisions u/s. 46A(3) of the I. T. Rules, 1962 - Addition of unsecured loans and advances from customers u/s 68 - whether allegation of not providing opportunity to the AO by Ld. CIT (A) is really exists or not? HELD THAT:- Information furnished by the assessee before the Ld. CIT (A) is mostly available on record before the AO also. It is also observed that addition u/s. 68 of the Act on account of Unsecured Loan may be treated as such but as far as advance received from customers is concerned it s a settled position of law, same can t be considered as income for the purposes of section 68 of the Act. So, addition made u/s. 68 on account of customer s advance treatment by AO was void-ab-initio and Ld. CIT (A) rightly handled the issue by analysing the same in the light of the fact that same has been duly reflected in the books of account as per the accounting system followed by the assessee under the head sales, advance and booking amount returned. The job which ought to have been done by the AO on amount received by assessee as customer s advance, same has been carried out by the Ld. CIT(A) and due assessment has been carried out. As far as amount involved on account of unsecured loans are concerned as mentioned (supra) most of the documents were available before the AO and practically AO may have grievance that due procedure was not followed as prescribed under Rule 46A (3) of the Rules, but same was not required as the powers of Ld. CIT (A) was coterminous with that of AO, and what an AO can do the same action, can be taken by him also. We found the order of Ld. CIT (A) to be reasonable and logical on the given set of facts and other than the issue of giving opportunity to AO under 46A (3) of the Rules, AO is not able to make out the case how it is prejudicial to the interest of revenue or what anomaly is there in the order of Ld. CIT (A). No infirmity in the order of Ld. CIT (A), especially when a substantive justice has been delivered within the scope of powers given to him by the statute and confirmed over the period by the Superior Courts. In view of above, grounds raised by the Revenue are dismissed. Revenue appeal dismissed.
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2024 (6) TMI 1349
Disallowance of deduction u/s 35(1)(ii) - donations for undertaking scientific research - Trust has raised substantial donations over the last six years on the basis of forged document, since obtained, wherein the appellant was found to be one of the beneficiaries - assessee as mentioned hereinabove has been denied by the assessee but no documents and/or corroborative evidence in respect of the deduction claimed u/s 35(1)(ii) has been filed before the Ld. AO in the re-assessment proceeding. Thus, the expenditure has been disallowed as unexplained expenditure u/s 69C HELD THAT:- We have carefully considered the entire aspect of the matter and we find that it appears practically and factually the entity, namely, M/s. Shri Arvindo Institute of Applied Scientific Research Trust having PAN No. AAFTS7349D with whom the donation to the tune of Rs.20,00,000/- was made by the appellant and claimed weighted average deduction u/s 35(1)(ii) of the Act for A.Y. 2016-17, though earlier was approved u/s 35(1)(ii) the same was expired on 31.03.2006. Thus, the entity is not recognized for the purpose of Section 35(1)(ii) and neither eligible to raise donations for undertaking scientific research. Expenditure was disallowed as unexplained expenditure u/s 69C - In this regard, CIT(A) observed that the same expenditure is unexplained and how the source of the same is unexplained, has not been able to be specified by the Ld. AO while invoking Section 69C of the Act while rejecting the claim of the appellant. Keeping in view the entire aspect of the matter, the claim made by the appellant on a wrong footing, particularly, when the donation made to the entity which is not eligible to raise donation u/s 35(1)(ii) CIT(A) upheld the order of disallowance of the claim made by the appellant by the AO which, in our considered opinion is just and proper. Appeal preferred by the appellant is dismissed.
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2024 (6) TMI 1348
Denial of claim for exemption u/s.11(2) - Form 10B a/w. return of income were not furnished electronically within the due date specified u/s.139(1) - HELD THAT:- The assessee trust had obtained the audit report in Form 10B on 10.08.2016, i.e. prior to filing of its return of income on 10.10.2016, but the third limb/condition provided in Para 4(i) which requires that the audit report in Form 10B should be filed before the date specified u/s.139 of the Act is not found to be satisfied. We say so, for the reason that the date specified u/s.139 in the case of the assessee society for filing of its return of income for the year under consideration, i.e., A.Y.2016-17 was 17.10.2016 (as was extended from 30.09.2016). As the date specified u/s. 139 of the Act for filing of return of income in the case of the assessee society before me for A.Y.2016-17 was 17.10.2016 while for it had e-filed/uploaded the audit report in Form 10B on 06.12.2018, which is much beyond the said specified date, therefore, it s case would clearly fall beyond the scope and gamut of Para 4(i) of the CBDT Circular No. 10 dated 22.05.2019. On the basis of the aforesaid facts, the case of the assessee society before me would not fall within the meaning of Para 4(i) of the CBDT Circular (supra.). As the assessee s case with respect to condonation of delay in filing of Form 10B would not be covered by Para 4(i) (supra), therefore, the same would fall within the sweep of Para 4(ii) of the CBDT Circular No.10 (supra), which, as observed by me hereinabove, would be applicable to all other cases prior to A.Y.2018-19 where Form 10B is belatedly filed. Accordingly, I am of the considered view that the case of the assessee due to non-satisfaction of the conditions contemplated in Para 4(i) of CBDT Circular No. 10 would fall within the sweep of Para 4(ii) of the said circular (supra.). As the assessee-society does not cumulatively satisfy the set of conditions specified in Para 4(i) of the CBDT Circular No.10 and also had not filed any application for condonation of delay u/s.119(2)(b) of the Act as provided in Para 4(ii) of the said circular therefore, there remains no occasion for condoning the delay involved in filing of Form 10B by it beyond the stipulated time period. Thus, no infirmity in the view taken by the lower authorities who had rightly declined the assessee s claim for exemption u/s.11 of the Act. Disallowance of the assessee s claim for salary expenditure - assessee had claimed to have paid a salary of Rs.6 lacs to Dr. Ashish Dubey, cardiologist (trustee of the assessee society) - No justification for disallowance of the entire salary paid by the assessee society to Dr. Ashish Dubey as the rendering of professional services by him to the assessee society had admittedly been accepted by the department while framing assessment in the case of the assessee society for the immediately preceding year, i.e., A.Y.2015-16. As per Section 13(2)(c) r.w.s.13(3) of the Act, it is only the amount which is, inter alia, paid in excess to a trustee/member of the society as against what may reasonably be paid for the services rendered by him that is to be deemed to have been used or applied for the benefit of the person referred to in Section (3) of Section 13 of the Act, therefore, find no justification in declining of the assessee s entire claim for deduction of salary expenditure of Rs.6 lacs. Though the assessee society had not placed on record supporting documentary evidence to substantiate the authenticity of its claim of salary expenditure of Rs.6 lacs paid to Dr. Ashish Dubey, but at the same time we cannot remain oblivion of the fact that the A.O had not called upon the assessee society to furnish any specific details with respect to its aforesaid claim of expenditure. In my considered view the matter in all fairness requires to be restored to the file of the A.O who is directed to verify the authenticity of the aforesaid claim of the assessee society. Appeal of assessee is partly allowed for statistical purposes.
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2024 (6) TMI 1347
Unexplained cash credits u/s. 68 - Deposits in bank accounts jointly held by the assessee and his father [Shri Devidas Keshwani i.e. primary account holder] - HELD THAT:- We find substance in the claim of the Ld. AR that as the aforesaid bank account and interest income accruing on the same had been accounted for/offered for tax in the hands of Father i.e. primary account holder, therefore, in absence of any material proving to the contrary there was no justification for the A.O to have made addition of the cash deposits made during the year in the said bank account; or the interest income accruing therefrom in the hands of the assessee. At the same time, we cannot remain oblivion of the fact that the assessee had adopted a lackadaisical approach and failed to participate in the course of the assessment proceedings, which, thus, had led to framing of the assessment by the A.O u/s. 144 r.w.s. 147 dated 20.10.2018. Accordingly, as the aforesaid documents which had been pressed into service by the assessee before us were not there before the A.O in the course of the assessment proceedings, therefore, we are of the view that the matter in all fairness requires to be restored to the file of the A.O for the limited purpose of verifying the correctness of the aforesaid claim of the assessee. In case, the claim of the assessee is found to be in order and also, to the satisfaction of the A.O, the addition made in his hands to the said extent shall stand vacated.
