TMI Tax Updates - e-Newsletter
July 23, 2022

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

• Impact of Withdrawal of Exemptions on Hotel Accommodation Services - Govt delivers another shocker Post COVID
• Important Changes in GST w.r.t Foods industry w.e.f July 18, 2022
• Return filing for individuals, HUF and non-audit cases Care required in personal accounting and compilation of information and ITR filing to ensure correct reporting of income duly reconciled and properly quantified with due diligence and care.
• SERVICE CHARGE ON FOOD: LEVY, UN-LEVY AND STAY BY COURT
• ITC is not available on input, input services and capital goods on purchased for the construction of the LNG jetties

News

• Advisory on Upcoming Changes in GSTR-3B

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• 206 Crore released to States for promotion of exports under TIES scheme

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• District Export Action Plans under ODOP prepared in 557 districts; Adopted by District Export Promotion Committees (DEPC) in 218 districts

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• The Agreement on Fisheries Subsidies (Agreement) at the WTO Ministerial meeting to prohibit subsidies from being provided for Illegal, Unreported and Unregulated (IUU) fishing and overfished stocks

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• India’s merchandise exports during January-June 2022 was USD 235.7 billion as compared to USD 185.9 billion during the same period of the previous year

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• Banking Beyond Tomorrow (Speech by Shri Shaktikanta Das, Governor, Reserve Bank of India - July 22, 2022 - Delivered at the Bank of Baroda’s Annual Banking Conference in Mumbai)

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• Shri Piyush Goyal asks White goods industry to become global champions; says PLI scheme meant to give only the initial push in that direction;

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• India and the UK sign MoU on Mutual Recognition of Academic Qualification to facilitate student mobility and academic collaboration between HEIs

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Notifications

GST - States

• (11/2022) FD 20 CSL 2022 - dated 15-7-2022 - Karnataka SGST
  Rescinds notification No.(45/2017) No. FD 48 CSL 2017, dated the 14th November, 2017

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• (10/2022) FD 20 CSL 2022 - dated 15-7-2022 - Karnataka SGST
  Amendment in Notification (02/2022) No. FD 20 CSL 2022, dated the 31st March, 2022

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• (10/2022) FD 07 CSL 2022 - dated 15-7-2022 - Karnataka SGST
  Amendment in Notification (07/2019) No. FD 47 CSL 2017, dated the 14th March 2019

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• (09/2022)FD 07 CSL 2022 - dated 15-7-2022 - Karnataka SGST
  Seeks to amend Notification (05/2019) No. FD 47 CSL 2017, dated the 7th March 2019

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• (09/2022) FD 20 CSL 2022 - dated 15-7-2022 - Karnataka SGST
  Amendment in Notification (05/2019) No. FD 47 CSL 2017, dated the 7th March 2019

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• (08/2022) FD 20 CSL 2022 - dated 15-7-2022 - Karnataka SGST
  Amendment in Notification (03/2017) No. FD 48 CSL 2017, dated the 29th June, 2017

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• (07/2022) FD 20 CSL 2022 - dated 15-7-2022 - Karnataka SGST
  Amendment in Notification (02/2017) No. FD 48 CSL 2017, dated the 29th June, 2017

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Income Tax

• 86/2022 - dated 21-7-2022 - IT
  Specified person u/s 10(23FE) for the purposes of eligible investment made by it in India - Central Government specifies the pension fund, namely, CPPIB Credit Investments VI Inc.

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• 85/2022 - dated 21-7-2022 - IT
  Specified income U/s 10(46) of IT Act 1961 - "Odisha Electricity Regulatory Commission" a body constituted by the State Government of Odisha notified.

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Highlights / Catch Notes

GST

• Classification of goods - applicable rate of GST and/ or Compensation Cess - Keer Kokil/Tobacco pre-mixed with lime - Once it is held that the product is 'unmanufactured tobacco', the classification of the product is under CTH 2401 which specifics under the sub head 2101 20 90 as 'others' and attracts GST @ 28% - Compensation Cess Rate as 71% for the product “Unmanufactured Tobacco (without Lime tube) - AAR
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Income Tax

• Prosecution proceedings u/s 276CC - failure to file ITR in time - Since the law provides that without sanction u/s 278B of the IT Act, the Department cannot proceed against a person found liable to prosecute him for the offence under Section 276 CC of the IT Act, the present prosecution must fail qua the petitioner. In the absence of a specific sanction for prosecuting the petitioner, the learned ACMM could not have taken cognizance of the complaint against him and then framed charge against him. The edifice built without foundation must crumble. - HC
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• Deduction of bad debt written off u/s. 36(i) (vii) - lease rental - the prospects of recovery of lease rentals were quite bleak and the assessee considering that the same could not be recovered in the foreseeable future decided to write off a debt as bad debt during the previous year relevant to the Assessment Year 1991-92. It is nobody’s case that the assessee had not complied with the provisions of Section 36(2) - The assessee took a business decision to write off the debt as a bad debt. - The Tribunal has erred in rejecting the claim of the assessee - HC
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• Revision u/s 263 by CIT - an order which is deemed to be erroneous in so far as it prejudicial to the interest of the Revenue - the AO has adopted one possible legal view sustainable in law on the issue and mere invoking proviso based on revenue audit objection amounts non application of mind. Merely just because the view taken by the AO was not found acceptable does not mean that the AO has failed to make requisite enquiries. - HC
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• Additions towards interest received from the firm on the capital deployed in the firm by the Partner - Since the assessee has already offered the income being the interest received from the firm in the return of income filed, therefore, addition of the same again amounts to double addition. We, therefore, set aside the order of the learned CIT (A) on this issue and direct the Assessing Officer to delete the addition. - AT
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• Capital gain - sale of property by the legal heir with the co-owners - the assessee (as legal heir of the said property) is liable to capital gains tax during the year under consideration. Accordingly, we are of the considered view that Ld. CIT(Appeals) has not erred in law and in facts in holding that the assessee is liable to pay capital gains tax on her 1/4th share in the property during the year under consideration - AT
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• Ex-parte order passed by CIT-A - Non speaking order - The exercise of the “right to be heard at the hearing of the appeal” by “the appellant, either in person or by an authorized representative condition”, under section 250(2)(a), is not a condition precedent for the disposal of appeal on merits in accordance with the scheme of Section 250(6). In our considered view, irrespective of the non-appearance of the assessee before the CIT(A), the CIT(A) ought to have dealt with the issues so raised by the assessee-appellant on merits and by way of speaking order and in accordance with the law. - AT
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• Penalty u/s 271(1)(c) - Transfer Pricing adjustment made - applying the analysis of the term ‘good faith’ and ‘due diligence’ we are of the considered view that in the present case the assessee has computed the ALP in respect of the international transaction in good faith and with due diligence. Accordingly, we find no infirmity in the impugned order passed by the learned CIT(A) directing deletion of penalty levied under section 271(1)(c) - AT
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• Deduction u/s. 80IA(4)(v) - Claim denied as assessee did not make any claim of deduction in the original return of income and made this claim only in the revised return - AO directed to examine the factual aspect of assessee having furnished the tax audit report on Form 10CCB (Rule 18BBB) electronically as discussed above and decide the issue in accordance with law after giving reasonable opportunity of being heard to the assessee. - AT
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• Estimation of income for bogus purchases - It is settled law that in case of disputed purchases shown from such hawala dealers only the profit element embedded in such transaction, to avoid the possibility of revenue leakage, is to be disallowed, and not the substantial part of the transaction. No doubt the assessee has shown extremely low G.P yet the disallowance at rate of 12.5% is on higher side. - restricted the addition of similar bogus/ impugned purchase to the extent of 6% - AT
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• Disallowance of land leveling expenses - the assessee filed his Return of Income in Form No. 2 which is meant for individuals & HUF, NOT having income from Business or Profession. Thus, the assessee was not in clear mind to file the prescribed form and also claimed allowable expenditure, within the provisions of law. Thus, the lower authorities' finding of disallowance does not require any interference. - additions confirmed - AT
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IBC

• CIRP - The onus to prove the existence of fraud is on the party alleging the same and in the present case, the applicant had miserably failed to establish the same - there is no injunction against the Lenders from exercising their contractual rights or statutory rights. Further, the banks are exercising their statutory rights in accordance with law as they are not party to the arbitration proceedings. Moreover, the Applicant is not even a stakeholder in respect of the Corporate Debtor and, a complete third-party to the proceedings before this Tribunal and has no locus standi to question initiation of proceedings under Section 7 of the Insolvency and Bankruptcy Code against the Corporate Debtor. - Tri
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Service Tax

• CENVAT Credit - common inputs and input services - the various options under Rule 6 are options given to the assessee and the Revenue cannot choose one of the options and force it upon the assessee. Even if the assessee is rendering exempted services or manufacturing exempted goods and using common input services no demand can be sustained under Rule 6 (3) as this is only one of its options available to assessee to fulfill its objection. - AT
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Central Excise

• Levy of penalty - wrongful availment of CENVAT Credit - allegation is that the appellant had abetted/aided, planned and conspired with other co-noticees in the preparation of invalid document - There are no whisper about any retraction or any disputes as to their statements being not voluntary. The same are not even rebutted as having been obtained per force. Hence, the statements are relevant documents. The present appeal was filed in the year 2013 and the appellant had sufficient time to place all such relevant documents on record, but no such attempt is made. - demand confirmed - AT
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• Default in the payment of Central Excise Duty - Undisputedly appellants have discharged the duty as demanded in the show cause notice and confirmed against them for the subsequent period from their CENVAT account. The demands have been made against them considering that the payment of the defaulted duty for the Month of Jan-2013 on 26.03.2013 from their CENVAT Account was not a valid payment. Once, it is held that the payment from their CENVAT account was valid payment the demands for the subsequent period will automatically be not sustained. - AT
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VAT

• Levy of Sales Tax / VAT - deemed export to DTA - units in SEZs - A declaration is sought to extend the benefit contrary to the Statute (i.e., KVAT), and the declaration could be over and above what is accepted as a Policy by the State Legislature in Section 6(7)(b) read with Section 32(1). The declaration could be a singular instance under the Act despite attracting the incidence of liability for the sales made to DTA, still, the petitioner could be allowed to have the exemption from payment of tax.- HC
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Case Laws:

• GST

• 2022 (7) TMI 969
  Transitional credit - Carry forward of Input Tax Credit - allowing any balance in their credit account under the earlier regime by filing or revising the GST who had already filed. HELD THAT:- Issue notice.

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• 2022 (7) TMI 968
  Permission to file SLP - HELD THAT:- Permission to file Special Leave Petitions without certified copy of the impugned order is granted - Issue notice returnable on 29.11.2021 - In the meanwhile, the petitioners shall not be arrested, until further orders. The petitioners shall cooperate in the pending investigation.

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• 2022 (7) TMI 967
  Classification of goods - applicable rate of GST and/ or Compensation Cess - Keer Kokil/Tobacco pre-mixed with lime - HELD THAT:- Unmanufactured tobacco with lime tube signifies those pouches where a tube of lime is put inside the pouch containing unmanufactured tobacco. As against, 'unmanufactured tobacco without lime tube' signifies those products where it is sold without any lime tube i.e. no tube of lime is put inside the pouch. In the instant case, product of the applicant is tobacco pre-mixed with lime which is not containing any lime tube. The mixing of lime in tobacco leaves does not alter the nature of the product. The addition of their volatile flavours will not amount to rendering unmanufactured tobacco to manufactured tobacco in view of judgment of Hon'ble Apex Court in case of M/s Yogesh Associates [ 2006 (4) TMI 503 - SC ORDER ] - The quality of tobacco leaves used in the product i.e. Keer Kokil' is different with the tobacco leaves used in the Chewing Tobacco or Zarda Scented Tobacco. Thus, the product is basically Unmanufactured Tobacco (without Lime tube) bearing a brand name. The HSN notes for heading 2401 specifically covers leaves in natural slate, cured tobacco and tobacco for manufacturing chewing Tobacco etc. Hence. 'Tobacco pre-mixed with lime' containing ingredients like lime is nothing but 'unmanufactured tobacco' and will be classified under heading 2401. Once it is held that the product is 'unmanufactured tobacco', the classification of the product is under CTH 2401 which specifics under the sub head 2101 20 90 as 'others' and attracts GST @ 28% as per S. No. 13 of Schedule IV of the Notification No. 01/2017-CT (Rale) dated 28.06.2017 - As far as the rate of Compensation Cess applicable to the product is concerned, the rate of Compensation Cess is provided vide Notification No. 1/2017-Compensation Cess (Rate), dated 28-6-2017 and SI. No. 5 provides the Compensation Cess Rate as 71% for the product Unmanufactured Tobacco (without Lime tube) .

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• Income Tax

• 2022 (7) TMI 966
  Prosecution proceedings u/s 276CC - failure to file ITR in time - Violation of Section 276-CC read with Section 278-B - manadation of seeking valid sanction u/s 278B - As per DR Assessee company not filed the Income Tax Returns (ITR) for the assessment year 2012-13 by 30th September, 2012 which was the last date to file the ITR - HELD THAT:- In the present case, the sanction which is placed on the record as Annexure P-9 may be seen. It refers to the Company M/s ASM Traxim Pvt. Ltd as the assessee . It refers to a response to the show cause notice under Section 276 CC dated 20th March, 2014 vide a letter dated 25th March, 2014 by Mr. B.L. Gupta ITP on behalf of the assessee company , contending that the return had been filed within time allowed u/s 139(4) and that there was no willful default. It refers to the petitioner only in para no.10 in the following words, AND WHEREAS it is seen that the return of income was verified by Sh Vipul Agarwal director by digital signature , and nothing more. Thus, the sanction is specifically to institute a criminal complaint against the Company M/s ASM Traxim Pvt Ltd. It is crystal clear that the sanction has been accorded for the prosecution only of the person named as the assessee , namely the Company M/s ASM Traxim Pvt. Ltd. There is no sanction qua the petitioner, even as a person being a director/being responsible to the conduct of the business of the company. It cannot be held that the observation in para no.10 of this sanction, that the petitioner had verified the returns filed by appending his digital signatures, would tantamount to sanction qua him. That would be stretching language too far. Since the law provides that without sanction u/s 278B of the IT Act, the Department cannot proceed against a person found liable to prosecute him for the offence under Section 276 CC of the IT Act, the present prosecution must fail qua the petitioner. In the absence of a specific sanction for prosecuting the petitioner, the learned ACMM could not have taken cognizance of the complaint against him and then framed charge against him. The edifice built without foundation must crumble. The complaint and all proceedings emanating therefrom, including the impugned orders qua the petitioner Vipul Aggarwal, stand quashed. WP allowed.

