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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter July 16, 2024 Case Laws in this Newsletter: GST Income Tax Customs Insolvency & Bankruptcy PMLA Service Tax CST, VAT & Sales Tax Indian Laws Highlights / Catch Notes GST Non-service of show cause notice led to unawareness. Tax demand quashed if 15% remitted within 15 days. 10% already paid for appeal. Visit to Get Source GST Appeal delay condoned; registration suspended due to lapse; re-hearing ordered with conditions for lapses; Covid-19 infection caused delay. Visit to Get Source Challenge assessment order time limit. GST taxability from 01.07.2017 irrelevant. Fresh order after 10% tax deposit in 30 days. Visit to Get Source Order quashed for lack of natural justice. Fresh orders within 60 days on Rs. 38L recovery treating impugned order as show cause addendum. Visit to Get Source Respondent didn't pass GST rate cut benefit, profiteered Rs. 54L+ on cinema tickets. Directed to reduce prices, deposit profiteered amount. Visit to Get Source Profiteering by cinema on GST rate cut, not passing benefit to customers. Directed to reduce prices. Violated law, but penalty can't be retrospective. Visit to Get Source Income Tax Reopening notice beyond 4 years quashed. Complete details submitted, no non-disclosure. Mere change of opinion. Visit to Get Source No undisclosed investment found, only profit on unaccounted sales taxable. AO's assumption unsupported. Tribunal's view upheld. Visit to Get Source Parents' admission fee treated as corpus donation, not capitation fee. Trust entitled to tax exemption. Revenue's stance incorrect. Visit to Get Source Delay of 3 years by revenue dept. rejected; official machinery excuses not accepted. No justification for colossal delay in re-filing appeals. Visit to Get Source ITAT: Disallowed cash purchases over Rs. 20K under 40A(3). Cash deposits treated as unexplained income. License fee addition set aside. Appeal partly allowed. Visit to Get Source Excess deduction claimed u/s 36(1)(viia) led to income escapement. AO rightly reopened assessment based on records. Not opinion change. Visit to Get Source Domestic co. pays dividend tax u/s 115-O at rate therein, not DTAA rate for non-resident shareholders unless treaty protects dividend tax. TP regs inapplicable to TTS income. Visit to Get Source Cash deposits in Nov 2016 unexplained, rightly taxed at 60% u/s 115BBE. Limited scrutiny scope upheld for demonetization verification. Visit to Get Source ITAT: Deleted expense disallowances, interest disallowance, salary disallowance. Allowed deduction u/s 80IC. Restricted selling/distribution expense disallowance. Visit to Get Source Jewellery seized but treated as explained based on income & family status. Unexplained additions set aside, following HC precedent. Visit to Get Source TCS on scrap sale: Assessee claimed immunity u/s 206C(6A). AO didn't consider nature of goods & Form 27BA. Remitted to verify 206C purview. Visit to Get Source Customs Petitioner not an importer under Customs Act; penalty on abandoned cargo unjustified sans Bill of Entry. Court allowed petition to avoid litigation delays. Visit to Get Source Taxpayer gets refund + 8% interest for delay, 2% interest penalty on officers for inaction. Visit to Get Source Imported goods from Malaysia, claimed preferential duty under Indo-ASEAN FTA. Revenue alleged Chinese origin. Court upheld Malaysian origin based on documents. Visit to Get Source Self-assessed Bill of Entry appealable. Tribunal remanded matter for classification of Glivec-400 mg under Tariff Sub-heading & Notification benefits. Visit to Get Source Injection Stretch Blow Moulding Machine produces IV fluid bottles, differs from Injection Moulding Machine. Classified under 84773000. Visit to Get Source Indian Laws Empowered to take disciplinary action against CA firms for misconduct, ICAI can hold firms accountable under CA Act. Visit to Get Source IBC Section 7 application wrongly rejected despite debt & default. Assignment failed, liability remained. Interim injunction irrelevant for CIRP. Visit to Get Source Section 33 allows pending suits, but Respondent unlawfully adjusted ITR against pre-CIRP dues sans claim. ITR was liquidation estate; adjustment violated stakeholders' rights. Visit to Get Source Provident fund, interest, damages not part of liquidation assets. EPFO can determine dues, recover damages. Gratuity, pension excluded from liquidation assets. Priority payment to workers. Visit to Get Source NCLAT upheld re-verification of Pegasus's claim by RP & approval of Resolution Plan sans payment to appellant promoter. Visit to Get Source Service Tax Public sector undertaking's service tax demand upheld but penalties waived. CENVAT credit eligibility cited for revenue neutrality. Visit to Get Source SVLDRS: Service tax recovery from foreign agencies: pre-deposit deducted from net eligible amount. HC allows refund of excess deposit. Visit to Get Source Residential complex built for govt bodies' non-commercial use exempt from service tax, akin to 'personal use' under residential complex service definition. Visit to Get Source VAT Arbitrator's award set aside for lack of evidence, exceeding jurisdiction & patent illegality. Arbitrator bound by contract terms. Visit to Get Source Articles VALUATION OF GOODS AND SERVICES A good beginning – no GST on notional loan processing charges Circulars / Instructions / Orders Customs - PUBLIC NOTICE No. 33/2024 - dated 10-7-2024 Waiver of late fees due to Non-transmission of EPCG and DEEC (Advance Authorisation) Licences Online from DGFT to ICEGATE System –Reg Customs - PUBLIC NOTICE NO. / 2024 - dated 10-6-2024 Disbursal of Drawback amounts into the exporters' accounts through PFMS - Reg. Case Laws: GST 2024 (7) TMI 810 Violation of principles of natural justice - impugned SCN was not received and therefore she neither filed a reply nor appeared before the concerned authorities - HELD THAT:- The GST Authorities had addressed the issue and had re-designed the portal to ensure that View Notices tab and View Additional Notices tab were placed under one heading. The impugned SCN was issued before the portal was re-designed. The impugned order is set aside - matter is remanded to the concerned authority to adjudicate the SCN afresh - Petition disposed off by way of remand. 2024 (7) TMI 809 Time Limitation - Challenge to assessment order and N/N. 9/2023-Central Tax dated 31.03.2023 - time limit specified under Section 73 (10) of Central Goods and Services Act, 2017 for passing an order under Section 73 (9) of the CGST Act, 2017 - HELD THAT:- A plain reading of the impugned order indicates that it does not set out any reasons for rejecting the petitioner s response to the Show Cause Notice. It is also apparent that the petitioner was not afforded a personal hearing pursuant to the Reminder Notice dated 23.09.2023 and the impugned order incorrectly proceeds on the basis that such personal hearing was afforded to the petitioner. It is not necessary to examine the petitioner s contentions that the impugned order was passed beyond the period of limitation. The matter remanded to the respondent no. 2 for consideration afresh - impugned order set aside. 2024 (7) TMI 808 Seeking restoration of GST registration - the respondent submits that since there is no dispute that the petitioner failed in statutory compliances, the impugned order cannot be assailed - HELD THAT:- It is considered apposite to set aside the impugned order and direct that the petitioner s registration be restored forthwith. The petitioner shall file its GST returns as due and also clear all its tax dues within a period of four weeks thereafter. The petitioner shall also pay the penalty and other charges as imposed by the respondent. Petition disposed off. 2024 (7) TMI 807 Violation of principles of natural justice - petitioner did not have a reasonable opportunity to contest the tax demand on merits - wrongful availment of ITC - Challenge to assessment order - HELD THAT:- On perusal of the petitioner's reply, it appears that the petitioner submitted original tax invoices, the ledger account pertaining to the supplier concerned, bank statement and relevant GSTR returns. The petitioner does not appear to have submitted eway bills, lorry receipts, weighment slips and the like to establish actual movement of goods. On examining the impugned order, it appears that the tax proposal was confirmed largely on the ground that there was no proof of actual movement of goods. By taking into account the nature of documents submitted by the petitioner, which include the bank statement showing payments made to the supplier, the GSTR 2A indicating the availability of ITC, it is just and appropriate that the petitioner be provided an opportunity to produce relevant documents to prove actual movement of goods. As a condition for remand, however, it is also necessary to put the petitioner on terms. The matter is remanded for reconsideration on condition that the petitioner remits 20% 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 is disposed off by way of remand. 2024 (7) TMI 806 Violation of principles of natural justice - non-service of SCN - consultant did not know about the proceedings because the show cause notice and other communications were uploaded in the View Additional Notices and Orders tab on the GST portal - HELD THAT:- It is evident that the case relates to a mismatch between the petitioner's GSTR returns and those filed by tax deductors/service recipients in Form GSTR 7. Such tax proposal was confirmed because the tax payer failed to reply to the show cause notice. By taking into account the assertion that non participation was on account of not being aware of proceedings, the interest of justice warrants that the petitioner be provided an opportunity to contest the tax proposal on merits by putting the petitioner on terms. It should be noticed that the petitioner had remitted 10% while presenting the statutory appeal. The petitioner has also agreed to remit an additional 5%. Petition is disposed of by moulding the relief and setting aside the order in original dated 12.11.2023 subject to the condition that the petitioner remits an additional 5% of the disputed tax demand within 15 days from the date of receipt of a copy of this order. 2024 (7) TMI 805 Cancellation of GST registration of petitioner - impugned SCN was issued solely on the basis of the communication received from the other department without the Proper Officer being independently satisfied of the same - HELD THAT:- This is not a case where an action has been taken by the Proper Officer to cancel the GST registration based on the dictates of any other authority - The petitioner was called upon to furnish a reply within seven working days and was also directed to appear before the Proper Officer on 24.04.2023 at 04.10PM. Concededly, the petitioner did not avail of the opportunity of filing any reply or appearing before the Proper Officer. Consequently, the Proper Officer issued the impugned order on the basis that the petitioner was not existent at the given place of business. The impugned order notes that neither any reply in response to the impugned SCN was filed nor was there any representation on behalf of the petitioner on the appointed date - The petitioner contends that it had a filed reply to the impugned SCN on 27.04.2023. The same is incorrect and is based solely on the reference to a reply dated 27.04.2023 made in the impugned order. The petitioner s case as to why its registration be not cancelled has not been considered on merits. It is considered apposite to set aside the impugned order cancelling the petitioner s GST Registration and permit the petitioner to respond to the impugned SCN. Since the only allegation against the petitioner is that it was found to be non-existent, the petitioner is also at liberty to furnish all documents and material in support of its contention that it continues to be a valid tax entity. Petition disposed off. 2024 (7) TMI 804 Jurisdiction to condone the delay caused in filing the GST Appeal - Suspension of registration of the Petitioner - HELD THAT:- The cause of the Petitioner receiving an adverse order from the State Tax Officer, is on account of the lapse on his part in not submitting the tax returns for six consecutive months. Reasons could be varied. However, the fact remains that if the impugned order is sustained, the Petitioner would not be in a position to conduct his business and he would then have to move the appropriate Authority for a fresh registration. If the Petitioner can be permitted to seek a re-hearing before the State Tax Officer, subject to certain conditions for the lapse on its part, ends of justice would be met. The case put forth by the Petitioner for not being able to formalize the monthly tax returns, was that his sole Accountant suffered from Covid-19 infection and it is known to all that during such Covid-19 times, even the closest blood relative was not permitted to meet the patient and there are instances when the dead body of a person, who had suffered death due to Covid-19, was not handed over to the relatives and had to be disposed off by the Authorities themselves. It is in these circumstances that token cost of Rs. 5,000/-, could be imposed upon the Petitioner. Petition allowed in part. 2024 (7) TMI 803 Challenge to assessmnet order - non-payment of tax due of seigniorage fees under RCM - short payment of taxes on outward supply - HELD THAT:- The petitioner filed a rectification application dated 27.11.2023 under Section 161 of applicable GST statutes. The petitioner states that such rectification petition was not disposed of within the time limit of six months. The present writ petition has been filed in these facts and circumstances seeking disposal thereof within the time frame fixed by this Court. The petition is disposed of by directing the respondent to consider and dispose of the rectification application dated 27.11.2023 in respect of assessment period 2020-21, within a period of three months from the date of receipt of a copy of this order. 2024 (7) TMI 802 Challenge to appellate order - rejection of refund claim - time limitation - relevant date for issuance of provisional acknowledgment - HELD THAT:- The petitioner has placed on record evidence that the appeal was filed in Form GST APL-01 through the online mode on the GST portal on 29.06.2022. Such filing was in accordance with Rule 108(1) of the Central Goods and Services Tax Rules, 2017 (the GST Rules) and within the prescribed period of limitation. The sub-rule 3 indicates clearly that the requirement of filing a self-certified copy of the order appealed against becomes applicable, as per the first proviso thereto, only where the order appealed against is not uploaded on the common portal - In the case at hand, the order was duly uploaded on the common portal. In such event, the date of online filing is the date of filing of the appeal. Even otherwise, the filing of a hard copy is a purely procedural requirement. Consequently, the impugned order is not sustainable. The impugned order dated 24.01.2024 is set aside and the appellate authority is directed to receive and dispose of the appeal on merits - petition is disposed off. 2024 (7) TMI 801 Challenge to assessment order - time limitation - HELD THAT:- It is not required to dilate on the taxability on the supplies made by the petitioner, under the new regime with effect from 01.07.2017, under the respective GST enactments. The matter may require some consideration on merits. Therefore, the prayer of the petitioner for quashing as such cannot be considered. However, the balance interest of the petitioner and the Department, this Court is inclined to set aside the impugned orders by remitting the cases back to the respondent to pass fresh orders, subject to the petitioner depositing 10% of disputed tax to the credit of the respondent from its Electronic Cash Register within a period of 30 days from the date of receipt of this order. Petition disposed off by way of remand. 2024 (7) TMI 800 Demand of tax liability - demand on account of the difference between GSTR 01 and GSTR 3B and also between GSTR 2A and GSTR 3B - HELD THAT:- This Court is of the view that the petitioner may have a case on merits and therefore, this Court is inclined to grant partial relief to the petitioner by quashing the impugned order and remitting the case back to the respondent to pass fresh orders, subject to the petitioner depositing Rs. 1,50,000/- to the credit of the respondent from his Electronic Cash Register. The impugned order, which stands quashed, shall be treated as addendum to the show cause notice that preceded the impugned order - Petition allowed. 