Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
July 13, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
GST
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Amended notification reduces TCS rate from 1% to 0.5% for e-commerce operators on inter-state supplies & where consideration is collected.
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Rate of TCS by e-commerce operators for intra-State supplies reduced to 0.25% from 0.5% of net taxable value.
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MSME taxpayers with turnover upto Rs. 2Cr exempted from filing annual GST return for FY24. Easing compliance burden.
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Aadhaar exemption for GST revoked. Biometric authentication mandatory. Effective from gazette publication date.
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CSD can electronically file quarterly refund for 50% GST paid on inward supplies for Unit Run Canteens/authorized customers. Refund subject to supplier's GSTR-1 & GSTR-3B filing.
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Mechanism for IGST refund on upward price revision of exported goods post-export. File claim electronically under "Any other" category.
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Corporate guarantee between related parties: 1% p.a. of guaranteed amount or actual fee, whichever higher. ITC available. No GST on existing loans unless fresh guarantee.
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Circular: Recovery proceedings allowed if appeal can't be filed due to non-operational Tribunal. Pre-deposit via ELR for stay. Undertake to appeal later. Adjust DRC-03 via DRC-03A.
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Jailed petitioner's registration cancelled sans response opportunity. HC revoked cancellation order subject to tax compliance.
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Provisional attachment order challenged for exceeding 1-year limit. Court upheld mandatory time limit, quashing order dated 19.05.2023.
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Petition maintainable for rights violations despite alternative remedy. Cancellation of GST registration questioned for lack of natural justice. Bogus invoices alleged.
Income Tax
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Faceless Assessment Unit denied video hearing despite request, mere meeting ID insufficient. Finding of non-attendance perverse. Order vitiated, remanded with directions.
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Notice u/s 143(2) issued late, assessee didn't object. Tribunal held proceedings invalid due to delayed notice beyond time limit.
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Nursery income: Agri or other? Details like land, ledger, expenses provided. Explanation 3 deems it agri. But sales register lacked order/supply dates, addresses. Partly remanded.
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Disallowance of VAT non-payment before filing upheld. Accounting method rejected. Ganapati Motors case distinguished.
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Disallowance of revenue expense claim without fair hearing violated law. Late return accepted earlier. Contradictory stance unjustified. Relief granted.
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Gynecologist deposited demonetized cash from profession. Onus discharged. Mere demonetization can't treat income unexplained. Revenue failed.
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ITAT quashed penalty order u/s 271(1)(c) as assessment order u/s 263 was unsustainable. Consequentially, penalty levy dismissed.
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Warranty expenses based on formula allowed even without past history. Accrual system prevails over actual payment year.
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Dividends from donated shares form corpus, not income, if donor directs so. Reinvestment in specified modes u/s 11(5) qualifies for exemption.
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CSR expenses allowed as 80G deduction if conditions met. AO to allow claim.
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Mere non-disclosure claim insufficient for reopening assessment beyond 4 yrs. AO must prove specific failure. Disclosure accepted earlier can't be reinterpreted later.
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Environmental compensation disallowance deleted; AO couldn't decide without examining PCB order in summary proceedings. (1)
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Non-deduction of TDS on directors' fees & transaction charges not liable for penalty. Payments to directors allowed. Bona fide belief on transaction charges.
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Transfer pricing adjustment rejected. APA relied upon. TNMM for distribution segment. No royalty/FTS. Sec 10A deduction recomputation ordered.
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TP Adjustment: TPO must examine work, agreements, functions, qualifications, remuneration to determine ITeS/KPO/BPO status. Opportunity of hearing. Assessee to produce documents.
Customs
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New utility standardizes Voyage Call Number format for ports. Use it for non-standard VCNs & non-NLP ports.
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Surat Diamond Bourse gets Air Freight Station for EDI-based imports/exports of precious cargoes, enabling electronic clearance.
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Penalty can't be levied for unfulfilled export obligations if no violation attempt. Order imposing penalty for export shortfall sans contravention quashed.
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Customs duty case remanded for fair hearing. Dept denied docs relied on, violating natural justice. Fresh order after providing docs mandated.
IBC
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NCLAT: IBC's Section 7 prevails over CPC Section 10. Insolvency resolution must be prompt. DRT order can't bar Section 7 petition.
SEBI
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SEBI redefined "liquid asset" for Credit Rating Agencies to include low-risk assets easily convertible to cash.
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SEBI mandates 15-day record date for interest/dividend payments, debenture trustee due diligence certificates, web-links for financials in offer docs.
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Listed firms can publish newspaper ads with QR code/website link for financial results, subject to debenture trustee approval.
Service Tax
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Transfer of goods with effective control retained is taxable as Supply of Tangible Goods under service tax, not VAT. Agreement clauses prevail.
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Communication of the order: Contract security person not authorized agent for service. Order traced later. Appeal allowed for merit consideration.
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Classification of service, CENVAT credit denial for non-submission of invoices, demand under tangible goods service - remanded for reconsideration after verifying facts.
Articles
Notifications
Circulars / Instructions / Orders
- GST - States - 6/2024 – GST (State) - dated
2-7-2024
Mechanism for providing evidence of compliance of conditions of Section 15(3)(b)(ii) of the CGST Act, 2017 by the suppliers
- GST - States - 5/2024 - GST (State) - dated
2-7-2024
Clarification on time limit under Section 16(4) of CGST Act, 2017 in respect of RCM supplies received from unregistered persons
- GST - States - 4/2024 – GST (State) - dated
2-7-2024
Clarification on valuation of supply of import of services by a related person where recipient is eligible to full input tax credit
- GST - States - 3/2024 – GST (State) - dated
2-7-2024
Clarification on the provisions of clause (ca) of Section 10(1) of the Integrated Goods and Service Tax Act, 2017 relating to place of supply of goods to unregistered persons
- GST - 224/18/2024 - dated
11-7-2024
Guidelines for recovery of outstanding dues, in cases wherein first appeal has been disposed of, till Appellate Tribunal comes into operation.
- GST - 225/19/2024 - dated
11-7-2024
Clarification on various issues pertaining to taxability and valuation of supply of services of providing corporate guarantee between related persons.
- GST - 226/20/2024 - dated
11-7-2024
Mechanism for refund of additional Integrated Tax (IGST) paid on account of upward revision in price of the goods subsequent to exports
- GST - 227/21/2024 - dated
11-7-2024
Processing of refund applications filed by Canteen Stores Department (CSD)
- Customs - PUBLIC NOTICE NO. 05/2024 - dated
26-6-2024
Launch of Indian Customs EDI System - (ICES 1.5) for Air Freight Station (AFS) at M/s. SDB Diamond Bourse, Upper Basement, Diamond Club, Surat Diamond Bourse (SDB), Plot No. 177. P. Dream City, Village-Khajod. Taluka Majura, District —Surat 395007. for Imports and Exports of precious and semi- precious cargoes - reg.
- Customs - PUBLIC NOTICE NO. 03 / 2024 - dated
29-5-2024
New Utility to make uniformity in Voyage Call Number (VCN) format for NLP and Non-NLP ports-Reg.
News
Case Laws:
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GST
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2024 (7) TMI 675
Grant of anticipatory bail - person summoned under Section 69 of the Central Goods and Service Tax Act 2017 for the purpose of recording of his statement - HELD THAT:- The High Court committed no error in cancelling the anticipatory bail granted by the trial court. However, in the facts and circumstances of the case, liberty is granted to the petitioner to invoke the writ jurisdiction of the concerned High Court under Article 226 of the Constitution. If any writ petition is filed in the High Court, the same may be considered in accordance with law - SLP disposed off.
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2024 (7) TMI 674
Levy of penalty - cancellation of GST registration - no reasons for cancellation was provided - violation of principles of natural justice - HELD THAT:- It is evident that no reasons are recorded for the conclusion that the petitioner's reply is an after thought and that such reply does not establish existence at the registered place of business at the time of inspection. Such conclusions disclose that the explanation of the petitioner with regard to shifting the place of business was not taken into consideration. Since findings were recorded without assigning reasons in support thereof, the impugned order cannot be sustained. The impugned order dated 19.03.2024 is set aside and the matter is remanded for re-consideration. After providing a reasonable opportunity to the petitioner, including a personal hearing, the respondent is directed to issue a fresh order within three months from the date of receipt of a copy of this order. Petition disposed off by way of remand.
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2024 (7) TMI 673
Validity of assessment order - petitioner did not have a reasonable opportunity to contest the tax demand on merits - violation of principles of natural justice - HELD THAT:- On examining the impugned order, it is evident that the tax proposal was confirmed because the petitioner failed to reply to the show cause notice or submit any documentary evidence in accordance with the Circular No.183 and Circular No.193. By taking note of the assertion that non participation was on account of not being aware of the proceedings, the interest of justice warrants that the petitioner be provided an opportunity to contest the tax demand on merits by putting the petitioner on terms. The impugned order dated 09.01.2024 is set aside on condition that the petitioner remits 10% of the disputed tax demand as agreed to within a period of two weeks from the date of receipt of a copy of this order. The petitioner is permitted to submit a reply to the show cause notice within the aforesaid period. Petition disposed off.
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2024 (7) TMI 672
Cancellation of registration of the petitioner - petitioner not filed any application for revocation of cancellation of registration - HELD THAT:- Admittedly, during the period between 3rd February, 2022 and 30th July, 2023 the petitioner was in jail custody. The show-cause was issued on 27th July, 2023 and order of cancellation of petitioner s registration was passed on 23rd August, 2022. The petitioner had no opportunity either, to respond to the show-cause or to prefer an application for revocation of the order of cancellation. From the certificate issued by the Superintendent, Raiganj District Correctional Home dated 27th July, 2023 it would appear that the petitioner had been released pursuant to his acquittal on 20th July, 2023. Thereafter, the petitioner had preferred an appeal. The order dated 23rd August, 2022 cancelling the petitioner s registration and the order dated 13th March, 2024 passed by the appellate authority under the said Act, is set aside, subject to the conditions that the petitioner files his returns for the entire period of default and pays requisite amount of tax and interest and fine, late fees and penalty, if not already paid. Petition disposed off.
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2024 (7) TMI 671
Violation of principles of natural justice - mismatch between the petitioner's GSTR 3B returns and the auto-populated GSTR 2A - HELD THAT:- It is evident that at least the issue relating to a mismatch between the petitioner's GSTR 3B returns and the auto-populated GSTR 2A is common to both proceedings. Solely on this ground, the impugned order calls for reconsideration. Learned counsel for the petitioner also contended that requisite certificates in terms of Circular No.183 are now available with the petitioner. Consequently, it is just and necessary to provide an opportunity to the petitioner. The impugned order dated 20.12.2023 is set aside and the matter is remanded to the respondent for reconsideration. After providing a reasonable opportunity to the petitioner, including a personal hearing, the respondent is directed to issue a fresh order within three months from the date of receipt of a copy of this order. Petition disposed off by way of remand.