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2024 (6) TMI 1346
Addition of long-term capital gain u/s 50C - reference to the DVO - FMV determination by DVO - DVO valued the same below the Jantri rates - HELD THAT:- We note that DVO in determining the FMV of the property has considered only two special observations/qualifications i.e. the agriculture land being deep from the village main road and about 1 to 2 kilometers on kachcha village road and it is adjacent to Sugar factory giving fall smell and affecting crop production. According to assessee, there is water logging on the land during monsoon, due to dyeing and printing units in the close proximity results in chemical contamination of the land making it useless for agriculture or residence has not been considered by DVO. We note that above factors were considered by the DVO only partly and most of the above factors were ignored by the DVO. Assessee has submitted that the DVO has not considered all the objections filed by the assessee, hence the fair market value (FMV) determined by the DVO is an estimate which is not based on full facts of the case. As fairly well known that the valuation of property involves some kind of guess work and estimation and this fact is very much evident from the valuation report of DVO. It is also a fact that the rate of property even in the same locality differs depending upon locational advantages and other factors. In the instant case, the DVO has not accepted the entire factors of the assessee`s case, as noted by us in above para. We note that determination of fair market value, after all, is an estimate only and therefore, considering the facts and circumstances of the assessee`s case, as noted above, we are of the view that ends of justice would be meet if an addition of Rs. 50,00,000/- is sustained in the hands of the assessee, as the same would take care of the inconsistencies between DVO report and price of property adopted by the assessee. Therefore, we direct the assessing officer to make/sustain the addition in the hands of the assessee - Appeal filed by the assessee is allowed partly
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2024 (6) TMI 1345
Refusal to grant approval u/s 80G(5) - cancelling the provisional approval granted by CPC u/s 80G(5) - assessee society is granted with the registration u/s 12AA - claim denied as objects of the assessee were religious in nature and expenses incurred during the last three years exceeded 5% of the total income, violating Section 80G(5B) - HELD THAT:- In the present case the assessee society is found to be formed with certain objectives. Though the assessee society as admitted being involved in certain religious activities also but on perusal of the financials of the society it is not emanating that it had incurred any expenditure on such activities for more than 5% of the total income in the relevant period. As in the present case the assessee society was formed with the objects to provide education, research, training, support to orphans, moral education, literature, environmental safety, employments to deprived, Human welfare, animal kindness, scholarship, library, hostels for meritorious students etc. It is also an admitted fact that the assessee society is granted with the registration u/s 12AA by the Ld CIT(E). The expenditure incurred by the assessee society are not found to be religious in nature, as per the financials statements submitted by the assessee society, though, CIT(E) has commented in the order that the expenses incurred by the assessee during last three years also exceeds 5% of the total income but have not clarified or commented, which are those expenses and how the said expenses are religious in nature. Thus we are of the considered view that the assessee society is eligible for grant of approval u/s 80G(5) of the Act, thus, set aside the order of Ld. CIT(E) and direct to grant exemption/approval to the assessee society, accordingly. Appeal of assessee allowed.
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2024 (6) TMI 1344
Denial of Exemption u/s.11 - assessee was not holding any registration u/s.12A/12AA - Denial of deduction of expenditure incurred towards educational purposes - as claimed that since the turnover of the assessee is less than Rs.1 Crore and the assessee is engaged in the educational activities by running Educational Institution, the assessee is eligible for deduction u/s.10(23C)(iiiad) - CIT(A) observed that the assessee has claimed expenses for which no proper evidences are available and claim of deduction of the expenses have been made merely on the basis of self-made vouchers , as was adversely reported by the auditors in their audit report by way of adverse comment/remarks about the claim of deduction of expenditure based on self made vouchers instead of evidence in support of expenses, and based on that Ld.CIT(A) disallowed the claim of deduction of expenses as the genuineness of these expenses could not be proved by the assesse HELD THAT:- Assesse had submitted before us that one more opportunity be provided to the assessee , and the assessee will produce all the relevant documents/evidences to prove that the assessee is genuinely engaged in the educational activities of running of the educational institution and holding the necessary evidences to support the expenses being incurred for the purposes of the educational activities of the assessee. It was submitted by ld. Counsel for the assessee that the auditors had given a general remarks about non availability of evidences in support of the expenses incurred. The ld. Counsel for the assessee had submitted that the assessee has filed paper book containing 15 pages in which audited accounts with auditors report is placed. Also assessee submitted that the expenses incurred included salaries to the tune of Rs. 26,53,200/- which is paid to staff who is engaged by the educational institution run by the assessee for educational activities such as faculty members, administrative staff etc, and there are other expenses such as seminar expenses, uniform expenses , communication expenses , vehicle expenses, postage expenses etc. which were also incurred for educational activities of the assesse in running the educational institution, for which it is submitted by ld. Counsel that the assessee will submit all the evidences to substantiate the genuineness of expenses being incurred for the educational activities of the assessee. Department has no objection if the matter is restored back to the file of Ld.CIT(A) for fresh adjudication. Therefore we set aside the appellate order passed by ld. CIT(A) and restore the matter back to the file of ld. CIT(A) for deciding afresh appeal filed by the assessee with ld. CIT(A) on merits in accordance with law - The assessee is directed to co-operate with Ld.CIT(A) , and submit all the explanations and information sought for by ld. CIT(A) in order to adjudicate appeal filed by the assesse on merits - Appeal of the assessee is treated as allowed for statistical purposes.
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2024 (6) TMI 1343
Settlement of disputed tax arrears under the Direct Tax Vivad Se Vishwas Act, 2020 - assessee did not finally pursue the remedy under the Direct Tax Vivad Se Vishwas Act, 2020, though the competent authority had issued Form No. 3 - AR pointed out that the order of the CIT( A) is wholly unsustainable, in as much as the appeal of the assessee has been dismissed by treating the same as withdrawn by the appellant , whereas no such fact-situation persisted before the CIT( A) - As argued since the taxes were not paid as per the determination made by the PCIT in Form No. 3, the mandatory condition of Section 5 (2 ) of the Direct Tax Vivad Se Vishwas Act, 2020 remained uncomplied and therefore, in such a situation, the CIT( A) grossly erred in treating the appeal pending before him as withdrawn by the appellant . HELD THAT:- As DR has not contested any of the factual assertions made by the Ld. AR, and contended that the CIT( A) has referred to Form Nos. 1 , 2 , 3 issued under the Direct Tax Vivad Se Vishwas Act, 2020 which were appearing in ITBA system, and therefore, he has dismissed the appeal as withdrawn, though he conceded that Form Nos. 4 5 were not available on the ITBA system. Be that as it may, according to the Ld. DR the merits of the issue can be examined only at the level of the ld. CIT( A) and pleaded for restoring of the matter to ld. CIT( A) for adjudication for afresh. Keeping in view, the facts narrated above and the arguments of both the parties, the matter is being restored to the file of the ld. CIT(A) for adjudication denovo - Appeals of the assessee are allowed for statistical purpose.
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2024 (6) TMI 1342
Condonation of delay in filing appeal before CIT(A) - delay of 335 days - HELD THAT:- It appears that the plea taken by the assessee to explain for not been able to prefer the appeal before the CIT (A) in time, is sufficient enough to prove that there was no intentional latches on the part of the assessee in doing so. The documents in regard to payment of tax in Norway and other details in support of such payment was the main documents to be considered by the assessee s advisor in preferring the appeal before the FAA, fact whereof needs consideration. It naturally took time particularly considering the situation emancing from covid 19 which was still persistent during the period when the assessee was required to get the details from Norway. Thus no negligence on the part of the assessee is found in preferring the appeal before the First Appellate Authority. With our humble understanding, find that the sufficient cause pleaded by the assessee before the First Appellate Authority and before us is in affirmity, in favour of the assessee without finding any deliberate delay or gross negligence on the part of him and therefore infact relying upon the judgment and the observations made by the Hon ble Supreme Court in its proper perspective declined to accept the reason given by the First Appellate Authority in rejecting the explanation rendered by the assessee in preferring the appeal before it. In fact, the explanation was not taken into consideration by the First Appellate Authority in its proper perspective and/or judiciously. We, therefore, condoning such delay in preferring the appeal before the Ld.CIT(A), remit the issue to the file of CIT (A) to adjudicate the issue afresh upon giving an opportunity of being heard to the assessee and upon considering the relevant evidence on record or which the assessee may choose to file at the time of hearing of the matter. The Ld.CIT (A) is directed to pass order strictly in accordance with law. Appeal filed by the assessee stands allowed for statistical purposes.