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• 2022 (7) TMI 965
  Income accrued in India - Nature of gain - gains arising to the Assessee on the transfer of Compulsorily Convertible Debentures ( CCDs ) - capital gain or interest income - as per ITAT gains arising to the Assessee on the transfer of CCDs to M/s Vatika Ltd. is in the nature of capital gains and shall not be taxable in India under Article 11 of DTAA between India and Mauritius - HELD THAT:- Both the CIT(A) and the ITAT have held in favour of the assessee holding that that the present case is covered by the decision of this Court 2014 (8) TMI 9 - DELHI HIGH COURT] in assessee s own case. The assessment order in the present case was passed on 9th April, 2014 in pursuance of the decision [ 2012 (4) TMI 154 - AUTHORITY FOR ADVANCE RULINGS] of the Authority of Advance Ruling ( AAR ). Assessee preferred a writ petition against the said order of the AAR, which was disposed of by this Court in favour of the assessee [ 2014 (8) TMI 9 - DELHI HIGH COURT] Though the said judgment has been challenged before the Supreme Court by way of a Civil Appeal [ 2018 (1) TMI 1688 - SUPREME COURT] yet there is no stay of the said judgment. Accordingly, the present appeal is dismissed. However, it is clarified that the order passed in the present appeal shall abide by the final decision of the Supreme Court.

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• 2022 (7) TMI 964
  Deduction u/s 80IB - pro rata deduction for eligible units - Tribunal allowing the assessee s claim of deduction u/s 80IB(10) on pro rata basis considering the fact that the assessee did not comply with the limit on built-up area prescribed of Section 80IB(10)(c) in respect of eligible fats in the project Kumar Kruti and Kumar Shantiniketan - as suggested that even if a single fat in a housing project is found to exceed the permissible maximum built-up area of 1500 sq.ft., the assessee would lose its right to claim the benefit of deduction in respect of the entire housing project under Section 80IB(10) - HELD THAT:- A plain reading of the said section does not support that interpretation at all. Learned Counsel for the appellant would have been perfectly justified, had the legislature in its wisdom, in clause c used the words each residential unit has a maximum built-up area . This would then clearly indicate that the intention was to ensure that each and every residential unit in such a housing project confirms inter alia to the size prescribed with a view to make an assessee eligible for claiming the deduction. It is a well settled principle of interpretation of statutes that when the language of a statute is unambiguous and admits of only one meaning, no question of construction of a statute then arises. Reliance in this regard can be placed on the Apex Court judgment in Nelson Motis [ 1992 (9) TMI 355 - SUPREME COURT ] It, therefore, becomes clear that clause c only qualifies an eligible residential unit and no more and further that if there is such a residential unit, which confirms to the requirement as to size in a housing project, all other conditions being fulfilled, the benefit of deduction cannot be denied in regard to a such residential unit. Section 80IB(10), nowhere even remotely aims to deny the benefit of deduction in regard to a residential unit, which otherwise confirms the requirement of size at the cost of an ineligible residential unit with a built-up area of more than 1500 sq.ft. We are of the opinion that the order of the ITAT directing the A.O. to workout the pro rata deduction under Section 80IB(10) of the Act, 1961, in regard to the eligible residential units, merits no interference. The appeal is held to be without merit.

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• 2022 (7) TMI 963
  Deduction of bad debt written off u/s. 36(i) (vii) - outstanding debtors against lease rental - AO held that as per the mercantile system of accounting followed by the assessee, the accrued lease incomes were taxable in the respective years and writing off was not allowed observing that in view of the pendency of the dispute of the assessee before the High Court, assessee had not foregone its right to claim the lease rentals and that the write off was premature - whether the Tribunal was right in rejecting the claim of the assessee for deduction of bad debt written off under Section 36 (1)(vii)? - HELD THAT:- The assessee following the mercantile system of accounting offered these incomes as set out earlier in the Assessment Years 1987-88, 1988-89 and 1989-90. However, in view of the dispute with the lessee, the assessee filed a winding up petition against the lessee in the Bombay High Court. It is not in dispute that the assessee had entered into a bona fide lease agreement with the lessee or that it had paid amounts to the suppliers of the equipment on behalf of the lessee. The first installment of the lease amount was received by the assessee. Further installments due were also accounted for in view of the mercantile system of accounting followed by the assessee. The depreciation was also claimed by the assessee on the equipment which was not disallowed by the AO. The legal dispute between the assessee and the lessee was pending in the Bombay High Court. It is recorded in the order of the Commissioner of Appeals that the lessee company had become a sick company. Obviously, the prospects of recovery of lease rentals were quite bleak and the assessee considering that the same could not be recovered in the foreseeable future decided to write off a debt as bad debt during the previous year relevant to the Assessment Year 1991-92. It is nobody s case that the assessee had not complied with the provisions of Section 36(2) - The assessee took a business decision to write off the debt as a bad debt. Wise businessman would not want to spend good money in litigating for a bad bargain especially in the light of the facts noted above. Having taken the commercial decision to write off the debt as a bad debt based on the material, cannot lead to a conclusion that the decision was not bona fide. The lease rentals offered as income by the Appellant on mercantile basis had become bad and the Appellant decided to write it off and did write off the same in its books of accounts in the previous year in relation to A.Y. 1991-92 in terms of the amended Section 36(1) (vii). In our view, no fault can be found with the same. Reversal of lease rentals - As in our view is not a requirement of Section 36(1)(vii) of the Income Tax Act for allowing a debt as a bad debt. In fact, what emerges from Note-5 of making a special mention is that a prudent practice has been adopted by a limited company of informing its shareholders about the remote possibility of recovery of the said amounts and the decision to reverse and that the same would be accounted for as and when received. The reliance by the Tribunal on the decision of Commissioner of Income - Tax V/s. Coates of India Ltd.[ 1998 (2) TMI 102 - CALCUTTA HIGH COURT] in our view is also misplaced. We observe that the said decision was rendered with respect to the facts of a case relating to the pre-amended Section 36(1)(vii) and not to the post amended situation and is therefore distinguishable. Moreover, in view of what we have already observed with respect to the bona fide nature of the decision by the assessee to write off the debt as irrecoverable, the said decision would not further the case of the Revenue. In our view, the finding of the Tribunal that the claim of the assessee in respect of bad debt cannot be considered, is without any basis. Once, a business decision has been taken to write off a debt as a bad debt in its books which decision as discussed above, is bona fide, that in our view, should be sufficient to allow the claim of the assessee. The method of accounting has no relevance to the issue. Tribunal has misdirected itself in proceeding to give precedence to accounting principles over clear statutory provisions. Evidently, the written off lease rental amount has not been reversed from the income entry in Schedule-16. This is a clear case of writing off a bad debt in accordance with the provision of Section 36(1)(vii) - The Tribunal has erred in rejecting the claim of the assessee for deduction of bad debt written off under Section 36(1)(vii) - The substantial question of law framed in this Appeal is accordingly answered in favour of the Appellant Assessee

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• 2022 (7) TMI 962
  Reopening of assessment u/s 147 - Notice issued u/s 148A - Allegation of violation of principles of natural justice - no reply/submission of the petitioner was available in the case history/noting page in the Income Tax Business Application Portal - HELD THAT:- As the petitioner sent a representation on 11.04.2022. The reply with the documents annexed to it has been uploaded in the Departmental portal. In the reply, the details were given how the petitioner over a period of time made all the fixed deposits initially at Tuticorin and thereafter, at Chennai and further along with the bank statement records uploaded in the portal with hash value. In the order, dated 19.04.2022, there is no reference. It is clearly stated in the impugned order inner page 2 paragraph 4, it is recorded that the petitioner had not sent any reply on or before 11.04.2022 and further in view of the same, nothing has been considered and discussed in the impugned order. Hence, the impugned order is set aside. The petitioner is permitted to file any additional reply and documents in support of their contention in addition to the earlier reply, dated 11.04.2022. The Assessing Officer is directed to consider the petitioner's reply and give her an opportunity of personal hearing and pass appropriate orders on merits and in accordance with law thereafter.

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• 2022 (7) TMI 961
  Reopening of assessment u/s 147 - notice issued u/s 148A - violation of principle of natural justice - as stated under Section 148A(b) dated 31st March,2022 requiring compliance by 18th April, 2022, had been delivered by the postal authorities to the Petitioner on 25th April, 2022, i.e. on the same date the order under Section 148A(d) was passed - HELD THAT:- Mr.Zoheb Hossain, learned standing counsel accepts notice on behalf of the Respondent-Revenue. He states that as the notice issued under Section 148A(b) dated 31st March, 2022 had been received by the Petitioner on 25th April, 2022 i.e. on the same date the order under Section 148A(d) of the Act had been passed, he has no objection if the impugned order and notice dated 25th April, 2022 are set aside. He also states that he would ask the Assessing Officer to examine the fact threadbare, especially, keeping in view the averments made by the Petitioner in its letter dated 27th April, 2022. In view of the aforesaid statements made by Mr.Zoheb Hossain, learned counsel for the Petitioner does not wish to press the present writ petition any further. Accordingly, with consent of the parties, the impugned order issued under Section 148A(d) of the Act dated 25th April, 2022 as well as the notice issued under Section 148 of the Act dated 25th April, 2022 are quashed and the matter is remanded back to the Assessing Officer to decide the matter afresh in accordance with law within eight weeks, after giving an opportunity of hearing to the Petitioner. Moreover, in view of the averments made by the Petitioner in its letter dated 27th April, 2022 as well as Form 15 CA referred to in Section 148A(b) notice, this Court directs the Assessing Officer to apply his/her mind diligently.

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• 2022 (7) TMI 960
  Deduction u/s 10B - exclusion expenses incurred in foreign exchange, freight and clearing expenses incurred in foreign exchange in computing deduction - HELD THAT:- As substantial questions of law raised herein have been decided in favour of the assessee, in the decision of the Hon'ble Supreme Court in Commissioner of Income Tax vs. HCL Technologies Ltd. [ 2018 (5) TMI 357 - SUPREME COURT] held if the deductions on freight, telecommunication and insurance attributable to the delivery of computer software under Section10A of the IT Act are allowed only in Export Turnover but not from the Total Turnover then, it would give rise to inadvertent, unlawful, meaningless and illogical result which would cause grave injustice to the Respondent which could have never been the intention of the legislature. Even in common parlance, when the object of the formula is to arrive at the profit from export business, expenses excluded from export turnover have to be excluded from total turnover also. Otherwise, any other interpretation makes the formula unworkable and absurd. Hence, we are satisfied that such deduction shall be allowed from the total turnover in same proportion as well. On the issue of expenses on technical services provided outside, we have to follow the same principle of interpretation as followed in the case of expenses of freight, telecommunication etc., otherwise the formula of calculation would be futile. Hence, in the same way, expenses incurred in foreign exchange for providing the technical services outside shall be allowed to exclude from the total turnover - Decided against revenue.

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• 2022 (7) TMI 959
  Reopening of assessment u/s 147 - Cash deposit during the demonitisation period - eligibility of reasons to believe - HELD THAT:- As reasons recorded by the AO is required to be looked considering the facts so as to enable the AO to form a belief that income chargeable to tax had escaped assessment on the basis of materials which was available with him. During the course of regular assessment, the AO had asked the assessee to explain the source of cash deposit after demonitisation which was explained by the assessee in reply to the notice under section 142(1) which is accepted by the AO while framing the assessment under section 143(3) - Therefore, ratio laid down by this Court in case of Swati Malove Divetia [ 2018 (9) TMI 804 - GUJARAT HIGH COURT] is applicable to the facts of the present case as the Assessing Officer has recorded the reasons ignoring the reply of the assessee during the course of regular assessment and hence the reasons recorded by the Assessing Officer to reopen the assessment under section 147 of the Act lacks validity and the Assessing Officer proceeded on erroneous premise. This Court in case of Gujarat Power Corporation Ltd. [ 2012 (9) TMI 69 - GUJARAT HIGH COURT] has held that merely because the Assessing Officer did not record the reasons for making no disallowance in the assessment order under section 143(3) of the Act, 1961, would be of no consequence when during the course of assessment proceedings, the Assessing Officer did not reject the reply of the assessee and therefore, any reopening of such assessment would amount to change of opinion. Such tangible material which is otherwise available on the original assessment record and when there is a complete disclosure of all relevant facts upon which the assessment is made, the Assessing Officer cannot reopen the assessment on the ground that the income has escaped assessment due to failure on part of the assessee to disclose truly and fully the material facts. The petition requires consideration and is accordingly allowed. Notice issued by the respondent authority under section 148 of the Act, 1961 is hereby quashed and set aside and as a consequence thereof notice under section 143(2) read with section 147 of the Act, 1961 as well as order rejecting the objections of the assessee (Annexure-I) passed by the respondent authority are hereby quashed and set aside.

