Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
July 10, 2024
Case Laws in this Newsletter:
Income Tax
Benami Property
Customs
FEMA
Service Tax
Central Excise
Highlights / Catch Notes
Income Tax
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CIT(E) rejected 12AB registration due to lack of details from assessee. Tribunal upheld order, distinguishing from prior case with documents.
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Reopening invalid; profit disclosed. Assessing Officer overreached, no fresh material. Mere change of opinion unacceptable.
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Unexplained cash credit, non-genuine purchases additions rightly deleted. Interest expenses disallowance rightly deleted due to sufficient capital.
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High Court upholds deletion of addition u/s 41(1) where liability time-barred & no deduction claimed earlier.
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Reassessment invalid: No fresh material for reopening. Disclosed facts in original assessment. Mere change of opinion untenable. Impugned notice unsustainable. Entitled to co-owner's benefit.
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Donations receipts doubted, but AO failed to disprove evidence. ITAT: Allow deduction u/s 35(1)(ii) for earlier donations despite later withdrawal.
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ITAT upheld CIT(A) allowing full deduction u/s 54EC for REC bonds invested before 2015 amendment capping deduction at Rs. 50L.
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Publishing biz' subscription fee & commission income not taxable as Fees for Technical Services or royalty. Just promotion, sale, distribution. No special skills.
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Prior period expenses disallowed in first year of business. Reassessment quantum addition can't be challenged via rectification order.
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Live transmission fees not royalties under India-Australia DTAA. AO to verify amounts. Balkrishna fees not royalties. Appeal allowed.
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TP Adjustment: Proportionate adjustment for third-party transactions remitted for computation. Notional interest on receivables deleted following precedent.
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Tribunal upholds Commissioner's revision order on deduction u/s 80P(2)(d) for interest income from co-op bank deposits.
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TP Adjustment: Tribunal upheld assessee's stance on dissimilar comparables, excluding E-clerx, Acropetal, Infosys BPO & TCS EServe.
Customs
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Food import entry points: ICD/SEZ, LCS, seaports. Authorized officers: FSSAI, superintendents, appraisers, inspectors, examiners.
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Self-assessed goods before tariff hike. Reassessment orders quashed. Refund of additional duty allowed. Applicant to prove no unjust enrichment.
FEMA
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FEMA violation: Forex trading bitcoins in USD led to seizure of ₹1.97 crore. ED's bid to initiate fresh proceedings rejected.
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Clerk not instrumental in business; director not liable for past acts. Mere designation insufficient for vicarious liability under FERA.
Benami Property
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Benami Act amendment effective 2016. Cases from 2011-2015 pre-date it. SC ruling in Ganpati case led to High Court setting aside orders by consensus.
SEBI
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AIF schemes availing dissolution/additional liquidation period must file info memo/details with SEBI. Formats prescribed. In-specie distribution conditions specified.
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Passive funds like ETFs & Index Funds can invest up to 35% in group cos of sponsor if based on approved indices. Rebalance in 60 days else restrictions.
Articles
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2024 (7) TMI 446
Reopening of assessment u/s 147 - notice beyond the period of 4 years - Issue of shares at premium - reopening of assessment can be said to be change of opinion? - HELD THAT:- As made abundantly clear therein that the issue with regard to rise in share premium was discussed during the course of assessment proceedings and the said issue was well within the mind of then AO at the time of scrutiny assessment. At the time when the original scrutiny assessment was concluded, then Assessing Officer had already considered the issue of rise in share premium and thereafter the assessment was framed, therefore, it would not be now permissible in eye of law that revenue can reopen the concluded assessment proceedings on the same issue and details. It cannot be said that any new or tangible material has come in possession of the revenue which was not truly and fully disclosed by the assessee at the time when the assessment proceedings were concluded. Accordingly, in our view, notice u/s 148 of the Act seeking reopening of the concluded assessment is nothing but mere change of opinion. Decided in favour of assessee.
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2024 (7) TMI 445
Reopening of assessment u/s 147 - reason to believe - unexplained gold u/s 69 as petitioner could not offer any explanation with documentary evidence and failed to furnish the source of purchase of gold - HELD THAT:- It cannot be said that the AO came in possession of any new and / or tangible material. We say so because the very said ornaments were already recorded in the books of account of the petitioner. More so, while scrutiny u/s 143 (3) of the Act, the petitioner has submitted all the details such as quantity of gold ornaments, details of closing stock along with relevant documents, details of opening stock purchase, consumption, yield and sale both with respect to raw material as well as with respect to finished goods on 2nd January 2016, meaning thereby, forming of reason to believe is merely based on the information so received by the AO. Thus, it cannot be said that the AO has recorded its independent satisfaction, but only relied upon the information received from the Investigation Unit, which is nothing, but said to be borrowed satisfaction. Since no tangible and / or new material has come in possession of the Assessing Officer, the reassessment proceedings can also be said on the basis of the change of opinion, which, according to our considered opinion, is not permissible in the eye of law.
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2024 (7) TMI 444
Denial of registration u/s. 12AB - CIT(E) unable to arrive about the genuineness of the activities carried out by the assessee and thereby rejected the application for registration - HELD THAT:- The decision of the Co-ordinate Bench [ 2023 (9) TMI 1493 - ITAT AHMEDABAD] is clearly distinguishable with the facts of the present case, wherein assessee replied to the notices issued by CIT(E) and also produced copies of the Paper Book before us. It is for this reason, the Co-ordinate Bench of this Tribunal, the very same Members of the Bench, set aside the matter back to the file of the CIT(E) and to examine the documents afresh in accordance with the provisions of law after affording reasonable opportunity of hearing to the assessee. But in the present case, the Ld. CIT(E) clearly recorded the assessee failed to furnish any detail pursuant to the notices issued - In the absence of any details, the Ld. CIT(E) unable to satisfy himself about the genuineness of the activities carried out by the assessee and also rejected that the Applications in Form 10AB filed beyond the due date prescribed under the Act. No infirmity in the order passed by the Ld. CIT(E). Appeal filed by the assessee is hereby dismissed.
