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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter July 24, 2024 Case Laws in this Newsletter: GST Income Tax Customs FEMA PMLA Service Tax CST, VAT & Sales Tax Indian Laws Highlights / Catch Notes GST CSD to file GST refund applications sequentially on portal. Upload invoices, bank details. Preview before submission. NIL claim if no refund. Visit to Get Source Order u/s 74(9) post taxpayer's demise unenforceable. SCN issued, reply filed. Hearing on 7/2/24. 13/3/24 order set aside. Visit to Get Source HC held GST dept can't deny refund on inverted duty citing SC's Kusum Ingots ratio. Impugned order set aside, fresh order for refund in 3 months. Visit to Get Source Petitioner's contentions disregarded, GSTR mismatch unaddressed. Flawed order on ITC, classification. Opportunity for hearing ordered. Visit to Get Source Lack of ASMT-10 notice invalidated scrutiny, not adjudication. Petitioner's silence confirmed tax demand. Chance to contest merits granted on 10% deposit. Visit to Get Source Order upholding quashing of penalty for goods transport upheld. Seizure allowed only if documents not genuine under Act. Documents genuine. Visit to Get Source Petitioner can file representation to Additional Chief Secretary on tax liability for govt contracts pre/post GST within 4 weeks. Decision in 4 months. Visit to Get Source Expats' service tax on salaries & perks under manpower supply agency: Petitioners get time till 15.01.2024 to respond. No coercive recovery if adverse order. Visit to Get Source Transit fee paid to Forest Dept. for coal movement not exempt under GST. Continuous service exceeding Rs. 5000/yr, ineligible for exemption. Visit to Get Source Income Tax AO reassessed on seized docs, dictated by superiors, no independence, bias. HC upheld ITAT: order on dictation, delay beyond limitation. Visit to Get Source Income from commodity transactions disclosed; reopening of assessment invalid. Lack of factual basis & non-application of mind by Revenue. Visit to Get Source Expenditure on power, fuel & hired machines treated as capital expenditure for cement unit by ITAT, contrary to Revenue. Visit to Get Source Interest can't be charged post-CIRP if amount frozen by IBC moratorium & not in approved plan. Excluded claims extinguished. Visit to Get Source Domestic company paid higher DDT on dividends to Mauritius holding co. instead of lower DTAA rate. Claimed refund but failed to show Mauritius extended treaty protection. Appeals dismissed. Visit to Get Source Expenditure disallowed for bogus transactions, but financial charges allowed for genuine business. Order of CIT(A) sustained. Visit to Get Source Delayed PF & ESIC payment addition upheld in 143(1) intimation, Checkmate case inapplicable. Limitation not breached. Adjustment valid despite email non-receipt. (1) Visit to Get Source Approval u/s 153D must reflect due diligence, not mere formality. Scrutiny of seized docs mandatory. Safeguard against arbitrary assessment. Visit to Get Source Assessment order invalid, notice u/s 153C mandatory post-search. 6-year period from seizure date. Assessee's grounds allowed. Visit to Get Source Improper invocation of reassessment proceedings u/s 147 sans jurisdiction, as per precedents. Revenue failed to prove error. Visit to Get Source Bogus purchases reopening upheld; money laundering suspected. 6% income estimation sustained. Unexplained loans deleted; recorded in books. Penny stock losses allowed; from disclosed bank accounts. Visit to Get Source Interest income earned by a co-op society from deposits with another co-op bank is tax-deductible u/s 80P(2)(d). However, excess gratuity fund contribution is rightly disallowed. Visit to Get Source Profit set off against business loss & unabsorbed depreciation, no taxable income. Reopening futile after SC ruling. Revision quashed. Visit to Get Source Deductor's failure to deposit TDS can't deny credit to assessee. Declared income, no discrepancy found. Visit to Get Source Cash deposits during demonetization; nexus with disclosed sales established. No double addition