Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
July 18, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
FEMA
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
GST
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Unsigned order & notice quashed for lack of digital/physical signature as per Rule 26 CGST Rules & TGST Act.
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Sec 169 allows serving orders/notices via common portal. Sec 146 mandates portal use for registration, tax, returns & communication. Delayed access claim rejected.
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Defective notice sans details invalidated registration cancellation. High Court upheld natural justice principles.
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Order set aside on interest liability. Interest based on 700 days delay. Pay admitted interest in 15 days.
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Appellate authority's inconsistent approach in accepting/rejecting contentions sans evidence rejected. Order quashed, remanded for judicial consideration.
Income Tax
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Uttaranchal Board of Technical Education's specified income exempted from income tax for FY 2022-23, subject to conditions.
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Subsidiary's expenses for parent's contracts ineligible as business loss. Separate entities, expenses must pertain to assessee's business.
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Unexplained money taxable despite no books. Onus on assessee to prove source. Stamp duty on market value, not guideline value.
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Loan waiver under One Time Settlement: If for trading, taxable u/s 41(1). Facts on loan purpose needed. Case remanded.
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AO's reassessment notice invalid. Alleged profits unverified. Assessee's trading loss claim wrongly rejected. Court allows appeal, deletes addition.
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Mere disallowance u/s 40A(3) won't invite penalty for concealment if assessee disclosed all particulars in Tax Audit Report.
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For property valued >45L, indexed cost of 45L evidenced by cheque payments held acceptable for indexation benefit. LTCG addition deleted.
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Sec 145(3) invoked wrongly, books rejected improperly u/s 144. Gross profit addition unjustified, ignoring evidence. Excess stock part of closing stock, no addition needed.
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Estimated net profit based on 1.33% of gross receipts from past audits. Interest, commission & rental income excluded.
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Assessee disclosed income but failed to prove expenses. AO rightly disallowed unsubstantiated deductions. Afterthought lawsuit can't cover up tax evasion.
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Share capital, a liability, can't be treated as asset to invoke jurisdiction. AO overreached by probing beyond 6 years sans undisclosed asset.
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Loan from bogus entry provider, lender not produced despite directions. Inquiry prevented. Unusual huge yearly loans.
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Software depreciation 60%, sales promotion expense revenue, share premium valuation upheld. Genuine transaction. Recompute tax after PGBP loss.
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Income surrendered during search must meet "undisclosed income" definition for penalty. AO must record findings based on search material.
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Royalty receipts adjustment by TPO based on Form 3CEB differences without ALP computation by prescribed methods is unsustainable.
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Tribunal: Order based on binding precedent can't be recalled/reviewed due to later contrary higher court judgment. Final order can't be reopened u/s 254(2).
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Transfer pricing adjustment: Arm's length broking commission - TPO rejected TNMM, applied CUP method. Consider domestic & overseas clients for CUP. Allow 40% marketing & research cost adjustment.
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Salary earned for services rendered outside India not taxable. Short-term capital gains taxed at 15%. TDS credit after verification. Interest consequential.
Customs
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Revised tariff values: Crude Palm Oil $925/MT, Brass Scrap $5558/MT. Gold $775/10g (>99.5%), Silver $1000/kg (>99.9%). Areca nut unchanged.
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Diamond pendant qualifies as personal effect for jewelry biz owner. Customs erred in valuation. Refund ordered.
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Detention for smuggling under Customs Act requires strict interpretation, utmost care & specifying detenu's acts prejudicing forex conservation.
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Penalty on CHAs for not verifying exporters' KYC set aside; due diligence breach attracts CBLR provisions, not Sec 117 penalty.
FEMA
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FERA violations upheld for unrecovered export dues sans RBI nod. Collusion found. Penalty reduced for rationality with main defaulter.
Corporate Law
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Central Govt bans use of "Nidhi Limited" in company names unless declared as Nidhi under Cos Act. Nidhi Rules amended.
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Director's KYC: Update mobile/email once yearly for free, pay Rs 500 for more changes. Effective Aug 1, 2024.
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Amendment mandates MSME Form-1 for firms with pending MSME payments over 45 days. New Form-1 format in Annexure. Effective from Gazette publication.
Indian Laws
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Exemption for Market fee doesn't cover Rural Development fee. 2003 Policy doesn't exempt latter. Distinct fees under different statutes. Only Mega Projects exempted. Respondent ineligible.
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Legal notice for dishonor sent on 19.12.2018. Complaint filed on 14.1.2019 before 15 days' response period, no offense u/s 138 NI Act.
IBC
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The Tribunal allowed the Financial Creditor to amend the date of default for computing limitation to file u/s 95.
PMLA
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Court upholds ED's seizure & sale of luxury vehicles bought from proceeds of crime under PMLA. Sale proceeds kept as FDs to preserve value.
SEBI
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REITs allowed employee benefit schemes via trust. Unitholder nod needed to introduce, exceed limits. Disclosure norms for explanatory statement, reports.
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Comprehensive rules for unit-based employee benefit schemes in InvITs cover trust deeds, terms, disclosures, approvals, accounting & acquisition.
VAT
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Petitioner paid excess tax, Respondents illegally adjusted refund against non-existent demand. HC ordered refund of excess tax with interest.
Articles
Notifications
Companies Law
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G.S.R. 413(E) - dated
16-7-2024
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Co. Law
Nidhi (Amendment) Rules, 2024
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F. No. 8/4/2018-CL-I - G.S.R. 412 (E) - dated
16-7-2024
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Co. Law
Companies (Appointment and Qualification of Directors) (Amendment) Rules, 2024 - Updating Directors KYC and change in Mobile or Email Address
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F. No. 1/13/2013-CL-V, Vol. IV - G.S.R. 411 (E). - dated
16-7-2024
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Co. Law
Companies (Incorporation) Amendment Rules, 2024
GST - States
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04/2024–State Tax (Rate) - dated
15-7-2024
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Bihar SGST
Amendment in Notification No. 12/2017- State Tax (Rate), dated the 29th June, 2017
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03/2024–State Tax (Rate) - dated
15-7-2024
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Bihar SGST
Amendment in Notification No. 2/2017-State Tax (Rate), dated the 29th June, 2017
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02/2024–State Tax (Rate) - dated
15-7-2024
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Bihar SGST
Amendment in Notification No. 1/2017-State Tax (Rate), dated the 29th June, 2017
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56/2023-State Tax - dated
11-7-2024
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Delhi SGST
Seeks to extend dates of specified compliances in exercise of powers under section 168A of DGST Act
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18/GST-2 - dated
15-7-2024
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Haryana SGST
Notification to notify Amendment of Notification no. 47/ST-2, dated 30.06.2017 under the HGST Act, 2017
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17/GST-2. - dated
15-7-2024
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Haryana SGST
Notification to notify Amendment of Notification no. 36/ST-2, dated 30.06.2017 under the HGST Act, 2017
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16/GST-2 - dated
15-7-2024
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Haryana SGST
Notification to notify Amendment of Notification no. 35/ST-2, dated 30.06.2017 under the HGST Act, 2017
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F.12(1)FD/Tax/2024-87 - dated
13-7-2024
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Rajasthan SGST
Seeks to amend the notification No. F.12(56)FD/Tax/2017-Pt-I- 50 dated 29.06.2017 regarding amendment of tax rates in services
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F.12(1)FD/Tax/2024-86 - dated
13-7-2024
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Rajasthan SGST
Seeks to amend the Notification No. F.12(56)FD/Tax/2017-Pt-I- 41 dated 29.06.2017 regarding insertion of proviso relating to agriculture farm produce
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F.12(1)FD/Tax/2024-85 - dated
13-7-2024
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Rajasthan SGST
Seeks to amend the Notification No. F.12(56)FD/Tax/2017-Pt-I- 40 dated 29.06.2017 regarding amendment of tax rates in schedule II and III of the RGST Act, 2017
SEBI
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SEBI/LAD-NRO/GN/2024/193 - dated
9-7-2024
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SEBI
Securities and Exchange Board of India (Real Estate Investment Trusts) (Second Amendment) Regulations, 2024
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2024 (7) TMI 921
Levy of late fee and penalty - non filing of annual returns and reconciliation statement in time - inability to participate in proceedings culminating in the impugned order because GST compliances were entrusted to a Chartered Accountant and such Chartered Accountant had not noticed the show cause notice and impugned order - HELD THAT:- On examining the impugned order, it is evident that the tax payer fail to file objections to the show cause notice. By taking into account the assertion that such non participation was on account of not being aware of proceedings, the interest of justice warrants reconsideration especially by taking into account that the entire late fee portion was remitted by the petitioner. The impugned order dated 13.02.2023 is set aside and the matter is remanded for reconsideration. The petitioner is permitted to submit a reply to the show cause notice within fifteen days from the date of receipt of a copy of this order - petition disposed off by way of remand.
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2024 (7) TMI 920
Principles of natural justice - petitioner did not have a reasonable opportunity to contest the tax proposal on merits - petitioner was unaware of proceedings culminating in the impugned order - disparity between the petitioner's GSTR 3B returns and the auto populated GSTR 2A - HELD THAT:- The petitioner has placed on record the declaration issued by the supplier in terms of Circular No.183. The rectification petition was rejected in view of the limited scope of rectification under Section 161 of the applicable GST statutes. In the affidavit, the petitioner asserts that non participation was on account of not being aware of proceedings. The petitioner has offered to remit a sum of Rs. 25,000/- towards the disputed tax demand and this is in excess of 10% of the disputed tax demand. These facts and circumstances justify re-consideration. The order in original dated 13.12.2023 is set aside on condition that the petitioner remits a sum of Rs. 25,000/- towards the disputed tax demand, as agreed to, within fifteen days from the date of receipt of a copy of this order. Within the said period, the petitioner is permitted to submit a reply to the show cause notice - Petition disposed off.
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2024 (7) TMI 919
Violation of principles of natural justice - no personal hearing was granted in pursuance of the provision of section 75(4) of the U.P. GST Act - HELD THAT:- The petitioner did not reply to the show cause notice and he did not even take heed of the fresh date fixed in the matter. He did not pray for any extension of time to submit his reply to the show cause notice therefore, he cannot now on the basis of oral assertion argue that the date fixed by the proper officer/assessing authority of 17.11.2023 was not in the knowledge of the petitioner. This court having gone through the instructions as also the Judgment rendered in Eveready Industries India Ltd [ 2024 (6) TMI 162 - ALLAHABAD HIGH COURT ], is of the opinion that even if no date, time or place of hearing is indicated in the notice issued under Section 73, it was the duty of the assessee to file his reply to the show cause notice which was admittedly received by him. He chose to ignore the show cause notice. In such cases, the plea regarding denial of opportunity of hearing and violation of principles of natural justice cannot be countenanced. This writ petition is dismissed in view of statutory remedy available under Section 107 of the Central GST Act.
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2024 (7) TMI 918
Validity of SCN and assessment order - not signed by the 1st respondent while issuing the same either digitally or physically - SCN as also the assessment order have not been signed by the 1st respondent either digitally or physically as is otherwise required under Rule 26 of the Central Goods and Services Taxes Rules - HELD THAT:- The impugned order in the instant case also since it an un-signed document which lose its efficacy in the light of requirement of Rule 26(3) of the CGST Rules 2017 and also under the TGST Act and Rules 2017. The show cause notice as also the impugned order both would not be sustainable and the same deserves to be and is accordingly set aside/quashed. However, the right of the respondents would stand reserved to take appropriate steps strictly in accordance with law governing the field. This Writ Petition stands allowed.
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2024 (7) TMI 917
Input Tax Credit (ITC) reflected in GSTR 2A was not properly taken into consideration - HELD THAT:- The petitioner has placed on record screen shots from the GST portal in respect of the auto-populated GSTR 2A. The said document reflects details of 11 bills of entry. As regards such 11 bills of entry, the confirmed tax demand warrants reconsideration. Upon excluding the tax component relating to the said 11 bills of entry, the disputed tax demand is about Rs. 77,59,284/-. Learned counsel for the petitioner, on instructions, submits that the petitioner agrees to remit a sum of Rs. 8,00,000/- towards the disputed tax demand as a condition for remand. The impugned order dated 07.03.2024 is set aside on condition that the petitioner remits Rs. 8,00,000/- towards the disputed tax demand as agreed to within a period of four weeks from the date of receipt of a copy of this order - Petition disposed off.
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2024 (7) TMI 916
Levy of penalty - Part-B of the E-way bill was not duly filled - HELD THAT:- Admittedly, the goods in question were duly accompanied with all required documents such as tax invoice, e-way bill and R.R. There is no finding that there was any discrepancy in quantity and quality of the goods. Further, no material has been brought on record to show that there was any evidence with regard to evasion of tax. Further, only on the allegation that Part-B of the e-way bill was not filled, no adverse inference can be with regard to evasion of tax. This Court in Citykart Retail Pvt. Ltd. [ 2022 (9) TMI 374 - ALLAHABAD HIGH COURT] has held that ' There is no allegation that the goods being transported were being transported without payment of tax. The explanation offered by the petitioner for not filling the Part-B of e-way bill, is clearly supported by the Circulars issued by the Ministry of Finance wherein the problem arising in filling the part-B of e-way bill was noticed and advisories were issued.' The impugned orders cannot sustain - Petition allowed.