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2024 (7) TMI 443
Validity of reopening of assessment u/s 147 - profit earned by the petitioner by carrying out trading in shares treated as unexplained credit u/s 68 - HELD THAT:- Petitioner has disclosed truly and fully all material facts including the derivatives (future transactions) which are referred to in the reasons recorded in the books of accounts and after scrutinizing the same, AO has passed the order u/s 143 (3) assessing total income for the Assessment Year 2015-16. Though the assessee has offered to tax the profit in its return of income which was already assessed during the regular course of assessment, the petitioner has also filed additional affidavit placing on record the profit and loss account to demonstrate that the petitioner has already offered profit earned from the 09 transactions referred in the reasons recorded in the profit and loss account. Therefore, it cannot be said that the income of the assessee on profit earned by the petitioner by carrying out trading in shares is not reflected and has escaped the assessment. It appears that the Assessing Officer without verification of the record has blindly relied upon the information received and picked up the 09-transaction entered into by the petitioner in BSE F O Segment. Respondent No. 1 has not even co-related such information with the material available with on the record, more particularly, when the said issue has been thoroughly scrutinized in the regular assessment. It is also apparent that the petitioner has provided all the information and thereby disclosed truly and fully all material facts during the regular course of assessment. Therefore, the impugned show-cause notice is without jurisdiction and contrary to the provision of the Act and is liable to be quashed and set aside as there is no fresh tangible material available on record with the AO to have reasonable belief that the income has escaped assessment. The impugned notice for reopening is issued on merely change of opinion in respect of the fact of that the entire profit is offered to tax by the petitioner in the books of accounts and the same is reflected in the return of income filed by the petitioner which was scrutinized and the assessment order u/s 143 (3) of the Act was passed. Decided in favour of assessee.
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2024 (7) TMI 442
Addition u/s 68 - unexplained cash credit - Addition made as the said amount as the respondent assessee received it on account of transaction of sales made on NSEL - Tribunal has deleted the addition after taking into consideration the fact that the said amount is already accounted in the books of account of the respondent assessee - HELD THAT:- Considering the facts of the case, it is not disputed by the appellant Revenue that the amount of Rs. 108.97 Crores is credited in sales account offering as income by the respondent assessee and therefore, addition made by the AO u/s 68 of the Act was rightly deleted. Addition on account of non-genuine purchases - Tribunal arrived at a finding of fact on the basis of the Special Audit Report, wherein it is pointed out that the respondent assessee had shown purchase of Cotton Wash Oil (CWO) more than the sales shown - HELD THAT:- Tribunal, considering reconciliation provided by the assessee with regard to purchase of 10,180 Metric Ton of CWO for Rs. 59.70 Crores on delivery basis came to the conclusion that purchase of 10,180 Metric Tons of CWO for Rs. 59.70 Crores cannot be said to be excessive as it is established by the assessee on the basis of the supporting evidence that such purchase was duly recorded and corresponding sale was also proved having been duly recorded and recognized income in the books of account of the assessee and therefore, addition was rightly deleted by the Tribunal. Disallowance of interest expenses - HELD THAT:- Tribunal has recorded a finding of fact that as per the balance-sheet of assessee, there was a capital and reserved to the extent of Rs. 420 Crores with the assessee copany at the relevant time which was sufficient to give interest through advances in question. The Tribunal, therefore, rightly deleted the disallowance made by the Assessing Officer on account of interest expenses.
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2024 (7) TMI 441
Addition u/s 41(1) - addition for cessation of the liability of the assessee - right to recovery of the said amount has become time barred - ITAT deleted addition - HELD THAT:- The provisions of Section 41 (1) of the Act provides for the liability and there can be cessation of liability only when the assessee has returned of such liability in its books of account and the provisions of Section 41 (1) of the Act cannot be invoked under the circumstances on the ground that the payment of liability has become barred by limitation and there is no legal right or remedy to enforce such liability against the assessee. Tribunal has, therefore, rightly deleted additions made by the Assessing Officer invoking the provisions of Section 41 (1) of the Act inasmuch as the assessee has never claimed any allowance or deduction in respect of loan, expenditure or trading liability which the assessee has subsequently recovered and any benefit of remission or cessation thereof is availed by the assessee. Considering the decision of Bhogilal Ramjibhai Atara [ 2014 (2) TMI 794 - GUJARAT HIGH COURT] and Dattatray Poultry Breeding Farm (P) Ltd [ 2019 (4) TMI 1171 - GUJARAT HIGH COURT] Tribunal has held that the provisions of Section 41 (1) of the Act cannot be invoked where the existence of liability was doubted as such the addition could have been made in the year in which it was claimed or it could have been treated as unexplained cash credit in hands of the assessee under Section 68 of the Act as there is nothing on record to suggest that there is remission or cessation for the year under consideration. Tribunal has not committed any error in deleting the addition by arriving at a finding of fact that the said amount pertaining to five parties, there was nothing on record to suggest that there was remission or cessation of such liability of the respondent assessee so as to invoke the provisions under Section 41 (1) - Assessee appeal allowed.
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2024 (7) TMI 440
Validity of reassessment proceedings - capital gain on sale on co-owned land - reassessment proceedings on the basis of the report obtained from the DVO in case of co-owner making allegation of suppression of lower valuation for sale of land in question - as in the case of co-owner as referred the matter to the DVO for fair market valuation and long term capital gain was computed by making addition under Section 50C of the Act based upon the valuation report of the DVO - HELD THAT:- Reasons recorded nowhere mentioned about forming reason to believe due to the report of the DVO in case of co-owner and therefore, reliance placed on the report of the DVO by the respondent in the affidavit-in-reply to justify the reopening is not tenable as no fresh material to justify the reassessment forming part of the reasons recorded can be pressed into service to justify the validity of the reassessment notice. In view of the foregoing reasons, when the petitioner of Special Civil Application No. 22046 of 2019 has disclosed fully and truly all the material facts during the course of the original assessment, there was a change of opinion for reopening of the assessment by issuing the impugned notice u/s 148 of the Act. Therefore, the reliance placed on behalf of the respondent on the decision of Yogendrakumar Gupta [ 2014 (7) TMI 391 - GUJARAT HIGH COURT] would also not apply as the allegation in the said case pertains to the transaction with shell companies which stands on a different footing. The impugned notice under Section 148 of the Act therefore cannot be sustained. The petition deserves to be allowed. Reliance on benefit of other co-owners enjoyed - Different yardstick cannot be applied for treating the notice under Section 148 of the Act for reopening in view of the decision relied on by the petitioner in case of Kumararani Smt. Meenakshi Achi [ 2006 (10) TMI 123 - MADRAS HIGH COURT] wherein it is held that the assessee who is also a co-owner of the property, is entitled to the benefit enjoyed by the other co-owners, whose valuation of the same property, at the same rate as that of the assessee, was accepted by the Commissioner of Income Tax and recorded in the order under appeal by the Tribunal. Therefore, in the present case also, when the notice of reopening is held bad in law in case of the co-owner, on the same ground, the impugned notice for reopening, on the same facts, would not sustain and permitting such notice to be proceeded would be an exercise in futility. Assessee appeal allowed.