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• 2022 (7) TMI 958
  Revision u/s 263 by CIT - disallowance u/s 14A of the Income Tax Act r/w Rule 8D - HELD THAT:- As relying on case of husband of the respondent [ 2022 (7) TMI 598 - GUJARAT HIGH COURT ] the order passed by the AO, in our opinion, shall be deemed to be erroneous in so far as it prejudicial to the interest of the Revenue, if the Pr. CIT would have specifically pointed out which of inquiries or verification should have been carried out by the AO in this regard and the AO failed to carry out those inquiries and verification as desired by the Pr. Commissioner of Income-tax. Since the Pr. CIT has not suggested the basis of inquiry or verification to be carried out by the AO, the order passed by the AO cannot be deemed to be erroneous in so as far as it is prejudicial to the interest of the Revenue. In the light of the above mentioned judicial precedents and facts of the present case, we are of the opinion that the AO has adopted one possible legal view sustainable in law on the issue and mere invoking proviso based on revenue audit objection amounts non application of mind. Merely just because the view taken by the AO was not found acceptable does not mean that the AO has failed to make requisite enquiries. Thus, the view taken by the AO was plausible view, which cannot be disturbed by the Ld. Pr.CIT. Therefore, we find that twin condition were not satisfied for invoking the jurisdiction under section 263 of the Act. Therefore, in absence of the same the Id. Pr.CIT was not correct in exercise the jurisdiction under section 263 - Decided in favour of assessee.

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• 2022 (7) TMI 957
  Revision u/s 263 by CIT - Validity of Reopening of assessment u/s 147 - HELD THAT:- We do not justify the remand order to be sustainable particularly when the appeal has been preferred by the assessee against the said order passed by the Ld. AO. We further note that the CIT(A) is yet to decide the order either way and therefore, we do not find any reason to initiate and proceed against the said order passed by the AO u/s 147 taking recourse of the provision of law u/s 263 of the Act by holding the order passed by the Ld. AO erroneous and prejudicial to the interest of Revenue. In our considered opinion, the same is premature. In this regard, we have also considered the judgment passed by the Allahabad High Court in the case of CIT, Meerut vs. Vam Resorts Hotels Pvt. Ltd. [ 2019 (8) TMI 1418 - ALLAHABAD HIGH COURT] as relied upon by the A.R. We find that on the identical situation the Hon ble Court was pleased to quash the order passed under Section 263. During the pendency of the appeal preferred by the assessee u/s 250 while upholding the order passed by the Tribunal in holding the order exercising power under Section 263 was barred by Clause (c) of Explanation 1 of Section 263 . Thus reason/basis of the impugned proceeding u/s 263 of the Act when the appeal preferred by the assessee under Section 250 of the Act before the CIT(A) is pending against the order passed by the Ld. AO under Section 147 of the Act which has been sought to be revised by the Ld. PCIT in the garb of the provision of Clause (c) of Explanation 1 of Section 263 of the Act. The same is, thus, found to be unsustainable and therefore, quashed. Assessee s appeal is, therefore, allowed.

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• 2022 (7) TMI 956
  Exemption u/s 54B and u/s 54F denied - Capital gain - assessee with other co-owner sold property being agricultural land - Assessee was having 50% share in the said property - HELD THAT:- We note that assessee has furnished the relevant documents and evidences to claim exemption under section 54B and 54F of the Act, however, the same have not been examined by the assessing officer, in right perspective, therefore we are of the view that assessee should be given one more opportunity to plead its case before the assessing officer. We note that it is settled law that principles of natural justice and fair play require that the affected party is granted sufficient opportunity of being heard to contest his case. Therefore, we deem it fit and proper to set aside the order of the ld. CIT(A) and remit the matter back to the file of the assessing officer to adjudicate the issue afresh on merits. For statistical purposes, the appeal of the assessee is treated as allowed.

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• 2022 (7) TMI 955
  Addition towards late payment of PF, ESI and welfare fund - HELD THAT:- We find that as on today the issue is covered against the assessee by the decision of Hon ble High Court in CIT Vs GSRTC ( 2014 (1) TMI 502 - GUJARAT HIGH COURT] . Therefore, the assessee has no merit in its case. We further find that Hon'ble Jurisdiction High Court in subsequent decision in Salasar Laminates Ltd. [ 2018 (10) TMI 1632 - GUJARAT HIGH COURT] though dismiss that appeal. However it was directed that if the decision of GSRTC VS DCIT (supra) is reversed by Hon'ble Apex Court, the assessee is given opportunity to revive his appeal by filing application for seeking similar relief. Considering the fact that the issue is squarely covered against the assessee as noted above. However, instead of keeping the matter alive, the case was restore to Ld. CIT(A) to give effect to the order of the Tribunal in accordance with the decision of Hon'ble Supreme Court in SLP of Gujarat State Road Transport Corporation [ 2016 (3) TMI 1438 - SC ORDER] . Additional grounds of appeal - disallowance of professional tax deducted from the salaries of the employee - As we find that the assessee has raised additional ground of appeal for the first time before the Tribunal, facts related with the disallowances are emanates from the record of the lower authorities being part of computation of total income, therefore, we admit this ground of appeal and restore the same to the files of ld CIT(A) to decide it on merit. The ld CIT(A) will be at liberty to seek the remand report if so desired and pass the order in accordance with law. In the result, all the grounds appeal raised by the assessee is allowed for statistical purpose.

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• 2022 (7) TMI 954
  Disallowance u/s 14A r.w.r. 8D - As argued interest paid on partner s capital is not expenses for the purpose of section 14A, indeed, the same is attribution of profit - HELD THAT:- At the outset we find that this issue has been dealt by ITAT Pune Bench in case of Qualities Industries [ 2016 (10) TMI 56 - ITAT PUNE] held that partnership firm and its partners are seen holistically and in a combined manner with costs towards interest eliminated in contra, the investment in mutual funds generating tax free income bears the characteristic of and attributable to its own capital where no disallowance u/s 14A read with Rule 8D is warranted. Consequently, the plea of the assessee is merited in so far as interest attributable to partners. However, the interest payable to parties other than partners, in our view, would be subjected to provisions of Rule 8D(2)(ii) of the Rules. Similarly, in the absence of any specific plea from assessee towards disallowance under Rule 8D(3), we hold it sustainable in view of express mandate of law. The matter is accordingly remanded back to the file of the Assessing Officer for re-computation of disallowance under Rule 8D r.w.s. 14A of the Act in terms of our opinion expressed hereinabove. Disallowances under rule 8D(2)(iii) r.w.s. 14A - As in the case of Asstt. CIT v. Vireet Investment (P.) Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] had considered an identical issue and held that while computing average value of investments only those investments which yield exempt income in the year should be considered. Therefore, we are of the considered view that for computing disallowance under Rule 8D(2)(iii), those investments which yield exempt income only needs to be considered. Therefore, we set aside the issue to the file of the AO and direct him to re-compute disallowance in light of our discussions herein above which comes. Addition cannot exceeds the amount of exempted income - We direct the AO to limit the disallowance under section 14A read with rule 8D of Income Tax Rule, if any, then it should be lower of exempted income or the disallowance made under section 14A r.w.r. 8D of Rules of Income Tax Rules. Thus the grounds of appeal raised by the assessee is partly allowed.

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• 2022 (7) TMI 953
  Addition u/s 14A r.w.r. 8D - HELD THAT:- As regards the disallowance under limb (2) of 8D, it is an undisputed position that the investments are made in the earlier year 2007-08, where the CIT(A) has rendered a categorical finding that the investments were made out of interest free funds of the assessee company and no disallowance of interest under rule 8D(2)(ii) is required. Thus, findings of CIT(A) are not under challenge before us. In the circumstances, we hold that no disallowance of interest u/s 14A read with rule 8D(2)(ii) is warranted. Disallowance under rule 8D(2)(iii), for the purpose of computing the average value of investments, only the investments which yielded exempt income alone has to be considered - Hon ble Special Bench in the case of Asstt. CIT Vs. Vireet Investment (P) Ltd., [ 2017 (6) TMI 1124 - ITAT DELHI] has held that while computing the amount of disallowance under sub clause (iii) of sub-rule (2) of Rule 8D of the Rule, the value of investment which yielded exempt income alone has to be considered for the purpose of arriving at average value of investment We find merit in the submissions made on behalf of the assessee that the amount of investment which yielded exempt income alone should be taken into consideration for the purpose of arriving at average value of investment as envisaged under sub clause (iii) of sub-rule (2) of Rule 8D of the Rule. Accordingly, we restore the matter back to the file of Assessing Officer for the purpose of computing the amount of disallowance in the above mentioned manner. Nature of receipt - Taxability of the subsidy received by the respondent-assessee under the Package Scheme of Incentives, 2007 announced by the Government of Maharashtra - Revenue or capital receipt - HELD THAT:- As relying on case M/S. CHAPHALKAR BROTHERS PUNE [ 2017 (12) TMI 816 - SUPREME COURT] since the subsidy was granted actually as incentives for encouraging the dispersal of industries to the less developed areas of the State of Maharashtra, the subsidy cannot be treated as revenue receipt. As regards to the applicability of provisions of section 28(iv) of the Act, this envisages the value of entire benefit, whether convertible to money or not, which means the benefits have to be in the kind, the monetary benefits are not covered by the said provisions of the Act - Decided against revenue.

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• 2022 (7) TMI 952
  Exemption u/s 10(2A) - share of profit in the partnership firm - addition towards interest received from the firm on the capital deployed in the firm by the Partner - HELD THAT:- A perusal of the computation statement filed along with the return of income by the assessee clearly shows that the income from the business/ profession declared include the interest income and the assessee has separately claimed the profit being share of the profit as exempt u/s 10(2A) - Although these evidences were available with the AO as well as the CIT (A), however, they have not considered the same in the way the same should have been considered. Since the assessee has already offered the income being the interest received from the firm in the return of income filed, therefore, addition of the same again amounts to double addition. We, therefore, set aside the order of the learned CIT (A) on this issue and direct the Assessing Officer to delete the addition. So far as the profit from the firm is concerned, the assessee has already claimed the same as exempt u/s 10(2A) of the Act. Since the share of profit from the firm is exempt u/s 10(2A) of the Act, therefore, we modify the order of the learned CIT (A) and direct the Assessing Officer to delete the addition. Grounds of appeal No.1 3 raised by the assessee are accordingly allowed.

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• 2022 (7) TMI 951
  Disallowance u/s 10A - allocation of expenses made by the assessee to 10A eligible units and non 10A eligible units was not appropriate - assessee has established cost codes to record every cost in its accounting system for non 10A units and 10A units. It has also common cost codes for recording common costs incurred with respect to non 10A units as well as 10A units - HELD THAT:- The assessee furnished explanation / justification for allocation of expenses before the Ld. CIT(A) as also before us. CIT(A) recorded the finding that the manner of allocation of expenses between 10A units and non 10A units are based on common principles of costing and is reasonable. We agree with the findings of the Ld. CIT(A). CIT(A) further observed that the assessee is following the basis as provided by Accounting Standards-17 approved by ICAI for apportionment of expenses between different units. DR could not contradict and the above finding of the Ld. CIT(A) remained uncontroverted by the Revenue. If that be so, without bringing on record any adverse material, the accounting standard followed by the assessee for apportionment of expenses between different units cannot be faulted. We do not find any substance in the written submission filed by the DR in support of the apportionment of expenses in proportion of the revenue earned by 10A units and non 10A units done by the Ld. AO in both the AYs. Accordingly, we endorse the findings of the Ld. CIT(A) that the allocation of expenses between 10A units and non 10A units made by the assessee cannot be disturbed and therefore, the disallowance of deduction in AY 2007-08 and AY 2008-09 respectively under section 10A of the Act has rightly been deleted by the Ld. CIT(A). The grounds taken by the Revenue in this regard in both the AYs are rejected. - Decided in favour of assessee.

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• 2022 (7) TMI 950
  Capital gain - sale of property by the legal heir with the co-owners - AO taking 1/4 th of jantri value of the land as sale consideration in the hands of appellant for arriving at LTCG capital gain - addition made in the hands of assessee on protective basis - AO observed that the assessee had sold the immovable property along with other co-owners for a total consideration as per sale deed (valuation for purpose of stamp duty) but the capital gain arising from this sale was not offered to tax - HELD THAT:- When the father of the assessee entered into Banakhat with Mr. Hammad Ali in the year 2000, and received certain amount in cash, no amount was offered to tax as capital gains tax. Secondly, there is nothing on record to show that effective possession was transferred to Mr. Hammad Ali pursuant to entering of Banakhat in 2000. Thirdly, the fact that terms of conditions of Banakhat in 2000 do not find any mention in the registered sale deed dated 28.07.2011 points to the state of affairs that the terms of the registered sale deed were not governed by the terms of the Banakhat entered into in the year 2000 and operated independently of it. Fourth, the property remained in the name of Mr. Ganpathbai Patel till transfer took place pursuant to registered sale deed dated 28.07.2011. Therefore, in our considered view, in the light of above Rulings as applied to the assessee s set of facts, the assessee (as legal heir of the said property) is liable to capital gains tax during the year under consideration. Accordingly, we are of the considered view that Ld. CIT(Appeals) has not erred in law and in facts in holding that the assessee is liable to pay capital gains tax on her 1/4th share in the property during the year under consideration. In the result, the order of ld. CIT(A) is upheld.