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2024 (6) TMI 1341
Revision u/s 263 - Deduction u/s 80P - Interest Income earned from deposits made with co-operative and other banks - assessee has considered interest income earned from SCDCC Bank Ltd./Syndicate Bank and Co-operative Societies, Dividend from SCDCC Bank Ltd. and Dividend from Co-operative Bank as income from other sources - HELD THAT:- PCIT without understanding that the assessee is not claiming deduction u/s 80P(2)(a)(i) or 80P(2)(d) of the Act on the income shown in Schedule 7, he directed the AO not to grant deduction u/s 80P(2)(a)(i) 80P(2)(d) of the Act on the above income of Rs. 1,54,05,706/-, which is shown as income from other sources by assessee in Schedule 7 to computation of income. Being so, in our opinion, the order passed by ld. AO vide order dated 19.4.2021 is not prejudicial so far as erroneous to the interest of revenue, when there was no claim by assessee u/s 80P(2)(a)(i) or 80P(2)(d) of the Act in respect of income shown by assessee in schedule 7 as discussed above. Accordingly, we annul the revision order passed by ld. PCIT u/s 263 of the Act. Appeal of the assessee is allowed.
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2024 (6) TMI 1340
Taxability of software license receipts as royalty under India-US Tax Treaty - case involved a foreign company selling software licenses to its distributor in India, who then sells to end-users -HELD THAT:- In light of categoric finding by the CIT (A) that end-users in the instant case have been only granted a non-exclusive / non-transferrable and a non-sub licensable licence, payment received by the assessee from Math Work India Pvt. Ltd., on sale of software to the end-users cannot be termed as royalty under the relevant DTA. Taxability of amount received by the assessee towards maintenance services - CIT (A) had held the same is inextricably linked to the supply of software licence and when the software licence itself is not taxable as royalty , the provisions of Article 12(4)(a) of the India-US DTAA would not apply. CIT (A) had relied on various ITAT Orders to hold that when receipts are on account of maintenance which is inextricably linked to the supply of software licence and when the supply of the software itself is not taxable as royalty , the receipts cannot be termed as fees for included services . In view of aforesaid reasoning we see no reason to interfere with the order of the CIT (A) and we uphold the same. Appeal filed by the Revenue is dismissed.
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2024 (6) TMI 1339
Addition u/s 69A - addition of cash deposits during demonetization period - HELD THAT:- Considering the rival submissions, we note that the assessee is an agriculturist and did not file return of income as he had no taxable income. The explanation of the assessee regarding substantial amount of cash deposits made in the bank accounts during demonetisation period has not been considered by the AO as well as CIT(Appeals). Further since the issue involved in this case relates to the demonetization period the issue has to be examined in the light of the instructions issued by the CBDT in regard to the cash deposited during the demonetization period. As relying on M/S. BHOOPALAM MARKETING SERVICES PVT. LTD. [ 2022 (11) TMI 331 - ITAT BANGALORE] we deem it fit to remit the issue to the file of AO to decide the issue afresh in the same terms. AO will consider the explanation furnished by the assessee in respect of the cash deposited during the demonetization period and in light of the CBDT instructions, if applicable to the assessee being an agriculturist. AO is directed to give reasonable opportunity of being heard to the assessee and decide the issue as per law. The assessee is also directed to produce evidence/documents in substantiating his case. The assessee is directed not to seek unnecessary adjournments for early disposal of the case. Assessee s appeal is allowed for statistical purposes.
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Customs
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2024 (6) TMI 1338
Refund claim - provisional release of seized goods under Section 110A of the Customs Act 1962 - betelnuts - HELD THAT:- This issue on an earlier occasion had been deliberated upon by this Court and by order dated 24.04.2024, had directed the learned DSGI to obtain instructions on the amount that would be acceptable to the respondents. However, as no specific instructions were forthcoming, and the respondent No. 2 maintaining their stand, without further dwelling on any other aspect, the order dated 24.04.2024 will serve to dispose of this matter. In terms of the order dated 24.04.2024, the respondent No. 2 is directed to refund the amount of Rs. 60 Lakhs to the writ petitioner on sufficient proof of identity being provided, within a period of 8(eight) weeks from the date this order is presented before the respondent No. 2, and if the respondent No. 2, fails to comply, interest on the expiry of the said 8(eight) weeks shall be payable on the refund amount at the rate of 12% per annum. The petition is allowed.
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2024 (6) TMI 1337
Seeking grant of bail - false declaration of the consignment as Fabric Glue/Radiators/Assorted Colours for smuggling of Red Sanders - submitting forged/false documents of the companies situate at Special Economic Zones - evasion of duty - proceeds of crime - scheduled offences - HELD THAT:- Indubitably, investigation by the Ed is in respect of money laundering of Rs. 51.12 crores which relate to the period from 20th August, 2014 to 14th November, 2015. However, scope and ambit of investigation under the PML Act is wider in nature which can take into account the period even before the date and time of commission of the scheduled offence. As already stated, the criminal activity had been committed even before the same has been notified as a scheduled offence for the purpose of PML Act. The ED was well within it s jurisdiction to investigate continuing offence/s, irrespective of the date and time of commission of the scheduled offence as observed by the Hon ble Supreme Court in the case of Vijay Madanlal Choudhary [ 2022 (7) TMI 1316 - SUPREME COURT ]. It is crystal clear that a criminal activity may have been committed before the same had been notified as a scheduled offence for the purpose of PML Act, but if a person has indulged in or continues to indulge directly or indirectly in dealing with proceeds of crime, derived or obtained from such criminal activity even after it has been notified as scheduled offence, may be liable to be prosecuted for offence of money laundering under the PML Act for continuing to possess or conceal the proceeds of crime (fully or in part) or retaining possession thereof or uses it in trenches until fully exhausted. The Supreme Court has made it very clear that the offence of money laundering is not dependent on or linked to the date on which the scheduled offence or if we may say so the predicate offence has been committed. The relevant date is the date on which the person indulges in the process or activity connected with such proceeds of crime. As already stated hereinabove and the details of period unearthed by the Investigating Agency, the applicant had already indulged in the process connected with proceeds of crime - The Ed has a power to investigate a continuing offence of money laundering as the said offence is not dependent on the date on which the scheduled offence or predicate offence has been committed. The E.D, by clinching material placed on record, has shown that the applicant has been in continuing possession of proceeds of crime. The broad parameters which are required to be considered are the nature of accusation, the nature of material and evidence collected by the Investigating Agency in support of the allegations, severity of the punishment prescribed for the offence, character and antecedents of the accused, circumstances which are peculiar to the accused and last but not least, possibility of securing his presence during trial as well as reasonable apprehension of witnesses being hampered or tampered - The applicant has not discharged onus of satisfying this Court as regards reasonable grounds for believing that he is not guilty of such offence and he is not likely to commit any offence while on bail, more particularly in the light of the fact that in the past, he had indulged in similar activities of smuggling red sanders by using fake documents. The application is devoid of merits - Application dismissed.
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2024 (6) TMI 1336
Valuation/undervaluation - ship spares received through the courier mode - eligibility for exemption from duty as per N/N. 12/2012 - Confiscation - redemption fine - penalty - HELD THAT:- This case relates to the low valuation of ship spares received through the courier mode, in the name of the appellant who was the Agent for the vessel, during a breakdown of the vessel MV Samsun which required urgent repairs. When Customs asked for a commercial invoice the same was subsequently submitted by the appellant. It is found that though there was a technical breach of the Act and Rules there was no intention to evade payment of duty. Nor was the appellant involved in any fraudulent activity that invited harsh penalties. The goods were also statedly exempt from payment of duty as per Notification 12/2012, as the vessel carrying a foreign flag was registered in India during its contract period as per the tender conditions issued by the Directorate of Shipping. Confiscation of goods - imposition of a personal penalty - HELD THAT:- Confiscation of goods and imposition of a personal penalty is meant to be remedial and hence coercive in its nature so as to serve as a deterrent. It can be imposed for a tax delinquency. However, the amounts imposed in this case are not commensurate with the degree of contravention of law involved. The charge is for a procedural lapse which is technical in nature and happened during an emergency which does not involve an act of intentional duty evasion. The ends of justice will be served after this long period, by setting aside the fine and penalties imposed by the impugned order - The eligibility of the goods for clearance free of duty as per the conditional exemption, if desired by the importer or his agent, may be verified by the proper officer and decided on merits - Appeal disposed off.