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2024 (7) TMI 439
Validity of reassessment proceedings - reasons recorded for reassessment on the basis of information received from the Investigation Wing, Ahmedabad - cash deposited in the bank account by the petitioner - HELD THAT:- The assessee has disclosed full and true material facts before the AO during the original assessment proceedings and the Assessing Officer, after considering such notice, has passed the impugned assessment order dated 26th December 2019 un/s 143 (3) of the Act accepting the return of income of the assessee. The reasons recorded by the respondent - Assessing Officer is nothing, but mere change of opinion. Learned advocate for the respondent has tried to supplement to the reasons recorded by the report of the Investigation Department at Annexure : R1 to the affidavit-in-reply, but none of the parties referred to therein are part of the reasons recorded as the reasons recorded only referred to the cash deposited in the bank account and there is no reference to any purchase made by the petitioner which are referred to in the report of the Investigation Department. Therefore, AO could not have assumed jurisdiction to issue notice for reopening upon what is recorded by him for reopening the assessment. We are of the opinion that the impugned notice for reopening of the AY 2017-18 is nothing but a change of opinion, in view of the decision of the Hon ble Supreme Court in the case of Kelvinator of India Ltd. [ 2010 (1) TMI 11 - SUPREME COURT ] - The impugned notice issued under Section 148 for reopening of the Assessment Year 2017-18 is hereby quashed and set aside. Decided in favour of assessee.
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2024 (7) TMI 438
Disallowance of deduction claimed u/s 35(1)(ii) - institutions are involved in issuing bogus donations receipts - AO disallowed these deductions based on a report from the Investigation Wing, which alleged that the donations were bogus and provided in exchange for commissions - HELD THAT:- AO has relied upon the report given by the Investigation wing. He did not make any independent enquiry to prove that the view expressed by the Investigation wing would be applicable to the assessee. AO has not brought any material to disprove the evidences furnished by the assessee with regard to the donations paid by it to the institutions. There is also no proof to show that the cheque paid by the assessee has been ploughed back by way of cash to the assessee. It is settled proposition that the subsequent withdrawal of recognition granted u/s 35(1)(ii) will not be a bar for granting deduction to the donations paid earlier. Accordingly, we hold that the claim made by the assessee u/s 35(1)(ii) of the Act in both the years should be allowed. Assessee appeal allowed.
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2024 (7) TMI 437
LTCG - Deduction u/s 54EC - investments made in REC bonds - bonds purchases prior to the sale of property which resulted in LTCG - CIT(A) held that the investment in long term asset eligible for deduction u/s 54EC is not restricted to Rs 50 Lacs - scope of amendment in Proviso I of the Section 54EC to be prospective or retrospective in nature - HELD THAT:- CIT(A) considered notes and clauses of Finance Act, 2014 and Memorandum explaining provision of (Bill no.2) of the Finance Act, thereby Parliament has to remove the ambiguity in the proviso to section 54EC(1) of the Act, by insertion of second proviso with effect from 01.04.2015 onwards, which is applicable prospectively. It is undisputed fact that the investments made by the assessee in REC Bonds on 31.03.2010, 08.04.2010 and 21.07.2010 for Rs. 50,00,000/- each which are much before the insertion of 2nd proviso to section 54EC(1) of the Act with effect from 01.04.2015. Further, the above amendment was considered in the case of Aspi Ginwala and Shree Ram Engg. Mfg [ 2012 (4) TMI 195 - ITAT AHMEDABAD] the above decisions are also extracted in his order passed by Ld.CIT(A) at parahraph 4.3. Thus, we do not find any infirmity in the order passed by the Ld.CIT(A), therefore, the ground raised by the Revenue is devoid of merits and liable to be dismissed.
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2024 (7) TMI 436
Unexplained money u/s. 69A r.w.s. 115BBE - cash found during the search - assessee claims himself to be an agriculturalist and doing business of real estate/builder - HELD THAT:- Assessee/family agricultural income cannot be doubted and ought to have been accepted. Likewise, according to the assessee had rental income of Rs. 8,47,500/- and commission/brokerage from real estate transactions of Rs. 3 lakhs which totals to Rs. 23,22,500/-, which will be sufficient to explain the balance amount of Rs. 22,89,925/- (sustained by the ld.CIT(A)). Assessee has filed paper book containing more than 53 pages to prove the agricultural income, rental income as well as the commission income and prayed us to remit back issue to AO, since the assessee did not get proper opportunity before the AO. Therefore, relying on the decision in the case of Tin Box Company [ 2001 (2) TMI 13 - SUPREME COURT] we restore the addition back to the file of the JAO. Since, the revenue is not in appeal, we confirm the CIT(A) action of deleting Rs. 4,84,075/-. We direct the assessee to file all the documents to prove the agricultural income, rental income and commission and if the AO finds that the explanation given by the assessee is correct, then no addition may be made or else addition may be sustained. AR, has undertaken to file all the details and participate in the assessment proceedings and the AO to frame in accordance with law. Appeal filed by the assessee is allowed for statistical purposes.