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• 2022 (7) TMI 949
  Ex-parte order passed by CIT-A - Non speaking order - HELD THAT:- The issues implicit in the statement of facts in the grounds of appeals, as extracted above, do raise specific points for determination calling for adjudication by the learned CIT(A). While an assessee indeed has, u/s 250(2)(a), the right to be heard at the hearing of the appeal , such a right of the assessee-appellant cannot be put against the assessee inasmuch while the assessee-appellant is to be essentially extended a fair and reasonable opportunity of hearing before an appeal can be disposed of, the non-exercise of this right by the assessee-appellant cannot be a reason enough for the CIT(A) s not dealing with the points so raised before him on merits. The exercise of the right to be heard at the hearing of the appeal by the appellant, either in person or by an authorized representative condition , under section 250(2)(a), is not a condition precedent for the disposal of appeal on merits in accordance with the scheme of Section 250(6). In our considered view, irrespective of the non-appearance of the assessee before the CIT(A), the CIT(A) ought to have dealt with the issues so raised by the assessee-appellant on merits and by way of speaking order and in accordance with the law. We, therefore, deem it fit and proper to remit the matter to the file of the CIT(A) for adjudication on merits.

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• 2022 (7) TMI 948
  Revision u/s 263 by CIT - addition u/s 69A r.w.s. 115BBE - lack of inquiry or inadequate inquiry - Assessee argued the provisions of section 69A was not attracted, hence, section 115BBE of the I.T.Act has no application - HELD THAT:- In the instant case, the assessee has offered the entire cash seized as part of the income and paid duly the taxes thereon. The A.O. had taken a conscious decision while passing the assessment order u/s 143(3) r.w.s. 153A of the I.T.Act. When two views are possible and the A.O. adopts one of the views, the PCIT cannot treat the assessment order as erroneous and prejudicial to the interest of the revenue. In support of the above proposition, we rely on the judgment in the case of CIT v. Max India Limited 2007 (11) TMI 12 - SUPREME COURT] - The Hon ble Delhi High Court in the case of CIT v. Sunbeam Auto Limited [ 2009 (9) TMI 633 - DELHI HIGH COURT] had held that lack of inquiry or inadequate inquiry by the A.O. cannot be a reason to invoke the revisionary powers u/s 263. In the instant case, on perusal of the assessment order, it is clear that the enquiry was made by the Assessing Officer, and accordingly, the assessment order was concluded. The shortfall of enquiry or inadequacy of enquiry cannot be termed as total lack of enquiry. Hence, the order of the assessment cannot be held to erroneous. On identical facts, the Pune Bench of the Tribunal in the case of Alfa Laval Lund AB [ 2021 (11) TMI 327 - ITAT PUNE] had held that when revisionary proceedings have been triggered by the A.O. by sending a proposal to the PCIT and then the latter passing the order u/s 263 of the I.T.Act, there is jurisdictional deficit resulting into vitiating the impugned order. Thus we hold that the PCIT is not justified in passing the impugned order u/s 263 - Decided in favour of assessee.

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• 2022 (7) TMI 947
  Penalty u/s 271(1)(c) - Transfer Pricing adjustment made with regard to the transactions of the assessee-company with its Associated Enterprises - CIT - A deleted the penalty levy - HELD THAT:- Under section 271(1)(c) of the Act, penalty is levied for concealing the particulars of income or furnishing inaccurate particulars of income by the assessee. It is also pertinent to note the provisions of Explanation 7 to section 271(1)(c) of the Act, which deals with penalty levied in respect of transfer pricing adjustment As per the provision of this explanation, any addition on account of transfer pricing adjustment shall be deemed to represent income in respect of which particulars have been concealed or inaccurate particulars have been furnished by the assessee as per section 271(1)(c) which will result in imposition of penalty under the said section. The Explanation further provides an exception, where no penalty will be imposed pursuant to aforesaid addition, if assessee proves to the satisfaction of the authority that the price charged or paid in such a transaction was computed in accordance with provisions contained in section 92C and such price was computed as per the manner prescribed under that section in good faith and with due diligence. The term good faith and due diligence in Explanation 7 to section 271(1)(c) of the Act were analysed by the Co ordinate Bench of Tribunal in DCIT v/s RBS Equities India Ltd. [ 2011 (8) TMI 459 - ITAT MUMBAI] Section 92C of the Act deals with computation of ALP and enlists the methods to be followed for same. In the present case, assessee applied TNMM as the most appropriate method, which is also prescribed u/s 92C - as there is no dispute regarding the selection of most appropriate method in the present case. In the present case, the assessee has conducted and maintained contemporaneous transfer pricing documentation as per the provisions of section 92D of the Act read with Rule 10D of the Income Tax Rules. The assessee, in its transfer pricing report had conducted a detailed function, assets and risk analysis of its international transaction. It is also not the case, wherein, the transfer pricing documentations filed by the assessee were rejected by the TPO. Thus, applying the analysis of the term good faith and due diligence we are of the considered view that in the present case the assessee has computed the ALP in respect of the international transaction in good faith and with due diligence. Accordingly, we find no infirmity in the impugned order passed by the learned CIT(A) directing deletion of penalty levied under section 271(1)(c) - Decided against revenue.

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• 2022 (7) TMI 946
  Revision u/s 263 by CIT - Allowability of provisions for doubtful debts and air conditioner expenses - HELD THAT:- AO has specifically carried out the enquiry regarding provisions for doubtful debts and air conditioner expenses and specific reply has been given by the assessee. In the audited P L account the assessee has also shown bad debts written off. PCIT has mentioned provisions for doubtful debts. The assessee during the regular course of business has claimed to have shown sales in the preceding years of which some sales turned bad and the same has been written off in the books of account as bad debt, which the assessee is entitled for and therefore, the claim is admissible. Similarly for air conditioner charges, the assessee filed complete details along with tax deducted on the charges paid and the bills enclosed in the paper book justify the claim of assessee of air conditioner charges. Actually these are maintenance charges and other lift related expenditure, which are revenue in nature. Therefore, both the issues have been examined by the ld. AO and detailed inquiry has been made and thus in our view Ld. PCIT erred in invoking the revisionary jurisdiction u/s. 263. Employees contribution to PF - As it is not in dispute that there is a delay in depositing the said sum of Rs.9,16,893/- before the due date prescribed under the PF Act. It is also not in dispute that alleged sum stands deposited before the due date of filing of return of income u/s. 139(1) of the Act. In view of in view of the ratio laid down by Vijay Shree Ltd [ 2011 (9) TMI 30 - CALCUTTA HIGH COURT] the said sum is an allowable expenditure for the year under consideration as it has been deposited before the due date of filing of return u/s. 139(1) of the Act and do not call for disallowance u/s.36(1)(va) r.w.s 2(24)(x) of the Act. Ld. PCIT ought to have appreciated the settled legal judicial precedence should not have restore the said issue of PF/ESI contribution issues to ld. AO for further examination when all the facts were available on record. Provisions of section 263 of the Act itself provides that ld. PCIT ought to make or cause to make such enquiry as he deems necessary before passing the impugned order. Therefore, in our considered view, ld. PCIT erred in invoking revisionary jurisdiction u/s. 263 of the Act on this issue also. Assessee appeal allowed.

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• 2022 (7) TMI 945
  Deduction u/s. 80IA(4)(v) - Claim denied as assessee did not make any claim of deduction in the original return of income and made this claim only in the revised return - HELD THAT:- It is not in dispute that the assessee filed the original return of income before the due date of filing of return u/s.139(1) which in this case return was filed on 25-11-2014 as the extended due date was on 30-11-2014. It is also not in dispute that the assessee failed to make such claim of deduction u/s. 80IA(4)(v) in the original return of income and made the said claim subsequently in the revised return filed on 31-03-2016. Provisions of section 80IA(4)(v), 80IA(7) and 80AC and Rule 18BBB(2) and Rule 12(2) of the I.T Rules, 1962, we observe that one of the conditions for claiming deduction u/s. 80IA(4)(v) is that assessee needs to furnish the return of income before due date specified u/s. 139(1) - Another condition is that the assessee needs to obtain an audit report from a Chartered Accountants in Form 10CCB ( as per Rule 18BBB(2) and the same needs to be furnished electronically before the due date/specified date referred in section 44AB r.w.r.t section 139(1) of the Act. We note that for claiming such deduction if assessee has filed return of income before the due date specified u/s. 139(1) of the Act applicable to the assessee and has not made the claim u/s. 80IA in the original return, such claim can be made in a valid revised return. We find that there is no dispute to the fact that the assessee has filed original return of income before the due date specified u/s. 139(1) of the Act, but failed to make the claim u/s. 80IA(4)(v) of the Act in the original return and claimed it in a valid revised return. However, in the above referred decision there is no reference to electronically filing the audit report on Form 10CCB before the due date prescribed under the Act. We need to find that whether audit report in Form 10CCB electronically duly verified/certified by the Chartered Accountants has been filed electronically before the due date of filing of return of income applicable to the assessee, being subject to audit u/s. 44AB of the Act. On perusal of records, we find that nowhere in the proceedings below this aspect of furnishing of audit report on Form 10CCB for claiming of deduction u/s. 80IA(4)(v) has been dealt. Though during the course of hearing before us the Ld. Counsel for the assessee was asked about status of filing of such report, it was submitted that this matter was never in dispute. It is pertinent to observe that in the past when audit report prescribed under the Act were not required to be filed electronically, then if the assessee has obtained such audit report before the prescribed due date, but failed to attach it with the Income-tax return, then in such situation consistent view has been taken by various judicial forums that such mistake by the assessee of not enclosing the audit report with the income-tax return is a procedural lapse, which can be cured even at the stage of assessment proceedings, where such audit report can be filed. Subsequent to the amendments made in the Act audit report prescribed under the Act needs to be filed electronically on the Income-tax portal duly certified/verified by the Chartered Accountants. If such report is not furnished electronically before the due date prescribed under the Act for furnishing of such report, then such mistake cannot be considered as a procedural lapse because once report is to be filed electronically, then it will prove two things, firstly, assessee has obtained audit report before the due date and secondly, it is filed before the due date. Therefore, in case filing of audit report electronically there remains no option for the assessee to file such report at a later stage in the course of assessment proceedings and the assessee is mandatorily required to adhere to the provision of electronically filing the audit report before the due dates prescribed under the Act. We, therefore, are of the considered view that this is another important condition, which the assessee statutorily needs to fulfil in order to claim such deduction u/s. 80IA(4)(v) - Since this aspect of examination of the audit report on Form 10CCB having been filed electronically before the due date of filing of return has neither been discussed in the impugned order of the Ld. CIT(A) nor in the assessment order nor any information is available in the paper book and, therefore, this fact needs to be examined by the AO that whether the assessee has furnished the report as provided in section 80IA(vii) of the Act in prescribed Form 10CCB duly verified by a Chartered Accountant electronically before the due date of filing of return of income and if yes, then even if assessee forgot to claim such deduction u/s. 80IA(4)v) of the Act in the original return of income filed before the due date of filing return, such claim made in the revised return may be allowed. In case of the contrary situation, where the assessee neither claimed deduction u/s.80IA(4)(v) of the Act in the return of income filed before the due date nor filed the relevant tax audit report [i.e Form No. 10CCB ] as per provisions of section 80IA(4(v) r.w. proviso to Rule 12(2) of the I.T Rules, 1962, then the assessee will fail to get such claim of deduction u/s. 80IA(4)(v) of the Act made in the revised return of income. Accordingly we direct the ld. AO to examine the factual aspect of assessee having furnished the tax audit report on Form 10CCB (Rule 18BBB) electronically as discussed above and decide the issue in accordance with law after giving reasonable opportunity of being heard to the assessee. We direct the assessee to furnish necessary details to ld.AO regarding proof of filing audit report on Form No. 10CCB u/s. 80IA(4)(v) of the Act electronically on Income-tax portal before the due date prescribed under the Act. Therefore, Ground No. I (a) (b) are allowed for statistical purpose.

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• 2022 (7) TMI 944
  Addition u/s 41(1) - remission of liability - amount written off by the assessee company in respect of unpaid expenses like commission, Royalty, knowledge know-how fees etc. to br payable to Scholler Textile AG - Assessee submitted that Scholler Textile AG hold 74% of the share capital and is a promoter of the company. accumulated losses of the company and the sum payable to the holding company remained unpaid - HELD THAT:- Scholler Textiles AG is the promoter of the assessee company. The assessee was making consistent losses for the last several years and therefore, the promoter company was supporting the assessee in continuing its survival. The sums payable to the promoter towards commission, knowhow fees and royalty are outstanding constantly for 2012-13 onwards. On careful examination of section 41(1) of the Act, we find that assessee has not obtained any amount in respect of the above liability outstanding and there is no remission of the liability. Unless, there is an evidence of remission or cessation of liability, provisions of Section 41(1) of the Act does not apply. In fact, in this case assessee has acknowledged the existence of liability in its balance sheet year to year, shown relationship with the creditor and reasons for non-payment. In view of this, we do not find any infirmity in the order of the learned CIT (A) in deleting the above addition. Accordingly, the order of the learned CIT (A) is confirmed. The appeal of the learned Assessing Officer is dismissed.