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2024 (6) TMI 1335
Penalty u/s 112(a) and 112(b) of the Customs Act, 1962 - absolute confiscation - Smuggling of foreign origin gold - recovery of Gold from the body of appellant no.2 - non-compliance with section 138B of CA, 1962 - no cognizance can be taken of the statements recorded during the course of investigation which have been relied upon by the ld. adjudicating authority - onus to prove u/s 123 of the Customs Act - HELD THAT:- In the case of COMMISSIONER OF CUSTOMS, AIRPORT AND ADMN. KOLKATA VERSUS SHRI HIMADRI CHAKRABORTY, RAHUL RANJAN, SHRI KISLAY, GIRISH SHARMA, SUJAY KUMAR SARKAR, M/S. AAI CARGO LOGISTIC AND ALLIED SERVICES COMPANY LIMITED [ 2023 (6) TMI 557 - CALCUTTA HIGH COURT] , the Hon ble Calcutta High Court has held that if an opportunity of cross-examination of persons from whom statements are recorded is refused by an adjudicating authority, then such statements cannot be relied upon by the adjudicating authority - the Hon ble Calcutta High Court has held that if an opportunity of cross-examination of persons from whom statements are recorded is refused by an adjudicating authority, then such statements cannot be relied upon by the adjudicating authority. It is observed that an adjudicating authority should allow cross-examination of the person(s) making the statements before relying on such statements against the appellants. In the present case, the ld. adjudicating authority has denied the opportunity of cross-examination of the Pancha witnesses sought by the appellant - By not allowing the cross-examination, the Department could not conclusively establish that the nine gold bars were seized from the appellant. There is no evidence available on record to dispute the claim made by the appellant. In view of the above, we hold that the benefit of doubt should be given to the appellant no. 2. Penalty imposed on the appellant no. 2 - HELD THAT:- It is observed that the appellant no. 2 has not claimed ownership of the gold. Penalty under section 112(a) and 112(b) can be imposed only when the active involvement of the appellant is established in the smuggling of gold - In the present case, the evidence available on record does not establish that appellant no.2 was actively involved in the smuggling of the gold. Accordingly, the penalty imposed on the appellant no. 2 under Section 112(a) and 112(b) of the Act is not sustainable in the facts and circumstances of this case. Penalty imposed on the appellant no. 1 viz. Shri Birendra Kumar Gupta - HELD THAT:- It is observed that the appellant no. 2 implicated him in his Statement dated 16.08.2015, as the person who handed over the gold to him. However, there is no corroborating evidence available on record to substantiate this allegation. Later, after four months, Shri Birendra Kumar Gupta was arrested in another case. While recording his Statement dated 13.01.2016 in that case, he admitted that he has earlier sold the said 9 kgs gold to Shri Bharat Sonar - the provisions of Section 138B of the Customs Act have not been followed by the ld. adjudicating authority before taking cognizance of the statement given by appellant no.1. Since the provisions of Section 138B have not been followed, the statements recorded from appellant no.1 and 2 cannot be relied upon to implicate them in the offence - the penalty imposed on the appellant no. 1 is not sustainable. As per Section 123 of the Customs Act, 1962, the burden of proving that gold is not smuggled in nature lies on the person who claims ownership of the said gold. In the present case, both the appellants have not claimed ownership of the gold and hence the provisions of sections 123 of Customs Act, 1962 are not applicable to them - the ingredients available in Section 112(a) and 112(b) of the Customs Act, 1962 are not existing in this case to impose penalty on both the appellants. Accordingly, the penalty imposed on both the appellants under Section 112(a) and (b) of the Customs Act, 1962 is not sustainable and hence the same is set aside. The penalties imposed on the appellant no. 1 and appellant no. 2 is set aside - appeal allowed.
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2024 (6) TMI 1334
Entitlement for conversion of Ex- Bond Bill of Entry into Into-Bond Bill of Entry or not - Section 46 (5) of Customs Act - HELD THAT:- In this case, it is not disputed that initially, the appellant has filed Bills of Entry for warehousing, if the Bills of Entry has been filed for warehousing, then Section 68 of the Act shall come into force for clearance of the said goods for home consumption. In terms of Section 68, the conditions are to satisfy that the duty, interest and penalty should be paid and an order of clearance of such goods for home consumption has to be made by the proper officer - Admittedly, in this case, the appellant filed the Bills of Entry for home consumption, but neither the duty was paid nor any order for clearance of such goods for home consumption was made by the proper officer and in the meantime, the appellant filed an application for withdrawal of Ex-Bond Bills of Entry and reinstatement of Into Bond Bills of Entry. The provisions of Section 46 (5) of the Act are applicable in a case where Ex-Bond Bill of Entry, Into Bond Bill of Entry or vice versa, can be permitted if there is no revenue loss or there is no fraudulent intention - it is a fit case for consideration of the request made by the appellant on 08.10.2021 in the light of the provisions of Section 46 (5) of the Act. Admittedly, on 08.10.2021, there is no change of rate of duty and till three months, in terms of Section 61 (2) of the Act, the appellant is not required to pay any interest. Admittedly, for clearance of goods under Section 68 of the Act, the provisions of Section 47 (2) are not attracted. We hold that the provisions of Section 47 of the Act, are not applicable in the present case as the appellant has initially filed in to Bond Bills of Entry for warehousing. Section 68 of the Act is applicable in this case. As after filing Ex-Bond Bill of Entry on 21.09.2021 28.09.2021, the condition of Section 68 of the Act, were not satisfied and as no assessment was done for clearance of goods in question, therefore, the application dated 08.10.2021 is required to be disposed off - Admittedly, on 08.10.2021, there is no change in rate of duty and if the said application filed by the appellant would have been considered and disposed off on the same date, in that case, the appellant was entitled for withdrawal/cancellation of Ex-Bond Bill of Entry and reinstatement of Into Bond Bills of Entry. It is concluded that the application for withdrawal/cancellation of Ex-Bond Bill of Entry and reinstatement of Into-Bond Bill of Entry, was required to be considered by the authorities below in terms of Section 46 ( 5) of the Act immediately i.e on the date of filing of the said application. Further, on the said date i.e. 08.10.2021, there was no revenue loss and the interest of revenue has not been affected. Further, no fraudulent act is proved against the appellant - the appellant is liable to pay duty on applicable rate at the time of clearance of goods for home consumption and required to pay interest, if any, in terms of Section 61 (2) of the Customs Act , 1962. The duty is to be calculated accordingly and the same is liable to be paid along with interest if applicable at the time of clearance of goods and accordingly, the liability of the appellant is to calculate. If any excess duty has been paid by the appellant, the same is refundable to the appellant along with interest. Appeal disposed off.
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Service Tax
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2024 (6) TMI 1375
Invocation of Extended period of limitation - demand of service tax and the relevant Cess - HELD THAT:- This Court is inclined to grant partial relief to the petitioner by directing the petitioner to deposit 25% of the disputed tax in cash within a period of 30 days from the date of receipt of a copy of this order. Subject to above compliance, the impugned order shall stand quashed and the case is remitted back to the second respondent to pass a fresh order on merits and in accordance with law. The impugned order, which stands quashed, shall be treated as addendum to the show cause notice No.130/2020 ST dated 31.12.2020 - Petition allowed.