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2024 (7) TMI 670
Challenge to impugned summary of the order creating a demand - arrears of tax on self-assessment under the provisions of the Central Excise Act, 1944 - period between February, 2015 and June, 2017 - HELD THAT:- It appears that the petitioner is a Manufacturing Company, which has accumulated loss and was unable to discharge the tax liability under the old regime. The attempt of the petitioner to discharge part of the liability on the above dates stands recorded - Considering the fact that there is no other dispute barring the amount to be recovered from the petitioner, the discretion exercised partly in favour of the petitioner, by directing the petitioner to pay the balance amount in 12 equated monthly installments starting from 01.08.2024 ending with 01.07.2025. Petition disposed off.
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2024 (7) TMI 669
Challenge to assessment order - petitioner failed to submit material documents such as the trial balance with regard to Tamil Nadu, certificates from the Chartered Accountant with regard to the turnover in Tamil Nadu and GST returns relating to other States - HELD THAT:- The financial statements of the petitioner have also been placed on record. These statements appear prima facie to have been prepared on pan-India basis. The petitioner should have placed on record documents, such as the trial balance for Tamil Nadu, certificates from a Chartered Accountant and GST returns filed in other States, to substantiate the contention that there was no outward supply in Tamil Nadu during the relevant assessment period. The entire tax demand was appropriated pursuant to the impugned order. Therefore, revenue interest stands fully secured. In these circumstances, by taking into account the assertion that the petitioner is in possession of GST returns for other States and that these documents would corroborate that the outward supply related to those States, the interest of justice warrants reconsideration. The matter is remanded for reconsideration - petition disposed off by way of remand.
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2024 (7) TMI 668
Violation of principles of natural justice - SCN and other communications were uploaded on the GST portal, but not communicated to the petitioner through any other mode - mismatch between the petitioner's GSTR 1 and GSTR 3B returns - HELD THAT:- It is evident that the tax proposal was confirmed because the petitioner did not reply to the show cause notice or submit relevant documents. By taking into account the assertion that the petitioner could not participate in proceedings on account of being unaware of the same, the interest of justice warrants reconsideration, albeit by putting the petitioner on terms. The impugned order dated 29.12.2023 is set aside on condition that the petitioner remits 10% of the disputed tax demand as agreed to within a period of two weeks from the date of receipt of a copy of this order - Petition disposed off by way of remand.
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2024 (7) TMI 667
Maintainability of petition - availability of alternative remedy - non-constitution of GST Tribunal - Challenge to order passed by the Appellate Authority u/s 107 of the West Bengal GST/CGST Act, 2017 - Power to condone the delay - HELD THAT:- In this case it has been noticed that there is a statutory right of the Registered Tax Payer (RTP) to prefer an appeal from an order of adjudication passed under Section 73(9) of the said Act - Admittedly, the petitioner had exercised its statutory right and had filed the appeal along with the pre-deposit as is required for maintaining the appeal. Factum of payment of such pre-deposit would corroborate from the Form GST APL-01. It appears that in filing the appeal there was some delay. The powers of the Appellate Authority to condone the delay beyond one month from the time prescribed had duly been considered in the case of S.K. CHAKRABORTY SONS VERSUS UNION OF INDIA ORS. [ 2023 (12) TMI 290 - CALCUTTA HIGH COURT] . It has been held that in absence of non obstante clause rendering Section 29(2) of the Limitation Act, 1963, non applicable and in absence of specific exclusion of Section 5 of the Limitation Act, 1963, it would be improper to read implied exclusion thereof. As such, the appellate authority is not denude of its power to condone the delay beyond one month from the prescribed period of limitation as provided for in Section 107(4) of the said Act - the Appellate Authority had acted in a mechanical manner in purporting to reject the appeal on the ground that the same was filed beyond the period of limitation prescribed for filing of an appeal, by glossing over the explanation for the delay. Since, the explanation offered by the petitioner is found to be sufficient, while condoning the delay, the matter remanded back to the Appellate Authority for deciding the matter on merits by giving an opportunity of hearing to the petitioner of being heard. Petition disposed off by way of remand.
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2024 (7) TMI 666
Challenge to provisional attachment of bank account - completion of one year's period - HELD THAT:- The language employed in Section 83 of the CGST Act makes it clear that it is couched in a mandatory language and therefore, we find no difficulty in holding that impugned provisional attachment order dated 19.05.2023 cease to have effect on expiry of period of one year from the date of issuance of order i.e. 19.05.2023. Petition disposed off.
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2024 (7) TMI 665
Challenge to demand notice - rejection on the ground of time limitation - HELD THAT:- Considering the fact that the petitioner is still a going concerned engaged in business, this Court is inclined to set aside the impugned order rejecting the petitioner's appeal in limine by directing the first respondent to dispose of the appeal on merits and in accordance with law. The petitioner shall, however, deposit 10% of the disputed tax, as is contemplated under Section 107 of the respective GST enactments, through its Electronic Cash Register, within 30 days from the date of receipt of a copy of this order. Subject to such deposit, the first respondent shall take up the appeal and dispose of the same on merits and in accordance with law as expeditiously as possible preferably three months from today. Petition disposed off.
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2024 (7) TMI 664
Maintainability of petition - availability of alternative remedy - Cancellation of registration of the petitioner under CGST/APGST Act, 2017 - violation of principles of natural justice - HELD THAT:- Hon'ble Apex Court in Whirlpool Corporation v. Registrar of Trade Marks, Mumbai [ 1998 (10) TMI 510 - SUPREME COURT ] held that in certain contingencies viz., when writ petition is filed for enforcement of fundamental rights, or where there has been a violation of principles of natural justice or when the proceedings impugned are wholly without jurisdiction or the vires of an act is challenged, the writ petition could be maintainable in spite of availability of alternative remedy. In the instant case the petitioner banks upon the violation of principles of natural justice to maintain the writ petition. In this context, a perusal of the show cause notice dated 23.06.2023 shows that the 1st respondent has given required particulars of the non-existent tax payers from whom the petitioner allegedly obtained bogus tax invoices. Petition dismissed.
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Income Tax
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2024 (7) TMI 663
Condonation of delay in filling appeal before SC - delay of 215 days - TP adjustment - rejection of AMP adjustment using BLT method - AMP does not constitute an international transaction - ITAT justification in holding that the AMP cannot be inferred to be international transaction in the absence of any agreement, arrangement or understanding between the taxpayer and its AE - depreciation amounting to Rs. 37,54,845/- on de-capitalized assets - HC decided issues [ 2023 (8) TMI 1117 - DELHI HIGH COURT] in favour of assesee - HELD THAT:- The explanation for condoning the delay of 215 days in filing the Special Leave Petition is inadequate and does not constitute sufficient cause to condone the delay. The Special Leave Petition is accordingly dismissed on the ground of limitation. Since the Special Leave Petition is dismissed on the ground of limitation, we clarify that we have not expressed any opinion on the merits of the legal issue involved which may be decided in any other appropriate case.
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2024 (7) TMI 662
Delay in filling SLP - Addition u/s 41(1) - assessee s liability to the tune to be a case of cessation of liability - As decided by HC [ 2022 (11) TMI 1215 - CALCUTTA HIGH COURT] assessee has fulfilled the duty cast upon them to provide evidence that the liability exist at the end of the year. The duty on AO is to prove that the liability has ceased to exist which in our considered view has been miserably failed to be established. HELD THAT:- As here is a delay of 450 days in the filing of the present special leave petition. Even on merits, we do not see any good ground or reason to interfere with the impugned judgment.
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2024 (7) TMI 661
Validity of reopening of assessment - as decided by HC [ 2023 (1) TMI 1390 - CALCUTTA HIGH COURT] reopening of the assessment was bad in law as material already available in the books of accounts have been re-apprised by the assessing officer and notice u/s 148 has been issued - HELD THAT:- We are not inclined to interfere with the impugned judgment and hence, the special leave petitions are dismissed.
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2024 (7) TMI 660
Maintainability of the writ petition in HC - Non deposit of pre-deposit - Validity of reassessment order passed - petitioner has also challenged the very basis for issuing notices under sections 148 and 148-A of Income Tax Act, 1961 - case set-up by the petitioner is that there can be no second proceeding for the same period and on the same issue which was the basis for the previous proceeding in which a final order passed and the said order is a subject matter of challenge in Appeal - As decided by HC [ 2024 (4) TMI 54 - JHARKHAND HIGH COURT] without a pre-deposit as provided under the statute for preferring an appeal or for seeking an order of stay, the writ petition shall not be entertained. Secondly, this is also no longer in the realm of doubt that a notice issued by a statutory authority cannot be made the subject matter of challenge before the writ Court - the plea put forth by the petitioner is that the notice under section 148-A has been issued in breach of natural justice inasmuch as no opportunity of hearing was provided to the assessee and all that we intend to indicate is that the requirements of natural justice are not inflexible and its applicability shall be determined on the basis of the facts in each case. Thus present writ petition has been dismissed on the ground that the petitioner has efficacious remedy under the Income Tax Act, 1961. HELD THAT:- We are not inclined to interfere with the impugned judgment and, hence, the special leave petition is dismissed. However, all pleas and contentions of the petitioner, Renu Singh, relating to the reopening can be raised before the appellate forum. Pending application(s), if any, shall stand disposed of.
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2024 (7) TMI 659
Validity of assessment order - breach of principles of natural justice - addition of Bogus purchases - at least two notices were issued u/s 142(1) and the assessee was provided sufficient opportunity to submit necessary documents and clarifications. Since the assessee failed to provide complete information - as petitioner submitted a presentation, wherein, inadvertently, the petitioner failed to remove double entries relating to payments reflected in journal entries in the head and branch offices HELD THAT:- As petitioner has placed on record the relevant e-mail, which prima facie shows that invoices from 30 vendors are attached as PDF's. Petitioner contends that the discrepancy in purchase value would stand fully reconciled if these invoices are examined conjointly with the reconciliation statement. This makes out a case for reconsideration. Because the petitioner had sufficient opportunity, including a personal hearing, and failed to provide all these documents in time, it is just and necessary that costs be imposed on the petitioner. The impugned order is set aside on condition that the petitioner pays a sum of Rs. 30,000/- as costs to the Adyar Cancer Institute, Chennai, within 15 days from the date of receipt of a copy of this order. The petitioner is permitted to submit invoices and any other documents within the aforesaid period of 15 days.