2024 (7) TMI 799 Violation of principles of natural justice - no prior show cause notice as mandated in Section 74 (1) of the HPGST Act, issued - Challenge to assessment order u/s 74 (9) of the HPGST/CGST Act, 2017 - HELD THAT:- In view of the submissions of learned Advocate General, the impugned order dt. 20.06.2023 is set aside; the same is directed to be treated as a Show Cause Notice issued to the petitioner; the petitioner is granted four weeks time to reply to the same; on the receipt of the reply of the petitioner, a personal hearing be offered by the 2nd respondent and then reasoned order be passed in accordance with law and communicated to the petitioner. The petition is disposed off. 2024 (7) TMI 798 Violation of principles of natural justice - out of three notices issued, the second notice was issued without mentioning time or date for personal hearing - HELD THAT:- Considering the fact that Rs. 38 lakhs appears to have been recovered from and out of the petitioner's account, the Court is inclined to set aside the impugned order and remit back the case to the respondent to pass fresh orders on merits and in accordance with law within a period of 60 days from the date of receipt of a copy of this order. The impugned order, which stands quashed, shall be treated as addendum to the show cause notice that preceded the impugned order - Petition disposed off. 2024 (7) TMI 797 Profiteering - supply of Services by way of admission to exhibition of cinematograph films - not passing on the benefit of reduction in the GST rate by way of commensurate reduction in the price - contravention of section 171 of CGST Act - HELD THAT:- The Respondent had resorted to profiteering by way of either increasing the base price of the service while maintaining the same selling price or by way of not reducing the selling price of the service commensurately, despite a reduction in GST rate, on Services by way of admission to exhibition of cinematograph films where price of admission ticket was above one hundred rupees from 28% to 18% w.e.f. 01.01.2019 upto 30.04.2019. On this account, the Respondent profiteered to the tune of Rs. 54,44,642/- (including GST) was received from the recipients. Thus the profiteered amount is determined as Rs. 54,44,642/- as per the provisions of Rule 133 (1) of the CGST Rules, 2017. Further, as per the provisions of Rule 133 (3) (a) of the CGST Rules, 2017, the Respondent is directed to reduce the prices of cinema tickets, keeping in view the reduction in the rate of tax so that the benefit would be passed on to the recipients. The Respondent is also directed to deposit the profiteered amount of Rs. 54,44,642/- along with the interest, which is to be calculated @ 18% from the date, when the above amount was collected by him, from the recipients, till the above amount is deposited. Since the recipients, in this case, are not identifiable, the Respondent is directed to deposit the amount of profiteering in two equal parts, of Rs. 27,22,321/- in the Central Consumer Welfare Fund and Rs. 27,22,321/- in the Telangana State Consumer Welfare Fund as per the provisions of Rule 133 (3) (c) of the CGST Rules, 2017, along with interest. Penalty - HELD THAT:- The Respondent has denied benefit of rate reduction to his customers/recipients in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has committed an offence under Section 171 (3A) of the above Act. However, perusal of the provisions of Section 171 (3A), under which liability for penalty arises for the above violation, shows that it has been inserted in the CGST Act, 2017 w.e.f. 01.01.2020 vide Section 112 of the Finance Act, 2019 and it was not in operation during the period from 01.07.2017 to 30.04.2019 when the Respondent had committed the above violation. Hence, the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent retrospectively for the said period. 2024 (7) TMI 796 Profiteering - supply of Services by way of admission to exhibition of cinematograph films - not passing on the benefit of reduction in the GST rate, by way of commensurate reduction in price - contravention of Section 171 of the CGST Act, 2017 - HELD THAT:- The Respondent had resorted to profiteering by way of either increasing the base price of the service while maintaining the same selling price or by way of not reducing the selling price of the service commensurately, despite a reduction in GST rate, on Services by way of admission to exhibition of cinematograph films where price of admission ticket was above one hundred rupees from 28% to 18% w.e.f. 01.01.2019 upto 05.02.2019. On this account, the Respondent profiteered to the tune of Rs. 13,99,061/- (including GST) from the recipients. Thus the profiteered amount is determined as Rs. 13,99,061/- as per the provisions of Rule 133 (1) of the CGST Rules, 2017. Further, as per the provisions of Rule 133 (3) (a) of the CGST Rules, 2017, the Respondent is directed to reduce the prices of cinema tickets, keeping in view the reduction in the rate of tax so that the benefit would be passed on to the recipients. However, as observed by the DGAP during its investigation that w.e.f. 06.02.2019, the Respondent had revised the selling price of tickets from Rs. 150/- to Rs. 138/- which depicts commensurate passing on of the benefit of reduction in rate of tax from 28% to 18%. Penalty - HELD THAT:- The Respondent has denied benefit of rate reduction to his customers/recipients in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has committed an offence under Section 171 (3A) of the above Act. However, perusal of the provisions of Section 171 (3A), under which liability for penalty arises for the above violation, shows that it has been inserted in the CGST Act, 2017 w.e.f. 01.01.2020 vide Section 112 of the Finance Act, 2019 and it was not in operation during the period from 01.01.2019 to 05.02.2019 when the Respondent had committed the above violation. Hence, the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent retrospectively for the said period. Income Tax 2024 (7) TMI 795 Disallowance u/s 14A - denial of deduction of expenses related to tax-free dividend income from shares and bonds held as trading assets - as per revenue as much as the appellant-Bank had not maintained separate accounts to show that the investment in shares and bonds had been made from surplus funds available with it and not using the borrowed funds, the expenses incurred by way of interest paid to the lending institution could not be allowed as deduction - HELD THAT:- Issue as ultimately resolved in favour of the assessee by Supreme Court in an appeal pertaining to an earlier year as evident from the decision reported in South Indian Bank Ltd. v. Commissioner of Income Tax [ 2021 (9) TMI 566 - SUPREME COURT] where the Supreme Court found that there was no necessity for maintaining separate accounts to show that the assessee had made the investments only from surplus funds and that, so long as it was evident that interest free funds were available with the assessee which exceeded their investments, the provisions of Section 14A could not be relied on by the revenue to disallow the claim for expenses made by the assessee. We are also informed that the assessing officer has since, taking note of the Supreme Court judgment, passed rectification orders rectifying the assessments in the instant cases, in line with the Supreme Court judgment. Disallowance u/s 36(1)(viii) - disallowance arose consequent to an amendment that was effected to the provisions of Sections 36(1)(viii) with effect from 01.04.2010 through the Finance (No.2) Act, 2009 - change in the definition of eligible business via. amendment - HELD THAT:- A view had been expressed that National Housing Bank was not entitled to the benefits of the unamended Section 36(1) (viii) of the Act, on the ground that it was not engaged directly in the long term financing for construction or purchase of houses in India for residential purpose. The amendment was therefore deemed necessary to extend the said benefit even to the National Housing Bank. It follows therefore that the amendment was intended to widen the scope of the deduction in relation to Financial Corporations specified in Section 4A of the Companies Act, Financial Corporations that were Public Sectors Companies, Banking Companies and Corporative Banks other than Primary Agricultural Credit Society or Primary Corporative Agricultural and Rural Development Banks and to confine the benefit available to a Housing Finance Company only in relation to the provision by it of long term finance for the construction or purchases of houses in India for residential purpose. We therefore, cannot agree with the finding of the Appellate Tribunal that in as much as the providing of long term finance for construction or purchases of houses in India for residential purpose was an activity that qualified for deduction under Section 36(1)(viii) only for Housing Finance Companies, the same activity would not qualify for deduction in relation to a Banking Company. The phrase 'Development of Housing in India' is wider in its scope and ambit and includes within its ambit the phrase 'construction or purchase of houses in India for residential purposes'. We are therefore of the view that even after 01.04.2010, the appellant Bank would be entitled to the deduction envisaged under Section 36(1)(viii) of the Act in respect of the long term finance provided by it for construction and purchase of houses in India for residential purpose. Deduction u/s 36(1)(viia) - deduction in relation to the provisions made in its accounts for bad debts, particularly, in relation to the branches that were situated in rural areas - as submitted that the issue as to whether or not the area in question merits classification as rural area or urban area, is currently pending resolution before the Supreme Court - HELD THAT:- We are inclined to allow the request of the Senior Counsel in respect of the said issue and remit the matter to the Appellate Tribunal for a consideration as to whether the claim for deduction made under Section 36(1)(viia) of the Act could be considered in terms of Section 36(1)(vii) of the Act. 2024 (7) TMI 794 Reopening of assessment - notice beyond period of four years - deduction u/s 80IA(4) - HELD THAT:- The observation of the AO in the reasons recorded are based on the assessment records comprising Profit and Loss account, Balance-sheet, Tax audit report, Form 10CCB provided by the petitioner. There is no case of the respondent that the petitioner did not submit full details pertaining to the claim for deduction under section 80IA. On the contrary, the petitioner along with the return, filed on statutory declaration in Form 10CCB, audited accounts and as such there is no failure on the part of the petitioner to fully and truly disclose all material facts relevant for the assessment. The reasons recorded for reopening would amount to mere change of opinion of the respondent without there being any live link or nexus with the material relied upon as during the regular assessment proceedings. AO had examined the claim u/s 80IA(4)(iv) in detail by raising various queries which were duly answered by the petitioner-assessee. It is true that the specific query with regard to the issue pertaining to claim under section 80IA on account of amalgamation may not have been under consideration of the AO however, the entire claim made by the petitioner for deduction u/s 80IA was before the AO which was processed while passing the assessment order u/s 143(1)(3) of the Act. Notice for reopening issued beyond the period of four years cannot be sustained. In that view of the matter, it is not necessary to examine the rival contention with respect to validity or otherwise of the claim for deduction under section 80IA(4)(iv) of the Act. Decided in favour of assessee. 2024 (7) TMI 793 Estimation of income - Bogus purchases - CIT(A) restricting addition to 13.05% of the gross profit as confirmed by ITAT - HELD THAT:- As in view of the concurrent finding of facts arrived at by both CIT(A) and the Tribunal as relying on case laws Simit P. Sheth ( 2013 (10) TMI 1028 - GUJARAT HIGH COURT ) and Nickunj Eximp Enterprises Pvt. [ 2014 (7) TMI 559 - BOMBAY HIGH COURT] We are of the opinion that no question of law, much less any substantial question of law arises from the impugned Judgment and Order of the Tribunal. 2024 (7) TMI 792 Addition on account of interest expenses u/s 14A r.w.r 8D(2) (iii) - investment made for earning exempt income was made out of the borrowed funds - Sanction granted for filing an appeal before the High Court - CIT(A ) accepting the contentions of the assessee deleted the addition on the ground that the assessee was having sufficient interest in the funds in the form of share capital and reserves for making investments earning exempt income, as upheld by ITAT HELD THAT:- Tribunal after considering the facts of the case upheld the conclusion arrived at by the CIT (Appeals) to the effect that the assessee was having the interest free funds which were more than the investment made for earning exempted income. Therefore, the presumption of the AO that the investment so made is out of the interest bearing fund was without any basis in absence of any material to support the case of the Revenue that the assessee had utilised the borrowed funds for investment for earning exempt income. In view of the above facts and concurrent findings of the CIT (Appeals) and the Tribunal, we were astonished how the sanction was granted by the Principal Commissioner of Income Tax (for short the PCIT ) to prefer an appeal and therefore the original file granting sanction was called for. It appears that the sanction for filing the appeal is granted by the Department without considering the facts of the case and in the mechanical manner without application of mind on part of the PCIT. We, therefore, caution the appellant-Revenue to grant sanction to file Appeal before this Court in a fit case only. 2024 (7) TMI 791 Undisclosed investment in 29315 boxes of goods - goods detected during the course of search by Excise Department - Tribunal, as said in case of undisclosed sales, only profit margin should be taxed in absence of specific findings of any investment embedded therein - HELD THAT:- As both the Tribunal as well as the CIT(A) have arrived at concurrent finding of fact that the AO has not recorded any finding of any undisclosed investment found as a result of search by the Excise Department and has only assumed the undisclosed investment being the source of purchases recorded for subsequent sales. No substantial question of law arises from the impugned judgment and order of the Tribunal. 2024 (7) TMI 790 Addition made u/s 14A r.w.r 8D - ITAT deleted addition on the basis that the related investments are out of assessee company s old and own funds - HELD THAT:- No disallowance beyond what has been suo moto disallowed by the assessee can be made. In the result, the assessee's ground in this behalf is allowed and that of Revenue is dismissed. Disallowance u/s 80IA (4) - generation of power for captive consumption - HELD THAT:- Issue decided in favour of assessee considering the decisions of Tamilnadu Petro Products Ltd. [ 2010 (11) TMI 645 - MADRAS HIGH COURT] and Cethar Ltd., [ 2014 (9) TMI 831 - MADRAS HIGH COURT] 2024 (7) TMI 789 Benefit of exemption u/s 11 (1) (d) - trust received donation collected from students as corpus donation - AO treated donation as capitation fee - HELD THAT:- The amount paid by the parents of the students admitted to the education institution run by the appellant is required to be held as a payment towards corpus donation and same was not collected by way of capitation fee. As observed by this Court while considering such issue [ 2018 (10) TMI 377 - GUJARAT HIGH COURT ], the Assessing Authority has not taken any inquiry with regard to examination of parents who admitted the students in School as to whether the payment is made towards corpus fund or capitation fee. It is true that the donation is bound to have been given for material gain in securing admission, the same cannot be characterised as donation towards charitable purpose and the appellant would not be entitled to have the benefit but in the facts of the case, in absence of any material on record, such view cannot be taken in the circumstances, the Tribunal has committed an error by treating the admission fee charged from the students as not forming part of the corpus of the Trust. Therefore, this appeal is also allowed. Decided in favour of the assessee and against the revenue. 