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2024 (6) TMI 1333
Maintainability of appeal against order in original - Jurisdiction to pass order in appeal - HELD THAT:- The Order-in-Original was passed by the Adjudicating Authority in exercise of powers conferred under Section 73 [2] of the Finance Act, 1994 whereas the Order-in-Appeal has been passed by the Appellate Authority in exercise of powers conferred on it under Section 85 of the Finance Act, 1994. The learned counsel for the parties are not in disagreement on the fact that against the Order-in-Appeal, an appeal lies under Section 86 of the Finance Act, 1994 - The Order-in-Appeal has also mentioned that an appeal against the Order-in-Appeal would lie under Section 86 of the Finance Act, 1994 to the Customs, Excise and Service Tax Appellate Tribunal [CESTAT] within three months from the date on which the Order sought to be appealed against is communicated. It is in such backdrop, the rival contentions made by the parties are to be considered in the present writ petition. Availability of an alternative remedy does not operate as an absolute bar to the maintainability of a writ petition. It has, thus, been observed that entertainability and maintainability of a writ petition are distinct concepts. While an objection to the maintainability goes to the root of the matter, the question of entertainability is entirely within the realm of discretion of the High Courts. The issue involved in MAHARASHTRA CHESS ASSOCIATION VERSUS UNION OF INDIA (UOI) AND ORS. [ 2019 (7) TMI 1755 - SUPREME COURT] was whether a private agreement entered into between the appellant and the second respondent in the form of the constitution and bye-laws of the later could, by conferring exclusive jurisdiction on the courts of a particular place, oust the writ jurisdiction of a High Court which does not have territorial jurisdiction over the courts of that particular place, under Article 226 of the Constitution of India. It has been observed that the existence of an alternative remedy, whether adequate or not, does not alter the fundamentally discretionary nature of the High Court s writ jurisdiction and therefore, does not create an absolute legal bar on the exercise of the writ jurisdiction by a High Court. Whether in the fact situation obtaining in the present case and on the basis of the contentions advanced by the parties, an exceptional case has been made out for entertaining the writ petition? - HELD THAT:- The petitioner has, in the present writ petition, raised a ground that despite raising the issue of non-receipt of the Letter dated 04.09.2020 in the appeal, the Appellate Authority in the Order-in-Appeal did not give any consideration on it. It is trite to observe that this Court in writ proceedings does not determine any question of fact. Whether the Letter dated 04.09.2020 was issued or not and if issued, whether it was served upon or received by the petitioner or not; etc. are questions of fact and in the fact situation obtaining in this case due to claim and contrary claim, these are disputed questions of facts. It is settled that all questions of facts are to be decided by the Adjudicating Authority or the appellate authorities in the hierarchy, constituted by the statute, as such authorities are competent to deal with and decide on disputed questions of facts. The determination of such disputed questions of facts and to correct errors of fact fall within the province of the appellate authorities. As the said aspect is a disputed question of fact, this Court in writ jurisdiction is not required to embark on a fact-finding exercise on the said aspect. In the case in hand, the concerned Financial Year was 2015-2016 in respect of which the allegations regarding suppression of actual value of services provided and short-payment of Service Tax dues are made. The Demand-cum-Show Cause Notice dated 26.04.2021 was issued invoking the power under the proviso to sub-section [1] of Section 73 of the Finance Act, 1994. According to the petitioner, it had duly filed its returns in Form ST-3 for the Financial Year : 2015-2016. It is a settled proposition that the extra-ordinary and discretionary jurisdiction to issue a writ in the nature of certiorari under Article 226 of the Constitution of India is different from appellate jurisdiction. The writ jurisdiction extends only to cases where the orders are passed by tribunals or authorities without jurisdiction or by assuming jurisdiction where their exists none or in excess of their jurisdiction by crossing the limits of jurisdiction or by refusing to exercise jurisdiction vested in them or acting illegally or improperly in exercise of their jurisdiction causing grave miscarriage - It is not the case of the petitioner that the Demand-cum- Show Cause Notice was issued beyond the period of five years from the relevant date, thereby, making it a case as one without jurisdiction. Rather, it is the case of the petitioner that the Adjudicating Authority had issued the Demand-cum-Show Cause Notice by illegally extending the period of thirty months to five years. Having regard to the fact situation obtaining in the case in hand, the Appellate Tribunal can very well examine whether the petitioner was given adequate notice or was afforded adequate opportunity or a fair hearing in the proceedings before the Adjudicating Authority and/or before the first Appellate Authority. The contention of the petitioner as regards non-consideration of its Letter dated 15.09.2023 is also to be considered from the above perspective. Since this Court is of the considered view that neither the Order-in-Original nor the Order-in-Appeal has been passed in total violation of the principles of natural justice, the petitioner has not been able to make out an exceptional case on this point for entertaining the present writ petition. In view of the fact that a statutory, adequate and efficacious remedy of appeal has already been provided for to assail an order like the Order-in-Appeal before the Appellate Tribunal having the power to condone any delay, this Court is of the considered view that the writ petition preferred under Article 226 of the Constitution of India is not to be entertained at this stage, reserving the liberty to the petitioner to avail the statutory remedy of appeal provided under Section 86 of the Finance Act, 1994. It is accordingly observed. Consequently, the interim order passed earlier stands recalled. Petition disposed off.
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2024 (6) TMI 1332
Levy of service tax - Erection, Commissioning and Installation Service - providing services of laying of pipelines for water supply and drainage to Surat Municipal Corporation and others - HELD THAT:- he matter is no longer res-integra as it has already been decide in the case of SHREE HINDUSTAN FABRICATORS VERSUS C.C.E. S.T. -SURAT-I [ 2020 (2) TMI 110 - CESTAT AHMEDABAD ] that 'the activities under taken by the appellant cannot be classified under ECIS.' Since the present appeals appears to be part of the investigation which have been carried out against M/s. Shree Hindustan Fabricators and the present appellants are only the sub-contractor of the main contractor M/s. Shree Hindustan Fabricators and were engaged in providing service of laying pipelines for water supply and drainage to the Surat Municipal Corporation - Since the demand of service tax has been made in these appeals under service tax category of Erection, Commissioning and Installation Service however, in the similar matter of M/s. Shree Hindustan Fabricators, this Tribunal has held that the correct classification of such services should be under Commercial and Industrial Construction service as per Section 65 (25b) of the Finance Act, 1994. The impugned orders-in-appeal are without any merit - appeal allowed.
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2024 (6) TMI 1331
Levy of service tax - remuneration to Vice-Chairman cum Managing Director (VCMD) - reverse charge mechanism - whether Mr. Jayadev Galla, VCMD is an employee of the Appellant or whether he is providing services to the Appellant? - HELD THAT:- Mr. Jayadev Galla, who also happens to be a Co-Promoter and holding majority share along with his father in the company, was duly appointed by the Board on the basis of recommendation of the Nomination Remuneration Committee after due approval in the AGM. The Appellants have deducted TDS under Section 192 of Income Tax Act considering the remuneration/commission paid to Mr. Jayadev Galla as salary. There is no dispute that Mr. Jayadev Galla has not at all discharged his duty and functions as Managing Director towards the Appellant company, whether in part or full, because of his being otherwise as a Member of Parliament. A holistic evaluation would lead to the conclusion that a Managing Director is a key managerial person as envisaged under Companies Act, 2013, who is entrusted with certain functions and activities for running the company under the overall control of the Board and for which he is entitled to get certain remuneration as well as commission as provided under Companies Act, 2013 and Rules made thereunder. A Managing Director, as is defined under the Companies Act, will be an employee of the company and he may have other roles like Co-Promoter, Chairman, Vice Chairman, Director, etc., on the Board of the same company or on the board of other companies, as per the provisions of Companies Act, but his role as Managing Director, vis- -vis, company will be that of an employee and employer and therefore, any service provided by him in his capacity as Managing Director will not be covered by definition of service in terms of Section 65B(44) of Finance Act, 1944 - In this case, there is nothing on record that remunerations paid to him in his capacity as Managing Director included any amount paid or payable to him as Vice Chairman separately. The impugned order is set aside - appeal allowed.
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2024 (6) TMI 1330
Liability of subsidiary company to pay service tax - whether DCIPLP, Hyderabad is liable to pay Service Tax for the services rendered by its parent company in the USA, who had entered into a contract for providing services to DTTIPL, Gurgaon in connection with providing services to another company or otherwise? - HELD THAT:- It is an admitted fact that DTTIPL was to provide certain professional services to RCITPL and thereafter, DTTIPL sub-contracted the work of impugned services to DCL, USA, which in turn engaged DCIPLP, USA for provision of impugned services. The case of the department is that since the services will be deemed to have been provided by DCIPLP, USA s representational office at Hyderabad, therefore, latter is required to discharge Service Tax on the services rendered to DTTIPL. The admitted fact, which has not been disputed by the Revenue, is that it is DTTIPL, Gurgaon which has to provide service to RCITPL and for which it has outsourced the work to DCL, USA, who further outsourced to DCIPLP, USA. The service provider to RCITPL in this context would be DTTIPL, Gurgaon which, in fact, needed certain services to provide those impugned services for which it sub-contracted to DCL, USA, who in turn outsourced to DCIPLP, USA. DCIPLP, USA has raised the bill in US dollars for the services provided to DTTIPL and the amounts were paid in US dollars by DTTIPL to DCIPLP, USA. It is also not disputed by the Revenue that DTTIPL, Gurgaon has not discharged the Service Tax liability under RCM on this import of service for rendering services to RCITPL. The Adjudicating Authority has dealt with all aspects of the case based on the facts and evidence on record and has rightly came to the conclusion that there has been no service provided by the Respondents to DTTIPL and no consideration has been received by them. The stand of the Revenue, by merely relying on the fact that both DCIPLP, USA and the Respondents are to be treated as one single entity and therefore, whatever services provided by DCIPLP, USA to DTTIPL, it has to be treated as services provided by their representational office and consideration received by them has to be treated as consideration received by Respondent, would not be correct interpretation of the deeming provisions relied upon by the Revenue. There are no infirmity in the Order of the Adjudicating Authority - appeal of Revenue dismissed.