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2024 (7) TMI 658
Faceless Assessment Unit responsibility of offering personal hearing - Validity of order passed u/s 143 (3) r.w.s. 144B w/o affording the opportunity of personal hearing through video conferencing or video telephony, despite making a request, in terms of Section 144B (6) (viii) - HELD THAT:- Admittedly, in this case, the petitioner had applied for an opportunity of personal hearing. The petitioner s request was also approved by the Faceless Assessment Unit as would corroborate from the screen shot of the online portal. The screen shot, however, does not disclose that any video conferencing link had been shared, for the petitioner to log in and join the link, the same only records that the V.C. Link and password will be displayed two hours prior to schedule time for V.C . The petitioner claims that it did not receive the V.C. Link. Although, the petitioner had made a contemporaneous complaint, prior to such complaint being resolved, the assessment order had been passed. Today at the time of hearing of this petition Mr. Dutt, by placing before this Court a notice dated 28th March, 2024 has attempted to claim that video conferencing link was shared with the petitioner. The said document, however, is not visible on the petitioner s view of the portal. No automated SMS alerts/email alerts were also trigged. Thus, mere creation of video conferencing meeting ID/Link, does not absolve the Faceless Assessment Unit from discharging its responsibility of offering personal hearing. The meeting ID/Link is required to be disclosed/shared , for the petitioner to log in to the said ID/Link, for ensuring compliance of the statutory provision of personal hearing as provided for in Section 144B (6) (viii) of the said Act. The Faceless Assessment Unit cannot claim to absolve of its responsibility by mere creation of a meeting ID/Link, without having the same shared to the petitioner. The finding by the Faceless Assessment Unit in the order dated 29th March, 2024 that the petitioner chose not to attend the Video Conference thus, appears to be perverse and is based on no evidence. Since the determination made by the Faceless Assessment Unit stands vitiated from the stage of not affording the petitioner an opportunity of personal hearing, the order dated 29th March, 2024 cannot be sustained and the same is accordingly set aside. The matter remanded back to the Faceless Assessment Unit with directions.
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2024 (7) TMI 657
Validity of notice issued u/s 143(2) after expiry of limitation period - HELD THAT:- The screen shot of the e-filing portal mentioned filing section 153A of the Act. Assessee failed to challenge the notice u/s. 143(2), after expiry of limitation before the AO and CIT(A) and she stopped from raising the arguments before the Bench. She submits that Section 292BB of the Act has dealt with the scope of the provision to make service of notice having certain infirmities to be proper and valid if there was requisite participation on the part of the assessee. From the perusal of the records and in light of the rival contentions, it is crystal clear that a search and seizure operation was carried out u/s. 132 on 28.7.2011. As per assessment order assessee filed the return of income on 28.6.2012. As matter of fact according to copy of acknowledgment of return of income of appellant/assessee and copy of screenshot appellant/assessee filed return of income for AY 2012-13 on 28.9.2012. A questionnaire alongwith notice u/s. 142(1) and 143(2) was issued to the assessee on 28.5.2012 and 15.10.2013 respectively were issued. As per provisions of Section 143(2) of the Act, the notice u/s. 143(2) had to be issued within six months from the end of the assessment year i.e. by 30.9.2013. Admittedly, in this case, the notice was issued on 15.10.2013 i.e., beyond the time limit prescribed under the Act. Therefore, the initiation of proceedings and the jurisdiction invoked by the AO suffers from infirmity. In such a situation, we have no option to hold the impugned assessment order as bad in law as the notice u/s. 143(2) of the Act was issued beyond the limit prescribed under the Act. Since we have decided the legal issue in favour of the assessee, the issue raised on merits have become academic and hence, do not require adjudication.
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2024 (7) TMI 656
Levy of late fee under the provisions of section 234E - Intimation u/s 200A - HELD THAT:- It is only w.e.f. 01.06.2015 an amendment was made u/s 200A of the Act providing that fee u/s 234E could be computed at the time of processing of the return of income and intimation could be issued specifying the same payable by the dedutor as fee u/s 234E of the Act. The Hon ble Karnataka High Court in the case of Fatheraj Singhvi vs. Union of India [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] held that the provisions of section 234E of the Act are substantive in nature and the mechanism for computing the late fee was provided by the Parliament only w.e.f. 01.06.2015. Therefore, late fees u/s 234E of the Act can be levied only prospectively w.e.f. 01.06.2015. Thus, notices u/s 200A of the Act for computation and intimation for payment of fee u/s 234E as they relate to for the period of the tax deducted prior to 1.6.2015 are set aside. Decided in favour of assessee.
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2024 (7) TMI 655
Disallowance of provisions for routine expenses - audit fees, accounting charges and legal professional fees - failure of the assessee to furnish full particulars of provision for expenditure as well as substantiate the same - HELD THAT:- We find that the CIT(A)/NFAC merely extracted the submissions made by the assessee by giving bald finding, simply confirmed the addition only to the extent of Rs. 83,000/- without giving any cogent reason. Therefore, matter is required to be sent back to the file of CIT(A)/NFAC with a direction to pass a reasoned order after adverting to the written submissions of the assessee as well as the evidence filed during the course of assessment proceedings. Thus, Ground of appeal No.1 stands partly allowed. Addition on account of unsecured loans - failure of the assessee to furnish any explanation with regard to unsecured loans establishing identity of the loan creditors, their creditworthiness and the genuineness of the transactions - CIT(A)/NFAC deleted the part addition and confirmed balance of addition in respect of unsecured loan obtained from Mr. Janardhan Anant Patil by holding that the appellant only filed PAN and bank statement of the said lender but not submitted any evidence as to the creditworthiness of the lender - HELD THAT:- On perusal of the relevant material on record, bank statement of Mr. Janardhan Anant Patil, we are of the considered opinion that it can be found out whether there are any deposits in his account before giving loan to the assessee. It can also be found out whether said person has given the unsecured loans out of the money standing to his credit. From the reading of CIT(A)/NFAC s order, it would show that the ld.CIT(A)/NFAC swayed away by the remand report of the AO - It is also clear that the CIT(A)/NFAC has passed the order without any independent application of mind. Therefore, in the interest of justice, we are of the opinion that the matter requires remission to the file of CIT(A)/NFAC. Unexplained cash credit u/s. 69A - Requirement of passing a reasoned order by an authority whether administrative, quasi judicial or judicial - CIT(A)/NFAC deleted addition - DR submits that the ld.CIT(A)/NFAC without discussing any factual evidences merely deleted the addition - HELD THAT:- During the proceedings before the NFAC, it appears that the appellant had filed certain information/documents in support of the sources of the cash deposits. The ld.CIT(A)/NFAC had rightly called for the remand report from the Assessing Officer, however, deleted the addition without any discussion on facts of the case and the law governing the facts. However, the ld.CIT(A)/NFAC had failed to discuss the evidences as well as the remand report submitted by the Assessing Officer while reaching the satisfaction as to the sources of cash deposits. Needless to mention that in respect of the additions made on account of cash deposits, the sources of cash deposits, the evidences filed in support of the each cash deposits should be examined and then only the ld.CIT(A)/NFAC could have reached the satisfaction about the sources of the cash deposits. In the present case, the ld.CIT(A)/NFAC deleted the addition by recording a bald findings which does not meet the requirements of principles of natural justice and a reasoned order. The Hon ble Supreme Court in the case of Pankaj Garg vs. Meenu Garg [ 2013 (2) TMI 924 - SUPREME COURT] reiterated the settled position of law an order which does not contain any reason is no order in the eyes of law. Therefore, the order passed by the NFAC does not meet the requirements of being a reasoned order. Appeal filed by the assessee as well as Revenue is partly allowed.
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2024 (7) TMI 654
Reopening of assessment - Royalty receipts - taxation in the contracting state - assessee merely acted as conduit for royalty payments - The assessee did not make any value addition or performed any services to get a marked-up price, therefore, the treaty benefit would not be available to the assessee Whether appellant is not the 'beneficial owner' of the royalty received as per Article 12 of the Indo-Cyprus DTAA? - assessee computed tax of 15% on its royalty income based on DTAA instead of 25% as prescribed under Income Tax Act - AO noted that the assessee simply acted as an intermediary instead of RPPL who was ultimate beneficiary of such licensing agreement. The equity share capital and share premium invested by RPPL was nothing but royalty payment HELD THAT:- The case has been reopened in view of the findings rendered in earlier year. The same, in our considered view, was good reason enough to reopen the case of the assessee. The reasons recorded by Ld. AO to reopen the case have been placed - During assessment proceedings, a view was formed that the assessee was only created to be a conduit entity for royalty payments and to inflate royalty expenses of RPPL. Therefore, it was not eligible for the benefit of DTAA. The assessee, in return of income, offered the income @15% instead of 25% in terms of Sec.115A of the act. On the basis of these facts, Ld. AO formed a belief that the assessee was granted excess relief in the form of lower rate of tax as per Explanation 2(b) of Sec.147 of the Act. The reopening has been done after taking due approval of appropriate authority. In our considered opinion, aforesaid reasons constitute sufficient material to reopen the case of the assessee. The corresponding grounds stand dismissed. What will be the rate on which income returned by the assessee is to be taxed ? - While the assessee has claimed taxation @ 15% under India Cyprus DTAA, Ld. AO has declined the said treaty protection on the ground that the assessee was not beneficial owner of the royalty income and accordingly, brought the income to tax @ 25% instead. There is, quite clearly, no variation in the quantum of income. AO could have issued the draft assessment order - As w.e.f. 01-04-2020, Ld. AO is quite empowered to issue draft assessment order even in cases where Ld. AO proposes to make any variation which is prejudicial to the interest of the assessee. The application of higher rate of tax is certainly prejudicial to the assessee and the same, in fact, is the grievance of the assessee. We also find that case was reopened and notice has been issued on 20- 03-2020. AO has passed draft assessment order on 29-09-2021 which is after the aforesaid amendment has taken place. Therefore, no jurisdictional error could be found as urged by Ld. AR. The corresponding grounds stand dismissed. Case of the assessee that it was not acting as conduit between German entity and RPPL - We find that all the substantial submissions and arguments, on merits, have been made before us for the first time. For the same, the assessee has filed additional grounds of appeal also. These grounds were not taken up before lower authorities and there is no adjudication on these points - restore the matter back to the file of Ld. AO for re-adjudication on merits with a direction to the assessee to substantiate its case. The Ld. AO may re-examine the grounds on merits viz. whether the assessee could be considered as beneficial owner of the royalty in its own right as well as alternative argument that the rate as specified in India-Germany DTAA was lower than the offered rate. All the issues, on merits, are kept open.