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2024 (7) TMI 915
Challenge to assessment order - principal contention raised by the appellant was that the assessment order was communicated to the appellant through the portal that was notified by the Government for such purposes in accordance with Section 146 of the CGST Act, and hence he was not aware of the order since he had accessed the portal belatedly. HELD THAT:- A reading of Section 169 of the Act makes it abundantly clear that any decision, order, summons, notice or other communication under the Act or Rules may be served on the assessee, inter alia, by making it available on the common portal. This statutory provision has to be read along with the provisions of Section 146, and when so read, it would mean that once a common portal is notified for the purposes of the Act, then any of the actions such as registration, payment of tax, furnishing of returns, etc., as also the communication of notices, orders, etc., as provided for under the statute can be effected through the notified portal. Appeal dismissed.
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2024 (7) TMI 914
Violation of principles of natural justice - defective SCN - Cancellation of registration of petitioner - HELD THAT:- The SCN itself is defective and does not contain necessary foundation on the strength of which impugned action could have been taken after 08.07.2022. Thus, communication through email to the petitioner will not improve the case of the respondents. In nutshell, the SCN lacks minimum details to establish that after 08.07.2022, the respondents received any adverse material which formed basis of show cause notice and Order-in-Original. In this backdrop, we find substance in the arguments of learned counsel for the petitioner that if appropriate show cause notice is issued and he may be given an opportunity, it will meet the ends of justice. The SCN and Order-in-Original are set aside - petition disposed off.
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2024 (7) TMI 913
Cancellation of the petitioner s GST Registration - petitioner closed down its business - HELD THAT:- It appears from the notice that the Proper Officer is seeking to ascertain the petitioner s tax liability, if any. However, the petitioner s request for cancellation of the GST Registration is not contingent on its liability to pay tax. The learned counsel for the petitioner also refers to a circular dated 26.10.2018 which, inter alia, specifies that the application for cancellation of GST Registration ought to be decided within a period of 30 days, except in certain exceptional circumstances. It is considered apposite to dispose of the present petition by directing the respondent to consider the petitioner s application for cancellation of the GST Registration, and pass an appropriate order - petition allowed.
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2024 (7) TMI 912
Maintainability of petition - it is submitted by the Revenue that this Writ Petition is liable to be dismissed on account of latches as the issue has attained finality - HELD THAT:- This Court is inclined to grant partial relief to the petitioner by quashing the impugned order and remits the case back to the respondent to pass a fresh order on merits and in accordance with law as the petitioner may have a case on merits. Under these circumstances, the petitioner is directed to deposit 10% of the disputed tax from its electronic cash register together with the reply to the notice issued prior to the impugned order, within 30 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. It is expected that the final order will be passed within three months thereafter. Needless to state, before passing the order, the petitioner shall be heard - petition disposed off.
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2024 (7) TMI 911
Imposition of interest - contention of petitioner is that taxes were paid with a delay of 700 days and not 2080 days - mismatch between the petitioner's GSTR 3B return and the GSTR 1 statement - HELD THAT:- The impugned order records that the tax payer paid the tax amount, but did so belatedly. Therefore, the only aspect that remains to be considered is with regard to interest. The contention of learned counsel for the petitioner is that taxes were paid with a delay of 700 days and not 2080 days. In these circumstances, subject to payment of interest to the extent admitted, it is necessary that the petitioner be provided an opportunity. The impugned order dated 30.12.2023 is set aside only in so far as the interest liability is concerned subject to the petitioner discharging interest liability on the basis that the period of delay was 700 days instead of 2080 days. Such liability shall be discharged within 15 days from the date of receipt of a copy of this order - Petition disposed off.
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2024 (7) TMI 910
Initiation of proceedings for recovery of the outstanding dues - lack of evidence, that the vehicle was intercepted at a distance of about 25 to 30 Kilometers from the Cold storage - HELD THAT:- The Appellate Authority has affirmed the impugned order passed by the Assessing Officer, without there being any evidence and finding regarding intention of the petitioner to evade tax. This difference of approach adopted by the Appellate Authority in dealing with the contention of the petitioner and the department in as much as the petitioner's contention has been rejected for want of evidence whereas the department's contention has been accepted, although there was no evidence to support that also, cannot be appreciated by the Court. The Appellate Authority should act in a judicial manner, adopting the same approach towards the Assessee and the department. The order dated 06.12.2023 passed by the Appellate Authority is hereby quashed - Petition allowed by way of remand.
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2024 (7) TMI 909
Violation of principles of natural justice - opportunity of personal hearing not provided - HELD THAT:- Upon service of notice the petitioner had been called to file its reply only. Consequently, non-compliance of that show cause notice may have only led to closure of opportunity to submit written reply. However by virtue of the express provision of Section 75 of the Act, even in that situation the petitioner did not lose its right to participate at oral hearing and establish at that stage itself that the adverse conclusions proposed to be drawn against the petitioner, may be dropped. The rules of natural justice as are ingrained in the statute prescribe dual requirement. First with respect to submission of written reply and the second with respect to oral hearing. Failure to avail one opportunity may not lead to denial of the other. The two tests have to be satisfied independently. No useful purpose may be served in keeping this petition pending or calling counter affidavit at this stage or to relegate the present petitioner to the forum of alternative remedy. The order impugned has been passed contrary to the mandatory procedure. Matter is remitted to the respondent No. 2 to pass a fresh order - petition allowed by way of remand.
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Income Tax
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2024 (7) TMI 908
Disallowance u/s 14A r.w.r. 8D - disallowance u/s 36(1)(iii) - adjustment made u/s. 115JB on disallowance u/s. 14A and foreign exchange fluctuations - HC dismissal of the appeal based on the circumstances and the previous decision. HELD THAT:- The judgment which is relied upon in the impugned order has not been interfered with by this Court. It is not disputed that the questions involved therein were the same. Hence, in the facts of the case, no interference is called for. The Special Leave Petition is accordingly dismissed. However, the question of law, if any, is kept open.
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2024 (7) TMI 907
Penalty u/s 271(1)(c) - sundry credits as claimed by the assessee has not been substantiated before the AO - as decided by HC [ 2024 (1) TMI 1302 - PATNA HIGH COURT] mere disclosure of the name and address of the sundry creditors cannot lead to substantiation of the credits especially when there was no evidence produced regarding the transactions which led to the credit - HELD THAT:- After having heard the learned counsel appearing for the petitioner, we find no error in the view taken by the High Court. The Special Leave Petition is accordingly dismissed.
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2024 (7) TMI 906
Validity of Faceless assessment of income escaping assessment - Challenge to notice u/s 148 as non-compliance with Section 151A of the Act - notices issued by JAO instead of FAO - HELD THAT:- JAO would not have jurisdiction to issue the impugned notices more particularly in view of the clear provisions of Section 151A read with notification dated 29 March, 2022 issued by the Central Government. As fairly conceded on behalf of the revenue, the challenge in the proceedings would stand covered by the decision of this Court in Hexaware Technologies Ltd. ( 2024 (5) TMI 302 - BOMBAY HIGH COURT] . The impugned notices would be required to be held to be illegal and invalid. We, accordingly, allow this petition in terms of prayer clause (a).
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2024 (7) TMI 905
Demand notice u/s 156 - proceedings culminated in an order issued u/s 148A(d) - assessing the recomputed income to be Rupees Zero under Section 147 read with Section 144B - HELD THAT:- Faceless Assessment Unit, after taking into consideration all aspects, inter alia, including explanation given by the petitioner no.1, had concluded that no adverse inference can be drawn in the case and had accordingly accepted the income, as filed in the Income Tax Return as Rupees Zero, no demand on the basis thereof could have been raised by the respondents. Thus, the purported notice issued under Section 156 of the said Act dated 19th March 2024 had been issued mechanically, without taking note of the assessment order. The purported computation sheet appended to the demand notice is also contrary to the assessment order dated 19th March 2024. In view thereof, to the aforesaid demand notice cannot be sustained and the same is accordingly quashed.
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2024 (7) TMI 904
Business expenditure incurred for fulfilling contractual obligations of parent company - c an be considered as business loss of appellant company or not? - appellant company is a subsidiary company of LIC Energy, Denmark - HELD THAT:- Perusal of the record would show that the holding company had received five orders to supply LEAK detection and location system to India apart from several enquiries on other modeling software. The appellant company incurred expenditure for overseeing and execution of contracts entered by the holding company. It is also clear that the appellant company did not undertake any business on its own and thus, the expenses incurred by the appellant company are not occasioned in the process or for its own business. Therefore, the expenditure incurred by the appellant company cannot be considered as expenditure in connection with its business or incidental to its business. For allowing loss, the expenditure must be connected with or related to the business carried on by the assessee and profits and gains therein. However, in the present case, the losses incurred are for the purpose of giving support services to the holding company and the assessee did not derive any profit and gain from such expenditure, therefore, the loss incurred by the appellant company is not related to its own business. It is relevant to note that the holding company and the subsidiary company are separate entities and the expenditure pertaining to one entity cannot be claimed or allowed in the hands of the other. As per Section 37 of the Act, 1961, the prerequisites for allowing deduction are that the expenditure should have been incurred in respect of a business carried on by the assessee and should be spent wholly and exclusively for its own business. In the present case, admittedly, the expenditure sought to be deducted was incurred for overseeing the project of the holding company - in order to be deductible as a business loss, the expenditure must be in the nature of trading loss, not as capital loss springing directly out of trading activity and it must be incidental to the business of the assessee. It is not sufficient that it falls on the assessee in some other capacity or is merely connected with its business and also the amount incurred by the assessee which is not in the ordinary course of business cannot be allowed as a deduction. Thus the amount incurred by the appellant company cannot be considered as revenue expenditure of the appellant company and thus, not eligible for reduction under Section 37 - Decided against assessee.
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2024 (7) TMI 903
Unexplained money u/s 69A - petitioner contended that Section 69A does not apply in cases where books of account are not required to be maintained - HELD THAT:- In the case of an assessee who is not required to maintain books of account, but the Income Tax Department receives information that such person is the owner of unexplained money or other article, such assessee would be called upon to provide an explanation and the same consequences would follow if the assessee does not reply or if the reply of the assessee is not satisfactory. This is evident from the use of the expression books of account, if any , in Section 69A. If any other interpretation is placed on this provision, any assessee not required to file books of account would get away scot-free when such assessee is found to have unaccounted money. In response to the notice u/s 148A(b), the assessee stated that the source of funds for the purchase of the immovable property was from her husband. She stated categorically that the funds were accounted for in her husband's books of account. She also requested that she be provided an opportunity to make more detailed submissions if the explanation is not satisfactory. In reply to the show cause notice, once again, the bank statements were attached. It is stated therein that the payments were numbered on the bank statements and that such payments were made directly to the vendor. It should be noticed, however, that the petitioner did not submit the return of income of her husband or the ledger account, if any, relating to the purchase of this property. As petitioner submitted that such documents were not called for by the Income Tax Department. This submission is not entirely satisfactory because it was incumbent on the petitioner to not only establish the source of funds, but also to show that the sum was duly reported by her husband in his return of income and that applicable tax thereon had been paid. Petitioner has placed on record evidence that her husband paid for the purchase of the relevant immovable property. In the event that her husband had duly declared this income and paid applicable taxes thereon, grave injustice would be caused inasmuch as the same income would be subject to tax in the hands of two persons. For such reason, the impugned order warrants interference. Since the petitioner did not avail of the opportunities and provide all necessary documents, the petitioner is liable to pay costs. Addition u/s 56(2)(x)(b)(B) OR 56(2)(x)(b)(B)(i)/(ii) - Addition was proposed on account of the fact that the Sub Registrar concerned concluded that the market value of the property was more - petitioner contended that the show cause notice referred to Section 56(2)(vii)(b), which is not applicable to the assessee, whereas the impugned order refers to Section 56(2)(x)(b)(B) - HELD THAT:- The provisions are substantially similar albeit Section 56(2)(vii)(b) applies to transactions that took place on or before 01.04.2017, whereas Section 56(2)(x)(b)(B) applies to transactions subsequent thereto. Stamp duty was admittedly paid on Rs. 1,83,12,000/- and the differential amount of Rs. 26,16,000/- exceeds both the Rs. 50,000/- and 10% thresholds specified in Sections 56(2)(x)(b)(B)(i) and (ii). For the above reason and by taking into account the fact that the provisions are substantially similar and the petitioner had sufficient opportunity to show cause in respect of the proposed addition, conclude that the mentioning of a different provision in the show cause notice does not vitiate the order in this respect. Stamp duty is leviable on the guideline value - Stamp duty is imposed on conveyances under Article 23 of the Schedule to the Indian Stamp Act, 1899, as applicable in Tamil Nadu. As per Article 23, stamp duty is payable on the instrument of conveyance at a fixed percentage of the market value and not the guideline value. In the reply to the show cause notice, the petitioner stated that she was unable to object to the determination of stamp duty on the basis of the open market value of Rs. 1,83,12,000/- due to family and other personal reasons, and that the petitioner is taking steps to claim a refund of excess stamp duty. The contention of the petitioner and the learned counsel on this aspect cannot be accepted. As a corollary, no case is made out for interference with the impugned order on this aspect. Subject to the fulfillment of above condition, the petitioner is permitted to file additional documents within fifteen days from the date of receipt of a copy of this order. In order to enable the petitioner to upload the same, the respondent shall provide access to the portal. Upon receipt of such additional documents, the respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing through video conference, and thereafter issue a fresh order insofar as the addition under Section 69A is concerned within three months from the date of receipt of a copy of this order. For the avoidance of doubt, it is clarified that the order does not call for any interference as regards the addition under Section 56(2).