2024 (7) TMI 788 Condonation of delay in re -filing the appeals by revenue - Delay of three years - delays in appeals filed by the government departments on account of impersonal official machinery - HELD THAT:- Falling back to the present case, copy of the impugned common order dated 15.03.2019 having been admittedly received in the office of PCIT (Central-2) on 11.04.2019, the limitation period to file these appeals expired on 09.08.2019, while the present appeals were filed on 27.05.2022. The lack of sincerity, or rather complete absence thereof on the part of appellant/revenue in this case is glaringly conspicuous by their having not even filed an application seeking condonation of this colossal delay of about 03 years in filing these appeals, that too despite having faced a situation where they had to withdraw the earlier appeals and were granted liberty to file afresh. Apparently, the appellant/revenue remains under mistaken impression that being government department, all its laxities deserve to be ignored by the court. At the same time, we are also unable to clearly read in or rule out a conscious decision on the part of the responsible quarters of revenue to extend covert advantage to the assessee by filing the appeals with inordinate delay and that too, without any application seeking condonation of the delay. Be it the former or the latter, we find no reason in the present case to extend any further latitude to the appellant/revenue at the cost of frustration of the assessee, who certainly had reasons to believe across this period of three years that the revenue had accepted the decision of the Tribunal. The circumstances enumerated in the affidavits dated 17.05.2023 of the appellant/revenue as aforesaid, sound merely an excuse and not an explanation of delay. As discussed hereafter, none of the dates and stages recorded above can be accepted by any stretch of imagination as disclosure of factors beyond the control of the revenue and thereby sufficient cause which led to delay in filing the appeals. Coming to the explanation of time spent between 12.02.2021 (when earlier appeals were withdrawn) and 27.05.2022 (when the present appeals were filed), the explanation rendered on behalf of the appellant/revenue is that after withdrawal of the earlier appeals, it is only on 06.01.2022 that legal opinion of the Standing Counsel was sought. There is not even a whiff of explanation as to why it took almost one year for the appellant/revenue to seek legal opinion from Standing Counsel, that too when earlier the appeals had already been filed but had to be withdrawn merely on account of technical defect. After obtaining the legal opinion on 10.01.2022, it took further two months for the CIT to scrutinize the impugned common order on 09.03.2022 so as to direct the Standing Counsel to prepare draft appeal. The said draft appeal also took another period of 02 months for being placed before the concerned officer of the revenue for signatures and the same was filed on 27.05.2022. There is not even a whisper, explaining the delays on these stages as well, especially in the light of the previous stages enumerated above. Evidently, in the name of submitting through affidavits the sufficient cause to explain delay in filing the appeals, the appellant/revenue has presented merely a chronology of dates and stages, that too with prolonged vacuum periods. The same cannot be treated as an explanation of delay, much less setting up of circumstances which were beyond the control of the appellant/revenue, thereby precluding it from filing the appeals in time. The appellant/revenue has failed to set up any circumstance to satisfy us that they were precluded from filing the present appeals in time by any cause beyond their control. We are unable to find any sufficient cause to condone this inordinate delay in filing these appeals after removal of filing defects. Consequently, there is no occasion to condone the delay in re-filing these appeals. Both applications are therefore, dismissed. 2024 (7) TMI 787 LTCG - Deduction u/s 54 - capital expenditure so made by the assessee to bring the new property in the habitable condition stating that it will not be includible in the cost of new property and hence consequently disallowed the amount - whether the renovation expenses claimed by the appellant which were incurred much after the purchase of the property do form part of purchase consideration of the property eligible to claim the benefits of section 54? - HELD THAT:- The assessee has incurred the necessitate capital expenditures in the form of electrification of house and water facilities, wooden works, glass works, works to carry out cooking activities, bath room fittings and fixings and painting of wall, doors and windows, in support of which necessary evidences has been provided to the AO vide letter dated 05.02.2016 to make the new property in the habitable condition since the flat so purchased was in unfinished/in a state of general disrepair and was inhabitable. AO has denied assessee s claim u/s 54 of the Act without cogent reasons. Ld. CIT (A) also called the expenditure incurred to bring the house inhabitable condition as renovation expenses. As per the facts of the case, the house was purchased in inhabitable condition and expenditure was necessary for the proper electrification, water facilities, wood work, glass work, etc. as detailed above. It cannot be at all called renovation expenses. Assessee s claim is appropriate and assessee should get exemption u/s 54 of the Act on this expenditure also. Case of Rajat B Mehta [ 2018 (2) TMI 670 - ITAT AHMEDABAD] is applicable on the facts of this fact and ld. CIT (A) has erred in distinguishing the said case law. Decide the issue in favour of the assessee. 2024 (7) TMI 786 Penalty u/s 272A(2)(c) - assessee has failed to discharge the obligation prescribed u/s 133(6) of the Act by furnishing the requisite information before the prescribed authority - HELD THAT:- As per provisions of section 273B of the Act, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in section 272A of the Act and if he proves that there was reasonable cause for the said failure. In the present case, the assessee has asserted before us that the requisite information could not be furnished before the ITO for the reason that the same had wrongly been furnished before the Assistant Inspector General (Registration), Khushinagar. The explanation of the assessee is found to be bona-fide. Accordingly, we order deletion of penalty levied u/s 272A(2)(c) - Decided in favour of assessee. 2024 (7) TMI 785 Mismatch of TDS between Form 26AS of the relevant A.Y and return of income - appellant is following percentage completion method for recognizing the revenue which des not match exactly with the payment made or credited by the contractors - HELD THAT:- We find merit in the submission of the assessee for the simple reason that when the appellant is following percentage completion method for recognition of the Revenue, it may not match with the income from operations or receipts from its business and corresponding TDS credit as per Form 26AS. This is for the simple reason that, the contractor deducted TDS on the amount credited or paid to the account of the contractee, whereas the contractee recognizes revenue in terms of the percentage of completion of works. The credit for TDS should be allowed for the A.Y in which such income is assessed or assessable to tax irrespective of TDS credit available in Form No.26AS. In the present case, the appellant claimed that it has recognized revenue in terms of percentage completion method and also claimed TDS credited in proportion to income recognized for the relevant A.Ys. The appellant also claims that the excess TDS credit, if any, has been carried forward to subsequent A.Ys. Therefore, we are of the considered opinion that when the appellant is claiming credit for TDS in proportion to the income offered for the relevant A.Y, the AO ought to have allowed credit for TDS as claimed by the assessee, provided relevant details has been furnished to prove the claim of the assessee. Since, the appellant claims that it has filed all the relevant details to prove credit for TDS as per ITR filed for the relevant A.Ys, in our considered view, the matter needs further examination from the Assessing Officer. Thus, we set aside the order of the CIT (A) for both the A.Ys and restored the issue back to the file of the AO. Appeals filed by the assessee allowed for statistical purposes. 2024 (7) TMI 784 Exemption u/s 54F - computed the short term capital gain and thus, did not grant exemption u/s 54/ 54F - HELD THAT:- Here the claim of the assessee is that even if the capital gain is re-characterised by virtue of the deeming fiction as short-term capital gain but still the asset remains a long-term capital asset. Therefore, this decision does not prevent the assessee from claiming exemption u/s 54F of the act if the relevant conditions of that section are satisfied. No doubt, the assessee is precluded in making the about them without making any claim in the return of income or revised return of income before the assessing officer however the appellate authorities are not barred from considering the claim of the assessee. This is so because of the reason that decision in case of Goetze India limited [ 2006 (3) TMI 75 - SUPREME COURT] restricts the power of the AO but not the power of appellate authorities. Therefore, CIT- A should have granted the claim of the assessee u/s 54F of the act. Accordingly we restore the whole issue back to the file of AO to compute the income of the assessee considering the provisions of section 41 (2) of the act and section 50C of the act, and thereafter from the capital gain, allow the claim of the assessee under section 54F of the act, if the other conditions are satisfied. Appeal of the assessee are restored back to the file of the learned AO to give the fact accordingly. 2024 (7) TMI 783 Revision u/s 263 - escaped long-term capital gain - assessment orders u/s 153A were passed without making necessary inquiry, verification, investigation on the issue - CIT made reference to section 50C - as per CIT valuation of the Stamp Duty Authority ought to be deemed as full sale consideration for the purpose of computing long-term capital gain, thus the assessment order is erroneous, which has caused prejudice to the interest of revenue - whether scope of assessment u/s 153A could be enhanced to include re-computation of long-term capital gain qua those assessments, which are unabated? HELD THAT:- PCIT findings are not in consonance with the proposition of law laid down in the case of Abhisar Buildwell (P) Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT] - Had the assessees have not disclosed long-term capital gain in their regular returns of income and then a discovery of this factum was unearthed during the course of search. The situation would be different. PCIT has not made reference to any seized material found during the course of search. He is of the view that the subject matter of a regular assessment, which would have taken under section 143(3) after issuance of a notice u/s 143(2) ought to have been considered in this search assessment under section 153A, but this proposition harbored by the ld. PCIT is contrary to the position of law laid down by the Hon ble Supreme Court. As pertinent to note that section 48 of the Income Tax Act contemplates mode of computation of long-term capital gain. The expression full value of the consideration is to be deemed equivalent to the amount on which stamp duty was paid. This deeming fiction is provided under section 50C of the Income Tax Act. Sub-clause (2) of section 50C further authorizes the ld. Assessing Officer that in case, an assessee disputes about deeming of the full sale consideration equivalent to the amount on which stamp duty was paid, then, he would make a reference to the DVO for determining the fair market value. Now this exercise was required to be conducted in a regular assessment under section 143(3), but that assessment attained finality. The factum of transfer of capital asset was brought to the notice of the revenue by all these assessees, therefore, it is not a new discovery of fact during the course of search, which can authorize the AO to carry out the exercise contemplated in section 50C of the Income Tax Act. PCIT has misread and misconstrued the position of law laid down by the judgment of the Hon ble Supreme Court. This issue does not fall within the ambit of assessment under section 153A of the Income Tax Act. For buttressing our finding, we have made reference to the assessment orders. AO has duly observed that neither there was any incriminating material nor there is any adverse mentioned in the appraisal report for taking this action. AO has recorded a categorical finding that no incriminating material was found during the course of search. Therefore, no addition could be made and if no addition could be made, how ld. Pr. CIT could enlarge the scope of assessment by exercising the powers under section 263 of the Income Tax Act. The issue in dispute is squarely covered by the decision of Abhisar Buildwell (P) Ltd. (supra) as well as PCIT -vs.- Jay Ambey Aromatics [ 2023 (11) TMI 1051 - SC ORDER] . Therefore, orders of ld. Pr. CIT in each case of the appellant are not sustainable. Assessee appeal allowed. 2024 (7) TMI 782 Addition u/s 40A(3) - purchases exceeding INR 20,000/- made in cash - assessee vehemently argued that despite having noted that purchases were genuine, the lower authorities proceeded to make impugned addition in an arbitrary manner and contrary to the settled position of law - HELD THAT:- The assessee was afforded sufficient opportunities to prove business expenditure and/or to demonstrate that his case falls into any exceptions. Ld. CIT(A) had examined all aspects of the matter and by way of well-reasoned order, he had declined to accept the contention of the assessee. Before us also, Ld. Counsel urged that the concerned parties had confirmed payments in cash. The TCS as per law had been deducted. In our considered view, the confirmation by seller and TCS at source ipso facto, would not be justifiable reason for making payment in cash. The assessee is required to prove that he had no option other than making payment in cash under the compelling, commercial expediency. In the present case, no such case is made out by the assessee. If we accept the contention of assessee that genuineness of expenditure is not in doubt hence, provision of section 40A(3) will have no application. In that event, it will render the provision of section 40A(3) of the Act as redundant. Decided against assessee. Addition in respect of cash deposited in the bank account - addition and treating the amount deposited as unexplained - HELD THAT:- Law is well-settled that if any amount is found credited in the bank account of the assessee, it is incumbent upon him to prove the source of such credit. If he fails to do so, the authorities would be justified in drawing adverse inference against such credits. In the case in hand, the assessee could not prove the source of cash deposits neither before authorities below nor before this Tribunal. Therefore, assessee grossly failed to prove the source of the impugned cash deposit in bank account, we do not see any reason to disturb the findings of authorities below. Ground No.3 raised by the assessee is, therefore, rejected. Addition on account of license fee paid to Excise Department - AO was of the view that the assessee had claimed excessive sum - as argued assessee is that the payment was made to the Excise Department, Rajasthan and in support of the same, a receipt has been filed - HELD THAT:- The assessee furnished some evidences to demonstrate that the payment was made to the Excise Department at Rajasthan. We find merit into plea of the assessee that AO failed to verify the correct facts regarding payment of fee made to Excise Department, Government of Rajasthan. This claim of the assessee needs to be verified at the end of the AO. We therefore, restore this issue to the AO for verification. Appeal of the assessee is allowed partly for statistical purposes. 2024 (7) TMI 781 LTCG - exemption u/s 54F - exemption denied as assessee had not constructed residential property within two years of the sale of original asset (equity shares) Assessee has received the consideration in the form of asset and not in terms of money and further that the assessee should invest the money received from the sale of capital asset - HELD THAT:- This point is not tenable. As per the provisions of section 54F of the Act, the amount of consideration can be invested for purchase of house even the year prior to the date of sale of asset, hence it is not the same money but the amount equal to the net consideration received. Belated transfer of the house in the name of the assessee - The decision of case of Mr. Muthu Daniel Rajan [ 2023 (2) TMI 302 - ITAT CHENNAI] is squarely applicable to the facts and issues in the present case wherein as relying upon the decision of Suraj Lamp Industries Pvt. Ltd. v. State of Haryana Another [ 2011 (10) TMI 8 - SUPREME COURT] has held that when it comes to the beneficial provisions of section 54F of the Act, what is required to be seen is whether the assessee has invested amount for purchase of property or not? And further that the claim of benefit u/s 54F of the Act cannot be denied on the ground of technical lapses like non-registration of agreement to sale, etc. That in case, the assessee proves with evidences that finally he had registered the property in his favour and further the investment was made within the stipulated period, then the exemption cannot be denied u/s 54F of the Act - Decided in favour of assessee. Addition u/s 56(2)(vii)(b) - land purchased in lieu of transfer of shares was shown less than market value/stamp duty value as determined by the stamp valuation authority - as market value was disputed by the assessee and therefore, the case was referred to Departmental Valuation Officer ( DVO ), who estimated the market value of the property differently - HELD THAT:- As admittedly, the difference in the value given by the DVO and the value mentioned by the assessee in the transfer deed is less than 5%. The market value determined by the DVO is purely a work of estimation only. In this case, there is a minor difference of the estimation of market value of the property as declared by the assessee compared to the value estimated by the DVO. Undisputedly, the consideration received by the assessee has been invested for the purpose of construction of house amounting to Rs. 19050000/-, whereas, the assessee has claimed deduction u/s 54F of the Act of Rs. 1,65,52,344/- only. The assessee, otherwise, will be eligible of the aforesaid difference of the amount pointed out by the Assessing Officer towards deduction u/s 54F of the Act. In view of this, no additions are warranted on this ground also. Appeal of the assessee stands allowed. 