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2024 (7) TMI 653
Correct head of income - characterization of receipts - income derived from saplings or seedlings grown in a nursery - Agricultural income or income from other sources - HELD THAT:- During the course of the Assessment proceedings the assessee has produced the details such as ownership of land deriving income from sale of nursery plants and tissues, ledger copy of sale register, water chargers, power and fuel, repair and maintenance, as well as bank statements for the period 01.04.2015 to 31.03.2017. Therefore, as per the explanation 3 to section 2(1A) of the Act which defines agriculture income clearly states that income derived from saplings or seedlings grown in a nursery shall be deemed to be agricultural Income and the same cannot be taxed as Income from Other Source. AO as well as ld.CIT(A) observed that on perusal of Sales register, the full details like complete address and date of order, date of supply, nature of order of sale of plant/tissue, when it is supplied, mode supply, mode of sale consideration received, etc. have not been furnished during the course of the Assessment proceedings amounting to Rs. 1,73,50,000/- from different parties therefore, for this limited purpose of examining the same, the matter should go back to the file of the AO. Appeal filed by the assessee is partly allowed for the statistical purposes.
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2024 (7) TMI 652
Disallowances on account of non-payment of VAT before the prescribed date for filing of return u/s 139(1) - submission of AR, that the amount of VAT was not debited to the profit and loss account, as exclusive method of accounting was followed by the assessee - HELD THAT:- On interpretation of section 145A(ii) in the case of CIT vs. Knight Frank (India) Pvt. Ltd.[ 2016 (8) TMI 1096 - BOMBAY HIGH COURT] safely gathered and construed that FAA has rightly recorded his dissatisfaction and doubt on the exclusive method of accounting by the assessee, much less, Ld CIT(A) had categorically rejected the method / modality of accounting system adopted by the assessee, whereas such observations of the authorities below were missing in the case of Ganapati Motors [ 2017 (4) TMI 1613 - CHHATTISGARH HIGH COURT] as observed by Hon ble High Court. It is apparent that, such missing observations was the circumstance / basis wherein Hon ble Jurisdictional High Court had decided the issue against the revenue - the contention of assessee that the issue in the present case is totally covered by the order of Hon ble Jurisdictional High Court is found to be devoid and bereft of substance, as the facts of the present case are distinguishable from the facts in the case of Ganapati Motors (supra). Herein, it is pertinent to mention that the decision of Hon ble Jurisdictional High Court is binding on the tribunal, the tribunal is under abundant duty to adopt the same by ritually following each and every word emanating from the said judgment, therefore, going by the Judicial discipline, respectfully adhering to the ratio of law laid down wherein the question of law was answered in favour of the assessee, conditionally, directing the revenue not to invoke the provisions of section 43B de hors any adverse inference regarding accounting modalities of the assessee, however, in the present case the very condition / inferences / doubt on accounting system is discernible in the order of Ld. CIT(A), moreover specifying the reasons for such adverse inference, absence of which was the foundation of the judgment in favour of the assessee in the case of Ganapati Motors (supra). We, therefore, unbale to concur with the contention of the Ld. AR that the issue raised in the present appeal regarding disallowance of VAT u/s 43B is covered by the decision of Hon ble Jurisdictional High Court, as in the admitted facts of present case, Ld. CIT(A) had not only doubted but also pointed out infirmity in the accounting system of the assessee which were not in accordance with the mandate of law and the ratio of judgment of Hon ble Bombay High Court in the case of CIT vs. Knight Frank (supra). Therefore, the arguments of the Ld. AR are incomprehensible, on account of factual differences in the present case as against the case Ganapati Motors (supra). CIT(A) had rightly discarded the modality of exclusive accounting system adopted by the assessee, which was not the case of the revenue, while the judgment in the case of Ganapati Motors (supra) was accorded, and the error on the part of revenue committed in the case of Ganapati Motors (supra) has now been rectified / cured in the present case. No infirmity in the order of Ld. CIT(A), while confirming the disallowance made under intimation by CPC u/s 143(1) in the present case, consequently, we do not have any fair basis to interfere with the order of Ld. CIT(A), thus, the same stands upheld. Part deletion by CIT(A), of disallowance made u/s 43B in intimation u/s 143(1) by CPC, which considering the fact of the case includes opening balance i.e. amounts pertaining to earlier year - Disallowance so vacated by the Ld. CIT(A) was under correct appreciation of facts and law, since as per the provisions of law and under the settled principle of law, any addition / disallowance of expenditure incurred, which pertains to a different year other than the year under consideration (relevant year), cannot be made in the relevant year, therefore, we concur with the decision of Ld. CIT(A), which in our considered opinion is not suffering with any infirmity, that calls for our interference. We, thus, approve the decision of Ld. CIT(A) qua the deletion of addition for amounts pertaining to earlier year and reject the contentions raised by the revenue being bereft of merits. Resultantly, ground no. 1 and 2 raised by the revenue stands dismissed.
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2024 (7) TMI 651
Estimation of income - bogus purchases - quantification of the profit/income which the assessee would have made by purchasing the goods in question at a discounted value from the open/grey market - HELD THAT:- AO had made the addition of 25% of the value of the impugned bogus purchases, which thereafter, was scaled down by the CIT(Appeals) to 5% but neither of the said quantification of the profit element has any basis. We are unable to subscribe myself to the quantification of the profit element as had been done by both the lower authorities. As stated by the Ld. AR, and rightly so, the issue in hand is squarely covered by the order of M/s. Balaji Rice Industries [ 2022 (11) TMI 180 - ITAT RAIPUR] wherein the Tribunal after relying on the judgment of M/s. Mohhomad Haji Adam Company, [ 2019 (2) TMI 1632 - BOMBAY HIGH COURT] had restricted the addition only to the extent of the difference between the gross profit of the genuine purchases vis- -vis alleged bogus purchases Thus we restore the matter to the file of the A.O, with a direction to him to restrict the addition in the hands of the assessee qua the impugned bogus/unverified purchases by bringing the GP rate of such bogus purchases at the same rate as that of the other genuine purchases. Addition of commission made by the A.O @ 5% as scaled down by the CIT(Appeals) to 1% - HELD THAT:- As nothing have been placed on the record that would prove to the hilt that the assessee had incurred any such expenditure, therefore, the addition so made/sustained by the lower authorities on a presumptive basis cannot be sustained. Accordingly, herein vacate the addition. Thus, the Ground of appeal No.4 raised by the assessee is allowed.
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2024 (7) TMI 650
Adjustment in intimation u/s 143(1) - Disallowance of revenue expenditure claim incurred u/s 11(1) - assessee has filed the return u/s 139(4A) beyond the due date of filing the return as per Proviso to section 139(1) - as argued adjustment was made u/s 143(1) without giving the reasonable opportunity to assessee, which violates the 2 nd Proviso of section 143(1) - HELD THAT:- As per this order, the entire issue is duly accepted in the proceedings under section 143(3) of the Act. Same return of income is accepted in assessment proceeding U//s 143(3) of the Act and is rejected u/s 143(1) of the Act. The impugned appeal order is itself unjustified. The grievances of the assessee is that the return under section 143(1) was duly processed and addition was made without giving an opportunity to the assessee which clearly violated the 2 nd Proviso of section 143(1) of the Act. The fact is duly accepted by the revenue in order framed u/s 143(3) of the Act. The same authority on same ROI cannot take divergent view as per their whims. Further, the ld. AO has violated the 2nd Provision of the Sec. 143(1) of the Act without giving reasonable opportunity to assessee the adjustment done. Accordingly, the addition amount are deleted. The impugned appeal order is set aside and the appeal of the assessee is allowed.
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2024 (7) TMI 649
Reopening of assessment u/s 147 - notice made after four years - Addition on account of surrender of ULIP Market Plus-1 policy - Disallowance of Long Term Capital Loss claimed on surrender of ULIP policy - exemption under section 10(10A) or section 10(10D) claimed - HELD THAT:- Considering the legal ground, on perusal of the recorded reason the reopening is made after four years on a wrong assumption of the fact. The revenue assumed that the assessee claimed exemption under section 10(10A) or section 10(10D) of the Act in the return of income of the said investment was matured before the stipulated period. The assessee declared this income in the return of income. So accordingly, there is no question of concealment of fact. The assessee denied about the claim of exemption u/s 10(10A) or u/s 10(10D) of the Act. The recorded reason itself is erroneous and liable to be quashed. The assessee has taken additional ground which is purely legal and duly accepted by the Bench. DR has not made any strong objection against the submission of the assessee. The entire addition was made on the basis of wrong assumption of fact by the Ld.AO. Accordingly, we delete the addition. Assessee appeal allowed.
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2024 (7) TMI 648
Deduction u/s 80P - interest income from co-operative bank - as per revenue said Interest was not eligible for deduction u/s 80P(2)(a)(i) and the same was taxed by AO u/s 56 as Income from other sources - assessee submits that it is operational income and therefore the AO should have allowed entire deduction 80P(2)(a)(i) HELD THAT:- This issue has been settled in the case of PCIT v. Totagars Cooperative Sale Society [ 2017 (7) TMI 1049 - KARNATAKA HIGH COURT ] wherein it is held that the source of funds are irrelevant. Therefore the contention of the Assessee is not tenable we agree completely with the view of the ld. CIT(A) that the deduction for Interest on investment can t be granted u/s 80P(2)(a)(i) of the Income Tax Act. Claim of deduction u/s 80P(2)(d) - We direct the A.O. to verify whether interest / dividend is received by the assessee out of investments made with Cooperative Societies. If the assessee earns interest / dividend income out of investments with co-operative society, as observedin the case of Kerala State Cooperative Agricultural and Rural Development Bank Ltd. [ 2023 (9) TMI 761 - SUPREME COURT ] the same is entitled to deduction u/s 80P(2)(d) of the I.T. Act. Treatment of interest income from banks as Income from other sources and relief u/s 57 - If the interest earned by assessee from the banks is considered under the head Income from other sources , relief to be granted to the assessee u/s 57 of the Act in accordance with law. Accordingly, the issue is restored to the file of ld. AO for de-novo consideration with the above observations. Appeal filed by the assessee is partly allowed for statistical purposes.
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2024 (7) TMI 647
Addition u/s 68 - cash advances from customers towards plots and land and low cost housing - AO not having been convinced with the genuineness of the cash components comprising of small sums of advances received from several persons, particularly the creditworthiness of the persons made the advances mainly the lenders and farmers of remote areas, thus added it to the total income of the assessee as unsecured cash u/s 68 - CIT(A) deleted the addition - HELD THAT:- As relying on own case [ 2024 (7) TMI 534 - ITAT DELHI] for A.Ys. 2006-07 2007-08 set aside the issue of the file of the Learned AO to examine and verify the genuineness of the transaction in regard to the cash advances made by the customers, upon granting an opportunity of being heard to the assessee and upon considering the evidence on record or any other evidence which the assessee may choose to file at the time of hearing of the matter and to pass a reasoned order strictly in accordance with law. Appeal filed by the Revenue is dismissed.