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2024 (7) TMI 902
Taxability of waiver of loan in One Time Settlement Scheme (OTS) with bank - Addition u/s.28(iv) - treating benefit from One Time Settlement with the Bank of Baroda as income - HELD THAT:- If the loan has been taken for trading purpose waiver of such loan would tantamount to cessation of liability ,liable to tax under section 41(1) of the Act. In the present case the taxability of the loan waived has not been considered in terms of the provisions of section 41(1) of the Act by the authorities below, though surprisingly the assesses submission to the AO was solely in the context of section 41(1) of the Act, ruling out its applicability in the case of the assessee. Thus, this matter needs reconsideration particularly as to under which section the benefit accruing to the assessee under One Time Settlement Scheme is taxable. And for the said purpose, the facts relevant to the waiver of the loans needs to be brought on record. The matter is therefore restored back to the AO for consideration afresh of the taxability of loan waived under one time settlement scheme by the bank. Appeal of the Revenue is allowed for statistical purpose.
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2024 (7) TMI 901
Validity of order u/s 147 r.w.s. 148 - non recording proper reasons - reasons recorded that there was information from the Investigation Wing that the assessee had derived fictitious profits in the trading on BSE in equities and derivatives HELD THAT:-The issuance of notice u/s 148 by the AO simply on the basis of information of the Investigation Wing is unjustified. The same requires to be quashed. Further, it is also noted that the reasons recorded were factually wrong. The AO has simply adopted the figures alleged to be fictitious profits in the business of shares on BSE on the basis of report of the Investigation Wing of the department. The AO did not make efforts to verify as to how the figure of Rs. 51,47,700/- was arrived. There is absolutely no such profit of Rs. 51,47,700/- in the share business conducted by the assessee. Even in the assessment order, the AO has not given the working of this alleged fictitious profit of Rs. 51,47,700/- with reference to the scrips in which trading was done. In the absence of these details, the assessee was bereft of giving any defence. It is settled position of law that initiation of proceedings u/s 148 on the basis of wrong/incorrect facts is invalid in the eye of law. AO was not justified in making addition by rejecting the claim of loss of the assessee suffered in share trading. The addition made deserves to be deleted. Hence, taking into consideration above deliberations in the facts and circumstances case as detailed hereinabove, the Bench does not concur with the findings of the ld. CIT(A) and thus the appeal of the assessee is allowed.
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2024 (7) TMI 900
Revision u/s 263 - original order was subjected by the AO to rectification u/s. 154 - HELD THAT:- A perusal of the order passed u/s. 263 of the Act by the ld. CIT(E) for the impugned assessment year with that of the assessment year 2017-2018 which is already quashed by the coordinate bench of the Tribunal, shows that for the impugned assessment year the ld. CIT(E) has extracted the various submissions of the assessee. Nowhere in the order the ld. CIT(A) is able to point out any error in the submissions made by the assessee. What the nature of the shortfall in the examination as done by the AO in the course of original assessment, is also not coming out of the order of the ld. CIT(E). The fact that the ld. CIT(E) has taken a stand in his order that correct enquiry was not carried out while allowing the claim of application of the income, shows that the ld. CIT(E) was well aware that examination had been done by the AO. The order of the ld. CIT(E) also does not speak of the correct enquiries that he wants to be done by the AO. Thus, clearly shows that this is nothing but an attempt of the ld.CIT(E) to dislodge an opinion as arrived at by the AO without pointing out any error in such opinion arrived. CIT(E) has invoked his powers u/s. 263 of the Act on the assessment order passed u/s. 143(3) r.w.s. 144B of the Act, the same has already been rectified vide an order dated 29.07.2021 u/s. 154 r.w.s. 143(3) of the Act, thus, the order passed u/s. 263 of the Act is unsustainable and on this ground also the order passed by the ld. CIT(E) u/s. 263 of the Act stands quashed.
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2024 (7) TMI 899
Levy of penalty u/s 271(1)(c) - Disallowance u/s 40A(3) and Disallowance of loading and unloading expenses - HELD THAT:- Mere disallowance of expenses u/s 40A(3) in the present case would not invite the levy of penalty for concealing or furnishing of inaccurate particulars of income. As undisputed fact that all particulars relating to payments made in violation of the provisions of Section 40A(3) were disclosed by the assessee in its Tax Audit Report filed in terms of section 44AB of the Act, along with the return of income. No discrepancy has been pointed out by the Revenue in the contention of the assessee that he harboured a bona fide belief that these payments having been made in compelling business circumstances, they fell in the exceptions to the provisions of Section 40A(3) as brought out in Rule 6DD of the Income-tax Rules, 1962. It is not the case of the Revenue that the explanation furnished by the assessee for bonafidely believing that these payments were excluded from the purview of Section 40A(3) of the Act were found to be false. There was no concealment of the particulars of income relating to payments made in violation of Section 40A(3) by the assessee. We completely agree with the ld. Counsel for the assessee that it is simply a case of levying penalty on disallowance of claim of assessee, when the assessee admittedly had disclosed all particulars relating to the issue of payments made in violation of section 40A(3) of the Act and had also bonafidely believed the same as not covered under the said section. The assessee we hold ,cannot be charged with having concealed or furnished inaccurate particulars of income so as to impose penalty u/s 271(1)(c) of the Act. As decided in PRICE WATERHOUSE COOPERS (P.) LTD. [ 2012 (9) TMI 775 - SUPREME COURT] where the assessee was noted to have disclosed all particulars of expense and the assesses explanation for not suo moto disallowing the same as being done by mistake, was found bonafide by the court, penalty levied u/s 271(1)(c) of the Act was deleted by the Apex court. Disallowing loading and unloading expenses was a mere ad-hoc disallowance. The disallowance was not based on any finding of fact that the assessee had claimed bogus expenses of loading and unloading. It was made merely because the claims were not fully verifiable and therefore it was considered fit to disallow 15% of the expenses incurred by the assessee on lump-sum basis . Also while holding that the expenses not verifiable, the ITAT in its order had gone on to note that these expenses of loading and unloading were made to small workers in cash on self-made vouchers, and because of the nature of these expenses, it was difficult to check and verify them. It is evident that again it is not a case of finding the assessee to have claimed bogus expenses. It is merely because of the nature of the expenses having been incurred in relation to small workers on self-made cash vouchers that it was found that they were not completely verifiable. There is no doubt that such disallowances do not tantamount to the assessee having concealed or furnished any inaccurate particulars of income. They are mere ad-hoc disallowances, which, Courts have repeatedly held, do not attract any levy of penalty. Assessee appeal allowed.
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2024 (7) TMI 898
Penalty u/s 271(1)(c) - quantum addition has been sustained on estimated basis by adopting net profit rate of 18.40% - HELD THAT:- The additions which have ultimately been sustained are purely estimated additions. It could also be seen that substantial quantum addition has already been deleted by Ld. CIT(A) considering the findings given by Ld. AO in the remand reports. Therefore, it could very well be said that the action of Ld. AO in making the quantum additions, at the first instance, was only on estimated basis. In such a scenario, the penalty is not sustainable in law considering the ratio of Hon ble High Court of Madras in the cited case law of CIT vs. P Rojes [ 2013 (3) TMI 264 - MADRAS HIGH COURT] Mere making of an incorrect claim in law cannot tantamount to furnishing of inaccurate particulars. See Reliance Petroproducts (P) Ltd [ 2010 (3) TMI 80 - SUPREME COURT] . Thus, respectfully following the same, we delete the impugned penalty on merits, in all the three years. Legality of penalty notice in absence of specific charge in show-cause notice - As we are not impressed with all these grounds considering the facts that several notices were issued to the assessee after framing of assessment order as well as after first appellate orders in quantum appeals. However, the assessee failed to make any effective representation therein and failed to raise any such objections during those proceedings. Therefore, we are not inclined to concur with the legal grounds at this stage of proceedings. Appeals stands partly allowed.
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2024 (7) TMI 897
Addition of Long term capital gain - Determination of indexed cost of acquisition claimed by the assessee - HELD THAT:- As on the date of the conveyance deed, the value of the property is more than Rs. 45 lakhs. Moreover, there is direct evidence on record, which indicates that the assessee, in fact, had paid the consideration of Rs. 45 lakhs to Mr. Rajan Chanana through cheques for purchasing the property. Therefore, the cost of acquisition, insofar as the assessee is concerned, has to be taken at Rs. 45 lakhs and indexation benefit has to be given to the assessee based on the cost of acquisition of Rs. 45 lakhs. We direct the AO to delete the addition of Rs. 33,73,120/- made towards long term capital gain and accept the computation of income of the assessee. This ground is allowed. Denial of benefit of carry forward of capital loss - assessee had claimed long term capital loss for both properties sold, but the AO did not allow set off and carry forward of the long term capital loss - As per DRP direction though AO set off the long term capital gain computed on sale of commercial property against long term capital loss on sale of residential property, however, he did not allow carry forward of the long term capital loss remaining after set off - HELD THAT:- We are of the view that the assessee is entitled to avail the benefit of carry forward of long term capital loss. Accordingly, the Assessing Officer is directed to verify the issue factually and allow carry forward of long term capital loss claimed by the assessee. This ground is allowed.
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2024 (7) TMI 896
Rejection of books of accounts u/s 145(3) - addition applying gross profit rate of 18.94% on entire turnover - survey action u/s. 133A as carried out at the business premises of the assessee firm - certain loose papers / documents were found and impounded, and the statements of the partner of the assessee firm were recorded - During the recording of statement the partner of the firm surrendered a sum as undisclosed income [Advances Given to Various persons, amount found as excess stock then the stock recorded in the books and bogus expenses] HELD THAT:- Provision of section 145(3) can be invoked When the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee, When the method of accounting provided in Section 145 (1) has not been regularly followed by the assessee and When the accounting standards notified under Section 145 (2) have not been regularly followed by the assessee. From the observations recorded in the order of the lower authority none of the condition is satisfied and thus same is not evident from the finding of the lower authority. Not only that the bench also observed that when the provision of section 145(3) is to be invoked the assessment is to be completed as per the manner provided in section 144 of the Act and the proper opportunity is required to be given by pointing out the defects in the books of account which we observe that the same is not followed and the order is passed u/s. 143(3) of the Act which is also not correct. We get strength to support our view based on the provision of the Act and decision of Pink City Developers [ 2017 (11) TMI 1082 - RAJASTHAN HIGH COURT] - Thus, we considered ground no. 1 in favour of the assessee. Gross profit added instead of excess stock found - The assessee has in the assessment proceeding placed on record all the possible documentary evidence in support of such claim but all the evidences furnished were brushed aside, without assigning a single reason / discrepancy in the same and that too without following the provision of section 145(3) of the Act. As we have while dealing with the ground no. 1 held that without finding any faults in the books of account the same cannot be rejected. Not only that if the revenue intends to invoke the provision of section 145(3), there is a procedure to be followed which has not been followed. We note that the addition was made merely based on the fact that the assessee has disclosed the excess stock and the same is not adhered to in full by the assessee. The apex court in the case of CIT Vs. S. Khader Khan Son [ 2013 (6) TMI 305 - SC ORDER] held that statement itself cannot, by itself be made the basis for making the addition. Thus, merely the assessee has disclosed the unaccounted excess stock in the statement the purchases which remained to be accounted and subsequently demonstrated with evidence that none of the purchases were in cash and is supported by the relevant evidence, we do not find any single reason not to believe the contention of the assessee. As we also note that all the parties are regular from where the assessee has already made purchases and the transaction are not solitary transactions, all the relevant evidence for purchases made were submitted showing the bill, transport receipt and freight payment etc. Merely this list is of 47 parties and the amount based on the documents placed on record that purchases cannot be considered as undisclosed, and the credit of that purchases cannot be denied. Balance amount of excess stock since the assessee has already based on the affidavit and Chartered Accountant Certificate demonstrated that the same is forming part of the closing stock declared by the assessee. The bench noted that this certificate of CA is of the same CA who has signed the annual audited accounts and that is why the assessee at the request of the bench submitted that certificate of the same CA to confirm the contention raised by the assessee. Since this evidence in the form of the additional evidence called for from the assessee at the instance of the bench the same is very well fall within the power of the bench as per rule 29. As it is seen that the credit for purchase remained to be accounted for an amount of Rs. 82,40,125/- expenses vouchers of Rs. 8,58,956/- and sales bills of Rs. 18,57,710/- the actual excess stock figure works out at Rs. 53,17,973/- is incorporated in the books as part of the closing stock by the assessee and thereby offered the additional income we hold that there is no separate addition is required to be made in the hands of the assessee. Based on these observations ground no. 1.1 1.2 are allowed. Bogus expenses declared by the partner of the assessee firm at the time of survey - Cash available with assessee is of its own and though expenses were booked on paper was in fact not booked and thus, the cash of that expenses was very well available and remained with assessee to advance the money to the job worker. Therefore, the contention that the assessee was having the cash balance to the extent of Rs. 10,77,000/- to make the advances so disclosed and the benefit of the telescoping cannot be denied merely on the ground that there is no cash flow statement made available by the assessee. Based on these observations the ground no. 1.3, 1.4, 1.5 1.6 raised by the assessee are allowed.