2024 (7) TMI 780 Validity of the reopening of the assessment - Reason to believe - excess deduction on account of provision for bad and doubtful debts u/s 36(1)(viia) - HELD THAT:- The said excess claim of deduction was apparent from the record. It is not the case of the assessee that the assessee was entitled to claim the said deduction as per law. It is a clear-cut case of escapement of income of the assessee on account of excess claim of deduction as per the provisions of section 36(1)(viia). Therefore, in our view, it is not a case of change of opinion at all. It is an apparent case of escapement of income, which was noted by the jurisdictional ACIT when the assessment record was called upon from the ITO. There was tangible material before the AO in the shape of assessment records, which were obtained by him from the ITO and on perusal of which, it was apparent on record that the assessee has claimed excess deduction u/s 36(1)(viia) of the Act and it was a clear-cut case of escapement of income. Therefore, AO has rightly formed the belief of escapement of income in the present case. Even the ld. AR could not point out as to why the said observation of the Assessing Officer was not correct. So far as the reliance of Delta Airlines, INC [ 2012 (12) TMI 498 - ITAT MUMBAI ] we find that in the said case, the decision has been given only on the basis of the Third Member decision as discussed above, that there will be a tangible material to form the belief of escapement of income, which condition is duly fulfilled in the case in hand. We find that it is not a case of change of opinion at all as no second opinion could have been formed by any of the authority in view of the express statutory provisions of section 36(1)(viia) of the Act that deduction on account of provision for bad and doubtful debts cannot exceed more than 7.5% of the total income. Neither any second opinion nor two views were possible in this case, only one opinion/one view was possible in this case in view of the statutory provisions. There is no merit in the present appeal of the assessee, thus dismissed. 2024 (7) TMI 779 Denial of deduction claimed u/s 10(2A) - adjustment of income u/s 143(1)(a)(ii) - addition of share of profit (net of loss) derived by the appellant in the capacity as a Partner by invoking the provisions of Section 143(1)(a)(ii) - HELD THAT:- The addition was made on the basis of the profit received by the assessee from the different partnership firms total amount which is liable for exemption u/s 10(2A) of the Act. But in case of legal issue, the intimation was issued and within two days, the final order u/s 143(1) of the Act was passed which entirely violated the 2 nd Proviso of section 143(1) of the Act. In our considered view, the Ld.AO passed the order beyond the jurisdiction and liable to be quashed. Accordingly, the impugned appeal order is set aside and the addition is deleted. As the legal ground of the assessee is succeeded, the ground on merit is only remain for academic purposes. 2024 (7) TMI 778 Refund of excess Dividend Distribution Tax ('DDT') paid on dividend received by the Appellant - HELD THAT:- As decided in Total Oil India (P.) Ltd. [ 2023 (4) TMI 988 - ITAT MUMBAI (SB)] dividend is declared, distributed or paid by a domestic company to a non-resident shareholder(s), which attracts Additional Income-tax (Tax on Distributed Profits) referred to in section 115-O, such additional income tax payable by the domestic company shall be at the rate mentioned in section 115-O and not at the rate of tax applicable to the non-resident shareholder(s) as specified in the relevant DTAA with reference to such dividend income. Thus, wherever the Contracting States to a tax treaty intend to extend the treaty protection to the domestic company paying dividend distribution tax, only then, the domestic company can claim benefit of the DTAA, if any. Thus, the question answered accordingly. Applicability of transfer pricing regulations to the assessee to the extent of operations carried out through operating qualifying ships where the income is taxed under TTS - HELD THAT:- The issue is covered in favour of assessee s own case [ 2019 (12) TMI 815 - ITAT MUMBAI] , A.Y. 2010-11, [ 2019 (6) TMI 1238 - ITAT MUMBAI] , A.Y. 2007-08 as held that provisions of chapter-X have been invoked to alter an expenditure, namely the mobilisation and demobilisation charges paid for a qualifying ship, an item which has no bearing on the income as computed under Chapter XII-G and accordingly the provisions of Chapter-X have no application in computing the income of the assessee chargeable to tax as per Chapter XII-G. In view of the aforesaid discussion, the transfer pricing regulations do not apply to the assessee in taxed under TTS. 2024 (7) TMI 777 Estimation of work in progress - as per AO assessee has shown work in progress without showing any sales he estimated 75% of work in progress as sales of the assessee and profit was estimated at 18.54% - CIT(A) deleted addition - HELD THAT:- We observe that the CIT(A) after his detailed analysis came to the conclusion that no part of work in progress can be treated as sales and estimate the GP on such sales, thus, we sustain the order of the CIT(A). Ground no.1 of grounds of appeal of Revenue is dismissed. Addition towards Sales Tax and Service Tax - Addition made for the reason that the assessee did not file requisite details/reconciliation of Sales Tax with sales and purchases, details on additional tax paid year wise, assessee failed to furnish details of Sales Tax on purchases year wise the AO made the addition - CIT(A) restricted addition - HELD THAT:- We see no infirmity in the observations of the Ld.CIT(A) who do not agree with the numerical working of the Assessing Officer in as much as the total sales tax including the service tax on the entire sales made cannot be adopted for working out the calculation The value of closing stock can be enhanced only by the amount of sales tax pertaining to the closing stock on a pro-rata-basis. The closing stock of the appellant stands at Rs. 1,66,80,664/-. The sales tax on purchases was only Rs. 65,41,478/-. Material consumed during the year amounts to Rs. 16,57,76,188/-. Sales tax on the material consumed come to 3.94%. The value of closing stock therefore is required to be enhanced by 3.94%. The amount of addition thus works out to Rs. 6,56,280/-. Addition of additional Sales Tax pertaining to earlier years - contention of the assessee is that this amount has to be allowed as deduction u/s 43B of the Act has some force - HELD THAT:- We direct the AO to consider for allowing deduction u/s 43B the additional Sales Tax pertained to earlier years on payment basis. This ground of assessee is allowed for statistical purpose. 2024 (7) TMI 776 Unexplained money u/s. 69A r.w.s.115BBE(1) - no explanation as regards source of cash deposit made by him in his savings bank account - case of the assessee was selected for limited scrutiny , therefore, the recharacterization of his income as unexplained money u/s. 69A of the Act, i.e., an issue which did not form the basis for picking up the case for scrutiny assessment could not be sustained and was liable to be struck down Scope of limited scrutiny - HELD THAT:- As the case of the assessee was, inter alia, selected for verifying the cash deposits made by him during demonetization period, therefore, the view taken by the A.O that the cash deposits made in the assessee s bank account during demonetization period in absence of any explanation as regards the source of the same was to be held as his unexplained money u/s. 69A of the Act was clearly an exercise carried out as per the jurisdiction that was validly assumed by him. We, thus, finding no infirmity in the assumption of jurisdiction by the A.O qua, the aforesaid issue, reject the claim of the assessee to the said effect. Cash deposits made by the assessee in the month of November, 2016 would be governed by pre-amended provisions of Section 115BBE - We are afraid that the same does not find favour with us. We, say so, for the reason that a bare perusal of Section 115BBE of the Act reveals that the same is effective from 01.04.2017, i.e. A.Y. 2017-18. In fact, a reference to the Taxation Laws (2nd amendment) Bill 2016 clearly reveals that sub-section (1) of Section 115BBE had been substituted w.e.f. 1st April, 2017. We, thus, in terms of our aforesaid observations, are unable to concur with the claim of the Ld. AR that the provisions of Section 115BBE of the Act (post amended) would not be applicable to the case of the assessee for the year under consideration i.e. A.Y.2017-18. Cash deposit in the assessee s savings bank account was sourced out of his income disclosed under the head income from other sources in his return of income for the year under consideration - On a careful perusal of Section 69A of the Act, it transpires that where an assessee who is, inter alia, found to be owner of any money which is not recorded in the books of account fails to offer any explanation about the nature and source of acquisition of the same; or explanation offered by him is not, in the opinion of the A.O, satisfactory, then such money may be deemed to be the income of the assessee for such financial year. Admittedly, the assessee is found to be the owner of money amounting to Rs. 65 lacs (as on the date of deposit of the same in his bank account) which is not found to be recorded in the books of accounts. On being queried by the A.O about the nature and source of acquisition of the said amount the assessee had failed to come forth with any explanation as regards the same. Based on the aforesaid facts, we find no infirmity in the view taken by the lower authorities who had rightly held the above-mentioned amount of Rs. 65 lacs as the unexplained money of the assessee u/s. 69A of the Act. Levying tax u/s.115BBE(1) @ 60% on alleged unexplained money - Now when the assessee had in his return of income disclosed his income of Rs. 65 lacs, which, in turn had soured the cash deposit in his bank account, therefore, the same could not have been held as his unexplained money u/s. 69A of the Act, we are unable to persuade ourselves to subscribe to the same. As the case of the assessee clearly falls within the realm of Clause (a) of sub-section (1) of Section 115BBE of the Act (applicable w.e.f. 01.04.2017), therefore, the aforesaid claim of the assessee does not merit acceptance. Appeal of assessee dismissed. 2024 (7) TMI 775 Ad hoc disallowance of various expenses debited to Profit Loss Account - HELD THAT:- We find that this is a recurring issue from earlier years and Tribunal deleted such ad hoc disallowances for the assessment years 2004-05, 2005-06 2009-10 [ 2023 (5) TMI 1091 - ITAT DELHI] as held ad-hoc disallowance without bringing on record any adverse material is not sustainable. We observe that the Ld. AO required the assessee to produce the vouchers for the month of March, 2009. The assessee complied and the Ld. AO verified the same on test check basis but no defect was found. Therefore the impugned disallowance is not justified and hence has rightly been deleted by the Ld. CIT(A). Decided against revenue. Disallowance of interest paid to banks - HELD THAT:- We find that this issue also came up for consideration before the Tribunal in earlier AY i.e. 2009-10 [ 2023 (5) TMI 1091 - ITAT DELHI] and the Tribunal sustained the order of the Ld.CIT(Appeals) in deleting this disallowance as held AO made the disallowance even without mentioning the name of the sister concern to whom advance was allegedly made by the assessee. The loans obtained by the assessee from Citi Bank and ICICI Bank were utilized for working capital of the assessee and from the balance sheet and details of loans and advances it is obvious that no loan or advance was made to any relative or sister concern. In the absence of any instance of utilization of borrowed fund for purposes other than business brought on record by the Ld. AO, the Ld. CIT(A) correctly deleted the impugned addition. Salary received from Ozone Pharmaceuticals Ltd.- disallowance was made stating that in the absence of any details filed by the assessee the salary received by the assessee is calculated on the basis of earlier year - CIT(Appeals) deleted this disallowance for the reason that the assessee has not received any salary during the year and the claim for TDS was only a mistake and the TDS return was also revised - HELD THAT:- As Revenue could not controvert the findings of the Ld. CIT(A) and, therefore, the same is sustained. Ground no.3 of Revenue s appeal is rejected. Deduction u/s 80IB/80IC - HELD THAT:- As decided in own case [ 2023 (5) TMI 1091 - ITAT DELHI] not a single instance of transfer of finished goods or services from Baddi unit to the Guwahati unit is pointed out by the AO. The deduction u/s 80IC was claimed as per the audit report u/s 10CCB filed. Thus, all the conditions regarding grant of deduction have been satisfied. Disallowance of selling and distribution expenses - AO disallowed 25% of selling and distribution expenses on ad hoc basis are primarily on the ground that these expenses are excessive in comparison to total turnover of the assessee - HELD THAT:- As the findings of the AO as well as the CIT(A) and the evidences produced in the Paper Book, we are of the view that the disallowance made by the AO at 25% is excessive. Taking note of various deficiencies pointed out by the AO as well as the findings of the CIT(A) and taking the submissions of the Assessee into consideration to meet the ends of justice, we direct the AO to restrict the disallowance to 10% of the selling and distribution expenses as against 25% disallowed and recompute the income accordingly. 2024 (7) TMI 774 Unexplained jewellery found in search and seizure - addition being 1179.10 gms - jewellery found during the search stands at 2479.10 gms, AO has accepted 1300 gms as attributable to different family members - remaining jewellery being 1179.10 gms has been treated as unexplained on the ground that 514 gms and 250.400 gms stated to be relatable to sisters-in-law, i.e., sister of husband was not accepted by the AO - HELD THAT:- As per the instruction, the Income Tax Department also recognizes holding of such high quantity of jewellery as explained where the assessee is in the high income tax brackets. The assessee has thus sufficiently demonstrated the plausibility for holding gold ornaments in excess of the limit prescribed by the CBDT instruction. We also find merit in the explanation offered by the assessee that credit should be given for gold, jewellery and ornaments held in custody of the assessee on behalf of the sister-in-law, Smt. Anju Singh and Smt. Surekha Singh. Keeping in mind, the overall status of the family as demonstrable from the facts of records, whole of the gold ornaments found at the time of search requires to be treated as clearly explained. We refer to the observations made in the case of Ashok Chaddha [ 2011 (7) TMI 142 - DELHI HIGH COURT] wherein collecting jewellery above the limit prescribed in the instruction, in a married life of 25 to 30 years, was not treated as abnormal. The normal custom of Indian society and realities of life were taken into account by the Hon ble Jurisdictional High Court. The additions made u/s 69A towards gold ornaments are at odds with the decision rendered by the Jurisdictional High Court in Ashok Chhadha (supra) therefore cannot be countenanced. We thus set aside the order of the CIT(A) and direct the Assessing Officer to delete the additions made under Section 69A of the Act on this score. Assessee appeal allowed. 