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2024 (7) TMI 646
Unexplained cash credit u/s 69C - diary seized during a search operation contained entries of cash expenses - diary of Shri Rohit Sharma seized from the office of the assessee as belonging to the assessee by applying the presumption u/s 132(4) of the Act - HELD THAT:- As search and seizure action in the office of appellant/assessee led to recovery of diary which contained entries of cash payment to vendors. The assessee vide question was issued questionnaire u/s 142(1) of the Act to provide explanation. Appellant/assessee submitted reply and affidavit interalia claiming that the diary found from his office was of Shri Rohit Sharma. The diary mentions expenses incurred on election contested by several candidates of Aam Aadmi Party. Affidavit of Shri Rohit Sharma was also filed. The contents of affidavit especially para No. 6 do not properly explain entries as names of person paying the amount and the expenses paid are vaguely mentioned. Names of relatives of appellant/assessee are also mentioned. Shri Rohit Sharma had stated that only Rs. 10,95,700/- was incurred for promotion of Aam Aadmi Party and many candidates in West Delhi constituency. No supporting document regarding averment was submitted. In absence of specific details and other supporting documents, the affidavit of Shri Rohit Sharma was rightly rejected by the Learned AO and Learned CIT(A). Impugned orders being just, fair and reasonable, deserve to be upheld. Decided against assessee.
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2024 (7) TMI 645
Addition for deposits of demonetized currency notes - onus to prove - assessee is a Gynecologist by profession and had also income from investment activity - HELD THAT:- Based on that analysis of facts the lower authority without appreciating the facts when the demonetization announced the assessee has no option to carry the cash on hand but must deposit into the bank account. The source of that cash is duly explained and supported by the clear and cogent evidence placed on record. It has been held in a number of cases that it is trite law that suspicion howsoever strong cannot take place of a legal proof. The money deposited is from the professional income which is supported in the entries passed in the books supported by the patient register containing all the required details. Both that records were placed on record and no defects was observed in those record so it would be far starching that merely the assessee has deposited the cash available with her in SBN is deposited in bank account cannot be considered as unexplained money in the hands of the assessee. As assessee demonstrated that the income has not abnormal trend with that of with the last year month to month. The income is slightly higher, and it cannot be said sudden or irregular hike. Based on that finding so recorded herein above we hold that the cash deposited into the bank account of the assessee cannot be considered as unexplained considering the month wise receipt and income slightly more than last year cannot warrant the cash deposited into the bank account as unexplained cash which is proved as such and even taxed without rejecting the books of account. In the light of the discussion so recorded here in above we note that the cash so deposited by the assessee is explained to be emerges out of the her professional income and revenue has not proved that the assessee has any other source for the income which is already reflected in her books of account - addition so made by the ld. AO and sustained by the ld. CIT(A) is directed to be deleted. Decided in favour of assessee.
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2024 (7) TMI 644
Penalty u/s 271(1)(c) levied consequent to order passed u/s. 143(3) r.w.s. 263 - HELD THAT:- As the assessee challenged the order of the PCIT in an appeal before the ITAT, Jaipur Bench and in that appeal the order of ld. PCIT passed u/s 263 of the Act was quashed by the ITAT [ 2022 (3) TMI 1514 - ITAT JAIPUR] . In appreciation of these set of facts the consequential assessment order passed is not sustainable and as such when the very basis for levy of penalty, which is the assessment order in this case is not sustainable the consequent levy of penalty has not leg to stand. Appeal of the revenue is dismissed.
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2024 (7) TMI 643
Rejection of registration u/s 12AA - objects of the appellant company do not fall under the term 'charitable' as envisaged in section 2(15) - F iling of return of income in Form No. ITR-6 - as per assessee, the aims and objects of the company are to establish, promote, set-up, run, maintain, assist/finance, support and/or aid to or help in the setting up and/or maintaining and/or running ashrams, educational facilities, ayurvedic medical facilities schools, orphanages, widow homes, lunatic asylums, poor houses or other establishments for relief and/or help to the poor, old and infirm people and/or destitute. HELD THAT:- As decided by CIT(E) it is clear from the above stated objects that the objects of the applicant company do not fall under section 2(15) of the act which is essential for granting registration u/s 12AA of the Act and to that extent the objects of the applicant can't be established as charitable. The presence of such objects in MoA clearly leads one to conclude that the applicant entity intends to cover its motive of organizing seminars, exhibitions and opening lecture hall that too do not enure to the benefit of the public at large, under the provisions of exemptions. Moreover, perusal of financial statements reveal that no activity has been carried out by the applicant so far. In the absence of same, it is also impossible to ascertain the genuineness of activities. To that extent, it is safely concluded that the applicant company would not ensure to benefit for the general public. Also as per rule 12(1) of the IT Rules, 1962, the returns of income of the society/trust/company which works on the principal of 'no profit no loss, are required to be filed in Form No. ITR-7. Filing of return of income in Form No. ITR-6 clearly indicates that the applicant company is involved in business operations. A perusal of the order of learned CIT(E) reveals that in arriving at his conclusion the learned CIT(E) has conducted detailed inquiry and passed an elaborate order. We see no flaw or infirmity in the order of learned CIT(E) to take a different view in the matter. Accordingly, order of learned CIT(E) is upheld. Decided against assessee.
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2024 (7) TMI 642
Denial of approval u/s. 80G - application in form 10AB was filed belatedly by the assessee - AR submitted that the CBDT has extended the due date for filing Form 10A/10AB vide press release dated 25.4.2024 till 30.6.2024 - HELD THAT:- The assessee s case is covered by the CBDT press release wherein as extended the due date till 30.6.2024 for filing Form 10AB vide Press release dated 25.4.2024. Therefore, the matter in appeal is remitted back to the ld. CIT(Exemptions) for fresh consideration and decision as per law. Appeal is allowed for statistical purposes.
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2024 (7) TMI 641
Estimation of net profit - assessee is engaged in the business of commission agent for prawn seeds - HELD THAT:- Neither the AO nor the ld. CIT(A) has considered any comparative case for the purpose of determination of the rate of profit disclosed by the assessee. Normally, the best comparison to determine the net profit by the assessee would be earlier or the subsequent assessment years of the same assessee. In the present case, the impugned assessment year is the first year of assessee s business. A perusal of the facts also clearly shows that the assessee has shown the highest rate of net profit for the impugned assessment year. This being so, and considering the fact that the income of the assessee has been estimated, we are of the view that in the interest of justice, net profit of the assessee is liable to be estimated @2.75% on the total turnover of the assessee after reduction of the airport rent cost, thormocol sheet cost and truck rent cost as there is no possibility of assessee earning any income out of the said expenses. AO is directed to estimate the income of the assessee @2.75% on the total turnover of the assessee after reduction of the expenses regarding airport rent, thormocol sheet and truck rent, respectively. Appeal of the assessee is partly allowed.
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2024 (7) TMI 640
Addition u/s. 69A - cash received from the buyers of the flats - document taken from the accountant clearly depicts the details of cash receipts against flat numbers and name of the assessee - AO placed reliance on the statement taken from Sr. Accountant - case of the assessee is that it has made all payments by way of cheques only and the relevant details were furnished to the AO and purchase value of flats are also supported by the valuation report issued by a registered valuer and this report support the case of the assessee HELD THAT:- In the case of Shri Anil Jaggi [ 2018 (2) TMI 51 - ITAT MUMBAI ] the co-ordinate bench examined the addition made in the hands of buyer of flat on the basis of evidence seized from the builder during the course of search operations conducted u/s 132 of the Act - the addition could not have been made on the basis of recording done at the end of builder, when the purchase consideration matches with the market rates and further no other evidence corroborating those entries are found. In the case before the co-ordinate bench, the pen drive was found during the course of search operations conducted u/s 132(4) of the Act and further the builder has offered the alleged on-money receipts as its income. The coordinate bench has held that the action taken by the builder would not automatically support the presumption that the concerned assessee has paid on money. In the instant case, the facts are not in better footing at all on account of following reasons:- (a) The impugned document was found during the course of survey operations. (b) The accountant and director has admitted the entries in the statement taken u/s 133A of the Act, which does not have any evidentiary value. (c) The dates mentioned in the document did not match with actual dates of allotment or registration. (d) As observed by the co-ordinate bench in the above said case, the entries made in the document falls short of certain material facts, viz. date and mode of receipt of on money‟, who had paid the money, to whom the money was paid, date of agreement etc. Thus, we are of the view that the impugned addition made by the AO is not sustainable in law. Accordingly, we set aside the order passed by CIT(A) on this issue and direct the AO to delete the above said addition. Appeal of the assessee is allowed.
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2024 (7) TMI 639
Disallowance of provision for warranty expenses - provision for unexpired period is not allowed in the relevant AY - HELD THAT:- The law is well settled that the provision for warranty expenses would be allowable in the event of assessee proves that same has been computed on the basis of past experience and on scientific basis. In the present case, no past history is available, but the claim is based purely on estimation basis. The assessee has applied a formula and claimed this formula has been applied in subsequent years as well. The claim of the assessee based upon such formula has been allowed in subsequent years. Alternate prayer of the assessee is that the expenses may be allowed in the year of payment without prejudice to the other contentions - It is not the case of Assessing Authority that the expenses, even if actually incurred, would not be allowable. It is also admitted fact that the assessee is maintaining its books of account on accrual basis. The assessee has claimed that the payments of expenses were actually made in subsequent year. As per the assessee, this fact goes to prove that provision so made is justified and ought to have been allowed, at first instance, in the year under appeal. Otherwise same may be allowed in the year when such expenses are incurred. Allowablility of the expenses in the year of payment, same cannot be allowed in view of the fact that the accounts are maintained on the basis of mercantile system of accounting. The nature of expenses being business cannot be lost sight. The factum of actual incurrence of expenses goes to prove that the provision so computed on the basis of formula devised and applied by the assessee is correct. The Hon ble Supreme Court in the case of Rotork Controls India (P) Ltd. [ 2009 (5) TMI 16 - SUPREME COURT] has held that if the facts establish/show that the defects existed in some of the items manufactured and sold then the provision made for warranty in respect of the army of such sophisticated goods would be entitled to deduction under section 37 of the Act. In the present case, the assessee has demonstrated that defects were occurred and rectified during the warranty period. Thus, in our considered view, the learned CIT(A) erred in holding that the ratio of decision of Hon ble Supreme Court in the case of Rotork Controls India (P) Ltd. (supra), is not applicable. We, therefore, direct the AO to allow claim of the assessee after verifying the claim of the assessee that it actually incurred the impugned expenses during the unexpired warranty period. Ground is allowed for statistical purposes.