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• 2022 (7) TMI 943
  Reopening of assessment u/s 147 - information of investigation wing Mumbai - bogus purchases - HELD THAT:- We find that in case Peass Industrial Engineers (P) Ltd [ 2016 (8) TMI 280 - GUJARAT HIGH COURT] while considering the validity of similar notice of reopening, which was also issued on the basis of information of investigation wing that they have searched a person who is engaged in providing accommodation entries, held that where after scrutiny assessment the assessing officer received information from the investigation wing that well known entry operators of the country provided bogus entries to various beneficiaries, and assessee was one of such beneficiary, assessing officer was justified in re-opening assessment. Similar view was taken by Hon ble Jurisdictional High Court in Pushpak Bullion (P) LTD. [ 2017 (8) TMI 961 - GUJARAT HIGH COURT] - Therefore, respectfully following the order of Hon ble High Court, we find that the assessing officer validly assumed the jurisdiction for making re-opening under section 147 on the basis of information of investigation wing Mumbai. Mandatory Permission u/s 151 - The other objection raised by the ld AR of the assessee that no permissions as required under section 151 was obtained by the assessing officer. We find that the ld AR for the assessee raised this objection for the first time, however, no evidence to substantiate such submission is placed on record. Thus, in absence of any proof or evidence that no permission under section 151 was availed by assessing officer before making reopening has substance. Therefore, we do not find any merit in the ground No. 1 of appeal by assessee. Hence, the ground No. 1 in assessee s appeal is dismissed. Estimation of income for bogus purchases - As profit margin in the trade and business of assessee is ranging from 5% to 7% and the disallowances restricted by the assessing officer are at 12.5% of the disputed/ impugned purchase shown from the entry provider. Considering all disallowance restricted by Ld. CIT(A) is on higher side, keeping in view of the profit margin in the industry. It is settled law that in case of disputed purchases shown from such hawala dealers only the profit element embedded in such transaction, to avoid the possibility of revenue leakage, is to be disallowed, and not the substantial part of the transaction. No doubt the assessee has shown extremely low G.P yet the disallowance at rate of 12.5% is on higher side. This combination in similar cases, wherein the purchases are shown from Bhanwarlal Jain, have restricted or enhanced the addition to the extent of 6% of impugned or disputed purchases. Therefore, taking the consistent the disallowance of purchases in the present case is also restricted to 6% of the disputed purchases. In the result, the grounds of appeal raised by assessee are partly allowed

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• 2022 (7) TMI 942
  Addition of unexplained cash deposits in the bank account of the assessee in IDBI and HDFC - HELD THAT:- We agree with the assessee that the addition on account of cash deposits in IDBI and HDFC Banks has been confirmed by the ld. CIT(A) without appreciating the contentions of the assessee; that the same could be attributed to the cash withdrawn from the same bank accounts, which were corroborated with the bank statement also. Revenue has not controverted the fact of sufficient cash withdrawal in Bank prior to deposit. We do not agree with the ld. CIT(A) that the assessee has to demonstrate one-to-one nexus between cash deposits and withdrawals which is virtually impossible. As long as there is cash withdrawal prior to deposits and gap between the withdrawals and deposits is a reasonably short period of time, it can be, in the absence of any evidence to show the utilization of the cash withdrawal, safely presumed that the cash deposits have been sourced from the cash withdrawn. No justification in the order of the CIT(A) upholding the addition made on account of cash deposits in the bank accounts of the assessee. We therefore direct the deletion of addition of cash deposits - Accordingly, ground no. 1 and 2 are allowed. Unexplained investments - HELD THAT:- We find merit in the contention of the assessee that no actual investment was made by the assessee in shares as held by the Revenue authorities, but the assessee had only indulged in buying and selling of shares on the same day, earning profit/loss only in the process without making any investment. The assessee has reasonably demonstrated this fact through broker's note of the investment. The said contract notes clearly reflect the sale and purchase of shares within the same day. The Revenue has been unable to controvert the same. Addition to be deleted - Decided in favour of assessee. Addition made on account of borrowed loan by the assessee from his friends - HELD THAT:- AO found that the assessee made certain transactions in cash relating to share trading transactions, source of which, he stated was loans from his friends and family. However, the loans amounting to Rs. 1,00,500/- was added to his income as source of the same was not explained to the satisfaction of the Revenue authorities. The assessee had given complete list of his friends from whom loans were taken, and it is evident from the same that he had taken very small amount of loan ranging from Rs. 3,000/- to Rs. 15,000/- and all the details regarding his friends from whom loan had been taken by the assessee was given to the AO who had issued summons to them and in respect of which, two persons had confirmed having given loan to the assessee. Considering that loans were taken for the purpose of carrying out share trading transactions, which is an accepted fact and were of very small amounts and two persons have confirmed of giving loan, we see no reason to treat the loans as unexplained. AO had accepted the fact of loan taken by the assessee from one Mr. Raj Kumar Sharma, as stated at para 9.2 of the Assessment Order. Also the fact of loan of Rs. 78,000/- taken from the father of the assessee has also been accepted by the Revenue noting that it is not improbable for this amount being given out of savings and agricultural income of his father. On the same analogy the explanation of the source of these very small loans as given by friends of the assessee to help him in his share trading transactions, and which has been confirmed by two parties to be given out of their labour work income, cannot be dismissed as unbelievable - we see no reason to uphold the order of the Ld. CIT(A) confirming the addition on account of alleged unexplained loans - Assessee appeal allowed.

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• 2022 (7) TMI 941
  Addition u/s 68 - amounts found deposited in the bank accounts through NEFT amount unexplained - HELD THAT:- We have perused the contents of the Bank account of the assessee as noted that the transactions reflected therein relate majorly to NEFT deposits narrated to be from Prakash Kumar Parmar and withdrawals by way of cheques issued in the name of Canon Capital and Finance, stated to be a Share Broking Firm. Statement of the assessee in Canon Capital and Finance, placed before us at P.B22-29 as evidence, corroborates the fact of cheques issued from her bank account to the firm. These facts have not been controverted by the Revenue. Therefore the contention of the assessee that her bank account reflected transactions on account of share trading only stands established. For deposits in assessee bank account as stated above are narrated in the bank statement as NEFT Prakash Kumar Parmar.Clearly all these deposits have come from transfers made by Mr.Parmar. Thus the facts on record demonstrate the transactions in the bank account as relating to share trading conducted through broker Canon Capital and money for the said purpose when falling short being transferred by one Mr.Prakash Parmar. Coupled with the fact that the assessee was a lady advanced in age ,being 78 years old, with meager means, having returned income of only Rs.99,740/-and stated to have no knowledge of shares, which considering her age and background is highly probable, the assesses explanation rings true that her bank account was being operated by others for conducting share trading transactions. The assessee we find had stated so on oath also. We completely agree with assessee that the assessee had discharged her onus of explaining the source of deposits in her account. Revenue, we hold, wrongly rejected the explanation as not tenable and made addition of the deposits in the hands of the assessee when rightfully the onus had shifted to the Revenue to inquire further into the matter having been given all relevant details of the persons allegedly operating the assesses bank account, including their names, addresses,PAN details. Both the lower authorities having failed to do this exercise, the addition on account of credits in the bank account of the assessee, for which reasonably satisfactory explanation had been given by the assessee duly corroborated with evidences and her own affidavit, could not have been made. Thus we hold, the addition made under section 68 on account credits in her bank account is not sustainable and the same is directed to be deleted. The grounds of the appeal of the assessee are allowed.

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• 2022 (7) TMI 940
  Disallowance on account of Client Code Modification - as per AO entire transactions of purchase and sales for booking the losses is by way of sham transaction through the broker M/s B P Equities Pvt. Ltd. - CIT- A deleted the addition - HELD THAT:- We are of the considered view that when investigation has not been carried out as to what was the client code of the assessee, how he has booked the loss. When the assessee himself has come up with a specific contention that if the client code has been changed it is due to mistake committed by broker Adroit Financial Services Pvt. Ltd. and not the assessee, the issue has not been investigated in entirety, rather both AO as well as Ld. CIT(A) proceeded on the basis of assumptions and surmises. When all the transactions carried out by the assessee during the year under assessment carried through his brokers are duly detailed with NSE, the complete investigation is required to be done. Moreover in para 4.5 AO has also come up with observations that client code 43334 also belongs to the assessee, which fact also remained uninvestigated if the assessee was operating through two client code one 7550 and two 43334. We hereby set aside the order passed by the Ld. CIT(A) and remit the file back to the AO to investigate in accordance with the observation made in the preceding paras and decide afresh after providing opportunity of being heard to the assessee. Resultantly, appeal filed by the Revenue is allowed for statistical purposes.

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• 2022 (7) TMI 939
  Disallowance of land leveling expenses - AO disallowed expenditure and held that the expenditure has been incurred for the land to make saleable cannot be allowed as deduction from the sale consideration - HELD THAT:- As expenditure claimed in respect of land development expenditure, all are in round figure viz. the payment of sand leveling, advance payment for purchase of fencing, purchase of fencing and final payment for fencing - There are no corresponding bills or invoices produced before us to substantiate the above claimed made by the assessee. Page No. 11 of paper book is an estimate with quotation given by Mamta Industries for digging of borewell - However, this is not an invoice or bill given by the said Mamta Industries. It is simply an estimate with quotation only. There are no details of ST/GST of the party concerned in this estimate memo. Thus, these documents cannot be accepted for substantiating the claim of expenditure of borewell. Also as noticed that the assessee filed his Return of Income in Form No. 2 which is meant for individuals HUF, NOT having income from Business or Profession. Thus, the assessee was not in clear mind to file the prescribed form and also claimed allowable expenditure, within the provisions of law. Thus, the lower authorities' finding of disallowance does not require any interference. Thus, the grounds raised by the assessee are hereby rejected. Unexplained cash credits u/s 68 - HELD THAT:- As stated in this confirmation accounts, PAN of the party was not furnished and one Mr. Dilip has signed on this document. The assessee also failed to produce Return of Income and bank statement relating to these transactions. Thus, the assessee failed to prove identity of the creditors and their capacity and genuineness of the transactions. It is well settled principle of law that onus of proving the source of the sum of money said to have been received by an assessee is on the assessee to prove identity, genuineness and credit worthiness of the party as held by the Hon'ble Supreme Court in the case of Kale Khan Mohammad Hanif [ 1963 (2) TMI 33 - SUPREME COURT ]. Having not discharged the initial onus of proving identity, credit-worthiness and genuineness of the transaction of cash credit, the additions made by the lower authorities do not require any interference. Thus, the grounds raised by the assessee are hereby rejected and the appeal of the assessee is dismissed.

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• 2022 (7) TMI 938
  Revision u/s 263 - 5% of bill amount never offered for taxation by the assessee - contention of the Revenue is that income has not suffered taxation, which has been rightly brought to tax by authorities below, which is vehemently disputed by assessee even in its grounds of appeal - HELD THAT:- We have prima facie observed that once the assessee has offered/credited total billed amount of Rs.4,40,43,593/- in its Profit and Loss Account (as stated by AO at para 5(i) of the assessment order) and merely receivables as at year end to the tune of Rs.22,02,368/- were set-off against creditors, then obviously instead of showing receivables in Balance Sheet as at year end, the assessee has reduced the creditors which are to be shown in Balance Sheet as at year end, but, prima facie it appears that the income has been fully brought to tax, which A.O. itself has admitted that the total receipt of Rs.4,40,43,593/- has been credited in the P L A/c. We are of the considered view that the matter need to be restored back to the file of A.O. for limited verification as to whether the entire amount of billing has been credited to P L A/c as income and suffered taxation or not, and in case, if 5% of the amount of receivable is merely set-off against the creditor instead of showing receivable in the balance-sheet, will not have any repercussion on the income chargeable to tax, provided 100% billing amount (including 5% receivable of the last fortnight aggregating to Rs.22,02,368/- ) was offered to tax by the assessee in return of income and due taxes paid. If that be so where merely receivables are set off against creditors although total billed amount is credited to P L Account and offered for taxation and due taxes paid, we are of the considered view that no prejudice is caused to Revenue although it may be an accounting error. Thus, with these directions, we direct A.O. to verify whether such income to the tune of Rs.22,02,368/- was offered to taxation by assessee or not, or it is purely an accounting error of setoff of receivable against creditor. With these directions, we set aside the matter to the file of A.O. for carrying out limited verification as directed by us in this order. Appeal of assessee allowed for statistical purposes.

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• 2022 (7) TMI 937
  Unexplained cash deposited in bank account - assessee has filed an application for additional evidence containing copy of confirmation of the debtors along with their PAN cards - whether the cash deposits are out of recovery of advance given/outstanding amount/accumulated cash balance etc. or not. ? - HELD THAT:- The assessee in her application for admitting the additional evidence has submitted that evidence could not be furnished before the Ld. CIT(A) on same were collected after the proceeding before the Ld. CIT(A) and therefore same may be admitted. Though the confirmation from the debtors have been collected subsequent to the order of Ld. CIT(A) but same are crucial to the determination of issue-in-dispute whether the cash deposits are out of debtors realized in the year under consideration. In view of the facts and circumstances of the case and interest of the substantial justice, we admit the additional evidence in the form of confirmations of the debtors and their PAN cards filed as additional evidence in terms of Rule 29 of the ITAT Rules, 1963. The order of the CIT(A) on the issue-in-dispute is accordingly set aside and matter is restored back to the Ld. CIT(A) for deciding afresh, in the light of the additional evidence filed by the assessee. It is needless to mention that both the assessee and Assessing Officer shall be afforded adequate opportunity of being heard. The grounds raised by the assessee are accordingly allowed for statistical purposes.