2024 (7) TMI 773 TCS u/s 206C on sale of scrap - revenue has treated as assessee in default for non-collecting of TCS u/s 206C - HELD THAT:- We can categorize the sale in three components. The sale to scrap which is covered Rule 37J and the Form 27BA is duly filed, also the list of purchase providing declaration that they have shown purchases from the assessee in their books of account, and also list of purchased providing declaration that they have shown purchased their assessee in the books of account along with the copy of declaration. On perusal of the orders the issue was never be discussed or material was never placed related to the nature of goods sold by the assessee the amount for sale of firewood and amount for sale of iron material. There is no doubt the assessee had sold the goods covered U/s 206C of the Act. But the assessee is claiming immunity by Provision of Section 206C(6A) of the Act. AO has considered the sale on the basis of the spot verification. However, now the assessee has also claimed other sales are not covered U/s 206C of the Act like sales of fire woods and iron materials. Also, the issue U/R 37J read with Form 27BA isremainedun-touched by the revenue authorities. Since, this is a factual aspect of the matter and needs proper a verification. We remit back the matter to the file of the ld. AO to verify the issues under purview of section 206C and in the light of above discussion. Needless to say, the assessee should get a reasonable opportunity of hearing in the set aside proceeding and should allow to file the evidence if required during the proceeding. Assessee appeal allowed for statistical purposes. Customs 2024 (7) TMI 772 Dismissal of appellant s application for condonation of delay of about 145 days - failure to pay interest on the amounts refunded - HELD THAT:- The Tribunal has simply dismissed the condonation of delay application by observing that appellant has failed to provide any sufficient cause to condone the delay. Though one may say that there was a delay of almost 2 years, the time between 15th March 2020 to 2nd November 2021 was a time when everything was shut due to COVID pandemic. It is mentioned that the legislature has conferred power to condone the delay to enable doing substantial justice to the parties. By delaying the filing of appeal appellant did not stand to benefit. If we do not condone the delay, there is possibility that a meritorious matter may be thrown out at the very threshold and cause of justice could be defeated. The Registry of CESTAT shall take further steps in the matter on the basis that the appeal has been restored to file. Since the matter relates to year 2006, CESTAT is requested to dispose the appeal as early as possible and in any case by 31st March 2025 - appeal disposed off. 2024 (7) TMI 771 Failure to fulfil the conditions of Notification No. 27/2002 Cus dated 01.03.2002 - imposition of redemption fine, interest and penalty upon the respondent - respondent admitting his fault has voluntarily paid the interest as per condition No. 5(c) of the Notification dated 01.03.2002 - liability to pay interest - section 27 and 27A of the Customs Act, 1962 - HELD THAT:- The respondent candidly admitted that they could not fulfil the export obligation due to circumstances which were beyond their control. This aspect has not been doubted by the department not shown to be factually incorrect. In such circumstances, the manner in which the respondent has been dealt with by the department right from the inception i.e. from the date of import is wholly unsustainable, unreasonable and arbitrary. Under the notification there was no power of confiscation. Furthermore, the notification does not provide for confiscation of the goods in the event the goods are not exported within the timeframe stipulated under the notification or the extended period thereof. Therefore, the question of confiscation of the goods also would not arise. The Tribunal was right in holding that the respondent was not liable for payment of any interest, till the payment of the duty as the entire amount of Rs. 73,65,624/- was with the appellant department - appeal dismissed. 2024 (7) TMI 770 Seeking grant of stay of the order - HELD THAT:- In the light of the fact that relief has also been granted, question of granting stay of the order of the Tribunal would not arise. Therefore, prayer for stay is refused. However, the stay petition shall be retained and filing of informal paper book is dispensed with. Application closed. 2024 (7) TMI 769 Confiscation - penalty - import of Soya Beans - petitioner is an importer within the meaning of Section 2(26) of the Customs Act, 1962 or not - jurisdictional error or not in invoking Section 112(a) of the Customs Act, 1962 - HELD THAT:- No doubt, the petitioner would have had transactions with the shipper, namely, STE EKE ET FILS SARL. The transactions were to be routed through the Bank namely, Bank PSC Dubai, United Arab Emirate. In the above said Bill of Lading, the petitioner's name has been shown as notified party. Thus, unless the transaction is complete in all respects, the petitioner cannot be termed as an Importer. To import the goods, the petitioner should have been given all the documents to negotiate the same with the Bank. In this case, the shipper has not given the documents and therefore, the petitioner has not come forward to take delivery of the same. Thus, the petitioner neither satisfies the definition of Importer within the meaning of Section 2(26) of the Customs Act, 1962 nor has crossed the threshold under Section 46 of the Customs Act, 1962 to file a Bill of Entry for clearance of imported goods for home consumption. Therefore, imposition of penalty on the petitioner on the abandoned cargo cannot be justified in the absence of Bill of Entry by the petitioner. Although the petitioner has an alternate remedy by way of an appeal before the Appellate Commissioner under Section 128 of the Customs Act, 1962, there is no reason to prolong the litigation for the time to come - Petition allowed. 2024 (7) TMI 768 Refund of amount admittedly due and payable to petitioner - illegal sale of 248 unused diesel engines - HELD THAT:- In VINODA B. JAIN VERSUS JT. COMMISSIONER OF INCOME-TAX SPECIAL RANGE 33, MUMBAI ORS. [ 2023 (9) TMI 760 - BOMBAY HIGH COURT] , the Court was dealing with a similar case under the Income Tax Act, 1961 where the Revenue had delayed the release of refund to petitioner. The Court held that an assessee cannot be deprived of its justifiable money. Such an inaction on part of the Revenue is certainly contrary to the provisions of the Act and on general principles petitioner ought to be compensated for such deprivation. Respondents are directed to refund the amount of Rs. 43,65,587/- together with interest thereon @ 8% p.a. from 27th October 2009 till the date of payment and this amount shall be paid on or before 28th July 2024 as against 6% that the Act provides. The difference of 2%, i.e., (8% - 6%), shall be recovered from the officers responsible for not acting on the letter dated 27th October 2009. Petition disposed off. 2024 (7) TMI 767 Wrongful availment of benefit of preferential duty under N/N. 46/2011-Cus. dtd. 01.06.2011 (Indo- ASEAN FTA). As per the revenue goods imported by the Appellant from Malaysia and declared to be of Malaysian origin, were, in fact, of Chinese Origin and were routed through Malaysia to wrongly avail the benefit of preferential duty and other applicable duties, on goods, at the time of import. HELD THAT:- It is found that all the documents viz. Bill of Entry of import, packing list, commercial invoice, Mill Inspection Certificate, Bill of Lading for Port-to port Transport, Fumigation Certificate, Certificate of Origin ASEAN India Free Trade Area Preferential Tariff clearly shown that the goods in questions were imported from Malaysia and that they are of Malaysia Origin. Appellant have adduced sufficient proof to establish that the impugned goods are Malaysia Origin. In the present matter revenue in support of allegations rely upon the statements of Shri Sanjay Jain and Shri GuganKumar. However it is found that said persons were not examined in the adjudication proceedings even after the request of Appellant and as such their statements are not admissible as evidence under the provisions of Section138B of Customs Act, which provides that - if an authority in any proceedings under the Act wants to rely upon the statement of any person (made during enquiry), such person is required to be examined as witness and if the adjudicating authority finds the evidence of the witness 'admissible', then such witness should be offered for cross-examination and only thereafter the evidence is admissible. In absence of compliance with the provision of Section138B of the Act, the statements are not admissible as evidence. In the present matter the Supplier of the goods at Malaysia nowhere have claimed that the goods have been supplied were Chinese origin. It appears that the allegations were very serious but no cogent material was collected to substantiate these allegations. It is settled law that in case of difference between documentary evidence and oral evidence the former should be given precedence and later should be ignored. In view of the settled law, the statements of persons cannot be relied upon or the same cannot be the sole basis to confirm the charge against the appellant as the same is contrary to documentary evidence which is in the form of Commercial Invoices, MILL Inspection Certificate , Packing List, Bill of Lading for Port to Port, Country Origin Certificate, Bill of Entry etc. The demands confirmed against Appellant is not sustainable - the impugned order set aside - appeal allowed. 2024 (7) TMI 766 Levy of Anti-Dumping Duty under Notification No. 57/2015-Cus (ADD) dated 04.12.2015 - import of Injection Stretch Blow Moulding Machine (ISBMM) from China - to be classified under tariff entry 84771000 which covers Injection Moulding Machines or not - HELD THAT:- The Chartered Engineer in his certificate dated 20.07.2020 certified that from technical perspective, this Injection Stretch Blow Moulding Machine (84773000) is different than the Injection Moulding Machine (84771000). The said Injection Stretch Blow Moulding will be used for the development of IV Fluid containers which is being used in Pharmaceutical Industry - The process of injection molding and inject stretch blow moulding are totally different. The said machine, the firm has imported is having a technical feature of simultaneous stretching and blow moulding, which is absent in Injection moulding machine. In Injection moulding machine, the moulds can be fastened either vertical or horizontal to develop the moulds. Due to this feature, the machine is able to produce the IV fluid bottle with hanger attached to it. In the instant case ISBMM being a composite machine comprising of IMM and BMM producing in end a Blow Moulded empty hollow 100ml or 500ml capacity bottle to hold pharmacopeia IV Fluid for infusion to patients in hospitals and the clearly defined function of the combination machine is Blow Moulding which is to be considered as the sole function - the classification of imported goods i.e. Injection Stretch Blow Moulding machine (ISBMM) is held to be under tariff heading 84773000. The impugned order is set aside - Appeal allowed. 2024 (7) TMI 765 Appeal against the self assessed bill of entry is Maintainable or not - Classification of imported branded medicaments namely, Glivec-400 mg. Imatinib tablets - to be classified under Tariff Sub-heading No. 3004 2099 of the Customs Tariff Act, 1975 or not? - HELD THAT:- It is found that the appellants have initially claimed the classification in the B/E with regard to the imported goods under CTI 3004 2099 and after realizing the mistake that the subject goods should appropriately be classified under CTI 3004 9049, had filed the appeal before the learned Commissioner (Appeals) under Section 128 ibid against the assessed B/E. In so far as filing of appeal against the self-assessment is concerned, the Hon ble Supreme Court in the case of ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV [ 2019 (9) TMI 802 - SUPREME COURT] have held that the self-assessed B/E is an assessment order, passed under the Customs Act, 1962 and thus, would be appealable. The submissions made by the appellants agreed upon that self-assessed B/E is an appealable order and can be appealed against before the learned Commissioner of Customs (Appeals) under Section 128 ibid. Thus, by setting aside the impugned order, the appeal is allowed by way of remand to the learned Commissioner (Appeals) for deciding the appeal on merits, as to whether, the product in question should be classifiable under CTI 3004 9049 or under CTI 3004 2099 and whether the appellants should be entitled for the benefits provided under Serial No. 83(A) read with List 4 of Notification No.21/2002-Customs dated 01.03.2002. The appeal is allowed by way of remand to the learned Commissioner of Customs ( Appeals ). Insolvency & Bankruptcy 2024 (7) TMI 764 Rejection of Section 7 application filed by the Appellant- Financial Creditor - assignment (of debt) agreement or not - intending assignor - corporate debtor continues to be liable for its debt and default or not - HELD THAT:- In the present case, Section 7 application is within the jurisdiction of the Adjudicating Authority which application although initially was withdrawn but having been restored by subsequent order of the Adjudicating Authority has to be continued and interim injunction order dated 29.09.2021 issued by the Commercial Court can have no effect on continuance of proceeding under Section 7. The view of the Adjudicating Authority that Appellant cannot proceed against Howrah Mills Co. Ltd. anymore is wholly erroneous and not in accordance with law. Appellant was entitled to proceed against the corporate debtor since debt and default continues and debt against the corporate debtor is not wiped off and in any manner or diminished. The interim injunction order dated 29.09.2021 can have no effect on continuous of Section 7 application. An order of court continues to bind the parties till it is set aside. Till the order of the court subsist, same is liable to be complied with. By proceeding with Section 7 application by the Appellant, no non-compliance of the interim injunction order dated 29.09.2021 can be read. Present is a case where the Appellant is not contending that order dated 29.09.2021 be ignored rather the submission is that the said order has no effect on continuance of Section 7 application which has been revived by the Adjudicating Authority itself to proceed. The debt and default on the part of the corporate debtor still continues. The intending assignment having never taken place, the debt cannot be held to be assigned to Respondent No.2 so that the Respondent No.2 may step into the shoes of the financial creditor of the corporate debtor. Adjudicating Authority committed error in dismissing Section 7 application filed by the financial creditor. Debt and default having been proved, the Adjudicating Authority ought to have admitted Section 7 application and initiated CIRP against the corporate debtor. The order dated 25.01.2024 is set aside - The application under Section 7 filed by the appellant deserves to be admitted. Adjudicating Authority may pass an order of admission along with consequential order within 30 days from the date copy of this order is produced before the Adjudicating Authority. 