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2024 (7) TMI 638
Assessment u/s 153C r.w.s. 153A - interpretation of the date of search under section 153C - commencement date for computation of the six assessment years - in search, documents belonging to the assessee were found and seized or not? - HELD THAT:- We find that this issue of the date of search for persons covered u/s 153C is no longer res-integra. It has now been well settled in the case of CIT Vs. Jasjit Singh [ 2023 (10) TMI 572 - SUPREME COURT] . The Hon'ble Delhi High Court has further elaborated the legal dictum in the case of Ojjus Medicare Pvt Ltd. [ 2024 (4) TMI 268 - DELHI HIGH COURT] . As per provisions of section 153C, the commencement date for computation of the six assessment years is deemed to be the date of receipt of books of account/materials/asset, belonging/pertaining to non-searched person, by the jurisdictional AO of the non-searched person. Date of recording of the satisfaction in the case of the searched person qua the non-searched person becomes date of search in the case of non-searched person [the assessee in the present case]. In the instant case of the assessee (non-searched person), the date of search would become the date of recording satisfaction i.e., 23.11.2010. The impugned A.Y 2004-05 would therefore fall beyond the period of six assessment years as reckoned with reference to the date of recording of satisfaction by the assessing officer of the searched person. We have no hesitation in quashing the impugned assessment order being made without jurisdiction.
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2024 (7) TMI 637
Exemption u/s 11 - assessment of trust - Treatment of dividend received from shares as corpus fund or income - as per DR investment in shares was not a specified mode u/s 11(5) - dividend received on the shares, which were received by the assessee as donation towards corpus fund, could also be treated as part of corpus fund or to be treated as income of the assessee which was to be applied or invested as per the provisions of section 11 HELD THAT:- We find that in the case of Mata Amrithanandamayi Math [ 2017 (9) TMI 1232 - KERALA HIGH COURT ] that when a corpus donation in the form of fixed deposit has been given to the assessee with the specific direction that said asset along with any interest earned thereon shall also to be added to the corpus of the trust, then said interest partake character of the income in the form of voluntary contribution mode with the corpus of the trust and therefore, the dividend income received also forms part of the corpus donation. Thus, same is not liable to be considered for application of income under the provisions of section 11(5) of the Act. Since, the assessee has already invested the dividend received in the form of fixed deposits and saving account in the HDFC Bank and therefore, same qualifies for the purpose of section 11(5) of the Act. In the instant case rather than fixed deposits shares have been donated as corpus donation and therefore, the dividend income earned thereon under the direction of the donor to treat is same as part of corpus donation has been correctly held by the Ld. CIT(A) as part of the corpus donation. CIT(A) has validly followed the decision of the Hon ble Kerala High Court Mata Amrithanandamayi Math (supra) which has been uphold by the Hon ble Supreme Court. [ 2018 (5) TMI 1028 - SC ORDER ] Appeal of the Revenue is dismissed.
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2024 (7) TMI 636
Adjustment in intimation u/s 143(1) - Disallowance u/s. 80G - 50% of the total donation paid by the assessee towards corporate social responsibility (CSR) - HELD THAT:- As observed that against section 143(1) intimation the assessee has filed the rectification application u/s. 154 of the Act before the AO which is pending for disposal. It is evident from the record that the assessee has only challenged the assessment order passed u/s 143(3) of the Act and not the intimation u/s. 143(1) of the Act before the first appellate authority. We are conscious of the fact that section 246A of the Act has specifically provided for an appeal before the ld. CIT(A) against the intimation issued u/s. 143(1) of the Act where the cause of action had arouse and the assessee ought to have filed an appeal against the same. Even before us, the assessee has challenged only the assessment order passed u/s. 143(3) and not the 143(1) intimation. We, therefore, find no merit in the ground raised by the assessee. Hence, ground no. 1 raised by the assessee is hereby dismissed. Disallowance u/s. 80G towards CSR expenses - AO has rejected the claim of the assessee for the reason that the CSR expenses is not a voluntary donation but is merely a statutory obligation u/s. 135 of the Companies Act, 2013 read with Schedule VII of the Companies Rules, 2014 - It is pertinent to point out that the intention of the legislature was clear when the same was clarified by the Finance (No.2) Act, 2014 that CSR expenses will not fall under the business expenditure and also there has been an express bar specified in sub clause (iiihk) and (iiihl) of section 80G(2)(a) of the Act that any sum paid by the assessee as donation to Swatch Bharat Kosh and Clean Ganga Fund will not come under the purview of deduction u/s. 80G of the Act subject to certain conditions. This justifies the fact that the other donations specified u/s. 80G of the Act would be entitled to deduction provided the conditions stipulated u/s. 80G of the Act are satisfied. In the present case in hand, the contributions made by the assessee would not fall under the two exceptions specified above which clearly mandates that the assessee is entitled to claim deduction for the donations contributed during the year under consideration u/s. 80G of the Act. The decision relied upon by the ld. A.O. in the case of PVG Raju [ 1975 (9) TMI 53 - SUPREME COURT] is distinguishable on the facts of the present case where there is no requirement of proving the voluntariness of the donation contributed by the assessee for claiming deduction u/s. 80G of the Act. The amendment brought about by Finance Act, 2015 to section 80G of the Act which had inserted the sub clauses (iiihk) and (iiihl) to be the exception for qualifying a donation for claiming u/s. 80G of the Act could also be an evidencing factor to substantiate that CSR expenditures which falls under the nature specified in section 30 to 36 of the Act are an allowable deduction u/s. 80G of the Act. Assessee is entitled to deduction claimed u/s. 80G of the Act towards the CSR expenditure incurred by it. We, therefore, direct the AO to allow the claim of the assessee subject to the condition that the assessee has satisfied the other requirements warranted u/s. 80G of the Act. We, therefore, direct the ld. A.O. to allow the claim of the assessee subject to the condition that the assessee has satisfied the other requirements warranted u/s. 80G of the Act.
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2024 (7) TMI 635
Nature of receipts - receipt of non compete fees - capital receipt or revenue receipt - HELD THAT:- The consideration received by the assessee towards non compete fee is capital in nature , as it is already held that the amendment to section 28(va) of the Act is not applicable to the year under consideration. The intention of the legislature was to clear the ambiguity of the non compete fee received by the assessee by treating the same as a revenue receipt in the hands of the assessee but only post amendment, i.e., w.e.f 01.04.2003. It is trite to reproduce section 28(va) of the Act for ease of reference herein under: We, therefore, find no infirmity in the order of the ld. CIT(A) in holding the non compete fee to be in the nature of a capital receipt for the year under consideration. The issue pertaining to the period of the said agreement also becomes irrelevant for the fact that the assessee would be liable to tax on non compete fee as revenue receipt from A.Y. 2004 2005 as per section 28(va) of the Act. Appeal filed by the Revenue is dismissed.
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2024 (7) TMI 634
Validity of reopening of assessment - regular scrutiny assessment was completed u/s. 143(3) - almost at the fag end of sixth year from the end of the relevant assessment year notice for reopening issued - assessee has shown amount under the head sundry creditors which was pending since November, 2006 payable towards purchase of transferable development rights - HELD THAT:- Mere writing of this phrase failure on the part of the assessee to disclose fully and truly all material facts for the purpose of assessment used in the proviso does not give any jurisdiction to the AO, albeit, ld. AO has to demonstrate as to what was the failure on the part of the assessee to disclose fully and truly all material facts. Here in this case, assessee has duly disclosed details of sundry creditors before the ld. AO and only because the amount was payable for last six years that does not mean that there is cessation of liability which can be taxed. In such a case where is the failure on the part of the assessee to disclose the facts. Simply because, ld. AO has presumed in the reasons that, since more than 6 years have been lapsed therefore, it is a deemed cessation of liability which is incorrect in law and on facts, because till assessee recognizes such debt it cannot be treated as cessation of liability. Secondly, in so far as recording of the sales, assessee has given the details before the ld. AO, as how the sales have been recorded in the books and also has given specific explanation during the course of original assessment proceedings. Thus there was a full disclosure made by the assessee and explanation which has been accepted by the ld. AO. Once that is so, then how the presumption can be drawn to draw another inference by the ld. AO without any material information contrary to the explanation given by the assessee. Thus on this point also there is no failure on the part of the assessee to disclose fully and truly material facts. Loss on cancellation of sales - explanation was there on the record and also explained before the ld. AO and ld. CIT(A), then we fail to understand what was the failure on the part of the assessee to disclose the facts. Ld. AO has tried to draw his own inference in the reasons and tried to justify it without actual finding what was the failure on the part of the assessee to disclose fully and truly material facts. Accordingly, we hold that the reasons recorded by the ld. AO do not give jurisdiction to reopen the case beyond the period of four years from the end of the relevant assessment year. Accordingly, the entire reopening is hereby quashed and consequently the entire re-assessment proceedings as well as order passed by the ld. AO is held to be without jurisdiction and is hereby quashed. Appeal of the assessee is allowed.
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2024 (7) TMI 633
Nature of expenditure - Payment made towards environmental compensation is to be construed as penal in nature or just a payment in compensatory in nature - adjustment u/s. 143(1)(a) - HELD THAT:- Such question is quite debatable and according to our understanding, this cannot fall within the ambit of section 143(1), where arithmetical mistakes and adjustment of incorrect claim are to be looked into by a software while processing the return. It would be a different position, if assessment of the assessee was taken for scrutiny and after confronting the assessee, the AO would have decided this issue but in our understanding in a proceeding u/s 143(1), such disallowance cannot be made. AO has nowhere examined the order of the Pollution Control Board asking the assessee to make the payment. Every payment made by the assessee would not be in penal in nature, therefore, disallowance is not sustainable. We allow this ground of appeal and delete the disallowance.
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2024 (7) TMI 632
TDS u/s 271C - non deduction of TDS on Directors fee and transaction charges u/s 194J - HELD THAT:- Transaction charges which the tax authorities have considered as Professional charges paid to directors falling in limb (ba) of sub-section (1) of section 194J of the Act, it comes up that the PCIT has accepted the plea of the assessee that payments made to directors on account of sitting fee is allowable. The assessee seems to have had valid reasons to consider the payments on account of transactional charges to be not covered by Section 194J(1)(ba) of the Act as there is no such head in this section. Thereby not deducting the TDS seems to be out of bonafide belief. Imposition of penalty is thus not justified. Appeal of the assessee is allowed.