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2024 (7) TMI 435
Income deemed to accrue or arise in India - FTS - treatment to Commission income and receipts from Subscription fee - Assessee is in the business of publishing and selling of books and journals receiving income Subscription fee from third party end users customers in India on behalf of the SMG Affiliated Publisher entities which the revenue treated as FTS - HELD THAT:- As decided by Hon ble Jurisdictional High Court in assessee s own case for the A.Y. 2013-14 [ 2023 (7) TMI 618 - DELHI HIGH COURT] for a service to be construed as a technical service, it should involve the application of some special skill or knowledge concerning the technical field. Consultancy service involves offering advice, or extending advisory services by a professional, although there could be an overlap between technical and consultancy services. In some cases, consultancy services may involve entering a technical field. There are also cases where consultancy services involve rendering advice, with or without expertise in technology. There is nothing in the Commissionaire Agreement which is suggestive of the fact that the respondent/assessee was required to discover, develop, or define/evaluate the goals that SIPL had to reach, or even frame policies that led to these goals, or supervise or execute or change policies that were already adopted. The respondent/assessee was not performing, as it were, executive or supervisory functions. All that the respondent/assessee was obliged to do was render support to business operations. There is no reference to any special skill or knowledge that the respondent/assessee personnel brought to bear in rendering the services encapsulated in the Commissionaire Agreement. Promotion, sale, or distribution of SIPL's publications, or rendering support services of the nature referred to in Article 3 of the Commissionaire Agreement, although involving human intervention, do not, in our view, fall in the category of technical and/or consultancy services. There were no special skills or knowledge that the respondent/assessee's personnel were required to possess to render the services that were contemplated under the Commissionaire Agreement. The respondent/assessee also did not render any professional advice, or service concerning a specialized field. As indicated above, for a service to be categorized as a technical service, it had to be concerned with applied science, i.e., using scientific knowledge for practical applications, or industrial science concerning, relating to or derived from industry. The subscription amount cannot be treated as royalty, having regard to the fact that there is nothing on record to suggest that the respondent/assessee has granted the right in respect of copyright to the concerned subscribers of the e-journals. All that the respondent/assessee did was to sell the copyrighted publication to the concerned entities, without conferring any copyright in the said material. Decided in favour of assessee. Therefore, the contention of DR that on account of there being human intervention, the services rendered by the respondent/assessee should be considered as technical services, is a submission, which according to us, is completely misconceived. Decided in favour of assessee.
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2024 (7) TMI 434
Application for extension of stay of demand - proceedings going on with grant of extension of stay has exceeded 365 days - non-disposal of rectification application by DRP - HELD THAT:- As examined the assessee has all throughout acted in a bonafide manner and has cooperated with the department but has not got any relief by way of disposal of its rectification application which is pending before the department. The assessee has also taken reasonable efforts to pursue the matter for a speedy disposal from the department as had been evidenced on record. Considering the totality of facts and circumstances of the case, specifically the delay caused by the department in not disposing the rectification application filed by the assessee dated 31.12.2020, we are of the considered view that DRP shall pass order within a period of two months from the date of receipt of this order and the ld. DR is directed to make all efforts and communications with the DRP so that the said pending proceedings are completed within the said time frame. The assessee is also directed to ensure requisite compliance with any notices of the DRP, if any, and make reasonable efforts so that the proceedings before the DRP are completed within the time limit specified in this order. There is also an appeal pending before the ITAT filed by the assessee. Therefore, this stay is granted for a period of 180 days or till the disposal of the appeal, whichever is earlier. The stay is granted as per the above terms and conditions
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2024 (7) TMI 433
Validity of order passed u/s 154/147/143(3) - Disallowance of prior period expenses - As contented the relevant previous year consisting of 2 months was the first year of the appellant/ assessee s business; therefore, there was no prior period expenses - HELD THAT:- The quantum addition and charging of interest in the reassessment order dated 02.09.2011 passed under section 147/143 of the Act cannot be raised during the appellate proceedings initiated in consequence to the revision/rectification order dated 24.10.2018 passed under section 154/147/143(3) of the Act. Basically, the appellant/assessee, in consequence to the order of the Hon ble High Court against penalty order, filed an application u/s 154 of the Act requesting deletion of the penalty demand from the System, which was acceded to by the AO. We are of the considered opinion that the rectification order passed under section 154/147/143(3) of the Act cannot be taken as escape route to challenge the validity and quantum addition made in the reassessment order passed under section 147/143 of the Act. We, therefore, do not find any merit in the appeal challenging the quantum addition. Hence, we dismiss grounds no. 2 and 3 challenging the quantum addition. Appeal of the assessee is dismissed.
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2024 (7) TMI 432
Royalty receipts in respect of live transmission programmes - amount received by the appellant under the Broadcasting Agreement under the India-Australia DTAA - Whether payments in lieu of live and non-live transmission of feed received from ESPN is a payment covered under the definition of royalty? - HELD THAT:- As we take note of the findings of the Coordinate Bench in AY 2018-19 [ 2023 (8) TMI 1253 - ITAT DELHI] it comes up that the Coordinate Bench had relied another Coordinate Bench order [ 2020 (3) TMI 1428 - ITAT DELHI] dated 20.3.2020 in the case of Fox Network Group Singapore Pte. Ltd. vs. ACIT (International Taxation), Circle 1(3)(1), New Delhi to benefit the assessee holding that the fee received towards live transmission cannot be taxed as royalty. This decision of the Delhi Tribunal has been affirmed by the Hon ble Delhi High Court in the case of CIT vs. Fox Network Group Singapore Pte. Ltd. [ 2024 (1) TMI 1008 - DELHI HIGH COURT] Decided in favour of the appellant-assessee. Addition to the license fee received on the basis of the difference in the Rupee amounts reported by the appellant and the Rupee amounts reported by Culver Max Entertainment Private Ltd. in Form 15CA/CB - there is difference in exchange rates applied by the Culver Max Entertainment Ltd. while making remittances and exchange rates adopted by the appellant in computing the INR equivalent to US Dollar invoiced rates raised on Culver Max. Ld - HELD THAT:- DR could not dispute the aforesaid facts of adoption of different rates of exchange by the two parties leading to anomaly. As, while determining the above ground no. 2 to 5, we have concluded the fee received towards live transmission to be not taxable as royalty, there is substance in the contention of the Ld. Counsel that 95% of the receipts attributed to live portion deserve to be deleted. As for remaining Rs. 20,28,253/-, the issue is restored to the files of the AO for verification of the reconciliation, on basis of difference in exchange rates, as submitted by the appellant before us. Accordingly, the Ground No. 6 is partly allowed in favour of the assessee. Taxing the receipts from Balkrishna Industries Limited as royalty both under Income tax Act and the Article 12 of the India-Australia - HELD THAT:- The right to use the intellectual property should be independent of any act of the owner of the intellectual property. It should not be restrictive in purpose or mode of use. The commercial partnership agreements no where indicates that BAL, as sponsor, had any claim in the logo or other intellectual property of assessee, beyond the event of BBL. In fact, in para 7.3 of draft assessment order, AO refers to the rights given to the sponsor as, bouquet of services from the assessee. This has been relied by the DRP too. This finding in itself is erroneous because if assessee was providing any services , there was no question of consideration being for transfer or exclusive use of any copy rights. After going through the impugned orders, we are of considered view that, there was failure on part of AO and DRP also, to have not gone into the recitals of agreements in holistic manner, but very summarily the conclusion was drawn that, BAL as sponsor had got any exclusive right in the logo or other intellectual property of assessee. The right was not in the logo or other intellectual property of assessee, but right to be part of Big Bash League, organized by assessee, as sponsor and represent it to the viewers of this event, the said association, to market it s own product or brand. Thus we are inclined to allow this ground no. 7. The remaining grounds being general or consequential need no separate adjudication. Sequel to above, the appeal of assessee is allowed.