2024 (7) TMI 763 Seeking return of Income Tax refund amount of two previous assessment years to the liquidation estate of the Corporate Debtor- Sunil Hitech and Engineers Ltd. - Regulation 12 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - HELD THAT:- While moratorium under Section 14 applies to CIRP, Section 33 applies to moratorium in a liquidation process. A close examination of these two statutory provisions would reveal that both these sections are however entirely distinct in their sweep and application. In terms of the language employed in Sections 14 and 33 of IBC, while Section 14 prohibits both institution and continuation of pending suits or proceedings against the Corporate Debtor, Section 33(5) of IBC is only a bar on the institution of new suits during the liquidation process though the proviso to Section 33(5) further provides that if a fresh suit or legal proceeding is to be instituted, the Liquidator is required to obtain specific permission and prior approval of the Adjudicating Authority - though Section 33 contains provisions similar to Section 14 contemplating stay on suits/proceedings during liquidation, however, the reach and gamut of stay under Section 33 differs from Section 14 in that there is no moratorium on continuation of suits/proceedings already instituted earlier. The Respondent not having followed the mandatory procedure prescribed by the IBC acted unlawfully in adjusting the ITR amount without having filed any claim before the Liquidator though the Liquidator had published the public announcement inviting claims from the stakeholders of the Corporate Debtor. It is also canvassed that the ITR amount was part of the liquidation estate of the Corporate Debtor and by wrongful adjustment of the ITR against pre-CIRP income tax dues, the rights of other stakeholders of the Corporate Debtor stood violated. There is no material on record to show that the Adjudicating Authority while passing the impugned order has considered what amount was due to the Respondent in the context of Income Tax pre-CIRP dues for adjustment/set-off of ITR as against what was due to them as their claim under the liquidation proceedings - it is appropriate to remand the matter back to the Adjudicating Authority to examine afresh the quantum of set-off of ITR against pre-CIRP tax dues which has been allowed to the Respondent as against their claim entitlement in the liquidation proceedings. Appeal disposed off. 2024 (7) TMI 762 Distribution of provident fund dues - waterfall mechansim - distribution of provident fund dues in accordance with Section 36(4)(iii) of the Code or in accordance with Section 53 of the Code? - treatment of the various components of claims of the EPFO (the Respondent herein) i.e., contribution under Section 7A, interest under Section 7Q and damages under Section 14 of the EPF Act - PF dues in terms of EPF Act or not - costitution of liquidation estate - HELD THAT:- The sum due to any workmen or employee from provident fund, pension fund and gratuity fund are not to form the assets of liquidation estate - the EPFO Authorities have been given powers to determine the amount due from the employer under the provisions of the EPF Act, or the pension scheme or insurance scheme as the case may be under Section 7A of the EPF Act. From section 14B of the EPF Act, it is noted that the EPFO Authorities hae been given powers to recover damages in case of employer s defaults in payment of any contribution to the fund. There is no pre-conceived formula regarding what damages should be fixed under Section 14B of the EPF Act and the same has been left to the discretion of the EPFO Authority to determine the damages in facts of each case - it becomes clear that the EPFO Authorities have powers to levy damages. It is also significant to note that damages is in relation to non- payment or delayed payment of contribution under Section 7A of the EPF Act by the employer (the Corporate Debtor herein) therefore, the damages in a sense is to be treated as extended part of the contribution. The Hon ble Supreme Court of India in Sunil Kumar Jain v. Sundaresh Bhatt [ 2022 (4) TMI 888 - SUPREME COURT ] held that the dues of the gratuity and pension shall be governed by Section 36(4) of the Code. It is reiterated that Section 36(4)(ii) of the Code specifically excludes all sums due to any workman or employee from the provident fund, the pension fund and the gratuity fund , from the ambit of liquidation estate assets. Therefore, Section 53(1) of the Code cannot be made applicable to such dues, which are to be treated outside the liquidation estate assets under the Code. Section 36(4) of the Code has clearly gives protection to workmen's dues under provident fund, gratuity fund and pension fund which are not to be treated as liquidation estate assets and the liquidator cannot claim over such dues. This Appellate Tribunal in the case of State Bank of India v. Moser Baer Karamchari Union, [ 2019 (8) TMI 915 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] also examined the question of whether gratuity fund, provident fund and pension fund should be included as part of liquidation estate by including the same for payments under the waterfall mechanism under Section 53 of the Code. In this case, the Liquidator denied payment of the said funds in a preferential manner and had included the same for payment under the waterfall mechanism prescribed under Section 53 of the Code whereas the workers union claimed dues cannot be part of the waterfall mechanism under Section 53 of the Code - It was decided that the dues are to be paid to the workmen/employees on priority, without reference to or waiting for distribution of liquidation assets as per the waterfall mechanism under Section 53 of the Code. There are no merit in the appeal. The appeal deserved to be dismissed and stand dismissed. 2024 (7) TMI 761 Approval of Resolution Plan - redetermination of claim of Pegasus - HELD THAT:- The Hon ble Supreme Court in M/S. TULIP STAR HOTELS LIMITED ANR. VERSUS MR. ANISH NIRANJAN NANAVATY ANR. [ 2024 (5) TMI 1449 - SC ORDER] has clarified that reworking/ verification in terms of the order dated 22.11.2023 may not have any impact on the Resolution Plan or its implementation. The Hon ble Supreme Court has also held that re-working/ verification in terms of order dated 23.11.2023 has no effect on the Resolution Plan. The said observation are equally applicable to the reverification by the Pegasus, which was also done and placed before the CoC in its 32nd Meeting. The Appellant, who is shareholder and promoter of the Corporate Debtor and related party, has not been proposed any amount in the Resolution Plan. The submission of the Appellant that redetermination of Pegasus ought to have been complied by RP before proceeding further, needs no further consideration, since Pegasus itself on 27.11.2023 after the order of this Tribunal on 21.11.2023, has requested the RP to redetermine its claim @ 14.85%. The RP was fully entitled to redetermine any claim on account of any subsequent facts or materials, hence, the RP did not commit any error in redetermining the claim of Pegasus, which was made on its own request and ultimately, the Adjudicating Authority vide its order dated 26.04.2024 passed in IA No.5606 of 2023 has approved the said reverification. There are no error in the orders passed by Adjudicating Authority - Adjudicating Authority having found the Resolution Plan in accordance with the statutory scheme of the Code, has not committed any error in approving the Resolution Plan - appeal dismissed. PMLA 2024 (7) TMI 760 Money Laundering - proceeds of crime - reasons to believe - violation of Section 19 of the Prevention of Money Laundering Act, 2002 or not - It is contended that the arrest was illegal, which makes the order of remand to custody of the DoE passed by the Special Court dated 01.04.2024 also illegal. HELD THAT:- The power of judicial review shall prevail, and the court/magistrate is required to examine that the exercise of the power to arrest meets the statutory conditions. The legislature, while imposing strict conditions as preconditions to arrest, was aware that the arrest may be before or prior to initiation of the criminal proceedings/prosecution complaint. The legislature, neither explicitly nor impliedly, excludes the court surveillance and examination of the preconditions of Section 19(1) of the PML Act being satisfied in a particular case. This flows from the mandate of Section 19(3) which requires that the arrestee must be produced within 24 hours and taken to the Special Court, or court of judicial/metropolitan magistrate having jurisdiction. The exercise of the power to arrest is not exempt from the scrutiny of courts. The power of judicial review remains both before and after the filing of criminal proceedings/prosecution complaint. It cannot be said that the courts would exceed their power, when they examine the validity of arrest under Section 19(1) of the PML Act, once the accused is produced in court in terms of Section 19(3) of the PML Act. Power to arrest under Section 19(1) is not for the purpose of investigation. Arrest can and should wait, and the power in terms of Section 19(1) of the PML Act can be exercised only when the material with the designated officer enables them to form an opinion, by recording reasons in writing that the arrestee is guilty. Section 45 of the PML Act does not stipulate the stage when the accused may move an application for bail. A bail application can be submitted at any stage, either before or after the complaint is filed. Whether the charge is framed or evidence is recorded or not recorded, is immaterial. Clearly, the fact that the prosecution complaint has not been filed, the charge has not been framed, or evidence is either not recorded or partly recorded, will not prevent the court from examining the application for bail within the parameters of Section 45 of the PML Act - It is only on establishing the three facts that the offence of money laundering is committed. When the foundational facts of Section 24 are met, a legal presumption would arise that the proceeds of crime are involved in money laundering. The person concerned who has no causal connection with such proceeds of crime can disprove their involvement in the process or activity connected therewith by producing evidence or material in that regard. In that event, the legal presumption would be rebutted. Undoubtedly, the opinion of the officer is subjective, but formation of opinion should be in accordance with the law. Subjectivity of the opinion is not a carte blanche to ignore relevant absolving material without an explanation. In such a situation, the officer commits an error in law which goes to the root of the decision making process, and amounts to legal malice. The principle of parity or equality enshrined under Article 14 of the Constitution cannot be invoked for repeating or multiplying irregularity or illegality. If any advantage or benefit has been wrongly given, another person cannot claim the same advantage as a matter of right on account of the error or mistake. However, this principle may not apply where two or more courses are available to the authorities. The doctrine of need and necessity to arrest possibly accepts the said principle. Section 45 gives primacy to the opinion of the DoE when it comes to grant of bail. DoE should act uniformly, consistent in conduct, confirming one rule for all. Arvind Kejriwal is an elected leader and the Chief Minister of Delhi, a post holding importance and influence. We have also referred to the allegations. While no direction given, since it is doubtful whether the court can direct an elected leader to step down or not function as the Chief Minister or as a Minister, it is left to Arvind Kejriwal to take a call. Larger Bench, if deemed appropriate, can frame question(s) and decide the conditions that can be imposed by the court in such cases. The Registry is directed to place the matter before the Hon ble Chief Justice of India for constitution of an appropriate Bench, and if appropriate, a Constitution Bench, for consideration of the aforesaid questions. The questions framed above, if required, can be reformulated, substituted and added to. Service Tax 2024 (7) TMI 759 Levy of penalty by applying Section 80 of the Finance Act, 1994 - Respondent being a Public Sector Undertaking and yet not paying the Service Tax due in this case ought to be considered to be reasonable cause or not - applicability of ratio in the case of M/S HOUSING DEVELOPMENT CORPORATION LTD (HUDCO) VERSUS CST, AHMEDABAD [ 2011 (11) TMI 95 - CESTAT, AHMEDABAD] - levy of penalty u/s 76, 77 and 78 of the Finance Act - whether the Respondent is a public sector undertaking the amounts demanded as service tax would be admissible as CENVAT Credit? HELD THAT:- Taking note of the fact that Appellants are a public sector undertaking, amounts demanded as service tax will be admissible to the Appellants will be admissible to them as CENVAT Credit and the provisions of Section 80 of the Finance Act, 1994, Though the penalties under Section 76, 77 78 are imposable, they should be waived by the application of Section 80. The CESTAT has not only considered the fact that respondent/assessee was a public sector undertaking but has also kept in mind that if the service tax had been paid, respondent would have been entitled to take credit of the amounts paid, the net effect being it would have been revenue neutral. It is for that reason, the CESTAT set aside the order imposing penalty. It is a discretionary order and it is also noted that the finding that it will be revenue neutral has not been challenged in this appeal. Thus, no substantial question of law would arise - appeal dismissed. 2024 (7) TMI 758 Consideration of services rendered by the respondent is Mining Service for the period 16.08.2002 to 31.10.2006 though the mining service came into effect on 01.06.2007 - services provided by the respondent prior to 01.06.2007 can be considered as Mining service or the said services would be considered as Business Auxiliary service, Cargo Handling Service and Site formation and clearance, excavation and earth moving and demolition services? - appreciation of contents of the Circular dated 12.11.2007. HELD THAT:- It is found that except for the use of the words omission and failure , suppression of material facts , with an intent to evade payment of service tax , the adjudicating authority has not brought out any facts to substantiate as to how there was an act of omission and failure on the part of the assessee to disclose the correct facts and that it was with an intent to evade payment of service tax. In the absence of these essential elements, it is a settled legal position that the extended period of limitation cannot be invoked. Further, the assessee on facts had further stated that on and from 1st June, 2007 they have been paying service tax and earlier there was a doubt as regards the leviability of the service tax prior to 1st June, 2007, that too, by artificially bifurcating the composite services rendered by the assessee and therefore, the extended period of limitation cannot be invoked. That apart, the assessee had pointed out that they entered into contracts with reputed companies like TISCO Ltd. and ICML etc. and in the contracts which they have entered into with these listed companies there was no provision for service tax as there was no service tax on mining service during the material period. In UOI VERSUS INDIAN NATIONAL SHIPOWNERS ASS. ORS. [ 2010 (12) TMI 12 - SUPREME COURT] , the appeal was filed by the Union of India against a judgment of the High Court of Bombay quashing the notice issued by the appellant therein to the members of the Indian National Shipowners Association (respondents therein) by holding that the entry contained in Section 65 (105) (zzzy) of the Finance Act, 1994 does not include service provided by the members of the association. The Union of India, appellant therein contended that such service which were provided by the members of the association, have by then, subjected to the payment of service tax by virtue of the amendment brought in Section 65 (105) by way of amendment in Finance Act, 1994 with effect from 16.05.2008 by inserting a fresh entry namely Section 65 (105) (zzzzj) - The Hon ble Supreme Court, after considering the relevant provision and the nature of work that was carried out by the members of the respondent association therein, in terms of the contract entered into by them with ONGC held that none of them could be strictly stated by the service rendered in relation to mining of minerals, oil or gas and that the nature of work which has been placed before the Court cannot be said to be even remotely connected and included within the ambit of the provision as found in Section 65 (105), entry no. zzzy and, accordingly, the order passed by the High Court of Bombay was affirmed. This decision also lends support to the case of the respondent/assessee. The appellant was rightly granted relief by the learned Tribunal and the order does not call for any interference - Appeal of revenue dismissed. 