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2024 (7) TMI 631
TP adjustment - re- characterisation of the functionality of the Assessee in the Information Technology ( IT ) segment - assessee is a wholly owned Subsidiary of Google International LLC, USA with a registered office in Bangalore and has STPI units at Hyderabad and Gurgaon, and is engaged in the business of providing ITeS services; IT Services; and marketing and distributing Ad Words - HELD THAT:- Appendix I (c ) to the APA of the PB that, the agreements considered between the assessee and the AE s are dated 01/01/2006, 01/04/2004 and 12/12/2005 for the services rendered under IT Services, ITeS Services and Google AdWords programme distribution. Thus it is clear that these agreements have been considered to analyse the FAR of the international transactions in the years of APA. We further note that these are the same agreements relied by the assessee before the Ld.TPO and DRP to explain the FAR of the services rendered by the assessee to the AE s under the three segments, for which rollback benefit is sought for. The Income tax Rules provide that, if the International Transactions are same in the year of APA and in the past year than both the parties, assessee and CBDT may agree for applying the agreements contained in APA agreed. An APA also provides complete guideline in respect of the international transaction, whose ALP is to be determined by applying appropriate transfer pricing methodology. . We therefore remand the issue back to the Ld.AO/TPO. The Ld.AO/TPO is directed to examine the facts closely and conclude the issue of applicability of APA to the year under consideration in principle. The Ld.AO/TPO is also directed to consider the above cited decisions relied by the Ld.AR reproduced herein above of this Tribunal as well Hon ble Delhi High Court for the legal proposition of deciding the issue in the light of APA. Comparable selection - Acentia Technologies Ltd.,eClerx Services Ltd. and Infosys BPO Ltd. - As these are not fit comparable for a captive service provider like assessee. We therefore direct the Ld.AO/TPO to exclude the alleged three comparables from the final list. TP computed by the Ld.AO/TPO in the distribution segment - MAM Application of PSM OR RPSM - TPO reduced the adjustment under the distribution segment by applying PSM instead of RPSM - HELD THAT:- We note that the DRP has already directed the separating the ITeS segment with the Distribution segment and to independently benchmark the distribution segment by adopting TNMM as MAM. Further we note that the Ld.AO/TPO has not thereafter bench marked the distribution segment in accordance with the transfer pricing principles. We therefore remand the issue of determination of ALP of distribution segment to the LD.AO/TPO. We direct the Ld.AO/TPO to benchmark the distribution segment by adopting TNMM as MAM and to compute the ALP of the transaction in accordance with law. Needless to say that the proper opportunity of being heard must be granted to the assessee. Rejection of Books - HELD THAT:- As for the year under consideration, the revenue authorities did not point out any discrepancy in the books of accounts of the assessee, no reason to uphold the rejection of the books of account. Holding the assessee to be Dependent Agent Permanent Establishment ( DAPE ) of Google Ireland - HELD THAT:- As relying on assessee s own case ..[ 2023 (7) TMI 1432 - ITAT BANGALORE] , we hold that the assessee cannot be treated as a dependent agent of Google Ireland. Income deemed to accrue or arise in India - treating the payments made to Google Ireland as Royalty/ fees for technical services ( FTS ) - HELD THAT:- As relying on own [ 2023 (7) TMI 1432 - ITAT BANGALORE] we hold that the assessee cannot be treated as a dependent agent of Google Ireland and the payments made to Google Ireland cannot be treated as FTS or Royalty. Computation of Deduction u/s 10A - HELD THAT:- We direct the Ld.AO to recompute the deduction available to the assessee under section 10 A of the Act as per the directions of Hon ble Supreme Court in case of CIT vs. HCL Technologies [ 2018 (5) TMI 357 - SUPREME COURT ] that has upheld the decision of Hon ble Karnataka High Court in case of CIT vs. TATA Elxsi [ 2011 (8) TMI 782 - KARNATAKA HIGH COURT ] Unallocated expenditure for Accropetal Technologies Ltd., chosen by the Ld.TPO under the IT segment by treating the assessee as a KPO - HELD THAT:- As TPO already remanded the issue of bench marking the IT segment to the Ld.AO/TPO in accordance with the APA with a direction not to consider the assessee to be a KPO under the IT segment. It is also directed to use TNMM as the MAM for determining the arms length of the transaction. As we have remanded the entire issue to the Ld.TPO for computing the ALP of IT segment de novo as per the directions, the issue of comparables also stands remanded. The comparables are therefore to be selected to be in accordance with law. Attribution of additional profits - HELD THAT:- As we have already held while considering Issue 4 that assessee cannot be held to be a dependent agent permanent establishment of Google Ireland, the income earned by Google Ireland cannot be taxed in India as business profits. Under such circumstances, the issue of attribution does not arise. Deduction u/s allowed on the income earned under ITeS segment - DR submitted that the Ld.AO allowed deduction u/s 10A in respect of the income earned by the assessee under ITeS segment without carrying out necessary verification - HELD THAT:- Admittedly, the necessary criteria to claim eligibility under section 10A in respect of the income earned by the assessee under ITeS segment has not been verified by the Ld.AO. In the interest of justice we remand this issue to the Ld.AO to verify the invoices, the service work order and any other documents related to rendition of ITeS services and the necessary documents to verify if the payment has been received by the assessee in India in foreign currency in respect of the ITeS services rendered. Assessee is directed to furnish all relevant information in support of the claim.
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2024 (7) TMI 630
TP Adjustment - determination of functional profile - whether the assessee is a KPO/ITeS/high end BPO ? - HELD THAT:- There is inconsistency in the adjudication of this issue. The Tribunal in the case of the assessee for A.Ys. 2011-12 and 2012-13, treated the assessee as TPO/KPO whereas while deciding the appeal for A.Y. 2014-15, the Tribunal had deleted the E-Clerks on the premise that the assessee is not a KPO / ITeS. In our considered opinion, though the TPO in his order has mentioned that the assessee is a ITeS, however, the issue is required to be examined afresh by the TPO on the basis of the agreements entered by the assessee with its AEs and functions performed. The TPO shall examine the work profile of the assessee vis- -vis it s A.E. and the qualifications and experiences of employees / work force engaged by the assessee in discharging its duties pursuant to the contracts entered with its A.E. and remuneration paid. Based on the above said data, the TPO shall adjudicate and decide whether the assessee is a ITeS / KPO / high end BPO or merely low end BPO after following due process of law and decide the Arms Length Price afresh after providing the opportunity of hearing to the assessee, in accordance with law. The assessee is directed to produce all the documents / submissions before the TPO to substantiate its case that the assessee is not KPO / ITeS. Appeal of the assessee is allowed for statistical purposes.
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Customs
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2024 (7) TMI 629
Violation of provisions of notification No.64/2008-Customs dated 09.05.2008 - it was held by CESTAT that the matter needs to be looked into afresh by the original authority for determining the correct position of law in this case - HELD THAT:- There are no reason to interfere in the matter, as the main matter is still at large. However, the Commissioner of Customs shall dispose of the matter as early as possible. Appeal dismissed.
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2024 (7) TMI 628
100% EOU - interpretation of statute - Section 11 (2) of the FTDR Act, 1992 - levy of penalties for non-fulfillment of export obligations under a Letter of Permission/Letter of Undertaking - HELD THAT:- A reading of the provision makes it clear, Sub-section (2) can be invoked only when a person attempts to or succeeds in making an import or export in contravention of the provisions of the FTDR Act, the associated Rules and Orders, or the Foreign Trade Policy. In the present case, there is no allegation that the petitioner attempted to make any export or import in violation of the FTDR Act of 1992, or the Rules, Orders made thereunder, or the Foreign Trade Policy. In similar circumstances, the Supreme Court in the case of M/S. EMBIO LIMITED [ 2024 (5) TMI 684 - SUPREME COURT ] ruled that when the allegation pertains to the failure to fulfill the obligation to export goods within a specified period of five years, and there is no allegation of attempting to make an export or import, the imposition of a penalty under Section 11 (2) of the FTDR Act of 1992 cannot be sustained. In the absence of any contravention of the provisions of the Act, the Rules, Orders made thereunder, or the Foreign Trade Policy, the impugned order passed by the first respondent imposing a penalty of Rs. 2 crore on the grounds of a shortfall in the export of manufactured goods is without authority - the impugned order is quashed - petition allowed.
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2024 (7) TMI 627
Benefit of concessional rate of duty under N/N. 46/2011-Cus dated 01.06.2011 - violation of Rules of origin (ROO) - absence of documents relied upon by the department - violation of principles of natural justice - HELD THAT:- It is found that in this case, investigation was conducted by DRI- Mumbai and after the investigation, show cause notice was issued relying upon the information/documents collected during the investigation. Before filing reply to the show cause notice the appellant requested the department to provide them the copies of various documents/information relied upon in the show cause notice so that appellant can properly file their reply and defend them. It is found that not supplying these documents to the appellant would defeat and violate their fundamental rights of fair hearing inbuilt in the principles of natural justice - all the documents demanded by the appellant do not fall in the category of privilege and confidential documents more so when they have been relied upon while passing the impugned order. Matter remanded back to the Ld. Commissioner to pass fresh order; after complying with the principles of natural justice and after supplying them the copies of those documents which have been relied upon while passing the impugned order - appeal allowed by way of remand.
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2024 (7) TMI 626
Levy of penalty u/s 112(a) of the Customs Act, 1962 - containers not re-exported within a period of 6 months from the date of import, violating condition of N/N. 104/94-Cus dated 16.03.1994 - HELD THAT:- The Learned Adjudicating Authority has given one sided story of the department however, the appellant have made a detailed defense submission, on the fact as well as on the legal issue but from the perusal of the impugned order particularly with regard to imposition of penalties on the present appellants no discussion and finding was given. In the matter related to imposition penalty on the present appellants the Adjudicating authority must reconsider the matter carefully considering the submission made by the appellant and thereafter pass a speaking and reasoned order. The impugned order is set aside - appeal allowed by way of remand.
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Insolvency & Bankruptcy
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2024 (7) TMI 625
Public servant, under the Prevention of Corruption Act - Resolution Professional under the Insolvency and Bankruptcy Code is to be considered as a public servant or not - HELD THAT:- Issue notice, returnable in four weeks.
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2024 (7) TMI 624
Rejection of section 7 application - initiation of CIRP - Principles of estoppel. Whether reliance by the Adjudicating Authority to Section 10 of CPC for taking the view that Section 7 Application, which is subsequent proceeding need to be stayed is correct view in law? - HELD THAT:- Section 238 of the IBC as extracted above, gives overriding effect to the proceedings under Section 7. Thus, despite the provision of Section 10 of CPC, the proceedings under Section 7 has to be proceeded with. The clear intendment of the statute is that the provisions of the Code shall have effect, notwithstanding anything inconsistent therewith in any other law for the time being in force. Even if for argument sake, it is accepted the provisions of Section 10 CPC will be attracted, the clear intendment of the statute is that proceedings under the IBC shall have effect. Insolvency resolution of the Corporate Debtor has to be detected at the earliest and remedial measures are to be taken to bring back the Corporate Debtor on its feet - in view of the overriding provision of Section 238, the proceedings under Section 7 shall not be barred by any proceeding initiated under Section 19. As noted above, Section 19 proceedings are for the purpose of recovery of dues by the Bank and Section 7 proceedings are for insolvency resolution of the Corporate Debtor. Both proceedings covers entirely different field and rejection of proceedings under Section 19 by DRT on 17.06.2022 cannot operate as any bar for Application under Section 7. The determination of default in DRT proceedings, which is pending in Calcutta High Court can have relevance for the purposes of Section 19 Application, but cannot be said to be a reason to hold the proceedings under Section 7 barred, as has been held by the Adjudicating Authority. The Hon ble Supreme Court in Employees Organisation vs. Jaipur Metals Electricals Ltd. [ 2018 (12) TMI 674 - SUPREME COURT ] clearly held in the above case that petition under Section 7 is an independent proceeding, which is unaffected by pendency of proceedings in other Court, which may be filed by the same Company. The order of DRT dated 17.06.2022 and the proceedings under Section 19, which are still inconclusive, cannot be a ground to hold Section 7 Application as barred. The Adjudicating Authority committed error in holding Section 7 Application as barred in view of the order dated 17.06.2022 passed by DRT - order of Adjudicating Authority dated 21.03.2023 is unsustainable. Appeal allowed. The Company Petition is revived before the Adjudicating Authority, to be considered afresh in accordance with law.