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2024 (7) TMI 431
Dismissal of appeal by CIT(A) ex-parte - improper service of notice - notices were sent to an incorrect email address, which led to the non-receipt of the notices by the Assessee - HELD THAT:- Procedural lapse denied the Assessee a fair opportunity to be heard. The principle of natural justice mandates that an assessee must be given an adequate opportunity to present their case. The judicial pronouncements consistently emphasize the importance of proper service of notices as a fundamental requirement for the validity of proceedings under the Income Tax Act, 1961. Extrapolating these principles to the context of email communications, it is evident that incorrect email addresses would constitute improper service, thereby invalidating any subsequent actions based on such notices. Courts have repeatedly held that procedural requirements must be strictly followed to ensure fairness and legality in tax administration. Thus, we are of the considered opinion that CIT(A) has erred in dismissing the appeal ex-parte without providing the Assessee a fair opportunity to present their case. Therefore, in the interest of justice, we set aside the orders of CIT(A) for both the assessment years and restore the matter back to the file of Ld.CIT(A) for fresh adjudication, after providing an adequate opportunity of being heard to the Assessee. Appeals of the assessee allowed for statistical purposes.
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2024 (7) TMI 430
TP Adjustment - Proportionate adjustment for third-party transactions - HELD THAT:- We find that it is undisputed that AO/TPO has not given effect to the directions of the DRP. In such situation, the request of the ld. DR for the Revenue that the matter may be remitted to the AO/TPO cannot be accepted and he cannot be given a second inning. In our considered opinion, the submission of assessee has cogency and we do not find any infirmity in the same. However, the computational aspect can be checked by the AO only. Hence, for computational purposes, we remit the issue to the file of AO who should check the computational aspect. Notional interest on outstanding receivables - HELD THAT:- The assessee deserves to succeed on account of the fact that in assessee s own case for AY 2014-15 [ 2019 (9) TMI 1599 - ITAT DELHI] 2010-11 [ 2019 (10) TMI 1589 - ITAT DELHI] the issue is decided in favour of the assessee and Hon ble Delhi High Court in AY 2014-15 [ 2021 (10) TMI 751 - DELHI HIGH COURT] left the question open regarding whether transfer pricing adjustment on delayed receivables could apply to a debt free company. Hence, the submission of assessee that the decision of Hon ble Delhi High Court in assessee s own case for AY 2014-15 and Tribunal decision in assessee s own case for AY 2010-11 still applies. We find ourselves in agreement with the submissions of the assessee, since in assessee s own case, the issue is decided in favour of the assessee. Following the principles of stare decisis we set aside the orders of the authorities below on this issue and addition is deleted.
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2024 (7) TMI 429
Validity of Revision u/s 263 - eligibility to deduction u/s 80P on interest on its deposits (seed capital) with a cooperative bank - As per CIT no enquiry was conducted and no application of mind applied by the learned assessing officer on the issues of claim of deduction under section 80P(2)(d) and verification of expenditure - HELD THAT:- We are principally in agreement with the Ld. AR that the interest income received by a co-operative society on its deposits with a co-operative bank would be entitled for deduction u/s. 80P(2)(d) of the Act, but at the same time, we find from a perusal of the record that the A.O while framing the assessment had at no stage verified the authenticity of the claim of the assessee society that the deduction raised by it u/s. 80P(2)(d) of the Act pertained to the interest income on its deposits parked with a co-operative bank/banks. As nothing is discernible from the record nor any material has been filed before us in the course of hearing of the appeal, which would reveal that the assessee's claim for deduction u/s. 80P(2)(d) of the Act was raised as regards the interest income earned on its deposits lying with a co-operative bank/banks, therefore, to the said extent, we concur with the CIT that the A.O without carrying out any verification on the aforesaid material aspect had summarily accepted the claim of the assessee society for deduction u/s. 80P(2)(d) of the interest income (restricted in the computation of income i.e. the net taxable income disclosed in the return of income for the subject year). Accordingly, in terms of our aforesaid observations the order of the Pr. CIT to the said limited extent is upheld. Whether AO has after application of mind arrived at plausible view on the issue ? - Nothing is discernible therefrom which would reveal that the seed money of the assessee was lying in the form of deposits with a co-operative bank, which thus, would have entitled it to claim deduction u/s. 80P(2)(d) of the Act. Also, a perusal of the notices issued by the A.O u/s. 142(1) of the Act does not reveal that he had in the course of the assessment proceedings on any occasion raised any query on the aforesaid material aspect and verified, i.e. whether the interest income of Rs. 6.02 crore (approx.) on seed capital which was claimed as deduction u/s. 80P(2)(d) was earned from its funds parked with a co-operative bank/banks. Accordingly, to the said extent, we are unable to concur with the Ld. AR that as specific queries to the extent relatable to its entitlement for deduction u/s. 80P(2)(d) of the Act were raised by the A.O in the course of the assessment proceedings and were duly answered by the assessee society, therefore, the Pr. CIT in the garb of his powers u/s. 263 of the Act had wrongly assumed jurisdiction and set-aside the order of the A.O. Failure of the A.O to carry out necessary verification - We are unable to persuade ourselves to subscribe to the contention of the Ld. ARs that as the A.O while framing assessment had raised queries and deliberated on the replies filed by the assessee society qua both the aforesaid issues, viz. (i) verification of the assessee's claim for deduction u/s. 80P(2)(d) of the Act of interest received from banks on FDRs, FFD and SB interest etc.; and (ii) verification of the assessee's claim for expenditure; and had arrived at a plausible view, therefore, the Pr. CIT in exercise of powers vested with him u/s. 263 of the Act had grossly erred in law and facts of the case by seeking substitution of his view as against that arrived at by the A.O. As in the present case before us, the A.O while framing of the assessment had not queried on the material aspects pertaining to the both the issues, on which, the Pr. CIT had set-aside his order u/s. 263 of the Act, viz. (i) non-verification of satisfaction of the requisite conditions rendering the assessee eligible to claim deduction on interest on bank deposits (seed money) u/s. 80P(2)(d) of the Act; and (ii) non-verification of the claim of expenditure in the agency's