2024 (7) TMI 757 Recovery of service tax on payment made to the Foreign Government Agencies for statutory fees/charges for the licenses and permissions - Non-acceptenace of declaration/application filed by the petitioner under Sabka Vishwas Legacy Dispute Resolution Scheme, 2019 (SLVDRS) - HELD THAT:- The benefit of deduction in tax dues where the amount of duty is less than Rs. 50 lakhs, the amount in arrears is to be computed as per 60% of the amount of duty comprising of amount of central excise duty, service tax and cess payable under the indirect tax enactment. Therefore, the amount of pre-deposit made by the petitioner, at the time of filing of appeal, cannot be said to be an amount paid towards the amount in arrears as such amount is only a deposit. The Legislature has therefore, stipulated in sub-section (2) of section 124 that relief calculated under sub-section (1) shall be subject to the condition that amount paid as pre-deposit at any stage of appeal proceedings under the indirect tax enactment or as deposit during the inquiry etc. shall be deducted when issuing the statement indicating amount payable by the declarant - at the time of calculation of the amount payable under sub-section (1) of section 124, the amount of pre-deposit is not required to be deducted but the same is required to be deducted while issuing the statement indicating amount payable by the declarant. From the Circular No. 1072 dated 25.09.2019, it is clear that CBIC has clarified that the relief available under section 124 (1) (c) is to be applied to the net outstanding amount of tax dues in arrears after deducting the amount already paid in form of pre-deposit appropriated or paid subsequently by the tax payers voluntarily against the outstanding demand. It is also further clarified that money paid before appropriation is in nature of deposit only. The petitioner has therefore rightly deducted the amount of Rs. 2,27,622/- from the net amount eligible for the Scheme after deducting 60% of Rs. 30,34,955/- from the net eligible amounting to Rs. 12,13,982/- The petitioner is therefore liable to pay Rs. 9,86,360/- only under the scheme and not Rs. 11,22,933/- as stated by the respondent No. 3 in Form SVLDRS-3. The respondent-authority is directed to appropriate the amount of Rs. 9,86,360/- from the amount of Rs. 11,22,934/- deposited by the petitioner with the respondent on 27.10.2020 pursuant to the order passed by this Court dated 10.09.2020 and to return the remaining amount of Rs. 2,27,622/- by issuing rectified From SVLDRS-3 towards full and final settlement of the outstanding dues of the petitioner and thereafter, issue consequential Form SVLDRS-4 - Petition allowed. 2024 (7) TMI 756 Rebate/refund claims - rejection on the ground of limitation in terms of Section 11B - whether the provisions of Section 11B of the Act are applicable and if so, the claim for rebate made by the appellant is time barred? - HELD THAT:- As per the provisions of Section 83 of the Finance Act, various provisions of the Central Excise Act are made applicable to the service tax provisions and Section 11B is also included in the list of sections. Thus, there is no doubt that the provisions of Section 11B are applicable in so far as the provisions of the Act are concerned. However, the contention of the appellant is that their claim is not for refund, but a case of rebate in respect of the exports made and the provisions of Section 11B does not deal with it. In this regard, the Commissioner in the impugned order had relied on the provisions of Explanation A to Section 11B, which the appellant has completely ignored while making the submissions - the appellant exported services with payment of service tax and filed applications for claiming a rebate of service tax paid as per Rule 5 of the Rules, 2005. Hence the contention that what is being claimed is not tax but was only a deposit is unsustainable. The appellant though had an option to export without payment of service tax, however, under the self-assessment, had chosen to assess and deposit the service tax at the time of export of service - the provisions of Section 73A of the Act provides for such contingency that, where any person has collected any amount, which is not required to be collected from any other person, in any manner, as representing service tax, such person shall forthwith pay the amount so collected to the credit of the Central Government . Thus, no error can be attributed to the Department. In so far as the claim for the period April, 2007 to September, 2007, being within the time limit of one year as the rebate claim was filed on 30.06.2008, the Authorities below rejected the same as the appellant failed to produce the relevant documents, i.e. export invoices, FIRGs, service agreement between them and their foreign clients and also the declaration under para 3(ii)(b) of the Notification - it would be appropriate to grant an opportunity to the appellant to place on record the requisite documents in terms of the notification and the claim may then be considered by the Authorities in accordance with law. The impugned order is modified to the extent that the rebate claim for the period April, 2007 to September, 2007 may be re-considered on the basis of the documents to be submitted by the appellant. The rejection of the rebate claim as being time barred is upheld - Appeal allowed in part. 2024 (7) TMI 755 Levy of service tax - Construction of Complex and residential complex service - Construction Services provided by the respondents to M/s Gujarat State Police Housing Corporation Ltd. (GSPHCL), M/s Surat Municipal Corporation (SMC) and M/s Surat Urban Development Authority (SUDA) - HELD THAT:- The definition of residential complex excludes from the levy of Service Tax complex which is constructed by a person directly engaging any other person for designing or planning of the lay out and the construction of such complex is intended for personal use as residence by such persons. Reliance placed in the case of Khurana Engineering [ 2010 (11) TMI 81 - CESTAT, AHMEDABAD] wherein it was held that ' service provided by the appellant is to be treated as service provided to Govt. of India directly and end use of the residential complex by Govt. of India is covered by the definition Personal Use in the explanation to definition of residential complex service, the other aspects need not be considered.' In the present matter works orders clearly shown that respondents has provided the construction services to GSPHCL, SMC SUDA and status of these organisations are Government Bodies. Thus, the view taken by the Ld. Commissioner is agreed, that construction works undertaken on behalf of the Government for non-commercial purpose are outside the purview of the Service tax. The service provided by the respondents are to be treated as service provided to Govt. and end use of the residential complex by Govt. is covered by the definition Personal Use in the explanation to definition of residential complex service and not leviable to Service tax. There are no merit in the present appeals of the department - appeal dismissed. 2024 (7) TMI 754 Denial of refund claim of service tax paid - rejection on the grond that the refund claim has been filed beyond the time limit prescribed under 11B of the Central Excise Act, 1944 and the same has been filed after one year from the payment of service tax - HELD THAT:- The facts are not in dispute that the appellant paid advance towards purchase of 33 Flats in the year, November-December, 2015 and also paid the service tax on advance. Later on, the booking of the said flats was cancelled on September, 2017 and the builder has returned the amount of advance payment made and did not refund the payment of service tax to the appellant as the builders have no provisions to claim refund of service tax paid by them during the impugned period as the service tax was changed to GST Regime, therefore, the appellant has borne the component of service tax paid thereof. In that circumstances, the appellant has borne the component of service tax and is entitled to claim the refund thereof. Accordingly, the appellant has rightly filed the refund claim. The refund claim has been filed within one year from the date of cancellation of flats. The cause of action arose in this case at the time of cancellation of flats. Therefore, the time limit under Section 11B shall start from the date of cancellation of flats and admittedly the appellant has filed the refund claim within one year thereof. In that circumstances, the refund claim is not barred by limitation. The appellant has not taken cenvat credit of the service tax paid by them and the same has been shown as deemed receivable from the Revenue. In that circumstances, the appellant is entitled for refund claim - the impugne dorder set aside - appeal allowed. 2024 (7) TMI 753 Classification of service - mining activity or Site Formation and Clearance, Excavation and Earth Moving and Demolition services? - appellant provides open cast mining service comprising of removal of overburden wherever required and subsequent extraction/mining of coal or uranium for their clients Bharat Coking Coal Limited (BCCL) and Uranium Corporation of India Ltd. (UCIL) and transporting the same from the pit head to storage place/railway siding - HELD THAT:- The nature of activity remaining unaltered and constant both prior and pursuant to introduction of levy of Service Tax on mining services, it comprehends logic, as to how the nature of activity can be categorized under two different heads. It can thus be nobody s case that without carrying out the activities aforesaid any mining activity can be undertaken. Since mining services were introduced vide clause zzy under Section 105 of Section 65 of the Finance Act with effect from 01/06/2007, it is a pradox for the department to change its stance for classification of the service without any change in actual operations undertaken. The nature of activity carried out by the appellant was therefore non-taxable prior to the introduction of service tax on mining services. Therefore the appellant was not required to obtain Service Tax registration and discharge any Service Tax liability thereon - It need to be understood that for open cast mining operations to be carried out removal of overlaying soil and rocks is essential. Therefore, as such no mining activity can be executed either without removal of overburden (open cast minerals) or making a shaft (for underground mines). The contracts were awarded to the appellant not only for site preparation alone but also included a host of other activities from site formation, excavation of overburden, extraction of ore, transportation of overburden to a specific location, drilling, blasting, construction maintenance of haul roads, dust suppression etc. The present contract are therefore a composite contract and not a site formation contract simpiliciter, leviable to charge as a separate service (mining service), which was rendered chargeable to service tax w.e.f. 1.06.2007. Thus prior to 1.6.07, the operations undertaken on part of the appellant, under a composite contract cannot be treated/charged under site formation service - The Tribunal in the case of M/S. HAZARIBAGH MINING ENGINEERS PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS SERVICE TAX, BBSR-I [ 2016 (12) TMI 1131 - CESTAT, KOLKATA] had held that to invite levy to tax as site formation service, it was required to be a service contract simpliciter to the said effect. As no tax was leviable on mining activity during the material period, we are of the view that the appellants cannot be subjected to any tax liability in the matter. The order of the lower authority is thus set aside and appeal filed by M/s. Saumya Mining Pvt. Ltd. is allowed - Revenue s appeal seeking imposition of penalty in the matter is dismissed. CST, VAT & Sales Tax 2024 (7) TMI 752 Challenge to award passed by the sole Arbitrator - Section 34 of the Arbitration and Conciliation Act, 1996 - whether the Arbitrator committed a perversity or acted beyond jurisdiction in passing the arbitral award and/or whether the impugned award is ex facie illegal and/or opposed to public policy or otherwise comes within the ambit of Section 34 of the 1996 Act? - HELD THAT:- The crucial factor which was required to be taken into consideration was whether the claimant was able to prove that it had kept ready the said materials at the relevant point of time. Not even an iota of evidence in that regard has been discussed by the arbitrator. In fact, it has been admitted by the claimant in paragraph no. 19 of the statement of claim that it would be ready to supply the balance quantity, if given the opportunity, in four months - in the absence of any proof as to the claimant having kept the materials ready, there does not arise any question of loss being suffered by the claimant for refusal of the award-debtor to receive the same. It is well-settled that the very premise of arbitration is the consensus and concurrence between the parties to refer specific disputes to arbitration. The arbitrator is a creature of contract and as such, is bound by the terms of the agreement between the parties. Thus, being specifically debarred by the agreement and/or falling outside the purview of the agreement, the awards on the above components are categorically vitiated under Section 34(2)(a)(iv) of the 1996 Act, as well as by patent illegality as envisaged in Sub-section (2-A) of Section 34. It has been held by the Supreme Court and this Court time and again that the award of the arbitrator in violation of a bar contained in the contract has to be held as one beyond his jurisdiction, requiring interference by the Court. The impugned award passed by the learned Arbitrator dated September 24, 2020 is set aside - application allowed. Indian Laws 2024 (7) TMI 751 Professional misconduct - Can the Institute of Chartered Accountants of India (ICAI) take action against Chartered Accountant firms for professional misconduct under the existing provisions of the Chartered Accountants Act, 1949 or is the ICAI empowered to only take action against one person, who is identified by the firm? - HELD THAT:- In the present case, the firms themselves are registered with the ICAI as is clear from the submissions made in the writ petitions. Section 21A and Section 21B of the Act empowers the ICAI s Disciplinary Committee, if it is of the opinion that the member is guilty of professional or other misconduct, to reprimand a member, remove the name of the member, or even impose fine. In fact, Rule 8 of the 2007 Rules makes it clear that the notice of complaint can be given to the firm setting out the acts of omission and commission at the address of the firm. The firm has the option of sending a declaration as to the persons responsible/ member answerable for answering the complaint. The explanation makes it clear that the notice to the firm is the notice to all the members, who are the partners or employees of the firm on the date of registration of the complaint. The firm can disclose the name of a person who shall be responsible for answering the complaint provided such a member was associated with the firm either as a partner or employee at the time of the alleged misconduct. The proviso to Rule 8 (2) makes it clear that if no member owns responsibility in respect of the allegations, then the firm as a whole shall be responsible - Sections 21A and 21B of the Act read with Rule 8 of the Rules makes it clear that the ICAI is fully empowered to take action against a firm and issue notices even to a firm. Thus, in a case where there is any complaint or allegation in respect of a single incident or an act of a member, the firm can designate that particular person, who was associated with the said act, which is alleged to be misconduct. The position would however not be the same, say, in a case where the allegations are in respect of arrangements entered into by firms with other international counterparts, spanning over decades and multiple agreements. A single individual cannot be pinned down in such situations to be responsible for answering the complaint as member answerable . The firm as a whole has to be held responsible if found culpable, in such circumstances, failing which the Act would be rendered toothless. There is a recognized need for enhancing and strengthening the disciplinary mechanisms against firms and enhancing accountability and transparency by firms of CAs. Though the amendment Act of 2022 has not been notified yet, the current/extant Act and Rules cannot be read in a manner, which is contrary to the spirit of vested powers with the ICAI for taking action against firms or individuals, who are its members - The ICAI clearly did not proceed against the Petitioners due to the interim orders that were operating in these petitions. The final recommendations record categorically that the ICAI did not proceed against the Petitioners due to the said interim orders. CAs owe a responsibility not just to their clients but also to ensure, in the process of rendering their services, that there is compliance of law. The said profession also owes a duty to the country as also to the economy as a whole. Thus, regulation of the profession of CAs by establishment of the Regulatory body like the ICAI is an important feature of the said profession itself - Proper mechanism for the purpose of ensuring that there is no misconduct is essential to preserve the robustness and the integrity of the profession. If firms are permitted to only pin down one single individual in respect of alleged misconduct spanning over decades, the entire purpose of the Act and the Rules would be completely defeated. This Court is of the opinion that the writ petitions are themselves not tenable and hence the stay orders also do not deserve to be continued. The Petitioners would be liable to participate, if they so choose to do, give their reply on merits to the notice issued by the DC and insofar as the Petitioners or firms are concerned, the ICAI would be fully empowered to proceed in accordance with law. Writ petitions are dismissed with costs of Rs. 1 lakh each to be paid to Delhi High Court Bar Clerk Association.
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Newsletter: Where Service Meets Reader Approval.