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• 2022 (7) TMI 936
  Revision u/s 263 - validity of assessment as completed u/s 143 read with section 153A - HELD THAT:- We find that assessment order dated 30.3.2016 passed u/s.153A is confined only to the Returned Income, in other words, original assessment order is reiterated. As against this assessment order, the Ld. Pr. CIT could not initiate revision proceedings under section 263 of the Act on the ground that order passed by the AO is erroneous and prejudicial to the interest of the Revenue since the basic assessment itself is invalid in law. As we find that assessment order dated 30.3.2016 passed u/s. 153A is confined only to the Returned Income, in other words, original assessment order is reiterated. As against this assessment order, the Ld. Pr. CIT could not initiate revision proceedings under section 263 of the Act on the ground that order passed by the AO is erroneous and prejudicial to the interest of the Revenue since the basic assessment itself is invalid in law. Thus we hold that the Revision Order passed as against the invalid assessment order is nullity in law. Revision proceeding based on the Internal Audit Party report - As it is settled Principle of law by the Three Judges Bench judgment of the Hon'ble Supreme Court in the case of Sirpur Paper Mill Ltd. [ 1970 (4) TMI 4 - SUPREME COURT] that revision made by the Commissioner simply following direction of the Board, which may control exercise of power of officers of department in administrative matters, but not in quasi-judicial matters. In case of judicial matters, the Commissioner should apply his mind and initiate proceedings in accordance with law and not merely carry out directions of the Board. Thus, any order passed pursuant to the directions of the Board is liable to be set aside as Commissioner has not applied his independent judgments in invoking revision proceedings. Respectfully following the above judgments of jurisdictional High Court and judgment of Hon'ble Supreme Court cited (supra) we hold that revision order passed by the Pr. CIT [Central] for the asst. year 2009-10 is not in accordance with law and the same is hereby quashed. We further found the Explanation (2)(a) to section 263(1) of the Act has been inserted w.e.f. 01-06-2015 only. The Ld. Pr. CIT is legally not correct in invoking this provision and therefore the initiation of Revision Proceedings itself is invalid in law. For all the above reasons, we find that Revision Order passed by the Pr. CIT is not in accordance with law, and therefore, the same is hereby quashed. Cash on sale of land - Receipt by assessee as legal heir - Asst. Year 2008-09 - As on the date of execution of the sale deed, Smt. Shushilaben H. Thakkar was not alive. Therefore, the said amount of Rs. 24,46,500/- received by the assessee, on behalf of his wife can only be taxed in the hands of the assessee in his capacity as legal heir . It cannot be taxed in the hands of the assessee in his individual capacity. Both the status provided in the section 2(31) of the Act are distinct and separate. Therefore, the Ld. DCIT submitted that objection raised by the audit party was not acceptable. The income of legal heir cannot be assessed in the hands of individual and hence requested to drop Audit Objection. In the same line, Ld. JCIT vide his letter dated 14.3.2018 submitted before the Ld. Pr. CIT(Central) to drop further proceedings. However, as it can be seen from the show cause notice, for the very same reason, Pr. CIT has invoked revision proceedings without applying his mind, but borrowed reasons from Revenue Audit Party, which is bad in law. Thus the Ld. Pr. CIT erred in invoking proceedings under section 263 with barrowed reasons which is against the provision of law and liable to be quashed. Assessee appeal allowed.

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• 2022 (7) TMI 935
  Delayed deposit of employees contribution of provident fund ESIC - Addition u/s 36(1)(va) r.w.s. 43B - Scope of amendment - HELD THAT:- As the amendment was brought in finance Act 2021 w.e.f 1-4-2021.The law was not framed/amended in the relevant Assesseement year and any legal proposition which cast additional burden/liability on the assessee cannot be implemented retrospectively. We considering the overall facts, circumstances, judicial decisions, are of the reasoned view that the amendment to section 36(1)(va) of the Act will not be applicable to Assessment Year 2017-18. The assessee has deposited the employees contribution of provident fund ESIC before the due date u/sec 139(1) of the Act. Accordingly, we set-aside the order of the CIT(A) and direct the assessing officer to delete the disallowance and allow the grounds of appeal in favour of the assessee.

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• 2022 (7) TMI 934
  Unsecured loan u/s 68 - assumptions and uncorroborated material collected during the search and seizure operation - HELD THAT:- Addition is based on the information collected during the search and seizure operation carried out in case of Gautam Jain Group the entire additional evidence now sought to be brought on record by the assessee along with retraction affidavit of Shri Dharmendar Kumar Bhave, lenders from whom the assessee claimed to have availed of the loan, is required to be examined to substantiate the cause of justice. CIT(A) has passed the impugned order ex-parte without having any reply of the assessee on record. To decide the issue once for all assessee must be provided with an opportunity of being heard. So we hereby allow the additional evidence sought to be led by the assessee and case is remitted back to the CIT(A) to decide afresh after considering the additional evidence and by providing opportunity of being heard to the assessee. Consequently both the appeals filed by the assessee are allowed for statistical purposes.

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• Customs

• 2022 (7) TMI 933
  Smuggling - Foreign Gold Bars - recording of statements under Section 108 of the Customs Act, 1962 - HELD THAT:- The nature and gravity of allegation as also the fact that DRI officials have seized 3 kg gold bars worth Rs.1,58,20,500/- from the conscious possession of the present applicant and other three co-accused persons. During the search DRI officials found 3 yellow metal bars wrapped in papers from the specially built cavity under the seat adjacent to the Driver seat. Present applicant and other co-accused persons have admitted in their statements under Section 108 of the Customs Act that they have put gold bars under the seat, therefore, it may be presumed that present applicant had knowledge that smuggled gold was being carried in the said vehicle and he is involved in the illegal transaction of smuggling of huge quantity of gold. In view of the prima facie sufficient evidence available against the present applicant on record and bearing in mind that such a grave offence would cause damage to the economy of the nation and larger interest of the country, at this stage this Court is not inclined to grant bail to the present applicant, who is involved in serious offence of smuggling of huge quantity of gold. Application dismissed.

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• 2022 (7) TMI 932
  Seeking forebearance of respondent from adjudicating the show cause notice - seeking to direct the respondent to release the goods for Re-Export on execution of Bond for the full value of the goods - HELD THAT:- It is seen that the department following the procedure, issued show cause notice, which was received by the petitioner through E-mail. Initially, appending documents not sent, after receipt of reply dated 19.07.2022, documents were appended to the E-mail, which was followed by a hard copy, sent through speed post. The petitioner filed a contempt petition against the officials. In the meanwhile, the officials challenged the order of the learned Single Judge in W.A.(MD).No.556 of 2022 [ 2022 (6) TMI 1189 - MADRAS HIGH COURT] , which got dismissed. Hence, the respondent has issued show cause notice and given option for personal hearing, as he was constrained to conclude the same, in view of the order passed in W.P(MD)No.8916 of 2022, dated 28.04.2022 [ 2022 (4) TMI 1413 - MADRAS HIGH COURT] . It is only a classification issue, which is primarily proceeds based on the Notification No.20/2015, dated 25.07.2018. Now, this Notification has been stayed by the High Court of Karnataka in W.P.No.2898 of 2022, by order dated 10.02.2022 (following the order in W.P. No. 1329/2022 dated 8.2.2022, which is passed in following the order of Apex court in [ 2015 (11) TMI 80 - SUPREME COURT ] Be that as it may, now, the department has no objection to re-export the imported consignment of the petitioner. The only requirement for the department is that, the petitioner to execute a bond and to participate in the proceedings, for the show cause notice and enquiry. The issue can be decided on its own merits. The petitioner has to participate in all the proceedings without any delay. This Court directs the respondent to release the goods for Re-Export and the petitioner is directed to execute a bond for the full value of the goods, within a period of one week from 18.07.2022. The re-export order to be passed without delay, preferably within one week, of course, after complying the procedures of the Customs - petition disposed off.

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• 2022 (7) TMI 931
  Levy of penalty imposed under Section 114A of the Customs Act, 1962 - Mis-classification/declaration of wrong classification - wilful suppression of facts or not - acceptance and payment of differential duty alongwith interest - HELD THAT:- The initial dispute was with regard to classification which, as canvassed by the appellant, was debatable, but however, having not disputed, they chose to accept the classification adopted by the Adjudicating Authority and also paid the differential duty along with applicable interest even before the completion of adjudication. It is precisely for this reason that in the Order-in-Original dated 27.03.2015 there is an order appropriating these amounts towards the differential duty and interest. Hence, declaring a wrong classification per se would not amount to collusion or any wilful mis-statement or suppression of facts and other than mere allegation, the Revenue has not placed on record any supporting document/s nor has it established the existence of collusion, etc. It is the settled position of law that mere acceptance and payment of differential duty would not ipso facto attract any penalty under the statute. Hence, the fact of payment of differential duty along with interest by the appellant and the order of appropriation reflected in the Order-in-Original is a sufficient ground to disbelieve the mala fides on the part of the appellant. The lower authorities have given much importance to the first proviso to Section 114A ibid.: the first proviso is applicable only if an assessee chooses to avail the benefit of reduced penalty of twenty five per cent, if the duty or interest determined is paid within thirty days from the date of communication of the order, which is not the case of the appellant here, in the case on hand. The first test of collusion, etc., has to be established and only then could the penalty be imposed. Having not satisfactorily established collusion or any wilful mis-statement or suppression of facts, the penalty under Section 114A of the Customs Act, 1962 appears to have been imposed mechanically by the Adjudicating Authority, which is not in accordance with the statute. Appeal allowed - decided in favor of appellant.

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• 2022 (7) TMI 930
  Non-filing of shipping bills - shipping bills could not be traced - appellant is now confident to trace all the documents that are required to be produced and those which were not filed before the lower authorities, if given one more opportunity - HELD THAT:- It appears that for the reason that the appellant was unable to furnish all the relevant documents, the duty has been demanded. Hence, in all fitness of things, the matter is required to be remitted back to the file of the Adjudicating Authority, as pleaded by the Learned Advocate for the appellant, however, with a condition that the appellant shall not take unnecessary adjournments and shall co-operate by filing all the relevant documents as and when called for by the Adjudicating Authority. Also, since the matter relates to the year 2005, the Adjudicating Authority shall pass a de novo adjudication order within a period of six months from the date of receipt of this order by the concerned Commissionerate. The appeal is treated as partly allowed by way of remand.

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• Corporate Laws

• 2022 (7) TMI 929
  Seeking restoration of name of the struck off company in the Register of Companies, maintained in the office of the Registrar of Companies, Punjab and Chandigarh - Section 252(3) of the Companies Act, 2013 - HELD THAT:- On a perusal of the report of Registrar of Companies, Punjab and Chandigarh, the audited accounts submitted by the petitioner company, and other documents placed on record, this bench holds that it would be just, equitable and fair in the interest of justice to provide an opportunity to the company to rectify its defaults and continue the business. The Registrar of Companies, Punjab and Chandigarh, the respondent herein, is directed to restore the original status of the Petitioner company as if the name of the company had not been struck off from the Register of Companies with the resultant and consequential actions like changing status of petitioner company from 'struck off' to 'active' - Petition allowed.

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• Insolvency & Bankruptcy

• 2022 (7) TMI 928
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues- Financial Creditors - existence of debt and dispute or not - HELD THAT:- The Amazon.com NV Investment Holdings LLC has filed an Intervention Petition/1/2022 in CP/527/MB/2022 seeking investigation into fraudulent and malicious intention of the present proceedings by the Financial Creditor and to dismiss the present petition by imposing penalty on the Financial Creditor and the Corporate Debtor in accordance with Section 65(1) of the Code, same has been dealt separately vide order dated 20.07.2022. Moreover, the Corporate Debtor on the payment obligation under the OTR scheme, admitted the default of its repayment as on 31.12.2021. Further, on 04.02.2022, the Corporate Debtor admitted in its meeting with the Lenders that the Events of default continue to subsist. Furthermore, the Corporate Debtor issued an intimation under Regulation 30 and other regular regulations of Securities and Exchange Board of India (Listing Obligations Disclosure Requirements) Regulations, 2015 admitting the default of its repayment obligations under the Framework Agreement as on 31.03.2022 as well as 31.12.2021. This Bench is of the view that the existence of debt and default has been proved - petition admitted - CIRP is ordered to be initiated - moratorium declared.

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• 2022 (7) TMI 927
  CIRP - Seeking to direct investigation into fraudulent and malicious initiation of the present proceedings by the Financial Creditor - seeking direction to dismiss the present Petition purportedly filed under Section 7 of the Code by the Financial Creditor - penalty on the Financial creditor and FRL in accordance with Section 65(1) of I B Code - HELD THAT:- The FA has been signed within the ambit of the RBI Circular by all the 26 Lenders and the question of FA being in violation of any injunctions does not arise as no sale of any assets has happened and seeking consent of Amazon under Clause 5.1.2 was not breached. Moreover, FA does not violate the EA Order or the orders of the Hon'ble High Court of Delhi, as the two orders of the Single Judge of the Hon'ble High Court of Delhi - (i) dated 02.02.2021 (directing FRL to maintain status quo with respect to its assets); and (ii) dated 18.03.2021 (holding that EA Order is enforceable in India and directing FRL to not act in contravention thereof) were not operative as on 26.04.2021 i.e. the date the FA was entered. The passing of the board resolution dated 29.08.2020 in relation to scheme of arrangement to MDA group being alleged to be in violation of the EA Order has no connection with the Financial Creditor and the allegation of collusion of the Lenders with Corporate Debtor and MDA group seems to be baseless, since, at the time of voting by the secured creditors, the Financial Creditor and the other Lenders had opposed the scheme of arrangement, same has been admitted by the intervenor himself. The onus to prove the existence of fraud is on the party alleging the same and in the present case, the applicant had miserably failed to establish the same - there is no injunction against the Lenders from exercising their contractual rights or statutory rights. Further, the banks are exercising their statutory rights in accordance with law as they are not party to the arbitration proceedings. Moreover, the Applicant is not even a stakeholder in respect of the Corporate Debtor and, a complete third-party to the proceedings before this Tribunal and has no locus standi to question initiation of proceedings under Section 7 of the Insolvency and Bankruptcy Code against the Corporate Debtor. The present intervention petition is dismissed.