if already assessed u/s 44AD. Visit to Get Source Transfer pricing adjustments & benchmarking required for quasi-equity transactions. Lease accounting differs for operating & finance leases. ESOP expenses deductible. Visit to Get Source Non-profit's 12A & 80G registrations cancelled citing loan default, TDS delays, PF lapses, GST dues. Tribunal set aside 12A cancellation. Approvals directed to be granted. Visit to Get Source Customs Critical minerals exempted from customs duty & surcharge. Concessional 2.5% duty on graphite, quartz & silicon dioxide. Visit to Get Source Revising Health Cess on certain items, exercising powers u/s 25(1) of Customs Act & Section 141 of Finance Act. Amending previous notification. Visit to Get Source Customs duty exemptions extended till Mar'29 for some electronics. New items added to exemption list. 15% duty on PCB assemblies, chargers & mobiles. Visit to Get Source Reduced rates for imported gold, silver & platinum under specific schemes from 9.35% to 4.35% effective 24/07/2024. Visit to Get Source Govt revises Agriculture Infrastructure & Development Cess (AIDC) on precious metals & other items. Rates reduced substantially. Visit to Get Source Duty-free import of commercial samples: value limit hiked from Rs. 1L to Rs. 3L/consignment. Effective 24/07/2024. Visit to Get Source Customs rules amended for new exporters' subsidy review. Provisional assessment, guarantees allowed. Retrospective duty possible. Visit to Get Source Court: Quasi-judicial bodies must record reasons; vital contentions overlooked. Order set aside on Rs. 1.75 cr deposit; fresh order after hearing. Visit to Get Source Penalty for export violation quashed due to lack of show cause notice & hearing, violating natural justice principles. Visit to Get Source Importer paid duty on apples via scrips, later paid cash+interest. No fraud/evasion proven. Penalty set aside. Goods not confiscatable. Visit to Get Source Importers penalized for undervaluation & duty evasion racket. Forensic evidence exposed malpractice. Failed to justify waiver. Penalties upheld. Visit to Get Source Bill Union Budget 2024: Finance (No.2) Act, Budget Speech, Economic Survey highlights & news. Visit to Get Source Budget 3 schemes: 1-month wage for new workforce, incentives for manufacturing jobs & EPFO contribution reimbursement for 2 years. Visit to Get Source GST simplified tax, reduced burden on common man & logistics cost. Facilitated trade with amendments like liquor exemption & regularization. Visit to Get Source Income Tax reforms: Simplification, digitalization, dispute resolution scheme. TDS rationalization, higher appeal limits. STT hike, buyback tax. Visit to Get Source Capital gains tax: 20% on short-term gains, 12.5% on long-term gains. Higher exemption limit for long-term gains on financial assets. Visit to Get Source Customs reforms boost manufacturing, value addition, exports & simplify taxation. Exemptions for minerals, drugs, key sectors. Duty cuts for mobiles, chargers & renewable energy. Visit to Get Source Income tax relief for salaried & pensioners under new regime. Higher std deduction & family pension deduction. Revised tax slabs. Visit to Get Source Indian Laws Speedy trial a must; bail can't be denied solely on serious charges. Courts to uphold Article 21 over restrictive laws. Visit to Get Source Criminal case quashed due to complainant's financial inability despite arbitration clause. Dispute arose from work delay, GST impact. Visit to Get Source Service Tax Tour operator service requires planning, scheduling tours; standalone hotel booking not covered. Hotel service taxable from 01.05.2011; prior exemption & double taxation avoidance discussed. Visit to Get Source Articles MAINTAINABILITY OF PROVISIONS OF INSOLVENCY AND BANKRUPTCY CODE, 2016 OVER THE PROVISIONS OF SEBI ACT Budget Announcements 2024-25 - Quick go What Budget says - Direct and Indirect Taxes Budget 2024-25 - Focus On 9 Priorities Notifications Customs 39/2024 - dated 23-7-2024 - Cus Seeks to amend notification No. 45/2017-Customs dated 30th June, 2017 in order to extend the time period of re-import. 