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2024 (6) TMI 1329
Demand of differential service tax - non-payment of service tax - Booking Cancellation Charges - Price difference Corporate Discount - Balance Written Back - Interest on Income tax refund - Warranty Claims (Parts) - Procurement charges (Volume Discount-Paint) - denial of CENVAT Credit without considering copies of invoices and documents to the Commissioner during personal hearing - interest and penalties. CENVAT Credit - HELD THAT:- If SCN is issued and Revenue seeks to deny CENVAT credit taken on the strength of any invoice, it is for the Revenue to specify as to why CENVAT credit against each of the invoices is being denied and the legal basis for such denial. Sadly, none of the details are available and, therefore, the matter insofar as the denial of CENVAT credit is concerned, has to remanded to the Commissioner to re-examine the invoices and indicate the invoices on which she decides to deny CENVAT credit giving specific reasons - thus, no ground for denial of credit is established on any invoice, CENVAT credit cannot be denied. Booking Cancellation Charges - HELD THAT:- The booking cancellation charges being in the nature of damages are not a consideration for the contract. Section 66E(e) of the Act covers such cases where an agreement is entered into to refrain from an act or to tolerate an act, i.e. where the consideration is to refrain from an act. Here, there is no agreement to cancel the booking. The agreement is to book the car and subsequently buy it. By cancellation, the buyer goes back on his promise to buy the car and the cancellation charges are in the form of compensation - the demand of service on the amounts received on this account needs to be set aside. Price difference Corporate Discount - HELD THAT:- It is a well settled legal principle that any amount received by an automobile dealer from the manufacturer as trade discount including quantity discount (which is a trade discount given on the basis of volume of purchase) are not amounts received for providing any taxable service but purely discounts received on account of the trade and meeting certain sales targets. Such amounts cannot be charged to service tax and, therefore, the demand on this account needs to be set aside. Balance Written Back - HELD THAT:- What is important is to see as to why these amounts were received back. If these amounts were due from the debtors for providing taxable services and if no tax was paid on those amounts and, service tax has to be paid. On the other hand the service tax was already paid before these debts were written off no service tax needs to be paid. If any amount is received towards the sale of goods or for any purpose other than providing a taxable service no service tax can be charged on that amount - this issue needs to be remanded to the Commissioner to give full opportunity to the appellant to provide details of the amounts received in each year and the purposes for which they were due in the first place and if any taxable service was rendered. Interest on Income tax refund - HELD THAT:- Clearly, no service tax can be charged on this interest as no taxable service was provided. The demand on this account needs to be set aside. Warranty Claims (Parts) - HELD THAT:- It is found that no service tax could have been demanded on the value of spare parts received by the appellant from manufacturer as it was only a sort of reimbursement of the cost incurred by the appellant while servicing the cars during warranty service. The demand on this account needs to be set aside. Procurement charges (Volume Discount-Paint) - HELD THAT:- The manufacturers of paints offer the appellant volume discount if it purchases large quantity of paints in a year. The amounts so received have been credited by the appellant as procurement charges (volume discount-paints). Clearly, no service tax could have been charged on this volume discount which the appellant had received from the paint manufacturers. The demand on this account needs to be dropped. The matter needs to be remanded to the Commissioner to re-determine the service tax demand - Appeal allowed in part and part matter on remand.
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2024 (6) TMI 1328
Levy of service tax - educational services rendered by the appellant to the students undertaking the course of BS - period of dispute is from April 2013 to June 2017. Appellant has submitted that the degree of BS leading to degree of MD awarded by DMSF is an approved course and is covered under the negative list given under Section 66B of Finance Act, 1994 and is exempted under Entry No.9 of Notification No.25/2012-ST dated 20.06.2012. HELD THAT:- It is undisputed fact that the appellant is engaged in providing educational service to students who have enrolled for BS course with the appellant and the appellant has collected tuition fee from the students. It is also undisputed fact that BS course is prerequisite for obtaining degree of MD which is equivalent to MBBS degree in India and that MD degree is offered by an institute in Philippines where students completing BS course with the appellant take admission in Davos Medical School Foundation, Philippines. It is noted that Schedule 3 issued under Section 13 of Indian Medical Council Act, 1956 in its Part II has included MD degree offered by Davos Medical School Foundation, Philippines as recognized medical qualification under Section 13 of Indian Medical Council Act, 1956. It is also undisputed fact that the appellant is not receiving any consideration from any other source than the tuition fee collected from the students enrolled for BS course. During the entire period of dispute if a service is provided in respect of education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force, then such service either did not attract service tax under negative list till 14.05.2016 or was exempted from payment of service tax under Notification No.25/2012-ST dated 20.06.2012 under Entry No.9 with effect from 14.05.2016. The appellant was providing educational service for a course called BS which was pre-requisite for a course for MD and MD qualification is recognized by Indian Medical Council Act, 1956. It is noted that in the relied upon interim order in the case of ITM INTERNATIONAL PVT LTD VERSUS CST, DELHI [ 2017 (7) TMI 689 - CESTAT NEW DELHI] , the third Member to whom the matter was referred has clarified in para 5 that degrees and diplomas are issued by universities and the colleges affiliated to such universities provided educational service and such colleges who themselves are not issuing degree certificate are not being subjected to levy of service tax. In similar manner, here the degree of MD which is the qualification recognized by Indian Medical Council Act, 1956 is awarded and a part of the said qualification requires study of BS course which is provided by the present appellant. Therefore, the educational service provided by the present appellant is a part of a curriculum for obtaining MD qualification which is recognized by law for the time being in force. Therefore, all such services which were provided by the appellant to students for arranging visa and air tickets are exempted under the said Entry No.9 of the said Notification No. 25/2012-ST dated 20.06.2012. It is held that during the entire period of dispute, the appellant was not liable to pay service tax on the activity of imparting education and also on any other services provided to their students. The impugned order is set aside - appeal allowed.