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• Service Tax

• 2022 (7) TMI 926
  Territorial Jurisdiction - appellant had taken registration in Rajasthan and Chandigarh - Demand of service tax in respect of various projects executed in Rajasthan - demand raised by Principal Commissioner Service Tax, New Delhi - CENVAT Credit - HELD THAT:- It is not in dispute that appellant had taken registration in Rajasthan and Chandigarh on 17.01.2008 and 13.11.2006 respectively. It is also not in dispute that the appellant had obtained centralised registration on 18.07.2008 and had included their office of Rajasthan and Chandigarh in the said centralised registration as well. It is also a fact that the appellant had approached the Revenue for deletion of Rajasthan and Chandigarh address from the centralised registration and the same was allowed on 12.06.2013. All along the appellants were also filing their ST-3 returns separately for Rajasthan and Chandigarh and for the centralised registration (for operations other than in Rajasthan and Chandigarh) in Delhi - the Principal Commissioner Service Tax, New Delhi had no jurisdiction over the appellant and, therefore, the notice issued to the appellant in respect of the appellants operations in Rajasthan, where they were separately registered and filling returns, is without jurisdiction. Consequently, the demand on this issue cannot be upheld and is, therefore, set aside - since the demand itself has been set aside the issue of admissibility of input CENVAT credit on the strength of challans becomes irrelevant. Valuation of services - benefit of abatement - contract entered with GAIL Chainsa and VB Builders - appellant had paid VAT (value added tax) on more than 67 per cent of the total contract value and paid service tax on 33 per cent of the gross amount received in respect of such contracts - applicability of Rule 2 A of the Service Tax (Determination of Value) Rules, 2006 - HELD THAT:- It is an admitted fact that appellant had not provided any evidence of VAT payment and consequently valuation was done by the impugned order in terms of Clause 2 (ii) of Rule 2 A of the Determination of Value Rules, 2006 - It has not been denied by the appellant that the contract entered with GAIL Chainsa and VB Builders was in the nature of works contract and, therefore, the assessment of said transaction should have been done by classifying the said service as works contract. The assertion of the appellant is that it had sold goods and material amounting to more than 67 per cent of the value of the gross amount charged and paid VAT on the same and, therefore, there will be no duty liability even if assessment is made as works contract. The appellant has now filed copies of the work contract and VAT returns in the appeal memorandum. The same were not filed before the lower authorities - the matter is remanded to the original adjudicating authority to decide afresh after obtaining evidence of the value of goods sold by the appellant in execution of the contract with GAIL Chainsa and VB Builders. Thereafter, assessment can be done under Rule 2 (A) of the Service Tax (Determination of Value) Rules, 2006. If the assertion of the appellant that it had already paid tax on a value higher than that demanded by revenue, no demand would survive. Availment of claim under work contract service - benefit was denied on account of failure of the appellant to submit necessary documents - HELD THAT:- The appellant has submitted certain documents in the appeal papers. The demand on the third issue is also set aside, and the matter is remanded to the original adjudicating authority to examine the said documents produced by the appellant and decide the case afresh. Appeal allowed in part and part matter on remand.

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• 2022 (7) TMI 925
  Refund of service tax - principles of unjust enrichment - burden of tax passed on or not - appellate authority held that as the appellant had not paid any tax it could not claim refund and that there were no documents to support the fact that NBCC had not passed the burden of tax to any other person - HELD THAT:- It is an admitted fact that after the exemption notification was withdrawn on 01.04.2015, NBCC had paid its share of the service tax and deducted it while making payments to the appellant. Subsequently on 01.03.2016 the government restored the exemption where contracts were entered prior to 01.04.2015 as a result of which the tax deposited by NBCC, which had been deducted from the payments made to the appellant, became refundable. Initially the claim filed by NBCC was rejected for the reason that it had not borne the burden and the claim filed by the appellant has been rejected for the reason that only NBCC could have claimed refund and also on an account of unjust enrichment. It is an admitted fact that after the exemption notification was withdrawn on 01.04.2015, NBCC had paid its share of the service tax and deducted it while making payments to the appellant. Subsequently on 01.03.2016 the government restored the exemption where contracts were entered prior to 01.04.2015 as a result of which the tax deposited by NBCC, which had been deducted from the payments made to the appellant, became refundable. Initially the claim filed by NBCC was rejected for the reason that it had not borne the burden and the claim filed by the appellant has been rejected for the reason that only NBCC could have claimed refund and also on an account of unjust enrichment. The finding recorded in the impugned order while rejecting the refund claim filed by the appellant that only NBCC could have claimed refund is also erroneous for the reason that earlier the claim filed by the NBCC had been rejected for the reason that it had not borne the incidence of tax - appellant is, therefore, clearly entitled to refund of the service tax which was deducted from the payments made by NBCC to the appellant. Appeal allowed.

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• 2022 (7) TMI 924
  CENVAT Credit - common inputs and input services used for manufacture of its dutiable final products and for providing this exempted service - maintenance of separate records - Rule 6(3) of the Cenvat Credit Rules, 2004 - HELD THAT:- It is undisputed that the appellant has been manufacturing goods on job work basis and has been clearing them without paying duty as per the N/N. 214/86-CE dated 25.03.1986. If the activity amounted to manufacture- which has not been disputed by the Revenue at all in the past- it cannot also simultaneously become a service. If the processes undertaken by the appellant on job work did not amount to manufacture and was only a service, Revenue should have said so while assessing its central excise returns - If Revenue was of the opinion that it s original position was not correct and no manufacture was involved at all in the process undertaken by the appellant it should have brought out cogent reasons for holding so. Therefore, there is no basis for the allegation in the show cause notice that the appellant was rendering an exemption service when it was manufacturing dutiable goods. The demand has been made under Rule 6 (3) of CCR, 2004. It has been held by the Hon ble High Court of Andhra Pradesh and Telangana in the case of M/S TIARA ADVERTISING VERSUS UNION OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE [ 2019 (10) TMI 27 - TELANGANA AND ANDHRA PRADESH HIGH COURT] that the various options under Rule 6 are options given to the assessee and the Revenue cannot choose one of the options and force it upon the assessee. Even if the assessee is rendering exempted services or manufacturing exempted goods and using common input services no demand can be sustained under Rule 6 (3) as this is only one of its options available to assessee to fulfill its objection. Thus, the demand of an amount under Rule 6(3) of CCR cannot be sustained even if the appellant was rendering exempted services and had taken CENVAT credit on common inputs/input services. The impugned order, therefore, cannot be sustained and is liable to set aside. Appeal allowed - decided in favor of appellant.

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• 2022 (7) TMI 923
  Levy of Service Tax - renting of immovable property service - rent paid to Director for hiring of residential property which is used as residence of director - GTA service - Reverse Charge Mechanism - revenue neutrality - extended period of limitation - HELD THAT:- The demand of tax of Rs. 70,140/- have been wrongly raised as the premises are residential premises and being used for residence of the director. So far the other two demands are concerned, it is held that the situation is wholly revenue neutral and accordingly, invocation of extended period of limitation is not available to the Revenue in the facts and circumstances. The demand alongwith penalty set aside - Appeal allowed - decided in favor of appellant.

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• 2022 (7) TMI 922
  Waiver of demand and additional interest for delayed payment of Service Tax - services received from associated enterprises - short reversal of Cenvat credit for bad debt written off by the Appellants - demand of short reversal of Cenvat credit by adding the value of export of services in the total turnover (in the numerator) as per formula given under Rule 6(3A) of the Cenvat Credit Rules, 2004 - HELD THAT:- The Ld. Adjudicating authority placing reliance on the CBIC s Circular No. 868/8/2008-CX dated 09/05/2008, wherein it was already clarified that the export of services, without payment of service tax, are not to be treated as exempted services for the purposes of Rule 6(3) of the CCR, 2004. The Appellant submits that under Rule 6(3A)(b)(iii) of the Cenvat Credit Rules 2004, the term 'N' inter alia includes total value of taxable and exempted services provided. Under the Finance Act as well as Cenvat Credit Rules, 2004, only the terms 'exempted services' and 'taxable services' were defined. The term ' taxable service' has been defined under Section 65(105) of the Finance Act to mean the services specified under the various sub-clauses. The term 'exempted service' was defined, during the impugned period to mean taxable services which are exempt from the whole of the Service Tax leviable thereon and includes services on which no Service Tax is leviable under section 66 of the Finance Act - the Appellant has not short reversed Cenvat credit under Rule 6(3A) of the CCR, 2004 and we therefore drop the proceedings to the above extent by allowing the Appeal filed by the assessee. Demand of additional interest on delayed payment of Service Tax on account of services received from associated enterprises - HELD THAT:- The lower authority has given a finding that the tow enterprises namely PWC Services BV Netherlands and PWC Global Licencing Services Corporation, Canada cannot be treated as associated enterprises as the same has not been declared by the assessee in their Return of Income tax filed in form 3CEB for FY 2009-10 and hence the payment of Services Tax basis the booking of expense cannot be sustained - since the Ld. Adjudicating authority has not gone into the details of the matter, it would be prudent in the interest of justice, that the matter be remanded to the Adjudicating authority to verify as to why such enterprises were not disclosed in Income Tax returns and pass a reasoned and speaking order thereafter. Needless to mention an opportunity ofhearing should be given to the assessee concerned. Following the decision of the Chandigarh Bench in SBI CARDS AND PAYMENTS SERVICES PVT LTD VERSUS COMMISSIONER OF SERVICE TAX, DELHI [ 2022 (1) TMI 449 - CESTAT CHANDIGARH] , it is opined that the departmental Appeal as regards reversal of Cenvat credit on amounts written off as bad debt by the assessee cannot be sustained and the same is dismissed accordingly. Appeal disposed off.

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• Central Excise

• 2022 (7) TMI 921
  Levy of penalty - wrongful availment of CENVAT Credit - allegation is that the appellant had abetted/aided, planned and conspired with other co-noticees in the preparation of invalid documents, resulting in the wrongful availment of CENVAT Credit - HELD THAT:- When the Revenue entertained a genuine doubt as to the wrongful availment of CENVAT Credit after verifying documents like invoices, Daily Sheets, etc., and since there were discrepancies, a Show Cause Notice was issued. When a statutory notice was issued, it was incumbent upon the appellant to at least offer an explanation to clear the doubts pointed out. The appellant, however, without bothering to do so, has only contended that the documents / evidences relied upon by the Revenue were vague, etc., despite the fact that the Revenue had also relied on his statement recorded, which is not rebutted. There is no supporting material placed on record by the appellant or even by M/s. Hitech Mineral Industries (Covai) Pvt. Ltd. other than a mere statement that the credit in question have been availed in accordance with law, to clear the doubts in the mind of the Revenue. The fact remains that M/s. Hitech Mineral Industries (Covai) Pvt. Ltd. had wrongfully availed CENVAT Credit and the appellant being any person who has abetted in making such documents that helped M/s. Hitech Mineral Industries (Covai) Pvt. Ltd. in availing such wrongful CENVAT Credit, cannot escape from the rigours of Rule 26 of the Central Excise Rules, 2002. There are no whisper about any retraction or any disputes as to their statements being not voluntary. The same are not even rebutted as having been obtained per force. Hence, the statements are relevant documents. The present appeal was filed in the year 2013 and the appellant had sufficient time to place all such relevant documents on record, but no such attempt is made. The appellant has only relied upon those very same invoices, Daily Sheets, material inward notes of M/s. Hitech Mineral Industries, etc., which form the very foundation for issuing the Show Cause Notice. Appeal dismissed.

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• 2022 (7) TMI 920
  Default in the payment of Central Excise Duty - Constitutional Validity of Rule 8(3A) of the CCR - default in payment of duty for the clearances effected during January 2013 - For the period 26.03.2013 to 31.12.2013 the Central Excise duty was paid by the assessee through their Cenvat credit account - Revenues contention is that the payment made by the appellant by way of debit in his CENVAT Account is not proper discharge of defaulted duty for the month of January 2013 - HELD THAT:- From the correspondences it is quite evident that the revenue authorities took nearly one year to give consent to the appellant to operate as an LTU. In the meantime as per the show cause notice certain defaults in term of Rule 8, were noticed in the payment of Central Excise duty by the due date - Rule 12 A (4) of the CENVAT Credit Rules permitted the transfer of CENVAT Credit from unit of the person operating under the LTU scheme to the other unit of the same person. Appellant unit at Hyderabad was having sufficient credit balance of Rs 8,56,63,033/- in their CENVAT Account at the close of the January 2013. If they the appellant request to operate under the LTU scheme was allowed during any month prior to January 2013 or during the month of January 2013, they would have transferred this balance to their unit in Mumbai and would have utilized the same for payment of the duty. In fact appellant transferred this amount from their Hyderabad unit after being accorded the permission to join LTU on 28.02.2013. They utilized this transferred credit for payment of the defaulted duty for the month of January 2013. The delay in according the permission to operate as LTU, was primary reason for the delay in available credit from the Hyderabad Unit to Mumbai Unit. There are no justification in holding that the payment of amount of Rs 1,92,64,263/- from their CENVAT account was not enough to discharge the duty arrears for the month of Jan-2013 in terms of Rule 8 of the Central Excise Rules, 2013. Undisputedly appellants have discharged the duty as demanded in the show cause notice and confirmed against them for the subsequent period from their CENVAT account. The demands have been made against them considering that the payment of the defaulted duty for the Month of Jan-2013 on 26.03.2013 from their CENVAT Account was not a valid payment. Once, it is held that the payment from their CENVAT account was valid payment the demands for the subsequent period will automatically be not sustained. Plain reading of Rule 8 (3A) as it was then would clearly show that it is not amenable to Section 11A of the Central Excise Act, 1944. Rule itself declares that in cases where the rule apply, the clearances are to be made on payment of duty in cash and on consignment basis. In case of default from the same the goods will be treated to be cleared without payment of duty and consequences as per law will follow. By making the demand as above nearly one year later, for the clearances made without payment of duty revenue was not only soft pedaling the issue but was permitting the clearance without payment of duty. The natural consequence of the clearances made without payment of duty was to seize and confiscate all the goods that were cleared by the appellant without payment of duty. Might be revenue mulled over the issue during the intervening period as to what would be correct course of action. After permitting the clearances contrary to provisions of Rule 8 (3A) revenue authorities cannot subsequently turn back and make demand by invoking the provisions of Section 11A. Undisputedly appellants have paid the defaulted duty for the month of January 2013, by making a debit entry in the CENVAT Account on 26.03.2013. Even if this debit was to be considered as not a valid payment of duty, then also the Appellant could not have been proceeded against for the clearances made after 26.03.2013, in terms of Rule 8 (3A) - Hypothetically consider the situation whereby an assessee discharges the duty liability for a month on or before the due date as per Rule 8, by way of debit entry in the credit account and subsequently the debit so made is found to be erroneous/ malafide, then also the rigors of Rule 8 (3A) will not come into picture because in the first instance assessee has discharge the duty payable by the due date albeit subsequently found to be erroneous/ malafide. In such case the revenue proceeds against such defaulter by way of initiation of proceedings for short/ nonpayment of duty in terms of Section 11A of the Central Excise Act, 1944. This short/ non-payment cannot tiger the Rule 8 (3A) automatically into action. Rule 8 (3A), as it existed then provided a mechanism for ensuring the payment of the admitted duty liability of the month by the due date as per Rule 8. In the present case admittedly during the period of default appellants have acted as per the provisions of Rule 8 (3A) and have discharged duty consignment wise without utilizing the CENVAT Credit available with them. In the case of SHIVAM PRESSINGS VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-I [ 2015 (7) TMI 581 - CESTAT MUMBAI] referred by the authorized representative, tribunal has in para 4.1, after referring to the order of Hon ble Gujarat High Court in case of INDSUR GLOBAL LTD. VERSUS UNION OF INDIA 2 [ 2014 (12) TMI 585 - GUJARAT HIGH COURT] , dropped the demand of duty made treating the payments made through CENVAT account as proper payment of duty in respect of the consignments cleared during the period of default. Thus by application of the ratio of this judgement, the demand of duty made by the revenue for the period after 26.03.2013, the demand of duty needs to be set aside. Appeal allowed - decided in favor of appellant.