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2024 (7) TMI 895
Revision u/s 263 - payment of on-money - as per CIT assessee has made cash payment for the purchase of shop and the AO has failed to consider the on-money payment - HELD THAT:- In the case of the assessee AO has called for various details and after examining details, the AO has passed the order. It has been held in various decisions that no revision u/s 263 can be made where the assessment orders are passed after due verification and after examining the material available as well as after seeking the explanation from the assessee. Since the AO in the instant case has made detailed enquiry in the case of the assessee and in the case of spouse of the assessee. Further, the so-called shop were not purchased by the assessee and in fact were purchased by the wife of the assessee, therefore addition, if any, on account of payment of such on-money can be made only in the hands of the spouse of the assessed and not in the hands of the assessee. No error in the order of the AO so far as the payment of on-money in respect of shop is concerned. It is the settled proposition of law that for invoking jurisdiction u/s. 263 of the Act, the twin conditions, i.e. the order must be erroneous and it must be prejudicial to the interest of the Revenue must be satisfied - Assessee appeal allowed.
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2024 (7) TMI 894
Estimating the Net Profit - applying NP rate of 5% on Estimated Gross Receipts against net Profit as per Audited Profit Loss Account - second round of litigation HELD THAT:- Since the dispute relates to the estimation of profit, we have considered the certificate of Chartered Accountant produced, wherein the profit rate is certified based on the records already available in the form of audited accounts for A.Y 2009-10 to 2014-15. The year under dispute relates to A.Y 2013-14, the previous two years net profit declared are more or less similar to the year under consideration. As it is seen that in the A.Y 2012-13, net profit was @ 1.10% whereas in the year under consideration, turn over has increased and net profit shown by the assessee @ 1.19%. Since in the case of the assessee for past years i.e. A.Y 2011-12 2012- 13, the profit declared by the assessee was accepted considering the similar set of facts. As it is evident from the first round of litigation that the directors were ill and were passing through severe financial crunch and were not in a position to pay the self assessment tax and thereby the non-compliance and the assessment completed based on estimation of profit. The assessee subsequently when the proceedings were pending before the ld. CIT(A) and that of ITAT paid the taxes and matter was set aside and in that profit in this year profit was estimated @ 5 %. But looking to the past history of profit and assessee s nature of business estimation of profit @ 5 % is on higher side and at the same time since the assessee has not provided the details in assessment proceeding we deem it fit in the interest of justice to considered higher disclosed by the assessee @ 1.33% in the Assessment Year 2011-12, which should be considered as basis for estimating the net profit for the year under consideration. Based on these observations, the ground No. 1 raised by the assessee is partly allowed. Separate Addition towards Income from Interest and commission and Income from Rent - submission of additional evidences - HELD THAT:- We allow that additional evidence and direct the ld. AO to verify whether the assessee has disclosed the income towards the interest and commission and rent and thereby the profit is offered no separate addition is called for. Based on these observations, ground Nos. 2 3 raised by the assessee are allowed for statistical purposes.
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2024 (7) TMI 893
Addition as commission under the head income from other sources - whether the AO was justified in making the addition to the income of the assessee or not? - disallowing the expenses claimed by the assessee in the name of coordination settlement expenses - HELD THAT:- It was not the AO who made the addition as income under the head income from other sources , but it was the assessee himself who voluntarily declared such an income in his return of income. It is also apparent that in the absence of any evidence in support of the expenses incurred, the AO only disallowed the deduction claimed by the assessee towards expenses claimed in the name of coordination and settlement expenses. It is also important to observe here that the case of the assessee was selected under CASS for the reason of claiming deduction under the head income from other sources . Therefore, it was the duty of the AO to verify the claim of deduction made by the assessee in his return of income. In the instant case the assessee failed to provide any proof in support of expenses/deduction claimed by him. It is worthwhile to mention here that legislature has provided certain procedure under the Income Tax Act the assessee cannot chose to show income or expenses according to his own choice. Undoubtedly, the assessee was in receipt of income in his hands, which was voluntarily declared by him in his return of income and the deduction towards expenses claimed by him were not supported by any vouchers. It is also found that at the time of return filing there was no civil suit pending against the assessee, it was only 3 years later, when the civil suit was filed against the assessee therefore it was an afterthought to cover his mistake in return filing in the guise of civil suit, when the case was selected for scrutiny. It is pertinent to mention here that the assessee is still fighting civil suit against the purchaser claiming that the amount is still due from the purchaser. Under the above facts in the circumstances of the case, we find that even after 8 years the assessee is not willing to refund the amount already received by him, at the same time does not want to pay the legitimate taxes to the revenue. Therefore, in our considered opinion that AO has not committed any error in disallowing the expenses claimed by the assessee in the name of coordination settlement expenses, in the absence of any supporting evidence, which consequently resulted in income in the hands of the assessee. AO has not committed any error in accepting the income disclosed by the assessee himself in his return of income under the head income from other sources for which the assessee has also claimed relevant TDS therefore considering the totality of the facts, we do not see any infirmity in the order passed by LD CIT(A)/NFAC therefore does not require any interference from this Tribunal - Decided against assessee.
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2024 (7) TMI 892
Assumption of jurisdiction u/s 153A - Period of limitation - Unexplained credit u/s 68 - HELD THAT:- As per Explanation-2, asset includes immovable property being land and building or both, share and securities, loans and advances, deposits in bank accounts. In the present case, AO has doubted the share capital issued by the assessee during the year. The same is nothing but a liability for the assessee. Therefore, the jurisdictional requirement to make the impugned addition, in the present case, has not been satisfied by AO. AO could go beyond 6 years only in a case where there was certain income which escaped assessment and the same was represented in the form of an asset. The same is missing in the present case. CIT(A), in a very elaborate manner, has clinched the issue of jurisdiction and arrived at a conclusion that share capital would not come under the definition of asset since it represent liability of the assessee. Therefore, the satisfaction arrived at by Ld. AO to treat the share capital as an asset was an erroneous attempt and accordingly, the jurisdiction was not legally tenable. We concur with the same and accordingly, find no reason to interfere in the impugned order, in any manner. Our view is duly supported by the decision of Goldstone Cements Ltd. [ 2023 (10) TMI 278 - GAUHATI HIGH COURT] wherein the facts were identical held AO could not assume jurisdiction to make addition of other items viz. liabilities etc. Such a scenario belies the claim of Ld. AO that while issuing notice u/s 153A, he was in possession of the jurisdictional fact i.e., undisclosed asset valued Rs. 50 Lacs or more had escaped assessment which constitute the key to open the lock and then reassess the income of the assessee for the 7th to 10th year. When AO fails to make any addition for the undisclosed asset then it tantamount to admission that there was no jurisdictional fact present before AO in the first place and the necessary corollary would be that AO wrongly assumed jurisdiction u/s 153A and therefore, he could not proceed further to make other items of additions / disallowance. Decided against revenue.
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2024 (7) TMI 891
Addition of alleged on-money on sale of certain property - reliance on contradictory statements and retraction by the related party - HELD THAT:- Pursuant to search action u/s 132, a notebook was found which, inter-alia, contained notings of loans obtained by Shri R.Sabapathy. No dates were mentioned against these entries. Based on the statement of Shri R.Sabapathy, Ld. AO alleged that Shri R.Sabapathy received loan from Shri Rakesh of Swarna Shilpi out of which an amount of Rs. 5 Crores was utilized as payment to assessee as on-money against purchase of impugned property by his sister. However, this statement was retracted within a span of 3 months and Shri R.Sabapathy stated that loan of Rs. 17 Crores was received from Shri Rakesh whereas the balance of Rs. 8 Crores was out of sale of excess stock. It could thus be seen that Shri R.Sabapathy has taken contrary stand and his statement could not be held to be credible one. As the statement of Shri R.Sabapathy was modified within a short span of time and therefore, the same could not be accepted as credible one. No concrete reliance could be placed on the same to make impugned addition in the absence of any other evidence on record. We accept another argument of Ld. AR that the value as shown in the sale deed was accepted for stamp duty valuation purposes - No valuation whatsoever has been undertaken by Ld. AO and no exercise is shown to have been carried out by Ld. AO to establish that the market value of the impugned property was much more. In the absence of such a finding, the impugned additions are merely unsubstantiated additions which could not be sustained in law. It is trite law that no addition could be made on mere presumption and suspicion. The Ld. AO has to bring on record cogent positive evidences to sustain addition based on third party statement / material. The assessee has, all along denied impugned payments and the assessee, therefore, could not be expected to prove the negative. See P.V.Kalyanasundaram [ 2006 (2) TMI 79 - MADRAS HIGH COURT] wherein held Ld. AO did not conduct any independent enquiry relating to the value of the property purchased or did not refer the valuation to valuation officer and merely relied on the statement given by the seller, the same would be fatal to additions. We would hold that impugned additions are not sustainable in law. The same stand deleted. Assessee appeal allowed.
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2024 (7) TMI 890
Rejection of final approval u/s 80G(5)(iii) - application was not submitted within the prescribed time limits - provisional approval has also been granted to the assessee-institution - as argued assessee had already commenced its activities since 2002 i.e. even prior to grant of provisional approval, and since the time period for making application mentioned in Clause (iii) to First Proviso to section 80G(5) of the Act had already expired, therefore, the assessee could not be granted final approval u/s 80G(5) HELD THAT:- Institutions which stood already approved u/s 80G(5)(vi) on the date of Amendment brought to section 80G of the Act by Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 have to re-apply for fresh registration under Clause (i) to the First Proviso to section 80G(5) of the Act and those institutions have to be granted approval for five years by the ld. CIT(Exemption) without any enquiry. The prescribed date for final application for approval under Clause (i) to the First Proviso to section 80G(5) of the Act was stipulated as three months from 1st Day of April 2022. However, the CBDT from time to time extended the date for filing of the said application under Clause (i) to the First Proviso to section 80G(5) of the Act and finally vide Circular No.6 of 2023 dated 24.05.2023, the said date was extended upto 30.09.2023. As provisional approval has also been granted to the assessee-institution from 28.06.2022 to A.Y 2025-26, therefore, the assessee-trust was entitled to apply for final approval and there was no bar to the institution for making such application. This issue has already been adjudicated upon by the Coordinate Bench of the Tribunal in the case of Vivekananda Mission Asram vs. CIT [ 2023 (12) TMI 1298 - ITAT KOLKATA] wherein held that after grant of provisional approval, the application cannot be rejected on the ground that the institution had already commenced its activities even prior to grant of provisional registration. Under such circumstances, the date of commencement of activity will be counted when an activity is undertaken after the grant of provisional registration either under Clause (i) or Clause (iv) to First Proviso to section 80G(5) of the Act. CIT(Exemption) is directed to grant final approval to the assessee under Clause (iii) to First Proviso to section 80G(5) of the Act, if the assessee is otherwise found eligible. It is directed that the ld. CIT(Exemption) will decide the application of the assessee for final approval as expeditiously as possible but not later than two months from the receipt of this order. It is further directed that, if the assessee is granted final approval by the ld. CIT(Exemption) then, the benefit of approval u/s 80G of the Act, if it was available to the assessee prior to the Amendment brought vide Amending Act of 2020, will be deemed to have been continued without any break. Assessee will not be deprived of the benefit during the time period falling between 31/03/2021 and the date of grant of provisional approval under clause (iv) i.e., 28/06/2022, due to technical errors occurred in making the application under the relevant provisions of the Act because of the confusion and misunderstanding on part of the assessee as well as on part of the ld. CIT(Exemption) in properly interpreting the relevant provisions. Appeal of the assessee is treated as allowed for statistical purposes.
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2024 (7) TMI 889
Assessment u/s 153A - Addition u/s 14A - incriminating material for deduction claim found during search or not? - HELD THAT:- Observations made by the Ld. AO are routine in nature which have been found from the accounts of the assessee and submissions made thereon. It is also undisputed that the year under consideration is an unabated year considering the date of conduct of search within the meaning of section 153A of the Act. Admittedly, no incriminating material has been referred to which has been found in the course of search of the assessee for the impugned assessment year. As respectfully following the decision of Abhisar Buildwell (P.) Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT ] as no incriminating material has been unearthed during the course of search for the relevant assessment years, no addition can be made by the AO in the assessments. Consequently, the assessment orders passed for the impugned assessment years stand quashed. Decided against revenue.