TMI Tax Updates - e-Newsletter July 16, 2024

Highlights / Catch Notes

GST

Non-service of show cause notice led to unawareness. Tax demand quashed if 15% remitted within 15 days. 10% already paid for appeal.

GST Appeal delay condoned; registration suspended due to lapse; re-hearing ordered with conditions for lapses; Covid-19 infection caused delay.

Challenge assessment order time limit. GST taxability from 01.07.2017 irrelevant. Fresh order after 10% tax deposit in 30 days.

Order quashed for lack of natural justice. Fresh orders within 60 days on Rs. 38L recovery treating impugned order as show cause addendum.

Respondent didn't pass GST rate cut benefit, profiteered Rs. 54L+ on cinema tickets. Directed to reduce prices, deposit profiteered amount.

Profiteering by cinema on GST rate cut, not passing benefit to customers. Directed to reduce prices. Violated law, but penalty can't be retrospective.

Income Tax

Reopening notice beyond 4 years quashed. Complete details submitted, no non-disclosure. Mere change of opinion.

No undisclosed investment found, only profit on unaccounted sales taxable. AO's assumption unsupported. Tribunal's view upheld.

Parents' admission fee treated as corpus donation, not capitation fee. Trust entitled to tax exemption. Revenue's stance incorrect.

Delay of 3 years by revenue dept. rejected; official machinery excuses not accepted. No justification for colossal delay in re-filing appeals.

ITAT: Disallowed cash purchases over Rs. 20K under 40A(3). Cash deposits treated as unexplained income. License fee addition set aside. Appeal partly allowed.

Excess deduction claimed u/s 36(1)(viia) led to income escapement. AO rightly reopened assessment based on records. Not opinion change.

Domestic co. pays dividend tax u/s 115-O at rate therein, not DTAA rate for non-resident shareholders unless treaty protects dividend tax. TP regs inapplicable to TTS income.

Cash deposits in Nov 2016 unexplained, rightly taxed at 60% u/s 115BBE. Limited scrutiny scope upheld for demonetization verification.

ITAT: Deleted expense disallowances, interest disallowance, salary disallowance. Allowed deduction u/s 80IC. Restricted selling/distribution expense disallowance.

Jewellery seized but treated as explained based on income & family status. Unexplained additions set aside, following HC precedent.

TCS on scrap sale: Assessee claimed immunity u/s 206C(6A). AO didn't consider nature of goods & Form 27BA. Remitted to verify 206C purview.

Customs

Petitioner not an importer under Customs Act; penalty on abandoned cargo unjustified sans Bill of Entry. Court allowed petition to avoid litigation delays.

Taxpayer gets refund + 8% interest for delay, 2% interest penalty on officers for inaction.

Imported goods from Malaysia, claimed preferential duty under Indo-ASEAN FTA. Revenue alleged Chinese origin. Court upheld Malaysian origin based on documents.

Self-assessed Bill of Entry appealable. Tribunal remanded matter for classification of Glivec-400 mg under Tariff Sub-heading & Notification benefits.

Injection Stretch Blow Moulding Machine produces IV fluid bottles, differs from Injection Moulding Machine. Classified under 84773000.

Indian Laws

Empowered to take disciplinary action against CA firms for misconduct, ICAI can hold firms accountable under CA Act.

IBC

Section 7 application wrongly rejected despite debt & default. Assignment failed, liability remained. Interim injunction irrelevant for CIRP.

Section 33 allows pending suits, but Respondent unlawfully adjusted ITR against pre-CIRP dues sans claim. ITR was liquidation estate; adjustment violated stakeholders' rights.

Provident fund, interest, damages not part of liquidation assets. EPFO can determine dues, recover damages. Gratuity, pension excluded from liquidation assets. Priority payment to workers.

NCLAT upheld re-verification of Pegasus's claim by RP & approval of Resolution Plan sans payment to appellant promoter.

Service Tax

Public sector undertaking's service tax demand upheld but penalties waived. CENVAT credit eligibility cited for revenue neutrality.

SVLDRS: Service tax recovery from foreign agencies: pre-deposit deducted from net eligible amount. HC allows refund of excess deposit.

Residential complex built for govt bodies' non-commercial use exempt from service tax, akin to 'personal use' under residential complex service definition.

VAT

Arbitrator's award set aside for lack of evidence, exceeding jurisdiction & patent illegality. Arbitrator bound by contract terms.

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TMI Tax Updates - e-Newsletter
July 16, 2024