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• 2022 (7) TMI 916
  Maintainability of appeal - non-prosecution of the case - Scope of work official liquidator - HELD THAT:- A communication was sent to the appellant M/s. Hitech Mineral Industries (Kovai) Pvt. Ltd., indicating about the stand of the Official Liquidator that the period of dispute was prior to the winding up of the company and therefore, the official liquidator was not in the picture for the period. But however, there is no representation and hence, it appears that the appellant is not interested in pursuing the appeal. Accordingly, the appeal is dismissed for non-prosecution.

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• CST, VAT & Sales Tax

• 2022 (7) TMI 919
  Reopening of proceedings - Stock transfer - Determination of tax liability of the Petitioners under the Central Sales Tax Act, 1956 after adjustment of the admitted tax paid at the time of filing of return - HELD THAT:- The Court is satisfied that the present attempt by the Petitioners to reopen the proceedings after repeated rounds of failed litigation, should not be permitted as it is an abuse of the process of Court. All the issues raised by the Petitioners have already been conclusively decided against them by the aforementioned order of the Supreme Court and it is therefore not open to this Court to reopen these issues time and again. It was equally not opened to the authorities below to revisit the issues. All that the impugned orders do is to re-compute the tax liability on the basis of the order of the Supreme Court. This Court is not inclined to interfere with either of the impugned orders. The writ petition is accordingly dismissed.

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• 2022 (7) TMI 918
  Levy of Sales Tax - deemed export to DTA - units in SEZs registered under the Kerala General Sales Tax Act 1963/VAT - entitlement to exemption from levy of sales tax because of the policy decision of the State Government declared for units established in SEZs in the State of Kerala - Sl. No.68 to the First Schedule of notification no. GO (P) No.179/99/TD dated 31.12.1999 - Doctrine of promissory estoppel - HELD THAT:-The writ petitioner, based on a promise in the form of a Policy document, did not establish the industry in CSEZ. On the contrary, in its pleading, it is averred that the writ petitioner established the industry in CSEZ in December 2002, i.e., prior to the Policy in Ext.P3. The Policy document and the exemption are dated 17.06.2003 and 13.02.2004. Between 01.04.2005 and 06.10.2008, there was no order of the State Government enabling the petitioner or similarly situated units to continue to claim the exemption granted from payment of sales tax by Ext.P3. The claim is invigorated with the amended Policy dated 06.10.2008 in Ext.P9. In this background, the petitioner claims declaratory relief. In Kasinka Trading v. Union of India [ 1994 (10) TMI 64 - SUPREME COURT] and Shabi Construction Co. v. City Industrial Development Corporation [ 1995 (4) TMI 318 - SUPREME COURT ], it has been considered whether promissory estoppel, which is based on a promise contrary to the law, can be invoked. The decision laid down that the rule of promissory estoppel cannot be invoked for the enforcement of a promise or a declaration which is contrary to law or outside the authority or power of the Government or the person making that promise. Ext.P9 Policy grants exemption from payment of sales tax/VAT and the said Policy by itself is not an enforceable document since Ext.P9 envisages issuance of a notification for giving effect to the Policy decisions borne out by Ext.P9. It is at this juncture, that the absence of power for issuing exemption notification comes in the way of the declaratory relief sought by the petitioner. To say that the Government has the power to grant exemption from payment of VAT, and different departments in the Government have not acted in tandem and notification was not issued either for the continuation of benefit or extension of benefit, the State Legislature preferred to exercise discretion through legislation than by any mode in the matters of fiscal relaxation to units established in SEZ - The logic appears to be simple from the present mechanism, namely, to enable an SEZ located in the State to purchase raw materials etc., without the incidence of sales tax for achieving competitive prices for the products manufactured in the SEZ established in the State of Kerala. The declaratory relief as prayed for, on the Principle of Promissory Estoppel, is not made out or available to the petitioner. Appeal allowed - decided in favor of appellant.

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• Indian Laws

• 2022 (7) TMI 970
  Validity of Guidelines which have been issued by the Central Consumer Protection Authority [CCPA] - levy of a service charge in addition to the total price of the food items mentioned in the menu - Section 2(47) of the Consumer Protection Act, 2019 - HELD THAT:- The petitioners contend that various settlements came to be entered into between the workmen and individual establishments, awards came to be rendered by industrial adjudicators and those would clearly be upset if the impugned Guidelines were to be implemented - On a more fundamental plane, the Court notes that there would be a serious doubt whether the issue of pricing and the levy of a service charge would fall within the ambit of Section 2(47) of the Consumer Protection Act, 2019 itself. An identical issue of whether the levy of a service charge would amount to a restricted or unfair trade practice came up for consideration before the erstwhile Monopolies and Restrictive Trade Practices Commission in S. S. Ahuja vs. Pizza Express [ 2001 (12) TMI 903 - MONOPOLIES AND RESTRICTIVE TRADE PRACTICES COMMISSION NEW DELHI] where it is held that There is thus no unfair practice or deceptive method adopted by the respondent as contended by the complainant. In fact the extra levy at 9% would act as a disincentive to the promotion of sales, which is a pre-requisite condition for holding the trade practice to be unfair. The matter requires consideration. Consequently, and till the next date of listing the directions as contained in paragraph 7 of the impugned Guidelines of 04 July 2022 shall remain stayed subject to the following conditions: - (1) The members of the petitioner Association shall ensure that the proposed levy of a service charge in addition to the price and taxes payable and the obligation of customers to pay the same is duly and prominently displayed on the menu or other places where it may deemed to be expedient. (2) The members of the petitioner Association further undertake not to levy or include service charge on any take away items. List again on 25.11.2022.

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• 2022 (7) TMI 917
  Anti-competitive meeting or not - Informant has alleged that the decisions taken by the OPs in various meetings during 2010 to 2018 are anti-competitive - fixation of tariffs for trailers and not allowing CFS operators to reduce the rate from what was decided by OP - restriction imposed upon the members of the Informant/NACSF and their sister concerns by mandating them not to ply more than 20 trailers of their own for movement of containers - contravention of the provisions of Section 3(3)(a) and 3(3)(b) read with Section 3(1) of the Act or not - whether OP-1 to OP-10 have been able to rebut the said presumption so as to absolve them of the liability that has arisen? HELD THAT:- Both the allegations raised in the present matter fall under the category of decision taken by, any association of enterprises or association of persons, which are presumed to be having an appreciable adverse effect on competition (AAEC). Generally, in cases concerning horizontal arrangement/collusive conduct falling under Section 3(3) of the Act, the most difficult task is to establish the existence of the agreement/arrangement/understanding amongst the parties, because such agreements are often perpetrated in secrecy. In the present case, however, the existence of the agreement, i.e. the fixation of price, is not under challenge. The DG has found enough evidence that the prices were increased and certain restrictions were imposed collectively by OP-1 to OP-10 through association meetings from 2014 till 2018. OP-1, the only OP that filed response to the Investigation Report, has admitted to these meetings. Rather, it has sought to justify its participation in such meetings by citing the prevailing circumstances at the time when such meetings took place and the mutual nature of such meetings where, admittedly, the members of the Informant also participated. Further, many such meetings were organised at the premises of the Chennai Port Trust and with its knowledge. Circulars were issued by these OPs after the said meetings, which have been received and responded to by the Informant. Thus, the Commission finds no purpose being fulfilled by reiterating the minutes of the meetings and the discussions that took place, which have been amply elucidated in the DG findings - It suffices to say that the minutes of various meetings and various letters exchanged between the Informant and these OPs, relied upon by the DG, establish that the prices for container trailer services were being fixed and increased from time to time, collectively by the OPs, and also that a decision was taken to restrict the number of trailers plied/operated by the members of the Informant and their sister concerns. Section 3(3) being presumptive in nature, the presumption of these practices/decisions taken at the association meet. It is observed that OP-2 to OP-10 have not filed any response to the Investigation Report while OP-1 has filed its submissions. As can be noted from the submissions filed by OP-1, the justifications/reasons offered by it falls into three broad categories. Firstly, it has been stated that there was an increase in the price of fuel, insurance, spares, tyres, repair and maintenance, driver salary, labour charges, etc., besides inflation factor from 2010 to 2014 and from 2014 to 2018, which has not been considered by the DG. Though such increase has not been stated as a justification of collusive conduct, OP-1 has claimed that this provides some perspective on the reasonability of price increase. Secondly, OP-1 has brought forward their plight and financial considerations such as inordinate delay on the part of CFS in clearing the dues to use transportation services of the members of the TOAs; CFSs entering the transportation business, and thus, sidelining members of the TOAs, whose only means of survival was through these transportation services, etc. Thirdly, OP-1 has stated that the decisions taken at the impugned meetings were mutual decisions which had an active involvement of the members of the Informant and the Chennai Port Trust, and thus, the same cannot be held as unilateral price increases on the part of the OPs. The Commission will deal with each of these in the ensuing paras - The Commission observes that, through the first and second justification cited above, OP-1 has tried to demonstrate the role of associations as an instrument to further the economic and social well-being of its otherwise small members having unequal bargaining power. On one hand, OP-1 has cited the comparative increase in the prices of diesel, insurance, tyres, spare parts, driver/cleaner charges, inflation, etc. between 2010 and 2018, and on the other hand, it has brought forward the plight and financial distress of its members. OP-1 has stated that the transportation business is the only means of survival for the members of various associations which have been made OPs in the present matter, thereby making such members solely dependent upon the income derived from the transport business for their livelihood, for payment to their drivers/cleaners, repayment of loans from financial institutions, upkeep of the trailers etc. Further, CFSs were entering the transportation business, and thus, sidelining members of TOAs - While the Commission may tend to have a sympathetic inclination towards certain difficulties, which has been expressed by OP-1 that its members face and is cognizant of the facilitative role of trade associations in furthering the collective interests of its members to alleviate the hardships, if any, the Commission cannot be oblivious to such Association providing its aegis to facilitate coordinated conduct which are otherwise falling foul of the provisions of the Act. Further, as regards the third justification offered by OP-1, i.e. the decisions taken at the impugned meetings were mutual decisions which had an active involvement of the members of the Informant and the Chennai Port Trust, the Commission is hesitant to accept this as a justification for a conduct falling under Section 3(3)(a) and (b) of the Act. The rebuttal of the presumption of AAEC that exists in such cases or is likely to exist, thereby distorting competition, needs to be dispelled by providing concrete evidence to the satisfaction of the Commission on the redeeming nature of the alleged conduct. It has to be shown that the impugned conduct, rather than harming competition has resulted in accruing benefits to consumers or achieving improvements in the production or distribution of goods or provision of services or promotion of technical, scientific and economic development by means of production or distribution of goods or provision of services - The participation of Informant or Chennai Port Trust cannot alter the characterisation of an otherwise collusive conduct/practice. Neither can it dilute the responsibility of the associations involved in such collusive decision making. In a competitive market, the prices of goods or services should ideally be determined by a free interaction between demand and supply forces. Any collective collusive action can manipulate the market outcomes under which the independent decisions between each buyer and seller could have been reached. Seen in this light, the collective action by TOAs has manipulated the market forces and narrowed the scope of competition. The Commission does not find any of the justifications offered by OP-1 to be sufficient to rebut the presumption and discharge the burden of proof that was on it considering the nature of its submissions and evidence in support thereof. In the event thereof, the Commission concludes that the conduct of OP-1 to OP-10 has led to a contravention of the provisions of Section 3(3)(a) and Section 3(3)(b) read with Section 3(1) of the Act - The Commission holds that the decisions taken by OP-1 to OP-10, for the reasons adumbrated in this order, are in contravention of the provisions of Section 3(3)(a) and Section 3(3)(b) read with Section 3(1) of the Act. Accordingly, the Commission directs OP-1 to OP-10 to cease and desist in respect of the anti-competitive conduct committed by it and which has been found to be in contravention of the provisions of the Act. The Commission is of the considered view that a cease-and-desist order under Section 27 of the Act would sub-serve the ends of justice in the matter.

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