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2024 (6) TMI 1327
Eligibility to avail the CENVAT Credit on various input services for providing output services - Short term accommodation in Hotel services - Air-conditioned Restaurant Services - Rent-a-Cab services - Management Consultancy Services - extended period of limitation - penalty - HELD THAT:- It is an undisputed fact of the case that applicable service tax has been paid on the input services. There is also no dispute that the appellants are eligible to avail CENVAT Credit. The dispute is relating to whether certain disputed services are used in or in relation to the provision of output service. The services which are in dispute are security service, professional service in assisting the business. It can be seen from the factual matrix of the case that both the security service and professional service were utilized by the appellants during the course of conducting certain activities which forms a part of providing output service - prima facie, when the service tax has been duly paid on the input services and the when such services were utilised in provision of output service, then taking of CENVAT Credit cannot be objected to inasmuch as Rule 3 of CENVAT Credit Rules, 2004 specifically state that a provider of output service to avail such credit of tax paid on input service. The grounds for rejection of CENVAT Credit on input services in the order of the adjudicating authority which was upheld by the learned Commissioner (Appeals) is that the input services have not been specifically used in the premises which have not been registered with local authorities. From the facts of the present case, it clearly transpires that all output services have been provided by the appellant by duly discharging the service tax applicable thereon. Wherever separate service tax registration having been for provision of service from a particular facility or premises, the output service tax in respect of such facility or premises is duly discharged, and the input services with specific reference to such facility have been availed by the appellants. However, where there is no such separate facility or premises for which separate registration has been taken, the central registered office providing output service was discharging the service tax liability as well as taking the CENVAT Credit on eligible input services. Since, there is no legal requirement or any embargo in Rule 3 of CCR on availing inputs service only in respect of particular place or premises of an output service provider, there is no ground for restricting or denying an output service provider in taking credit of eligible input CENVAT Credit. In view of the above, the grounds on which the inputs service credit was disallowed in the original order, which was upheld by the impugned order, have no legal basis and accordingly is liable to be dismissed as being not legally sustainable. Vehicle hire charges - vehicle expenses - club membership charges - HELD THAT:- The definition of capital goods provided for motor vehicles, under clause (A) excludes motor vehicles falling under tariff headings 8702, 8703 which covers under its scope(i) motor vehicles for the transport of 10 or more persons, including the driver (ii) motor cars and other vehicles principally designed for the transport of persons, including station wagons and racing cars. In the present case, from the argument advanced by the consultant for the appellants, that whenever the vehicles owned by the appellants is in full use, the customers/clients using the hotel accommodation had to be provided with alternative vehicle/transport facility and thus the input services availed on Rent-a-Cab operator vehicle service is used in providing output service - the second limb of this requirement that the motor vehicle should be a capital goods is unable to be fulfilled, and thus under clause (B) of Rule 2(l) ibid, the input services availed in respect of such Rent-a-Cab operator vehicle service or such other motor vehicles is excluded from the scope of definition of input services in the present case - Similarly, the club membership services when used primarily for personal use has been excluded from the scope of input service by clause (C) of Rule 2(l) ibid in specific terms. In view of the above, the appellants are not eligible to avail CENVAT Credit for an amount of Rs. 14,231/- in respect of the above services as an input service. Determination of excess availment is with respect to ST-3 returns - HELD THAT:- Once, the credit has been allowed to the appellants without raising any objection, then excess CENVAT Credit cannot be calculated on account of periodical ST-3 returns, as these are only declarations in the prescribed format filed by the appellants. The mistakes or errors, if any, in such incorrect declaration of ST-3 returns have to be identified and the excess credit taken, arising on account of ineligible or incorrect credit amount having been taken has to be worked out. Obviously in the present case, neither there is any such explanation nor there is any discussion in the original order or impugned order, to justify the case of demand of excess availment of CENVAT Credit - In the absence of any specific grounds and the evidences leading to such CENVAT Credit being ineligible not produced in the adjudication stage, it is not feasible to fasten such liability on the appellants - there is no justification for demand of excess CENVAT Credit taken by the appellants for Rs.26,449/-, and the same is liable to be dismissed as legally not sustainable. Extended period of limitation - penalty - HELD THAT:- As rightly held in a number of decisions by the higher judicial forum, in respect of issues concerning interpretation of law, extended period of limitation cannot be invoked and penalty for evasion or for violation of law cannot be imposed. Therefore, in the present case, the adjudged demands having been held as not sustainable on merits, the imposition of penalty against the appellants by invoking extended period of demand is also not legally sustainable. The impugned order is liable to be set aside to the extent of denial of CENVAT Credit in respect of security services, Commission/service charges for a total amount of Rs.3,51,394/- and for denial of CENVAT Credit of Rs.26,449/- claiming as excess CENVAT Credit availed - In respect of CENVAT Credit of Rs.14,231/- being inadmissible CENVAT Credit on vehicle hire services, vehicle expenses, club membership charges which is held that being inadmissible in terms of Clause (B) and (C) of Rule 2(l) ibid, the impugned order upholding such confirmation in the original order is sustained. Appeal allowed in part.
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2024 (6) TMI 1326
Levy of service tax - scope of service - amount realized from the customers over and above the amount of trading/sale of goods - charges towards various services provided to their customers for facilitating them to take smooth and hassle free delivery of the cars - HELD THAT:- The issue is no longer res-integra and it has been exactly held by Ahmedabad Bench of this Tribunal in the case of M/s Jivan Jyot Motors Pvt. Ltd. [ 2023 (7) TMI 1178 - CESTAT AHMEDABAD ] that these services cannot be subjected to service tax. There are no merits in the appeal filed by the Revenue - appeal dismissed.
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2024 (6) TMI 1325
Nature of activity - manufacture or service - Business Auxiliary Service or not - manufacture of marble slabs/tiles by converting the marble blocks into slabs by sawing them and then subjecting them to the process of edge cutting, crack filling and polishing - HELD THAT:- A perusal of the order passed by the Assistant Commissioner shows that reliance has been placed upon a report dated 09.01.2017 submitted by the Range Officer regarding verification of certain documents including, RG-I, job work details, ledger account from which the Range Officer concluded that there was no correlation between ER-3 returns and the documents submitted by the appellant. The order also mentions that the contention of the appellant that the amount received for job work was already included in the excisable turnover and duty had also been paid on the same was not justified. The contention of the learned counsel for the appellant is that the said report could not have been relied upon without providing a copy of the said report to the appellant - This contention of the learned counsel for the appellant seems to be justified. If the said report was to be relied upon, it was incumbent upon the Assistant Commissioner to provide a copy of the report to the appellant. The impugned order dated 29.05.2018 passed by the Commissioner (Appeals) is, accordingly, set aside and the matter is remitted to the Commissioner (Appeals) to decide the appeal afresh - appeal allowed by way of remand.
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Central Excise
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2024 (6) TMI 1324
Violation of principles of natural justice - it is submitted by petitioner that without giving an opportunity to reply to the Show Cause Notice after providing the documents the impugned order has been passed - respondents agreed that the impounded documents were given to petitioner only on 6th December 2023 - HELD THAT:- The controversy whether the documents referred to in Paragraph No. 17 of the Show Cause Notice dated 25th September 2023 was given to petitioner along with Show Cause Notice, is not gone into - But the fact is, without copies of the impounded documents even if those documents referred to in the Show Cause Notice were given along with Show Cause Notice, petitioner may not be even able to effectively respond to the Show Cause Notice. The impugned orders are hereby quashed and set aside - matter is remanded to Respondent No. 1 for denovo consideration - petition disposed off by way of remand.
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2024 (6) TMI 1323
Clearance of goods for export without payment of duty in contravention of the conditions laid down in N/N. 42/2001-CE(NT) dated 26.6.2001 - failure to furnish / renew LUT - non-submission of the LUT - HELD THAT:- The SCN has not questioned the actual export of the goods but only the non-submission of the LUT for the relevant period. Post the export, certain documents are stated to have not been furnished by the appellant for verification as per the Order in Original. It is found that the charge of non-submission of documents was not an allegation mentioned in the SCN and the Ld. Original Authority and the Ld. Commissioner Appeals cannot travel beyond the allegations made out in the SCN and improve their case. Once the fact of the Export of the goods was not questioned, the confirming of demand along with interest and imposing an equal penalty under sec. 11AC of the Central Excise Act, 1944, for a procedural lapse was too harsh and not warranted. The ends of justice will be served by setting aside the fine and penalties imposed by the impugned order - the impugned order is set aside - Appeal allowed.
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2024 (6) TMI 1322
Clandestine Removal - paper boards - demand based on relying heavily on the statement of T Balakumar, Managing Partner - no other evidence placed on record by the Revenue to suggest the alleged clandestine removal - non-speaking order - violation of principles of natural justice - HELD THAT:- There appears to be a case made out by the appellant insofar as violation of principles of natural justice is concerned. To start with, it is contended that the statement of Balakumar is not considered in total, whereas the Revenue has picked up only the selective part, which is not justified. Other than this, there is no denial by the lower authorities that the Joint Commissioner did not afford reasonable opportunities since according to the appellants, it was the Additional Commissioner who has seized of the matter and hence, it was incumbent upon the Joint Commissioner to afford reasonable opportunities as prescribed under the statute. Thirdly, the adjournment appears to have been sought for on the ground of appointing a counsel to defend their case, has not been considered. Every person has a right to have a choice of his counsel to defend him before an authority. There is no speaking order to this affect as to why the said request was not acceded to by the first appellate authority. It also appears that the appellant has relied upon various judicial presidents which should have been considered and then the adjudicating authority should have passed a speaking order. The case remanded back to the file of the adjudicating authority, who shall pass a de-novo order after affording reasonable opportunities to the appellants - appeal allowed by way of remand.
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2024 (6) TMI 1321
Classification of Goods - Chewing Tobacco or Jarda Scented Tobacco - to be classified under CETH 2403 99 10 or under CETH 2403 99 30 - HELD THAT:- The issue in the present appeal is no more res integra and is covered by the decision in the case of M/S. FLAKES-N-FLAVOURZ VERSUS COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH [ 2014 (9) TMI 664 - CESTAT NEW DELHI (LB)] . Against the Final order of the Tribunal upholding the product to be Chewable Tobacco falling under Tariff Heading 2403 99 10 the appeal preferred by the Commissioner, Central Excise, Chandigarh before the Hon ble Supreme Court has been dismissed in COMMR. OF CEN. EXC. AHMEDABAD VERSUS URMIN PRODUCTS P. LTD. AND OTHERS [ 2023 (10) TMI 1112 - SUPREME COURT] and the order of the Tribunal has been upheld. Since the matter has been settled by the Hon ble Supreme Court in favour of the Respondent, the present appeals filed by the Department are liable to be dismissed - the appeals filed by the Department are dismissed.