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PMLA
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2024 (7) TMI 623
Grant of anticipatory bail - appellant not arrested during the investigation - HELD THAT:- Admittedly, the appellant has not been arrested during the investigation and as of now a complaint has been filed. The impugned order is set aside and the appellant is granted anticipatory bail on terms and conditions to the satisfaction of the trial court - Appeal allowed.
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Service Tax
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2024 (7) TMI 622
Levy of service tax - Business Auxiliary Service - activity of electroplating, filter components of automobiles, supplied by the manufacturers of auto parts, on job work basis - HELD THAT:- The issue is no longer res integra on merits. It is found that Tribunal, in the case of M/S. INTERPLEX ELECTRONICS INDIA PVT. LTD. VERSUS THE COMMISSIONER OF SERVICE TAX, BANGALORE [ 2013 (5) TMI 451 - CESTAT BANGALORE] , held that electroplating amounts to manufacture. As the activity of electroplating amounts to manufacture, no service tax is payable on the same. To this extent, the impugned order is not sustainable and is liable to be set aside as the appeal on this issue alone - Appeal allowed.
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2024 (7) TMI 621
Nature of activity - deemed sale or taxable service, namely, Supply of Tangible Goods (STGU) - extended period of limitation - suppression of facts or not. Classification of service - HELD THAT:- From the provision of Finance Act and of the Constitution of India, it can safely be said that transfer of use of goods is leviable to VAT under Sales Tax if goods to be used are transferred with possession and effective control in goods. If there is transfer of goods for use but the possession and effective control while transferring the goods is retained with the supplies of goods, the transaction is SUTG taxable under service tax. After perusing the clauses relied upon by the adjudicating authority specifically clause 3, 4, 8 13 of the agreement pursuant whereto the cranes were given on hire it is held that the effective control and possession of cranes was retained with the appellant while giving those on hire to various other parties. In view thereof and in view of the above discussion about various statutory provisions and the case law, there are no reason to differ from the findings arrived at by the original adjudicating authority - Mere presence of another clause agreeing for VAT to be paid at the rate of 5% is held highly insufficient to call the impugned transaction as a transaction of deemed sale in terms of article 366 (29 A) of the Constitution of India. Extended period of limitation - HELD THAT:- The activity in question is a taxable service namely Supply of Tangible Goods . Payment of VAT is insufficient to alter said status when apparently complete possessions and the effective control of cranes was not transferred by the appellants. Hence this act of appellant is rightly been held as an act of misrepresentation getting themselves not registered with the service tax department. Despite rendering a taxable service is rightly held as an act of suppression. Hence, there are no fault when the extended period of limitation has been invoked while issuing the show cause notice. There are no infirmity in the order under challenge/Order-in-Original - appeal dismissed.
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2024 (7) TMI 620
Rejection of appeal on the ground of time bar - absence of any power to condone the delay beyond 90 days - HELD THAT:- From the Clause (a) of Section 37 C, it is unambiguous that the order needs to be served to the person for whom it is intended that means to the appellant or to his authorized agent if any person is authorized. In the facts of the present case, the order was served to a contract security person Shri Rajendra Singh Bisht, admittedly he is not the authorized person of the appellant company. Therefore, the order was neither served to the appellant nor to any authorized person. In accordance with Section 37 C (a) the order was not served as per the statutory provision. Therefore, such service cannot be considered as service of the order. The appellant after knowing about the Order-In-Original through recovery notice of the department searched the order and could trace it on 25.10.2023. Since the Commissioner (Appeals) has rejected the appeal on time bar, merits of the case was not considered by him. Therefore, the matter needs to be remanded to the Commissioner (Appeals) for deciding the matter on merit - Appeal is allowed by way of remand to the Commissioner (Appeals).
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2024 (7) TMI 619
Levy of service tax - providing corporate guarantees to overseas entities - HELD THAT:- In the instant case there was no such calculation even made by the Income Tax Authorities or by the Appellant to make a declaration on account of transfer pricing and even the show-cause notice as well as Order-in-Original clearly indicate that no form of consideration-neither monetary nor in any other method, had flown from the corporate guarantor namely the present Appellant to the banks in favour of overseas entities. This being the fact on record and having guided by the precedent decision of Hon'ble Supreme Court rendered on the issue, as noted above including in the case of COMMISSIONER OF CGST AND CENTRAL EXCISE VERSUS M/S EDELWEISS FINANCIAL SERVICES LTD. [ 2023 (4) TMI 170 - SC ORDER] that corporate guarantees is not taxable to Service Tax without payment of consideration against such guarantee, the following order is passed. The order passed by the Principal Commissioner of GST CX, Mumbai East is hereby set aside - Appeal allowed.
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2024 (7) TMI 618
Denial of refund of unutilised accumulated CENVAT Credit - denial on the ground that the services were not exported as place of provision of service was in India in view of provision contained in Rule, 9(c) Place of Provision of Service Rules, 2012 (POPS) - HELD THAT:- In the instant case going by para 5 of the agreement copy, agent commission on all sale of products was only payable to the Appellant for providing services (promotional and other sale services) by the principle namely CPC Global but in carrying forward the same observations made in the previous order the subsequent order was passed with reference to those two paragraphs noted in Lubrizol Advanced Materials India Pvt. Ltd. and R.S. Granite Machine Tools Pvt. Ltd. respectively by holding that consideration received by the Appellant from M/s CPC Global as a service provider was not directly linked with the sale of products by the selling company in India. Further both are treated as independent entities only in view of general Clause prescribed under 10.1 that explicitly puts the Appellant in the nature of independent contractor agent and not an salary paid agent of CPC Global. This being the facts on record, the decisions of Co-ordinate Bench of this Tribunal is disagreed upon and the matter referred to the Larger Bench, had appeal against one of such orders not travelled up to the Hon'ble Supreme Court and resulted in denial of admission of the appeal filed by the Respondent-Department against the said order. Appeal allowed.
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2024 (7) TMI 617
Classification of services - work contract services or not - denial of CENVAT Credit - non-submission of input service invoices - denial of benefit of concessional rate - Demand under the head of supply of tangible goods service - HELD THAT:- The service which have been provided is in the nature of works contract service. However, the Learned Commissioner has not properly examined the entire fact that whether the service was provided along with material or otherwise and other criteria required for classifying the service as works contract services. It is further found that the adjudicating authority has denied the Cenvat credit on the ground that appellant have not submitted the input service invoices. However, the appellant had submitted before the adjudicating authority, the list of invoices, on which Cenvat credit was claimed. It was incumbent on the Learned Commissioner to call for the invoices if he feels so at the time of adjudication instead of outrightly rejecting the claim of the appellant of Cenvat credit. Demand under the head of supply of tangible goods service - HELD THAT:- It is observed that the service was provided by transferring the right to possession and effective control. Therefore, for this reason also the demand is prima facie not maintainable on the service of supply of tangible goods services. However, in all, the adjudicating authority has not examined the facts as submitted by the appellant. Therefore, the entire matter needs to be reconsidered, after verifying all the facts by the Adjudicating authority. Appeal allowed by way of remand.
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Central Excise
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2024 (7) TMI 616
Benefit of N/N. 8/2003-CE dated 01.03.2003 denied - appellant opted for availing cenvat credit on inputs and cleared the final products on payment of duty for the month of April 2006 - time limitation - suppression of facts or not - HELD THAT:- As per clauses 2(i) and (ii) of the above Notification, the appellant had an option either to avail exemption of duty or not to avail the exemption Notification; and pay duty on the final products and accordingly, will be eligible for the benefit of CENVAT credit on the inputs used in the manufacture of the final products. Such an option cannot be withdrawn during the remaining part of the financial year. Therefore, having paid duty in the month of April 2006 by availing CENVAT credit, the question of availing the benefit of exemption for the remaining part of the year did not arise. The appellant in order to exhaust the credit available with them paid duty by utilizing the credit for the month of April 2006 and thereafter, having surrendered the licence cannot go back to manufacture and avail the benefit of Nil rate of duty for the remaining months of the same financial year. Therefore, the benefit of the Notification No.8/2003-C.E. dated 01.03.2003 cannot be extended to the appellant for the remaining period of the financial year i.e. May 2006 to March 2007. Time Limitation - HELD THAT:- In the instant case, all the material facts were before the authorities before issuance of the first notice but they choose to issue for only one of the paras and the second notice was issued on the same audit note which was available to them at the time of the first notice and therefore as rightly observed by the Hon ble High Court of the Madras in the case of M/S. ANGLO FRENCH TEXTILES VERSUS THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, THE COMMISSIONER OF CENTRAL EXCISE [ 2018 (8) TMI 1396 - MADRAS HIGH COURT] and various other decisions relied upon by the appellant, there are no merit in the second show-cause notice invoking suppression in as much as the notice was issued based on the common audit note and all the relevant facts were available before the authorities concerned at the time of issuance of first show-cause notice. Second show-cause notice dated 22.09.2009 issued after the adjudication of the first show-cause notice as claimed by the appellant is clearly time barred and devoid of any merit. The impugned order is set aside - appeal allowed.
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CST, VAT & Sales Tax
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2024 (7) TMI 615
Refund of cash deposit - seeking release of seized vehicle and goods - HELD THAT:- Since, there appears to be certain doubts as regards what was paid by the respondent at the first instance and what was deposited, we are of the view that the matter should be re-examined by the learned Tribunal. However, it is made clear that the amount of Rs. 18,00,000/- was only by way of a security deposit and a pre-condition for release of the seized articles. Therefore, the revenue cannot take a stand that a sum of Rs. 10,00,000/-, which was made as a cash deposit out of Rs. 18,00,000/- is a payment. The matter is remanded back to the learned Tribunal to consider the aspect with regard to the payment of penalty, whether the same would be also covered under the SOD and other related matters - Petition disposed off by way of remand.
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