profit and loss account of the assessee society, therefore, the judicial pronouncements that had been relied upon by the Ld. AR to impress upon us that where the A.O had while framing the assessment arrived at a plausible view on the issue, the same cannot be substituted in the garb of powers vested with the CIT u/s. 263 of the Act, being distinguishable on facts would by no means assist the case of the present assessee society before us. AR's contention that the Pr. CIT had grossly erred in law and facts of the case by passing an order u/s. 263 of the Act without calling for and examining the records of the assessee society - We are of a firm conviction that pursuant to the specific reference of examination of the income tax records of the assessee society by the Pr. CIT in the SCN dated 11.03.2021, and also, similar reference of perusal of the assessment records, financial statements etc. in the body of his order reveals beyond doubt that the case records of the assessee society were called for and examined prior to assumption of jurisdiction by the Pr. CIT u/s. 263 of the Act. In our considered view once the Pr. CIT in the SCN, dated 11.03.2021 had observed that he had examined the records, then it cannot be presumed on the mere say of the assessee that he had without examining the assessment records and application of mind to the same had assumed jurisdiction and issued show cause notice to the assessee u/s. 263 of the Act. Non independent application of mind by CIT - Pr. CIT after receiving the proposal from the ACIT-1(1), Raipur had duly applied his mind to the records before him for arriving at a view that due to certain failure of the A.O to carry out necessary inquiries/verifications the assessment order passed by him u/s. 143(3) of the Act dated 28.12.2018 was rendered as erroneous in so far it was prejudicial to the interest of the revenue and thus, validly assumed jurisdiction u/s. 263 of the Act; and (ii) that there was no restriction on the Pr. CIT to have acted upon material placed before him by the A.O for arriving at a prima facie view that the order so passed u/s. 143(3) of the Act being erroneous and prejudicial to the interest of the revenue was amenable for revision u/s. 263 of the Act, thus are unable to concur with the aforesaid contentions advanced by the Ld. AR. Pr. CIT was divested of his jurisdiction u/s. 263 of the Act to adopt a view that was inconsistent with that which was adopted by the department in the said earlier years - All that is required as per Section 263 of the Act is that in case if the Pr. CIT finds that the order passed by the A.O is found to be erroneous in so far it is prejudicial to the interest of the revenue, then, he remains well within his jurisdiction to revise the same. Apart from that, we cannot also loose sight of the fact that the department taking cognizance of the fact that the A.Os while framing the assessments in the case of the assessee had failed to verify certain identical aspects, which thus, had rendered their respective orders as erroneous in so far it was prejudicial to the interest of the revenue for A.Y.2015-16, A.Y.2017-18 and A.Y.2018-19 had taken recourse to the corrective mechanism contemplated u/s. 263 of the Act. Apart from that, we find that as had been brought to our notice by the Ld. DR, the erroneous claim of the assessee society had also not been accepted by the department in the succeeding years i.e. A.Y.2019-20 onwards and had been corrected while framing assessments for the said years. All that is required for the Pr. CIT to exercise the jurisdiction vested with him u/s. 263 of the Act is a cumulative satisfaction of the conditions therein contemplated, i.e. if he considers that any order passed by the Assessing Officer is erroneous in so far it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, revise the order in exercise of powers vested with him under the said statutory provision. As nothing is provided in Section 263 of the Act, which jeopardizes the exercise of revisional jurisdiction by the Pr. CIT on the ground that a similar mistake in the preceding year had not been set-right and was allowed to perpetuate, therefore, we find no substance in the Ld. AR's contention who based on the same had tried to circumscribe the scope of jurisdiction of the Pr. CIT u/s. 263 of the Act. Also, we cannot loose sight of the fact that as every assessment year is an independent year and the principle of res-judicata is not applicable to taxing statutes, therefore, on the said count also the aforesaid contention of the Ld. AR does not merit acceptance. PCIT has revised the order w/o making or causing to be made any inquiry - We are unable to fathom that now when the assessee society on the one hand had neither provided the requisite details substantiating the genuineness of its claim of deduction and expenditure before the A.O nor in the course of the revisional proceedings before the Pr. CIT, then, what inquiry by the revisional authority in absence of the said complete details was expected. CIT in our view after considering the circumstances of the case, in all fairness, remanded the matter for fresh adjudication on the aforesaid issues. We, thus, in terms of our aforesaid observations, finding no substance in the claim of the Ld. AR that the Pr. CIT without carrying out any inquiry had wrongly held the order passed by the A.O u/s. 143(3) of the Act dated 28.12.2018 as erroneous in so far it was prejudicial to the interest of the revenue u/s. 263 of the Act, reject the same. CIT had passed the order u/s. 263 without applying his mind to assessee's submission - One can comprehend that in a case where the details as were called for by the revisional authority were though fully made available but the latter had without applying his mind to the same had held the order passed by the A.O as erroneous and prejudicial to the interest of the revenue that the assessee would be justified in carrying a grievance that without dislodging the authenticity of his claim and considering the supporting material the revisional authority had without application of mind most arbitrarily held the order as erroneous and prejudicial to the interest of the revenue u/s. 263 of the Act. However, it is incomprehensible that while for the assessee society before us had adopted an evasive approach and failed to come forth with the requisite details not only in the course of the assessment proceedings, but also failed to provide the same despite specific directions by the revisional authority, thereafter, is carrying a grievance that the Pr. CIT had failed to apply his mind to the issues and mechanically revised the order passed by the A.O. As in the present case before us, the Pr. CIT by drawing support from the powers vested with him under Explanation 2(a) to Section 263(1) of the Act which vested with him the jurisdiction to hold the order passed by the A.O as erroneous and prejudicial to the interest of the revenue, if the same had been passed without making any inquiries which should have been made, had set-aside the assessment order, therefore, the exercise of jurisdiction by him in the backdrop of our aforesaid deliberations does not suffer from any infirmity. Decided against assessee.