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2024 (6) TMI 1320
Valuation of goods - related person - Whether the price at which the finished goods cleared by the appellant to M/s. H.D. Consortium India Ltd. can be considered as the 'Transaction Value' for the purpose of payment of central excise duty? - time limitation. Valuation of goods - HELD THAT:- As per the provisions of Section 4(1) of the Central Excise Act, 1944, it is observed that the price determined by the appellant is the sole consideration for sale of the finished goods and it is the Transaction Value for determination of Central Excise Duty by the appellant. Accordingly, it is observed that there is no need to resort to Rule 9 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 to determine the assessable value in this case. Hence, the demand confirmed by interpreting Rules 8 and 9 of the Central Excise Valuation Rules, 2000, to confirm the demand of central excise duty in this case is not sustainable in law. Accordingly, the demand confirmed in the impugned order by rejecting the 'Transaction Value' declared by the appellant in the invoices raised to M/s. H.D. Consortium India Ltd., is not sustainable. The appellant has been availing the benefit of Notification No. 20/2007-C.E. wherein they are eligible for refund of the whole of the duty of excise paid by them. Thus, there are merit in the contention of the appellant that there is no revenue loss to the exchequer on account of the clearance to M/s. H.D. Consortium India Ltd. at a lower price. The Appellant has adopted a higher value addition and duty was paid at a higher side. Thus, there is no evidence available on record to substantiate the allegation that the appellant has undervalued the finished goods sold to M/s. H.D. Consortium India Ltd. Accordingly, the demand confirmed in the impugned order on the allegation of undervaluation of the final product is without any basis and liable to be set aside. Time Limitation - HELD THAT:- The appellant is eligible to claim refund of the duty paid by them in PLA as per Notification No. 20/2007-C.E. dated 25.04.2007. The appellant has been filing returns regularly and disclosing all relevant information before the appropriate authority. The Range Superintendent has verified all the invoices and challans submitted by the appellant while sanctioning the refund claims. Thus, the suppression of fact with intent to evade payment of tax does not exist in this case. Accordingly, the demand raised by invoking the extended period of limitation is not sustainable. The demand of duty confirmed in the impugned order is not sustainable - Since the demand itself is not sustainable, the question of raising any interest on the demands or imposition of penalty does not arise. Appeal allowed.
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2024 (6) TMI 1319
Clandestine removal of goods - statements recorded during the course of investigation were not tested in terms of Section 9D of the Excise Act - requirement to prove with cogent evidence and not on the basis of preponderance of probabilities - HELD THAT:- The facts of the case in the case of M/S. SHIV SHAKTI SPONGE IRON LIMITED, M/S. BHARAT BHUSHAN SACHDEVA (FORMER DIRECTOR) (NOTICEE NO. 2) VERSUS COMMISSIONER OF CENTRAL EXCISE, BHUBANESHWAR BHUBANESHWAR-I COMMISSIONERATE [ 2020 (1) TMI 532 - CESTAT KOLKATA] is perused. In that case, no search was conducted in the premises of M/s Shiv Shakti Sponge Iron Ltd. the same has been recorded in the said order. Therefore, the facts of the case in hand are not similar to the case of M/s. Shiv Shakti Sponge Iron Ltd. Therefore, the said decision is not applicable to the facts of the case in hand. The statements recorded during the course of investigation which were relied upon, are to be tested and examined in terms of Section 9D of the Excise Act, 1994 in which the Respondent failed to do so. In that circumstances it would be in the interest of justice to remand the matter back to the Adjudicating Authority first to test the statements relied upon in terms of Section 9 D of the Excise Act, 1944 and thereafter, to pass an appropriate order in accordance with law following judicial pronouncements. Matter remanded back to the adjudicating authority for fresh adjudication - appeal disposed off by way of remand.
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2024 (6) TMI 1318
Eligibility for exemption in terms of N/N. 06/2006-C.E. dated 01.03.2006 - goods supplied to Mega Power Projects wherein the contract is awarded on the basis of international competitive bidding - HELD THAT:- The respondent has manufactured and supplied the goods by availing the benefit of exemption Notification No. 06/2006-C.E. dated 01.03.2006. The goods supplied by the respondent are covered under Sl. No. 400 of Notification No. 21/2002-Cus. dated 01.03.2002 which clearly exempts goods imported for Mega Power Projects. The only condition prescribed in the said Notification is that the respondent should submit a certificate from an Officer not below the rank of Joint Secretary to the Government of India in the Ministry of Power - the respondent has produced the certificate from the competent authority to the effect that the goods are required for the Mega Power Projects. Accordingly, the respondent fulfilled the condition stipulated in the said Notification. The ld. adjudicating authority has examined this issue and rightly held that the respondent is eligible for exemption in terms of Notification No. 06/2006-C.E. dated 01.03.2006 - there are no infirmity in the impugned order dropping the proceedings. The impugned order passed by the ld. adjudicating authority upheld - the appeal filed by the Department is dismissed.
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2024 (6) TMI 1317
Retrospective application of benefit of N/N. 50/2008-CE (NT) dated 31.12.2008 - supply of exempted goods both to SEZ units and SEZ Developers/ Promoters - respondent made an objection regarding availment of said exemption since the exemption at the relevant time was only applicable to goods cleared to units and not to SEZ Developers - HELD THAT:- The issue is squarely covered by the decision of the jurisdictional High Court in the matter of THE COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX AND THE COMMISSIONER OF CENTRAL EXCISE VERSUS M/S FOSROC CHEMICALS (INDIA) PVT LTD AND OTHERS [ 2014 (9) TMI 633 - KARNATAKA HIGH COURT] and Division Bench decision of this Tribunal in the matter of SUJANA METAL PRODUCTS LTD. VERSUS COMMISSIONER OF C. EX., HYDERABAD [ 2011 (9) TMI 724 - CESTAT, BANGALORE] . Following the above, it is held that supplies made by the appellant to Developers of SEZ are eligible for exemption and demand of duty and recovery of Cenvat credit is unsustainable. Penalty is also unsustainable. The impugned order is set aside - Appeal allowed.
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Indian Laws
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2024 (6) TMI 1316
Dishonour of cheque - Funds Insufficient - existence of legal liability or not - cheques were issued during the pendency of Insolvency Resolution Professional proceeding - vicarious liability of Director (Ex-Director) or not - liability without pointing out actual role and knowledge of issuing the cheque for the alleged liability to pay the amount of dishonoured cheque. The first ground of objection of this application is that under Section 14 of the IBC Act there is order of the NCLT Chandigarh and therefore no criminal liability of the applicants arise - HELD THAT:- In view of the law laid down in P. Mohanraj and others Vs. M/s. Shah Brohters Ispat Pvt. Ltd. [ 2021 (3) TMI 94 - SUPREME COURT] Section 14 of the IBC applies to the corporate debtor and it is not applicable to the natural person. From the proceeding under Section 138 of the N.I. Act they are not exonerated from criminal liability. Thus, these applicants, who are natural persons cannot be benefited by the said order of NCLT. and Section 14 of the IBC. The argument of learned Senior Counsel Shri R.N. Dhorde for applicants is not acceptable in this regard. The second ground for quashing complaint is absence of knowledge of issuing of cheque - HELD THAT:- It is admitted fact that applicants have not signed any of cheques in question. The statutory notices were not send to them after dishonour of cheques - It is necessary to plead the knowledge of all these applicants which is require as per first proviso of Section 141 of the N.I. Act. Their specific status and role is not specified in the complaint. Their liability to pay that amount under dishonoured cheque is not establishing from the averments in the complaint. It is not established from any document or conduct that disputed cheques were signed with their knowledge. Therefore, all the applicants cannot be held liable and deemed to be guilty as per Section 141 of the N.I. Act. This is a fit case to exercise inherent power under Section 482 of the Criminal Procedure Code to stop the abuse of the process of the Court and to secure ends of justice. Therefore, the argument of Senior Counsel for the respondent Shri R.S. Deshmukh is not acceptable in this regard. The application for quashing of the said complaint deserves to be allowed - Application allowed.
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