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2024 (7) TMI 888
Addition u/s 68 - assessee is found to have obtained loan from the bogus accommodation entry provider - HELD THAT:- In this case, the assessee was directed to produce the lender but no efforts were made by the assessee to produce the lender. Thus, the enquiry by AO was prevented by the assessee. It is rather unusual that a company which gives loan to the assessee from year to year of huge sum and assessee fails to produce that party in each of the year and still gets away from the rigors of section 68 of the Act. The decision of the Hon'ble Bombay High Court reported in Mr. Gaurav Triyugi Singh Versus The Income Tax Officer-24 (3) (1) , Mumbai [ 2020 (1) TMI 1153 - BOMBAY HIGH COURT ] is in favor of the Revenue which categorically says that assessee is duty bound to explain the identity of the creditor, genuineness of the transaction and creditworthiness of the creditor. AO did not ask the assessee to prove the source of source but asked the assessee to prove the source of credit in the books of the assessee. In view of this the facts in this case of the assessee for A.Y. 2013-14 are distinguishable and does not apply for this year. In view of this, we restore this appeal back to the file of the AO with a direction to the assessee to produce the directors of Nazar Impex Pvt. Ltd. before the AO. AO may examine the same and after detail enquiry decide the issue about the loan from Nazar Impex Pvt. Ltd. We also clarify that there is no requirement for cross examination of the assessee because the assessee is required to prove the three ingredients of cash credit independently. AO is also directed to not to get swayed by the statement of confession and subsequent retraction of several accommodation entry providers but as to independently examine these transactions according to the parameters of Section 68 of the Act. In view of this, the appeal filed by the assessee is allowed for statistical purposes.
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2024 (7) TMI 887
Validity of reopening of assessment - non disposal of objections raised against reopening of assessment - disallowance of loss incurred on account of purchase and sale of equity shares - assessee-company has filed its return under section 139(1) and processed u/s 143(1)(a) - HELD THAT:- The reopening proceedings deserve to be quashed solely on the ground that AO has not disposed of the objections raised by the assessee to the reasons recorded. Reasons to believe or suspect - Secondly, the re-opening proceedings deserve to be quashed on the ground that no proper reasons have been recorded for reopening of assessment and the reasons recorded are merely based on the information received from Investigation Wing and cannot be treated as reasons to believe but are merely reasons to suspect and mere suspicion of the AO towards escapement of income, is not permitted u/s 147 of the Act to reopen an assessment. Therefore, the reassessment notice u/s 148 giving rise to jurisdiction under section 147 of the Act is quashed and consequently the reassessment order in question against appeal are also similarly quashed and set aside. The grounds of appeal are allowed.
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2024 (7) TMI 886
Disallowance of claim of depreciation on computer software - depreciation @60% or @25% - HELD THAT:- The software is guiding the hardware and also an integral part of the hardware. Considering the order of the co-ordinate bench in assessee s own case [ 2019 (5) TMI 689 - ITAT MUMBAI] in our considered view, the assessee has rightly claimed deprecation @60%. Disallowance of sales promotion expenses - whether AS-7 will be applicable in case of assessee or not? - HELD THAT:- As per the documents, we perused that the assessee is purely a civil construction developer and running the project at Mulund. The AS-7 is purely effective for the contractor in construction not for developers. We respectfully followed the judgement of co-ordinate bench of ITAT, Mumbai Bench in the case of Layer Exports P Ltd [ 2016 (10) TMI 1024 - ITAT MUMBAI] So the question of capitalizing the project cost of sale promotion is unjustified. We set aside the appeal order on this issue and the addition is deleted. Addition of share premium u/s 56(2)(viib) - assessee at a higher rate allotted the share - AO determined the share at Rs. 4.38 per share whereas the valuer made the valuation made at Rs. 69.41 per share and that the valuation report was not furnished to AO during the course of assessment proceedings - HELD THAT:- The assessee completed the valuation during the transfer of shares from intercompany adjustment. Rule 11UA was duly followed and assessee completed the valuation in NAV with a rate of 69.41 per share. On the other hand, the revenue had calculated without rejecting the valuation report of the merchant banker duly placed by the assessee at the time of assessment proceedings. The issue was duly resolved by the Ld.AR by inviting our attention where the proof is attached that the assessee placed the valuation report before the Ld. AO. The change of method of valuation cannot be done by Ld.AO. We fully relied on the order of PNP Maritime Services (P.) Ltd [ 2024 (7) TMI 393 - ITAT MUMBAI] Shanta Blankets (P.) Ltd [ 2024 (4) TMI 836 - ITAT DELHI] The Ld.AR relied on the decision in the case of BLP Vayu (Project-1) P. Ltd [ 2023 (6) TMI 209 - ITAT DELHI] From talking tour from this order, no addition can be made under section 56(2)(viib) of the Act in case of genuine commercial transaction in absence of any amount of unaccounted money of the assessee relied on Cinestaan Entertainment Pvt. Ltd [ 2021 (3) TMI 239 - DELHI HIGH COURT] . Both the revenue authorities have not rejected the valuation report duly prepared under rule 11UA of the Rule. Addition made by the Ld.Assessing Officer is hereby deleted. Erroneous action of the Ld.AO calculating the total tax payable by the assessee taking into consideration of loss assessed under the head PGBP - We direct the Ld.AO to recompute the computation and give the effect accordingly.
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2024 (7) TMI 885
Royalty receipts/Fee For Technical Services ('FTS') - receipts under Loyalty Programme, Reservation Fee and Marketing Fee - assessee is a private limited company incorporated in Singapore within the meaning of Article 4 of the India-Singapore Double Taxation Avoidance Agreement ('DTAA'/ 'Tax Treaty') - HELD THAT:- On perusal of the facts, it is seen that both the AO and the DRP have relied upon their findings/directions for the assessment year 2015-16 for this year also while making the additions for AY 2020-21. On similar facts, the co-ordinate Bench in assessee s own case [ 2024 (1) TMI 490 - ITAT DELHI] for AY 2015-16 held that the amount in dispute cannot be qualified as royalty and directed the AO to delete the addition. Therefore, addition is hereby deleted. Ground No.1 of the appeal is allowed. Computing of gross tax liability at incorrect rates (inclusive of surcharge and education cess) without taking into consideration, the applicable tax rates as per India Singapore DTAA in the computation sheet accompanying the final assessment order u/s 143(3) - AO is directed to verify the above grievance of the assessee and apply the correct tax rate in accordance with law. Ground no.3 is allowed for statistical purposes.
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2024 (7) TMI 884
Penalty u/s 271AAA - additional income so surrendered on behalf of the assessee firm in search and seizure operation - Onus to prove - HELD THAT:- The undisclosed income so surrendered and admitted during the course of search has to fall within the four corners of the definition of the undisclosed income and only in situation where it satisfy the said definition, the levy of penalty can be said to be justified and not otherwise. It is for the AO to record a specific finding that undisclosed income as so defined has been found based on tangible verifiable material found during the course of search and the onus is thus on the AO to satisfy the conditions before the charge for levy of penalty is fastened on the assessee. In the instant case, CIT(A) has returned a finding that the surrender made by the appellant as apparent from the statement of appellant firm's partner recorded u/s 132(4) of the Act was made to cover any discrepancy in the documents and books seized during the course of search, work in progress and stock. CIT(A) further held that in absence of any discrepancy pointed out, the appellant's admission of undisclosed income does not fall in the definition of undisclosed income which is the very basis of giving immunity from penalty u/s 271AAA as all the sub-clauses of section 271AAA of the Act are related to undisclosed income . CIT(A) has therefore rightly held that no specific discrepancy has been pointed out and merely the fact that surrender has been made by the assessee to cover any potential discrepancy, the same doesn t fall in the definition of undisclosed income as so defined. We are in total agreement with the said reasoning of the ld CIT(A) and fully endorse the same as we have held earlier that the essential condition which needs to be satisfied before penalty is levied is that there is an undisclosed income of the specified previous year as found during the course of search. Inspite of the same, we find that the ld CIT(A) has gone ahead and confirmed the penalty and it is here that we donot agree with him. It is for the Assessing officer to record a specific finding that undisclosed income as so defined has been found based on tangible verifiable material found during the course of search and the onus is thus on the AO (and not on the assessee) to satisfy the conditions before the charge for levy of penalty is fastened on the assessee. The assessee might be seeking immunity under section 271AAA(2) but before that the charge for levy of penalty has to be satisfied by the AO and for that, it for the AO to record a specific finding as to the fulfillment of conditions specified therein and which apparently has not been fulfilled in the instant case. Thus, we are of the considered view that there is no justifiable and legal basis for levy of penalty u/s 271AAA and the same is hereby directed to be deleted. Appeal of the assessee is allowed.
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2024 (7) TMI 883
TDS u/s 195 - disallowing expenses paid to various non-resident parties for non-deduction of TDS - addition u/s 40(a)(i) - HELD THAT:- The assessee before us now stated that the Tribunal again and again has restored the matter back to the file of the CIT(A) or AO but none of the authorities have looked into the details given regarding the fact that these parties have declared the income in their respective returns of income and once the assessee has provided the details in respect of recipient parties that they have declared the respective income in their return of income, no disallowance u/s. 40(a)(i) of the Act is to be made in view of second proviso for the reason that this issue has been settled in the assessee of Ansal Land Mark Township (P) Ltd. [ 2015 (9) TMI 79 - DELHI HIGH COURT] As against the same, the CIT(A)-NFAC for rejection relied on the decision of Prudential Logistics and Transports [ 2015 (2) TMI 847 - KERALA HIGH COURT] and Thomas George Muthoot [ 2015 (7) TMI 810 - KERALA HIGH COURT] We noted that when there was contrary decision of two High Courts that is of non-jurisdictional High Court, beneficial to the assessee is to be applied and adopted. For this proposition of ours, we are relying on the decision of Vegetable Products Ltd. [ 1973 (1) TMI 1 - SUPREME COURT] - Assessee is entitled for claim of deduction being amount paid to non-resident for expenses for the reason that the recipient parities have already declared the above receipts in their respective return of income and assessee has filed complete details before us and hence, the same cannot be disallowed by invoking the provisions of section 40(a)(i) of the Act. Appeal filed by the assessee is allowed.
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2024 (7) TMI 882
TP Adjustment - ALP of the royalty receipts - differences in the amounts reflected in Form 3CEB of the Assessee vis- -vis its group entities - as submitted TPO had not computed the ALP of the international transactions by following any of the prescribed methods u/s 92C but had proceeded to determine the ALP on the basis of differences in reporting amounts by the assessee and its AEs which is not prescribed under any method and hence amounts to an ad-hoc addition, which was not permissible under transfer pricing provisions HELD THAT:- We observe that the assessee is earning royalty income for allowing the use of the Trade name. Assessee is registered in the USA and therefore follows accounting principles in accordance with the relevant US GAAP and follows calendar year of accounting. Therefore, there are bound to be some differences when it prepares its accounts and files return of income in India, as the method of revenue recognition for the USA entity and the provisioning of expenditure for the Indian entities are bound to be different. When we peruse the agreement in relation to the royalty it is evident from Article VI (A) of the agreement that the method of computation of royalty for the assessee is also different and is based on the financial year sales of the group entities that end within the calendar year. However, when the group entities compute their royalty payments, it would be based purely on financial year figures on a real time basis as they have complete visibility regarding their external sales on which they have to pay royalty. Further, the group entities would also need to record royalty expenses following the accounting principle of conservatism irrespective of whether the assessee has disclosed the said figures as income in its books of accounts. Also examined the reconciliation submitted by the Assessee before the lower authorities and it is borne from record that the Assessee has been able to reconcile substantially the impugned differences and the major reason for the differences was only on account of timing differences in recognition of revenue. Thus, TP additions on royalty receipts by the assessee made by the TPO only on account of timing differences are not sustainable in law, since the same does not affect the arm s length determination of a transaction and in any case, there is no or very minimal loss actually caused to the exchequer on account of such differences so as to warrant any income addition to the total income of the assessee. TPO has not determined the ALP of the international transactions by following any of the prescribed methods but has made the transfer pricing addition by determining the ALP of the royalty receipts merely on the basis of the differences in the amounts reflected in the Form 3CEB/financial statements of the assessee and the AEs. Such an approach of the TPO is quite alien to transfer pricing provisions and is nothing but ad-hoc in nature. Thus we hold that such an ad-hoc approach of the TPO, without appreciating the functions, assets and risks in relation to the international transactions and without following the methods prescribed under section 92C of the Act, is completely contrary to law and does not serve the purpose of the Legislature in introducing Chapter X under the Income-tax Act. TPO has to determine the ALP by following any one of the prescribed methods alone and the transfer pricing addition cannot be made on an ad-hoc basis. See Johnson and Johnson Limited [ 2017 (3) TMI 1520 - BOMBAY HIGH COURT] and M/S. LEVER INDIA EXPORTS LTD. [ 2017 (2) TMI 120 - BOMBAY HIGH COURT] - Assessee appeal allowed.