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2024 (7) TMI 428
TP Adjustment - Comparable selection - functional dissimilarity of comparables selected - HELD THAT:- Factual consistency demands respect for the view taken by a Co-ordinate Bench of the Tribunal for the earlier assessment years in assessee s own case and, therefore, while respectfully following the same, we direct AO/TPO to exclude E-clerx Services Ltd., Acropetal Technologies Ltd., Infosys BPO Ltd. and TCS EServe Ltd., from the list of comparables. Accordingly, the Grounds of appeal of Revenue are dismissed. In view of the submission made by the learned AR that in case of exclusion of E-clerx Services Ltd., Acropetal Technologies Ltd., Infosys BPO Ltd. and TCS EServe Ltd., from the list of comparables, any consideration of other comparables challenged by the Revenue remains academic only, we do not propose to adjudicate the same, and, therefore, Cross Objection become infructuous and accordingly is dismissed.
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Benami Property
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2024 (7) TMI 427
Scope of amendment of Benami Transactions (Prohibition) Act, 1988 - HELD THAT:- As parties reached to a consensus. It is agreed that the amendment became part of statute book of Benami Transactions (Prohibition) Act, 1988 with effect from 01.11.2016 and in all these cases, the subject matter is for a period between 2011-2015 i.e., prior to the amendment. Thus, it is agreed that in the light of judgment of Supreme Court in Union of India and Another v. M/s. Ganpati Dealcom Pvt. Ltd. [ 2022 (8) TMI 1047 - SUPREME COURT] the impugned orders in all these petitions may be set aside. In view of consensus arrived at, the impugned orders in all these petitions are set aside.
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Customs
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2024 (7) TMI 426
Refund of the additional duty paid under protest - Re-assessment of Ex-Bond Bills of Entry - Benefit of enhanced tariff value - Clearance of the said goods for home consumption - Section 68 of the Customs Act, 1962 - Petitioner had filed the said four Ex-Bond Bills of Entry claiming classification and duty structure as referred earlier, under Section 68 of the Act, seeking clearance of 3465.024 MTs of the said goods for home consumption - HELD THAT:- Admittedly, in this case four Ex-Bond Bills of Entry have been presented before the said Notification came into force. One bill of entry was self-assessed on 13th May 2021 at 20:17:07 hours, the second was self-assessed at 20:56:11 hours, the third was self-assessed at 20:15:09 hours and the fourth was self-assessed at 20:59:08 hours, whereas, the Notification was e-gazetted on 13th May 2021 at 21:24:11 hours - the rate of duty that will be applicable will be USD 1163 PMT, which was in force when the four Ex-Bond Bills of Entry were presented. Reassessment orders are hereby quashed and set aside. In ITC Ltd. [ 2019 (9) TMI 802 - SUPREME COURT] the Apex Court held that under Section 27 (2) (a) it is incumbent upon the applicant to satisfy that the amount of duty or interest of which refund has been claimed, had not been passed by him to any other person, the provision aims at preventing unjust enrichment. Petition allowed.
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FEMA
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2024 (7) TMI 425
Offences under FEMA - Liability of the person-in-charge of the company - investment in Forex Trading Bitcoins were traded in terms of USD - seized Indian Currency to Rs. 1,97,03,000/- seized from the possession of the appellants was also confiscated to Central Govt. Account in terms of Section 13(2) of the FEMA, 1999. HELD THAT:- We are not satisfied with the contention of Ld. Counsel for the appellant ED to remand back the case for initiating fresh proceedings against the present respondents, along with M/s Ambidant Marketing Pvt. Ltd.due to following reasons: (1) As per record, show cause notice was issued to respondents, but no notice was issued to M/s Ambidant Marketing Pvt. Ltd. by the Enforcement Directorate for the purpose of adjudication and the said show cause notice is not challenged till date, for not impleading the said company as noticee. Similarly, no Complaint is filed by Deputy Director ED, before the Adjudicating Authority, by impleading M/s Ambidant Marketing Pvt. Ltd. as necessary notice/defendant no.3. The present revision petitions are not maintainable, in absence of any SCN and complaint against the said company. Hence, it was the duty of the appellant ED to file the revision at the initial stage when no complaint is filed against the said company and thereafter, when the show cause notice was issued only to the directors of the said company, but not to their company M/s Ambidant Marketing Pvt. Ltd. After adjudication by the Adjudicating Authority and the passing of the impugned order, appellant ED is not empowered to agitate this issue at belated stage. (2) Even otherwise, appellant ED has not impleaded M/s Ambidant as necessary party/contesting respondent in the present Revision Petition. Hence, no adverse order can be passed in absence of impleading the said company as respondent. (3) Moreover, from the impugned order, it appears that the said M/s Ambidant Marketing Pvt Ltd is incorporated at Dubai, and thus, Appellant ED and Adjudicating Authority cannot exercise its territorial jurisdiction over the said company. Even otherwise, the alleged contravention was committed by the present respondents in individual capacity. (4) Moreover, the Indian Currency seized by the Officers of ED from the residential premises of Shri Sayed Fareed Ahmed, is already stands confiscated to the Central Government u/s 13(2) of FEMA, 1999. The question of remanding back the case for imposing penalty on M/s AmbidantMarketing Pvt. Ltd. does not arise. (5) There is nothing on record that ED is able to recover the penalty amount from the present respondents till date, as per impugned order. The present whereabouts of respondents is not traceable and it will be a futile exercise to impose additional penalty on the company. (6) Further, appellant ED has not disclosed whether the said company incorporated in Dubai is still working or stands liquidated. Appellant ED has also not disclosed the registered address in the record of Registrar of Companies at Dubai, if the said company is still working. (7) It is pertinent to mention here that this type of Revisions and Appeals for enhancement, without realising the penalty as per impugned order, in absence of operation of any stay of the impugned order, appears to be an indirect attempt to favour the noticees to gain time to deposit penalty after second round of litigation, and/or to deplete the chances of recovery in future. Hence, such type of litigation by appellant ED needs to be deprecated and focus be made for realisation of the penalty amount. (8) Even otherwise, the impugned order was passed on 27.03.2018, whereas SCN was issued on 26.02.2018, but the present revision petition is filed on 04.02.2019, i.e. after more than ten months, without any reasonable explanation of delay. Hence, this revision petition also needs to be dismissed being time barred.