38/2024 - dated 23-7-2024 - Cus Seeks to amend 32 notifications in order to extend their validity to a further period and amend notification No. 153/94-Customs to extend the time period for re-export of certain foreign origin goods when imported for maintenance, repair and overhaul. 37/2024 - dated 23-7-2024 - Cus Seeks to amend notification no. 27/2011-Customs dated 1st March, 2011 in order to amend the export duty on specified items of raw hides, skins and leather. 36/2024 - dated 23-7-2024 - Cus Seeks to provide exemption/concessional rate of BCD and SWS to critical minerals - 36/2024 dated 23rd July 2024 35/2024 - dated 23-7-2024 - Cus Seeks to amend notification No. 8/2020-Customs dated 1st February, 2020 in order to revise Health Cess on certain items. 34/2024 - dated 23-7-2024 - Cus Seeks to amend notification related to electronics including Nos. 25/1999-Customs, 25/2002-Customs and 57/2017-Customs 33/2024 - dated 23-7-2024 - Cus Seeks to amend notification No. 57/2000-Customs dated 8th May 2000, which provides concessional rate for gold, silver and platinum imported under specified schemes. - Rates reduced from 9.35% to 4.35% 32/2024 - dated 23-7-2024 - Cus Seeks to amend notification No. 11/2021-Customs dated 1st February, 2021 so as to revise Agriculture Infrastructure and Development Cess (AIDC) applicable on certain items. - AIDC on Precious Metals reduced substantially. 31/2024 - dated 23-7-2024 - Cus Seeks to amend notification No. 22/2022-Customs dated 30th April, 2022 to revise rates under India-UAE CEPA. 30/2024 - dated 23-7-2024 - Cus Seeks to further amend notification No. 50/2017-Customs dated the 30th June, 2017, so as to notify BCD related changes 29/2024 - dated 23-7-2024 - Cus Seeks to amend notification No. 154/94-Customs dated the 13th July, 1994 which provides for duty free import of commercial samples. 51/2024 - dated 23-7-2024 - Cus (NT) Seeks to amend Customs Tariff (Identification, Assessment and Collection Countervailing Duty on Subsidized Articles and for Determination of Injury) Rules, 1995 to provide for New Shippers Review. Circulars / Instructions / Orders DGFT - Trade Notice No. 09/2024-25 - dated 23-7-2024 Verification of authenticity of Licences, Authorisations, Scrips, Certificates, Instruments etc. issued by DGFT using the UDIN. Customs - D.O. F.No. 334/04/2024-TRU - dated 23-7-2024 Changes in Customs, Central Excise, GST law and rates have been proposed through the Finance (No.2) Bill, 2024 Customs - Instruction No. 19/2024 - dated 22-7-2024 Provisional attachment of bank account(s) - Section 110 (5) of Customs Act, 1962 News Celebrating Income Tax Day 2024: A Journey of Transformation Budget 2024-25 - Customs Notifications HIGHLIGHTS OF THE UNION BUDGET 2024-25 SUMMARY OF THE UNION BUDGET 2024-2025 STATES TO BE INCENTIVIZED FOR IMPLEMENTATION OF THEIR BUSINESS REFORMS ACTION PLANS AND DIGITALIZATION: UNION BUDGET 2024-25 FOCUS ON AGRICULTURE RESEARCH SETUP FOR RAISING PRODUCTIVITY AND DEVELOPING CLIMATE RESILIENT VARIETIES PROVISION OF ₹ 1.52 LAKH CRORE FOR AGRICULTURE AND ALLIED SECTOR IN UNION BUDGET 2024-25 UNION FINANCE MINISTER SMT. NIRMALA SITHARAMAN PROPOSES EIGHT NEW MEASURES IN SUPPORT FOR PROMOTION OF MSMEs SCHEME FOR PROVIDING INTERNSHIP OPPORTUNITIES IN TOP COMPANIES LAUNCHED AS 5th SCHEME UNDER THE PRIME MINISTER'S PACKAGE NEW CENTRALLY SPONSORED SCHEME FOR SKILLING ANNOUNCED AS 4th SCHEME UNDER THE PRIME MINISTER’S PACKAGE GOVERNMENT TO IMPLEMENT 3 SCHEMES FOR ‘EMPLOYMENT LINKED INCENTIVE’ AS PART OF THE PRIME MINISTER’S PACKAGE GST A SUCCESS OF VAST PROPORTIONS, DECREASED TAX INCIDENCE ON COMMON MAN: FINANCE MINISTER SIMPLIFYING TAX AND IMPROVING TAX PAYER SERVICES – A CONSISTENT ENDEAVOUR OF THE GOVERNMENT: UNION FINANCE MINISTER CAPITAL GAINS TAXATION SIMPLIFIED AND RATIONALISED Speech of Nirmala Sitharaman, Minister of Finance, July 23, 2024 - Budget 2024-2025 'ANGEL TAX' ABOLISHED FOR ALL CLASSES OF INVESTORS REFORMS IN CUSTOMS DUTIES WILL SUPPORT DOMESTIC MANUFACTURING AND PROMOTE EXPORT COMPETITIVENESS; FINANCE MINISTER INDIA’S ECONOMIC GROWTH CONTINUES TO BE THE SHINING EXCEPTION