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2024 (7) TMI 881
Rectification of mistake - recalling order passed in lieu of subsequent/later judgment - review based on subsequent judgment of the Hon ble Supreme Court - Delayed deduction of deposits on account of employees contribution to PF and ESIC - Deposit after due dates specified in PF /ESIC Acts, but before the due date filing of return as prescribed in Section 139(1) which was allowed - Revenue seeks to recall of the order on the ground that the issue of claim of deduction is not allowable, in view of the subsequent judgment of the Hon ble Supreme Court in the case of Checkmate Services P Ltd. [ 2022 (10) TMI 617 - SUPREME COURT ] as decided the controversy in favour of the department - as argued by assessee that once the matter has attained finality, then based on subsequent judgment of a Higher Court, cannot be the ground to recall or to review the order within the scope and ambit of Section 254(2). HELD THAT:- As decided in Govt. of NCT of Delhi vs. M/s. K.L. Rathi Steels Limited and Others [ 2024 (7) TMI 811 - SUPREME COURT] issue of power to rectify error and power to review and after referring to catena of decisions of the Hon ble Supreme Court categorically held that, if the judgment has been passed by the Court following another judgment and subsequently by later judgment, the decision has been overruled or reversed, cannot have the effect of reopening or reviewing the former judgment based on following overruled judgment nor can the same be reviewed. The aforesaid judgment clearly clinches the issue that the subsequent judgment of the Hon ble Supreme Court in the case of Checkmate Services P Ltd. [ 2022 (10) TMI 617 - SUPREME COURT ] the earlier judgment passed by the Tribunal based on the binding precedents cannot be recalled or reviewed. Once this is the law of the land, then we are unable to appreciate the contention of the Revenue that the judgment of the Tribunal should be recalled which has been passed following catena of judgment of the Hon ble Jurisdictional High Court and other High Courts prevalent at that time in light of the subsequent judgment of the Hon ble Supreme Court this would be against the principle of law laid down by the Hon ble Supreme Court in the aforesaid cases specially once this law has been upheld by the Hon ble Supreme Court in various judgments which we are bound to follow. Even otherwise also once in the latest decision in the case of CIT vs. Reliance Telecom Ltd. [ 2021 (12) TMI 211 - SUPREME COURT ] the Hon ble Supreme Court have clearly held that the powers u/s. 254(2) of the Income Tax are akin to Order XLVII Rule 1 CPC, then it cannot be held that scope of power u/s. 254(2) is beyond and much larger than scope of review as given in the Order XLVII Rule 1 of CPC. In fact, the scope of Section 254(2) is much limited and the scope of review is much wider. Thus we hold that order of the Tribunal cannot be recalled based on the subsequent judgment of the Hon ble Supreme Court when the order of the Tribunal had attained finality between the parties. Consequently, the Miscellaneous Application filed by the department is dismissed.
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2024 (7) TMI 880
Addition u/s 68 - unexplained cash credit found in the books of the assessee - onus of proving the source of cash receipt, which was on the assessee could not be satisfied - HELD THAT:- Burden cast upon the assessee to place its explanations duly supported with corroborative evidence are found to be inadequate at both the assessment as well as appellate stage, however, in view of additional evidence, we found substance in the contentions raised by the AR, but, subject to verification of such evidence so as confirm the genuineness of the transactions. Thus, we are of the considered view that the issue raised by the department deserves to be restore to the file of AO to examine the same and decide the issue afresh in terms of facts and the provisions of law. It is also directed that the assessee shall be provided with reasonable opportunity of being heard and to produce all the significant evidence and contentions which were raised before us. Resultantly, in the interest of principle of natural justice, we set aside the order of Ld CIT(A) and restore the matter to the files of AO. Accordingly, the issues raised filed by the department is partly allowed for statistical purposes.
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2024 (7) TMI 879
TP Adjustment - ALP of the broking commission earned - Selection of MAM - Considering brokerage rate of all Non- AEs for the comparability purposes - TPO has rejected the TNMM method since the assesse has provided broking services to non- associate enterprise along with its associate enterprises, therefore, CUP method was selected - HELD THAT:- As following the decision of ITAT of earlier years [ 2023 (6) TMI 1357 - ITAT MUMBAI ] it is held to consider both overseas independent clients while applying CUP method. Accordingly we direct the TPO to consider both overseas and domestic clients while applying CUP method as directed. No adjustment of marketing cost while applying CUP method not granting adjustment of research cost and 50% of volume while applying CUP method - assessee submitted that there were functional difference in the services provided by the assessee to AEs and non-AEs therefore the same was not comparable and requested for adjustments for marketing cost, Research support and volume - HELD THAT:- With the assistance of ld. Representative we have perused the decision of ITAT in the case of the assessee itself for assessment year 2003-04 [ 2023 (6) TMI 1357 - ITAT MUMBAI ] wherein the ITAT in the case of the assessee itself after following the decision of ITAT, Mumbai for assessment year 2005-06 wherein held that adjustment of 40% will be allowed on marketing cost adjustments and research cost. Thus, we direct TPO to give adjustment of 40% to the assessee while determining the arm s length of international transactions of brokerage and commission as directed. Computing upward adjustment by considering addition instead of rectified amount - As assessee submitted that TPO had suo moto rectified the addition vide Rectification order therefore, we restore this issue to the file of the assessing officer for giving effect to the claim of the assessee after verification as per the Rectification order passed by the TPO. This ground of appeal of the assessee is allowed for statistical purposes. Disallowance of net loss incurred on error trading transactions - HELD THAT:- The assessee explained that error trades are the clerical other errors of the assessee in execution of the transactions for the clients. The error trades are basically trades generated by the clients, however, due to error inter alia in punching of the trade, etc. these trades are not executed as per the trading order of the clients. The error could be in the name of wrong punching of quantity, rate, security, system error and error in punching the type of order etc. As decided in in the case of CLSA India Pvt. Ltd. [ 2020 (12) TMI 815 - ITAT MUMBAI ] that certain client for whom the assessee was working as a broker had not owned up certain share transactions then the assessee had no other alternative but to accept those transactions as its own transactions because of its relation with the clients from whom it was accepting good earnings. After considering the volume of transactions undertaken by the assessee company as broker for various clients we observe that such marginal error in share trading is incidental to the business of the assessee, therefore, we don t find any reason to that assessee has wrongly claimed such loss, therefore, AO is directed to allow the claim of the assessee. Disallowance u/s 14A - assessee has received dividend and also had made investment which yielded exempt income - AO noticed that assessee has not computed disallowance as per provisions of Sec. 14A r.w.Rule 8D - HELD THAT:- As perused the decision of ITAT, Mumbai in the case of the assessee itself for assessment year 2008-09 [ 2023 (6) TMI 1357 - ITAT MUMBAI ] wherein on identical issue and similar facts the issue was remanded back to the file of the assessing officer to examine the disallowance u/s 14A and assessee was also direct to substantiate its claim as to why no disallowance should be made.
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2024 (7) TMI 878
Rejection of final approval u/s 80G(5) - application filed u/s 80G(5)(iii) in Form 10AB treated as not filed within due date as specified in the Act - HELD THAT:- We find that the case of the assessee is that they have made application for provisional approval u/s 80G, which was granted on 19.01.2023 for three years from 19.01.2023 to assessment year 2025-26, which was allowed and on receipt of provisional approval filed application in Form No.10AB for final approval on 24.01.2023 i.e., within week of provisional approval. The assessee never obtained approval of their fund in past, though their activities commenced in the year 1984, so the application of the assessee is not to be treated as time barred. We find that for obtaining approval u/s 80G, the primary condition is to first avail registration u/s 12AB, which the assessee has already been allowed. As find that the ld CIT(E) has not examined other requisite condition for approval of fund under section 80G and dismissed the application in limine, therefore, the application of the assessee is restored back to the file of CIT(E) to examine other required condition and pass the order in accordance with law. Appeal of the assessee is allowed for statistical purpose.
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2024 (7) TMI 877
Revision u/s 263 by CIT - addition of fixed asset in the year under consideration on which depreciation and additional depreciation was claimed by the assessee but AO has not inquired during the assessment proceedings anything about it - PCIT found that the assessee has made payment of commission to the foreign parties without deducting TDS and assessee has claimed deduction u/s 80JJAA HELD THAT:- There were enquires conducted by the AO during the assessment proceedings and therefore it cannot be said that the assessment has been framed by the AO without the application of mind - PCIT has not pointed out any flaw in the submissions made by the assessee in response to the notice issued u/s 263 of the Act. As perused the report in form 10DA relating to the deduction claimed u/s 80JJAA and find that it was duly filed by the assessee for claiming the deduction. PCIT has not pointed out any specific defect in such report furnished in form 10DA for claiming the deduction u/s 80JJAA - Thus the assessment has been framed by the AO after necessary verification and application of mind. In the case before us, there was proper verification and application of mind applied by the AO while framing the assessment u/s 143(3) of the Act. Hence, the order passed by the Ld. PCIT u/s 263 of the Act is not sustainable. Thus, the ground of appeal of the assessee is hereby allowed.
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2024 (7) TMI 876
Unexplained cash deposits during demonetization period u/s 68 - Addition u/s 115BBE - HELD THAT:- We are aware of the fact that not every deposit during the demonetization period would fall under category of unaccounted cash. However the burden is on the assessee to establish the genuineness of the deposit in order to fall outside the scope of unaccounted cash. If it is found to be business receipts and is explained by assessee to that extent, the amount to be considered @ 8% as income of the assessee and the balance to be treated as unexplained u/s 68 - On the other hand if entire amount is found to be unexplained credits which is, not from the business income the sec.68 of the Act to be invoked on the total amount. AO shall verify all the details/evidences filed by the assessee based on the above direction and applicable instructions to the facts and circumstances of the present assessee and to consider the claim in accordance with law. Presumptive tax levied on the entire cash deposit by the AO @ 8% - As we note that the Ld.AO already invoked the provisions of sec. 68 of the Act. The said issue has already been remitted by us to the file of the Ld.AO for fresh consideration. Hence this issue has been becomes infructuous otherwise it will amount to double addition which cannot be sustained.
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2024 (7) TMI 875
Approval u/s 80G - main objects of the assessee as per Trust deed were relief of poor, education and medical relief - Assessee has amended the trust deed dated and deleted two objects i.e., relief of poor and medical relief and retain only one object of Education - HELD THAT:- Although, the assessee has amended the main object, but claimed that by an inadvertent error while filing Form No. 10AB, it was wrongly stated the object of the trust was relief of poor, education and medical relief. We find that as per amended deed dated 01.12.2015, the main object is only Education as stated in application filed u/s 10(23C)(vi) of the Act and in Form No. 10AC issued by the PCIT. It seems that by an inadvertent error, the assessee has referred to all the objects including the objects deleted by way of amended deed dated 01.12.2015. When this fact was brought to the notice of the ld. CIT(E), in our considered opinion, the ld. CIT(E) ought to have considered application filed by the assessee in light of Form No. 10AC issued by the ld. PCIT dated 24.09.2021. Since, the ld. CIT(E) rejected the application of the assessee without considering arguments of the assessee in light of amended deed, we restore appeal back to the file of the ld. CIT(E) for fresh adjudication - Appeal filed by the assessee is allowed for statistical purposes.
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2024 (7) TMI 874
Deduction u/s. 80P(2)(d) - income earned by the assessee on fixed deposit with Surat District Cooperative Bank - deposit in cooperative banks lacks the degree of proximity between the members of the society with that of cooperative bank - CIT(A) held that the assessee has furnished evidence that Surat District Cooperative Bank is a cooperative society registered under Gujarat State Cooperative Societies Act HELD THAT:- As decided in the case of Surat Vankar Sahakari Sangh Ltd. [ 2016 (7) TMI 1217 - GUJARAT HIGH COURT] that the assessee cooperative society was eligible for deduction under section 80P(2)(d) in respect of gross interest received from cooperative bank without adjusting interest paid to said bank. Decided in favour of assessee.
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2024 (7) TMI 873
Taxability of salary income in India from employment in Korea - eligibility for exemption in terms of Article 15(1) of India-Korea DTAA - HELD THAT:- Salary payment could be stated to be earned in India only if the corresponding services are rendered in India. Since in the instant case, the services are rendered outside India which fact is not in dispute before us and hence income cannot be said to be deemed to accrue or arise in India. We find that Article 15 (1) of India Korea treaty states that employment income earned by individual is exempt from tax in India if the following conditions are satisfied :- (a) If the individual is resident of Korea; and (b) if the employment is outside India. In the instant case, both the conditions had been satisfied and hence in any event, the salary would not be taxable in India in terms of Article 15 (1) of India Korea treaty. Salary offered suo moto by the assessee in the return of income filed in India - Merely because a particular receipt has been erroneously offered to tax by the assessee in the return, it does not mean that the revenue acquires the right to tax the same in the hands of the assessee. The revenue could tax particular receipt only if the provisions of the Act enables it to do so. There is no estoppel against the statute. Thus, we hold that the salary income earned in India is not taxable under the Act as well as under the India Korea treaty. Accordingly the grounds raised by the assessee are allowed. Concessional rate of tax @ 15% on short term capital gains declared by the assessee - It is not in dispute that short term capital gain declared by the assessee had duly suffered Securities Transaction Tax ( STT) and thereby the assessee would be liable to tax in terms of section 111 A. From the perusal of the orders of the lower authorities, we find that there is no finding given with regard to this issue. Hence, we deem it fit to restore this issue to the file of AO for denovo adjudication in accordance with law. Accordingly, ground raised by the assessee is allowed for statistical purposes. Credit for tax deducted at source - This matter requires factual verification. Hence we direct the Ld. AO to grant the credit of TDS in accordance with law. Accordingly ground No.7 raised by the assessee is allowed for statistical purposes. Chargeability of interest u/s. 234B which is consequential in nature and hence does not require any specific adjudication.