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2024 (7) TMI 424
Utilization of foreign exchange otherwise than for the purpose for which it was acquired - Contravention of provisions of section 8(3) r.w.s. 49 68 of FERA, 1973 - Liability of the appellant/clerk with the said company for the contravention committed by the company - penalty imposed on the appellant - as per DR appellant has admitted that he was director in the company for a brief period of 13 months -as argued Adjudicating Authority failed to appreciate the fact that penalty cannot be imposed upon him just because he was director of the company for a brief period between 20.06.2000 to 19.07.2001, whereas, the machinery was imported by the company during the year 1994-1995. HELD THAT:- Admittedly, appellant was working as clerk with the said company during the year 1994-1995. There is nothing on record that being clerk, he was instrumental in conducting the business of the company and was thereby responsible for import of machineries, thereafter, for installation and initiating the manufacturing activity at SP-272-A, Matsya Industrial Area, Alwar, Rajasthan. There is nothing on record to show that present appellant was instrumental for not starting the manufacturing of the goods and thereafter making the export for M/s. Grapco Industries Ltd. to fulfil the export obligation. Learned Counsel for the respondent-ED failed to show any single document signed by the present appellant which may point out his role that he was instrumental in conducting the business of M/s. Grapco Industries Ltd. and further he intentionally failed to take any steps for the same and thereby he has vicariously liable for the contravention of provision under FERA. Simply because when the company was going through financial crisis, the then Managing Director R.P. Jhunjhunwala inducted him as Director, does not make him liable for the past act of the company committed during the year 1994-1995. We also find that the appellant s case is well supported by the decision of Satish Kumar Bhalla [ 2009 (2) TMI 929 - DELHI HIGH COURT ] as been cited on behalf of the appellant wherein it was held that Section 68 of FERA, 1973 is parimateria with Section 141 of the Negotiable Instruments Act, 1881 in reference to which the Hon ble Supreme Court held in S.M.S. Pharmaceuticals [ 2005 (9) TMI 304 - SUPREME COURT ] an averment must be made to the effect that the person was in charge of and responsible for the conduct of the business of the company at the relevant time when the offence was committed and not on the basis of merely holding a designation or office in the company. It was further held that the petitioner could not be held responsible for conduct of business of the company only on account of his being a Director. The case for holding the appellant responsible is even weaker in the present case as the appellant only held the post of Director for a short while, many years after the alleged contravention. Therefore, the present appeal needs to be allowed by this Tribunal seeing the fact that present appellant has no role in commission of any contravention being inducted as Director at very late stage when there was no manufacturing activity and import-export business of the company. The present appeal is hereby allowed and thereby, impugned order passed by the Adjudicating Authority is hereby set aside. Any pre-deposit tendered by the appellant be returned within two months from the date of expiry of period of limitation, failing which respondent ED will be liable to pay interest @ 9% per annum from the said date. The bank guarantee or security tendered by appellant in lieu of pre-deposit, if any, stands discharged.
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Service Tax
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2024 (7) TMI 423
Levy of service tax - advanced payments received from their prospective clients - no personal hearing has been accorded to the appellant and the impugned order has been passed ex-parte - violation of principles of natural justice - HELD THAT:- The entire amount of advance was received by the appellant in the nature of a loan for purchasing of necessary capital goods, which were required for execution of the service contract obtaining such advance/loan. Same was backed by the appellant by providing bank guarantee of equal amount to the provider of such advance. i.e. service recipient. It is found that subsequently, as per the contract between the appellants and its customers, the advances so received were adjusted towards supply of service charges. It is agreed with the submissions of the appellant that the advances are adjusted against the bills received on completion of stages of the contract and therefore same are in the nature of earnest money and not liable to tax at the time of receipt. This tribunal in case of Commissioner of Central Excise Pune Vs. Thermax Engineering Construction Company Ltd [ 2017 (12) TMI 1191 - CESTAT MUMBAI] as held similar view on the similar facts that ' It is also found from the certificate issued by the Chartered Accountant that the of such advances We thus find no reason to hold that the asseessee has discharged service tax liability on the entire amount said amount is liable to be taxed at the time of receipt. It became the part of consideration only when it was proportionately included in the stage-wise completion of work for which invoices were raised and service tax was paid by the assessee. Even if it is assumed that the said amount was not in the form of earnest money but was received as Advance. in that case also no service tax could have been demanded at the time of receipt as the same was not taxable.' The facts of the matter at hand are similar to the one which has been decided by this tribunal, following the same it is held that the impugned order in original is without any merit and therefore the same is set aside - appeal allowed.
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Central Excise
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2024 (7) TMI 422
Captive consumption - denial of benefit of N/N. 67/95-E dated 16.03.1995 - IC engines which are captively consumed in the manufacture of PD Pumps - HELD THAT:- The learned Principal commissioner has decided the matters solely relying upon the judgments of M/s. Honda Seil Power Products Ltd [ 2015 (11) TMI 322 - ALLAHABAD HIGH COURT] delivered by the Hon ble High Court of Allahabad. From the said judgment it is observed that if the PD Pumps and IC Engines are not assembled and kept together in one packing and cleared that activity does not amount to manufacture. However, in the present case it is the claim of the appellant that in majority of cases the IC Engine has been fitted with the PD Pumps and the PD Pump set was cleared duly assembled with IC Engine. Therefore, the fact of the case of M/s. Honda Siel Power Products Ltd judgment is different from that of the present case. It is also observed that as regard the Monoblock Pumps there is no dispute that the IC Engine was used in the manufacture of Monoblock Pumps. Therefore, the interpretation and contention applied in the case of PD Pump will not apply in the case of Monoblock Pump. Therefore, there is an error in the order to this effect. The impugned order suffers from various infirmity, accordingly the matter needs to be reconsidered on all the issues - Appeal disposed off by way of remand.
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