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Customs
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2024 (7) TMI 872
Interpretation of statute - whether Petitioner can bring into India a gold chain with pendant in which diamonds were embedded in accordance with Baggage Rules 1998? - HELD THAT:- Petitioner has produced an invoice dated 22nd October 1989 to prove that the diamonds which were embedded in the pendant, were purchased by him from a U.S.A. jeweller. The said invoice is rejected by Respondents only on the ground that the invoice is not signed by the seller. Merely because the invoice is not signed by the seller could not have been a ground for rejecting the evidence. The adjudicating authority could have inquired from the seller from New York by writing a letter on the genuineness of the said invoice. However, no such steps were taken by the authorities and merely because the invoice did not bear the signature, the same came to be rejected. It is not uncommon that many times, the invoices are unsigned, but that cannot be the sole basis for rejecting the same. The phrase personal effect has to be construed in the context and cannot be interpreted dehors the facts of a particular case, more particularly when what is being considered is the value of the article. In the instant case, one cannot lose sight of the fact that Petitioner is engaged in the business of jewellery in U.S.A. for last 25 years and has been declaring income in the U.S.A. of USD-1,50,000/-. A person of such background could wear a chain with a pendant of high value. For a High Net Worth individual, an expensive watch of Rolex made would be his personal effect, but same may not be the case if a person is of a mere means. In the context of Petitioner s case merely by ascribing high value, the customs authorities were not justified in initiating the impugned proceedings and contend that same is not his used personal effects, moreso, because the diamonds were valued at (assuming) price prevailing on date of Petitioner s arrival whereas the diamonds were purchased in 1989, although already observed, as to how the exercise of valuation carried out by the Customs Authorities is vitiated. The Respondents are directed to refund the sum of Rs. 35,00,000/- deposited by the Petitioner within a period of four weeks from the date of uploading the present order.
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2024 (7) TMI 871
Detention of an accused to prevent him from smuggling goods in exercise of power under Section 3 (1) of the Customs Act - right to prefer a representation - COFEPOSA - HELD THAT:- It is a settled position of law that if a statutory enactment confers an extraordinary power on the executive, to detain a person without recourse to the ordinary laws of land and by surpassing the stage of trial, exercise of such power places the personal liberty of such a person in extreme peril, as he has very limited right to raise a challenge to such an order and, therefore, it is necessary that such a law has to be strictly construed and the power to be exercised with extreme care, scrupulously within the bounds laid down by the statute. If statute permits detention on the specific grounds and as under the COFEPOSA Act, to prevent a detenu from acting in any manner prejudicial to the conservation or augmentation of foreign exchange or with a view to preventing him from smuggling goods, or abetting the smuggling of goods, or engaging in transporting or concealing or keeping smuggled goods etc., all the acts being separated and distinct must receive its connotation and the detenu must be tested against the prevented acts, as specified in the COFEPOSA Act. In a similar situation, when clause (iii) of Section 3 (1) has clubbed three activities in relation to the smuggled goods i.e. either its transport or its concealment or keeping the smuggled goods, it was imperative for the Detaining Authority to specify to the detenu as to which of these activities or all of the activities in which the detenu was engaged, were necessary to be prevented, as the act was prejudicial to the conservation or augmentation of foreign exchange - In absence of such a clarity being offered to the detenu, who had a right to prefer a representation, being aggrieved thereof and had a right to get a decision thereon, the detention order is vitiated by non-application of mind and, hence, it cannot be sustained. Application disposed off.
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2024 (7) TMI 870
Levy of penalty u/s 117 of the Customs Act, 1962 - only allegation in the SCN against these appellants is that as a CHA, the appellant did not exercise due diligence - HELD THAT:- The findings in the impugned order for imposing penalty is that the appellants have not been diligent enough to verify antecedents of the exporter and thereby facilitated the fraudulent export and availment of undue draw back. Being a CHA, the appellant has filed shipping bill on behalf of the exporters. Needless to say, that the details of value of the goods are entered in the shipping bill as per the instructions given by the exporter. It is not brought out from evidence that the CHA had in any manner assisted the exporter in over invoicing the goods so as to facilitate the availment of ineligible draw back. The act of not being diligent enough in verifying the antecedents of the exporter would attract the provisions of CBLR, 2018 and it cannot be a ground for imposing penalty under Section 117 of the Customs Act, 1962 - In the case of MOHAK ENTERPRISE VERSUS COMMISSIONER OF CUSTOMS, AHMEDABAD [ 2024 (2) TMI 1262 - CESTAT AHMEDABAD] , the Tribunal held that the penalty imposed alleging that the KYC of the exporter was not verified cannot sustain. The penalty imposed on the appellants under Section 117 of Customs Act, 1962 cannot sustain - the impugned order is modified to the extent of setting aside the penalty imposed on the appellants herein - Appeal allowed.
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Insolvency & Bankruptcy
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2024 (7) TMI 869
Dismissal of an application of recall of an order - manipulation of books of account and siphoning of funds - fabrication of valuation report - it was held by NCLAT that 'The orders dated 11.01.2024 and dt. 22.02.2024 does not warrant any interference by this Tribunal. There is no merit in the appeal' - HELD THAT:- There are no reason to interfere with the impugned order dated 3 May 2023 passed by the National Company Law Appellate Tribunal - appeal dismissed.
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2024 (7) TMI 868
Permission to Financial Creditor to amend the date of default as pleaded in the rejoinder affidavit - date of default - time limitation - HELD THAT:- The date of default is relevant for computing the limitation for filing Application under Section 95 for a Court, before whom any Application is filed, to determine as to whether the Application is filed within the limitation. It is well settled that Financial Creditor is permitted to supplement the Application by filing the additional documents. Present is a case where the issue of invocation of guarantee of Personal Guarantor was specifically raised in the reply of the Personal Guarantor. The question of date of invocation of personal guarantee of the Personal Guarantor is yet to be decided by the Adjudicating Authority. The Adjudicating Authority has granted time to the Personal Guarantor to file reply to the amended petition and to oppose the new date of default to be inserted by the Petitioner . By virtue of the order dated 03.05.2024, the date of new default, which is inserted by the Appellant is 22.12.2021 and when the Demand Notice was sent to the Personal Guarantor by which the guarantee was invoked. The Personal Guarantor has ample opportunity to oppose the date of default and satisfy the Court that it is not the correct date of default and raise all contentions with regard to limitation. In the facts of the present case, there are no error in the order of the Adjudicating Authority, permitting the Financial Creditor to amend the date of default, specially when the date of default 01.12.2015, which was mentioned in Section 95 Application is date of default of Corporate Guarantor and the Notice dated 19.01.2022, which was relied under Section 13, subsection (2), was the notice to Guarantors and Mortgagers. It is well settled that parties/ Applicants are entitled to bring additional materials on record, which can be accepted by the Adjudicating Authority for adjudication of Application. Materials brought on the record by rejoinder affidavit, refers to Notice dated 22.12.2021, which is being relied by the Applicant as a date on which guarantee of Personal Guarantor was invoked. The rights of the Personal Guarantor being fully protected by order impugned, there are no ground to entertain this Appeal - appeal dismissed.
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FEMA
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2024 (7) TMI 867
Offence under FERA - contravention of section 18(2) and 18(3) read with section 64(2) of FERA, 1973 - company failed to recover the amount of export dues - investigation in the matter was conducted where it was revealed that without the permission of RBI or an extension order for recovering of the export dues, the noticee firm failed to recover the amount and even did not seek further extension for its recovery - appellant has virtually admitted his failure for contravention of 18(3) but it is only in reference to one consignment therefore questions the imposition of heavy penalty of Rs 50 lacs while on the main defaulter Smt Venita, it is only 45 lacs. HELD THAT:- We find contravention of section 18(2) and 18(3) of FERA, 1973 because Shri V.K. Singh and Shri Dilip Nihalani colluded and were instrumental in making the exports and they received incentive from the custom authorities in respect of the shipment. The appellant had admitted for preparation of the documents though attended only one shipment. Taking into consideration the overall circumstances and while we find a case for contravention of section 18(2) and 18(3) read with section 64(2) of FERA, find penalty of Rs. 50 lacs to be disproportionate. The penalty of Rs. 45 lacs has been imposed on Smt Venita, proprietrix of M/s Sai International while Rs 50 lacs on the appellant who said to have received Rs. 14 lacs towards work and out of drawback. Thus, to make the penalty rational, we reduce it to Rs. 14 lacs and out of which Rs. 6 lacs have already been deposited to satisfy the condition of pre-deposit. We partly allow the appeal while finding a case for contravention of section 18(2) and 18(3) of FERA, 1973, but penalty of Rs. 50 lac is reduced to Rs. 14 lacs and with the aforesaid, the appeal is disposed of.
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PMLA
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2024 (7) TMI 866
Money Laundering - proceeds of crime - sale of seized vehicle - Interplay between Section 17 8 of PMLA and Rule 3 4 of PMLA Rules of 2013 - Whether the proceedings carried out in this case by the Directorate of Enforcement are as per law? - HELD THAT:- This Court is of the opinion that in the present case, in order to collect the records relating to the money laundering and to trace proceeds of crime involved in money laundering, the Directorate of Enforcement had carried out search under Section 17 of PMLA at several locations and premises. In this process, a total of 26 luxury and high-end cars were found and seized by the respondent, which were prima facie found to have been purchased out of the proceeds of crime generated out of the criminal activities of Mr. Sukash Channdersekhar. A bare perusal of the record leads to only one conclusion that the procedure followed by the respondent was in accordance with the provisions of PMLA and the Rules of 2013. Even the petitioner, neither through the contents of the petition nor during the course of arguments, has been able to point out any infirmity in the above-mentioned process followed by the respondent. Further, the validity of the relevant rule(s) of Rules of 2013, as referred hereinabove, has also not been assailed before this Court by the petitioner herein. Whether Vehicles are subject to natural decay? - HELD THAT:- The depreciation of vehicles is a well-recognized phenomenon in the automobile industry. From the moment a car is driven out of the showroom, its value begins to decrease. This depreciation accelerates with each passing year, and the resale value drops substantially. After some years, most vehicles lose a significant part of their original value, making them less economically viable to maintain or sell. By converting the sale proceeds of a movable property subject to natural decay, such as a vehicle, into an interest-bearing fixed deposit, the Rule ensures that the value of seized properties is preserved and potentially increased, thereby ensuring equal justice to either of the party, regardless of the trial s duration. In this manner, both the right of an accused as well as the right of the investigating agency is protected, since a piece of junk or scrap is of no use to either of them. In the present case, the petitioner herein has not made any request whatsoever in terms of proviso to Rule 4 (2) that in exchange of any fixed deposit receipt equivalent to the value of cars furnished by her, the cars in question be not sold by the Directorate of Enforcement. There is no merit in the argument that the sale of seized vehicles in this case is against the mandate of Section 8(6) of PMLA. Needless to say, as per Section 8(6), if the accused persons in this case are found not guilty of offence of money laundering, they would be entitled to receive the amount generated from selling the movable property i.e. cars in the present case, which the Directorate of Enforcement is obliged to keep deposited in the nearest Government Treasury or branch of the State Bank of India or its subsidiaries or in any nationalised bank in fixed deposit. This Court finds no infirmity with the orders impugned by way of this petition - Petition dismissed.
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Service Tax
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2024 (7) TMI 865
Levy of service tax - Construction of Complex Services / Construction of Residential Complex Services - Commercial Construction Services for T. Nagar project as well as Construction of Residential Complex Services for Mogappair project - period from April 2005 to December 2009 - HELD THAT:- On perusal of the joint venture agreement as well as other agreements, it can be seen that the appellant has been entrusted with the work of construction of flats / complexes. The nature of such composite contracts involve both supply of materials as well as rendition of services. The Tribunal in the case of REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI [ 2018 (9) TMI 1149 - CESTAT CHENNAI] had considered the issue whether the demand of service tax can be made under Construction of Residential Complex Services / Construction of Commercial Complex Services for the period prior to 01.07.2012. It was held that in the case of indivisible contracts which are composite in nature, the demand can be made only under Works Contract Services. The Tribunal had followed the decision of the Hon ble Apex Court in the case COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] . In the present case, the demand is raised under Construction of Complex Services / Construction of Residential Complex Services. The demand therefore cannot sustain. It is also seen that the demand in respect of T. Nagar project is made for the period after prior to 01.06.2007. It is submitted by the Ld. Counsel that the Completion Certificate for this building was obtained on 02.05.2005. The activity being composite contracts, the demand cannot sustain as per decision in the case of Larsen Toubro Ltd. The demand raised in the present case under Construction of Complex Services / Construction of Residential Complex Services cannot sustain - the impugned order is set aside - appeal allowed.
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Central Excise
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2024 (7) TMI 864
Contest to present petition - no challenge to judgment and order dated 3 February 2022 passed by the High Court of Gujarat - HELD THAT:- The respondent no. 2 are directed to pay a sum of Rs. 1,00,000/- as cost and this amount shall be paid before the next date to the High Court Legal Aid Fund, Account No. 60045304283, IFSC-MAHB0000002, of Bank of Maharashtra, Branch- Fort, Mumbai 400 032, maintained by the High Court Legal Services Committee, Mumbai. Room No. 105, 1st Floor, PWD Building, High Court, Mumbai and to furnish the details of such cost to the High Court Legal Services Committee, Mumbai and obtain the receipt thereof physically or through Email, i.e., [email protected] which shall be the proof of such payment/deposit. Petition disposed off.
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2024 (7) TMI 863
Extended period of limitation - exemption under Entry No. 144 of N/N. 12/2012-CE dated 17.03.2012 as amended by N/N. 12/2016-CE dated 01.03.2016 - Manufacture of Ready Mix Concrete - addition of words of knowledge of the department previous audit etc. so as to discard the substantial authority with the department for invoking extended period for issuing demand notice in terms of Section 11A (1) of the Central Excise Act, 1944 - HELD THAT:- On perusal of the finding of the Tribunal in relation to the Notification No. 12/2016-CE dated 1.3.2016, it only considers the applicability of such Notification; as to whether the exemption claimed by the respondent assessee on the RMC used at the construction site was liable for Nil rate of duty or not. In the facts of the case, the breach of any condition of the exemption Notification was not under consideration before the Tribunal. By the N/N. 12/2016-CE dated 1.3.2016, Explanation is inserted as to what the site means and the Tribunal has merely held that in the facts of the case, the interpretation which was canvassed on behalf of the appellant revenue that the entire goods manufactured at the site which are required to be used for the construction site only, is not provided in the Notification. Meaning thereby that the Tribunal has considered the applicability of the Notification to the exemption of excise duty on RMC used by the respondent assessee on the site is considered. The Tribunal has also held that the respondent assessee has paid the excise duty on the RMC which is cleared outside the construction site and sold to other third party. The Appeal is required to be filed before the Hon ble Supreme Court. The Registry to hand over the papers of this Appeal to the appellant as per Order VII Rule 10 of the Code of Civil Procedure, 1908 to be filed before the appropriate Court.
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CST, VAT & Sales Tax
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2024 (7) TMI 862
Refund of tax with interest for the year 2011-2012 - adjustment of refund with the demand of tax for the earlier period - Settlement Scheme for the year 2010-2011 - HELD THAT:- There is no dispute that Petitioner s liability under the Settlement Scheme is Rs. 8,46,84,821/- as against which the Respondents have recovered from the Petitioner Rs. 19,16,74,501/- thereby resulting into excess collection by Respondents to the extent of Rs. 10,69,89,606/-. The excess arose because on 13th May 2019, Petitioner, under the Settlement Scheme, paid Rs. 8,46,84,821/- and subsequently on 23rd May 2019, Respondents, without any authority of law, adjusted the refund for the year 2011-2012 amounting to Rs. 10,69,89,606/- against the demand for the year 2010-2011 which did not exist. This has not been disputed by Respondents. Therefore, even on this count, the claim of Petitioner for refund of Rs. 10,69,89,606/- is justified since it is a settled position that the State authorities cannot retain the excess amount which is not in accordance with law and same would be violative of Article 265 of the Constitution of India. On a reading Section 11 of the Settlement Scheme, the defect notice is issued when there is a shortfall in making the payment and not when an applicant has paid the correct amount. In the instant case, on a perusal of the defect notice it states that requisite amount payable is Rs. 66,17,057/-, whereas Petitioner has paid Rs. 8,46,84,821/- which is excess payment and not short payment. Therefore, even on this count, defect notice is contrary to Section 11 of the Settlement Scheme. Reliance placed by Respondents on Section 18 of the Settlement Scheme for not granting the refund is also misconceived. Section 18 provides that under no circumstances, shall the applicant be entitled to get refund of the amount paid under the Settlement Scheme. In the instant case, Petitioner is not seeking refund of Rs. 8,46,84,821/- which is the undisputed amount paid under the Settlement Scheme, but is seeking a refund of Rs. 10,69,89,606/- which is refund for the year 2011-2012 arising out of the appeal order for the said year and not an amount paid under the Settlement Scheme. There are no force in the submissions of Respondents to withhold the refund amount for the year 2011-2012 - Respondents are directed to refund to Petitioner a sum of Rs. 10,69,89,606/- alongwith interest at 6% per annum as per Section 52 read with Rule 88 of the MVAT Rules from 1st June 2019 till the date of payment. Petition disposed off.
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Indian Laws
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2024 (7) TMI 861
Exemption from payment of Market fee and Rural Development fee - whether the exemption from payment of Market fee granted under Clause (i) of 11.4.2 of 2003 Policy of the Punjab Government can be said to include exemption from Rural Development fee as well or not? - HELD THAT:- It is clear that the issue as to whether the 2003 Policy only grants exemption from the Market fees as levied under the 1961 Act and does not grant exemption from the Rural Development fees under the 1987 Act, has not been adjudicated by the High Court on merits. The said adjudication could not happen as the Counsel for the State had stated before the High Court that Market fee will also cover Rural Development fee and the High Court dismissed the petition as not pressed. This is pertinently where the trail of errors began - The High Court, only recorded the submissions of the State counsel and thereafter referring to the three notes/letters of 2001 of the Agriculture Department and dismissed the application. Neither the arguments were discussed and analysed nor the contents of three notes/letters were discussed. Scope of exemption under the 2003 Policy - HELD THAT:- The 2003 Policy does not specifically exempt Rural Development fees and therefore, such an argument by the Respondent is highly presumptive, far-fetched and a clear attempt at over-reaching the scope of the 2003 Policy. If such an assumption is allowed, it would considerably broaden the canvas of the incentives available under the 2003 Policy, which was never intended. In fact, such a loose interpretation of the State policies would lead to an ambiguity to the State s intent and render it opposite to the public policy - the exemption from Market fees is inclusive of Rural Development fees shall be contrary to the statutory provisions and objective behind both the Acts as well as the 2003 Policy. Thereby, the two fees cannot be equated or assumed to be same or similar for the purposes of exemption. Effect of communication made by the State via various notes/letters - HELD THAT:- From an in-depth analysis of the statutes and policies produced, it is apparent that no unit, other than those approved as Mega Project, has been allowed exemption from the payment of Rural Development fee, unless explicitly provided by the authorities. The Respondent herein, M/s Punjab Spintex Limited, has admittedly not been approved as a Mega Project and, therefore, not eligible for such exemption from Rural Development fee. The Market fees and Rural Development fees are distinct and, there being no exemption from Rural Development fees mentioned in the 2003 Policy, it only encompasses exemption from Market fees in its ambit. The two fees under the two different statutory frameworks cannot be equated as one by the Respondent and they cannot assume that exemption from Market fees would subsume in itself Rural Development fees also. The impugned order set aside - appeal allowed.
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2024 (7) TMI 860
Attribution of bid to a bona fide mistake - prayer for recommencement of the e-auction process - bona fide and inadvertent human error - HELD THAT:- It is well settled that, normally, the courts would be loath to interfere in commercial matters, especially when such interference has the effect of delaying the execution of mega projects of national importance. It is evident that while undertaking the exercise of judicial review of matters relating to tenders, the court has to strike a fair balance between the interests of the Government, which is always expected to advance the financial interests of the State, and private entities. As observed by this Court, not every small mistake must be perceived through the lens of a magnifying glass and blown up unreasonably. The present case is precisely of such a nature. A mere typographical error forms the fulcrum of the present lis and, thus, the principles of proportionality, reasonableness and equity demand that the appellant s grievance be heard. This Court, on the facts of the case in Patel Engineering Co. Ltd. [ 2001 (1) TMI 921 - SUPREME COURT] , held that negligent mistakes in bid documents could not be permitted to be corrected on the basis of equity. There, the bidders had merely informed the State authorities of the alleged mistake in their bid more than two months after the same was announced in front of all the bidders who responded to the tender. It is as clear as daylight that the forfeiture of the entirety of the appellant s security deposit worth Rs 9,12,21,315/- as against evident human error, which has not been shown to even border on mala fides, or knowingly done, is punitive. The enforcement of an otherwise commercially unviable bid, with the forfeiture of the deposit hanging over the appellant s head akin to a sword of Damocles, can hardly be said to be in either party s best interests. Perhaps, the respondents could consider to provide a cross check and affirmation, from the party, to avoid human errors and mistakes. The impugned communication issued by the first respondent - The civil appeal stands partly allowed.
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2024 (7) TMI 859
Recovery of the remaining sum payable by the appellant - manufacturer or importer or distributor - whether the National Pharmaceutical Pricing Authority (NPPA), Government of India, was justified in raising a demand against the appellant to recover the higher price charged in relation to Roscilox, a brand of a Cloxacillin-based drug formulation, than that fixed by the Government under the provisions of the Drugs (Price Control) Order, 1995? HELD THAT:- There is some overlapping inasmuch as a wholesaler , as defined in Paragraph 2(y), would include not only a dealer , as defined in Paragraph 2(d), but also a stockist appointed by a manufacturer or an importer, who would fall within the ambit of a distributor under Paragraph 2(e). There is, thus, no clear and absolute delineation amongst the definitions. However, the so-called distinction in the defined categories was the basis for the claim of the appellant that it could not be proceeded against under Paragraph 13 of the DPCO. It asserted that it was not a manufacturer or an importer or a distributor and, therefore, it stood beyond the grasp of Paragraph 13. Though an attempt was made by the learned counsel for the appellant to enlarge the scope of this appeal by questioning the very validity of the demand made under the DPCO, the same is not permitted - there is no evidence of the appellant having raised such an issue properly before the Delhi High Court. The main issue that was raised before and considered by the High Court was whether the appellant would come within the reach of Paragraph 13 of the DPCO in the light of its claim that it was not a manufacturer or importer or distributor. In this regard, we find that the replies filed by the appellant in response to the notices issued by the NPPA categorically manifested that the appellant admitted purchase of the drug from the manufacturer itself. Thus, in terms of its own admissions in its replies, the appellant had direct contact with the ostensible manufacturer - Though the definition of wholesaler under Paragraph 2(y) of the DPCO blurs the distinction between a dealer and a distributor , by including a dealer as well as a stockist appointed by a manufacturer, the fact remains that a distributor under Paragraph 2(c) of the DPCO has links with the manufacturer directly while a dealer does not, as he obtains his supply of drugs from the said distributor . Given its own inconsistent versions and in the absence of a firm factual foundation being built up by the appellant with proper documentation as to its status, it was not open to it to baldly claim that it was not a distributor but only a dealer - thus, no error committed by the High Court in rejecting the claim of the appellant. Appeal dismissed.
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2024 (7) TMI 858
Dishonour of Cheque - insufficient funds - service of legal notice - authorisation of power of attorney to file the complaint on behalf of its principal - HELD THAT:- In the instant case, legal notice was sent on 19.12.2018, therefore, for want of any specific averment and proof of service, if the presumption of service of notice in reasonable time is raised, it should be deemed to have been served at best within a period of 30 days, from the date of its post i.e. 17.1.2019. However, in the instant case, the complaint itself has been filed on 14th January, 2019. Thus, prima facie on 14.1.2019, no offence under Section 138 of N.I. Act, 1881, was attracted as after presumed service on 17.1.2019 still 15 days were required for response by applicant. The opposite party No.2 was still required to wait for another 15 days. Therefore, no offence under Section 138 of N.I. Act, 1881, was made out against the applicant on the relevant date when the complaint was filed. Since in the instant case, the complaint has been filed by the power of attorney holder in his own name and not as the power of attorney holder of the payee of the cheque and further no offence under Section 138 of N.I. Act, 1881, is constituted in view of the failure of the applicant to make assertion with regard to service of notice and on the basis of presumption of service after expiry of 30 days of its sending through registered post, no cause of action has ever arisen to opposite party No.2 to maintain the instant complaint. The entire proceedings of Criminal Complaint Case under Section 138 of Negotiable Instruments Act, 1881, Police Station-Bhadohi, District- Bhadohi, pending before the court of Chief Judicial Magistrate, Bhadohi at Gyanpur, are hereby quashed - the instant application under Section 482 Cr.P.C. is allowed.
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