DESPITE GLOBAL UNCERTAINTITES GOVERNMENT MAKES NEW TAX REGIME MORE ATTRACTIVE PRIME MINISTER’S PACKAGE WORTH Rs. 2 LAKH CRORE CENTRAL OUTLAY ANNOUNCED; EMPLOYMENT, SKILLING AND OTHER OPPORTUNITIES FOR 4.1 CRORE YOUTH OVER A 5-YEAR PERIOD INDIA’S REAL GROWTH AT 8.2 PERCENT AND NOMINAL GROWTH AT 9.6 PERCENT IN FY 2023-24 HOUSING NEEDS OF 1 CRORE URBAN POOR AND MIDDLE-CLASS FAMILIES TO BE ADDRESSED WITH AN INVESTMENT OF ₹ 10 LAKH CRORE UNDER THE PM AWAS YOJANA URBAN 2.0 OUR EFFORTS IN POSITIONING INDIA AS A GLOBAL TOURIST DESTINATION WILL CREATE JOBS STIMULATE INVESTMENTS AND UNLOCK ECONOMIC OPPORTUNITIES FOR OTHER SECTORS: SMT. NIRMALA SITHARAMAN NEW PENSION SCHEME ‘VATSALYA’ ANNOUNCED FOR MINORS; CONTRIBUTION BY PARENTS AND GUARDIANS UNION FINANCE MINISTER ANNOUNCES ‘PRADHAN MANTRI JANJATIYA UNNAT GRAM ABHIYAN’ FOR IMPROVED SOCIO-ECONOMIC CONDITION OF TRIBAL COMMUNITIES UNION BUDGET SIGNALS GOVERNMENT’S COMMITMENT TOWARDS ENHANCED ROLE OF WOMEN IN ECONOMIC DEVELOPMENT FINANCIAL SUPPORT FOR HIGHER EDUCATION LOANS UPTO ` 10 LAKH TO HELP YOUTH WHO HAVE NOT BEEN ELIGIBLE FOR BENEFIT UNDER GOVERNMENT SCHEMES AND POLICIES ‘SATURATION APPROACH’ TO BE ADOPTED FOR INCLUSIVE AND COMPREHENSIVE RESOURCE DEVELOPMENT AND SOCIAL JUSTICE POLICY FOR PROMOTING PUMPED STORAGE PROJECTS TO BE BROUGHT OUT FOR ELECTRICITY STORAGE UNION BUDGET ANNOUNCES A VENTURE CAPITAL FUND OF ₹ 1,000 CRORE TO EXPAND THE SPACE ECONOMY BY 5 TIMES IN THE NEXT 10 YEARS LAND REFORM AND ACTIONS TO BE INCENTIVISED FOR COMPLETION WITHIN NEXT 3 YEARS TWELVE INVESTMENT-READY “PLUG AND PLAY” INDUSTRIAL PARKS TO BE CREATED UNDER NATIONAL INDUSTRIAL CORRIDOR DEVELOPMENT PROGRAMME: UNION BUDGET 2024-25 ₹ 11,11,111 CRORE ALLOCATED FOR CAPITAL EXPENDITURE IN BUDGET 2024-25 THE FINANCE (NO. 2) BILL, 2024 Union Budget 2024-25 (Full) + FINANCE (No.2) ACT, 2024 Economic Survey 2023-24 - Highlights Role of Assurance Functions in Navigating Growth and Risk (Remarks by Shri M Rajeshwar Rao, Deputy Governor, Reserve Bank of India - July 22, 2024 - delivered at BFSI Summit organized by CareEdge in Mumbai) Case Laws: GST 2024 (7) TMI 1162 Challenge to assessment order - part -B of the e- way bill was not duly filled - respondent did not submit any reply to the SCN - HELD THAT:- It is not in dispute that the goods in question was intercepted and same was detained on the ground that the e-way bill was not duly filled as required under the Act and after giving due notice to the respondent, the order was passed specifically mentioning therein that there was an intent to avoid the payment of tax. Once the authorities have recorded a finding of fact that there was an intent to avoid the payment of tax, the appellate authority was duty bound to reverse the said finding of fact but only a reference of the judgment passed by this Court in the case of M/S RAJ IRON BUILDING MATERIALS VERSUS UNION OF INDIA THRU' ITS SECY. 3 OTHERS [ 2018 (1) TMI 949 - ALLAHABAD HIGH COURT] has been given while allowing the appeal, thus, the appellate authority had failed to record any cogent reason as to how the said judgement was applicable in the facts of the present case. The appellate authority has neither recorded any specific finding of fact in order to reverse the finding that there was no intent to avoid the payment of tax, nor recorded any reason that the said case law relied upon was applicable in the facts of the present case. In such circumstance, the impugned order cannot be sustained in the eyes of law. Petition allowed. 2024 (7) TMI 1161 Challenge to order passed under Section 74 (9) of the West Bengal GST/CGST Act, 2017 - order by Proper Officer, passed subsequent to the demise of the registered taxpayer - HELD THAT:- Admittedly, in this case it would transpire that a show cause notice had been issued on the registered taxpayer. The registered taxpayer had also duly responded to the said show cause notice. Records would also reveal that from the order passed under Section 74 (9) of the said Act, it would transpire that an opportunity of hearing was also afforded to the registered taxpayer on 7th February, 2024. The order passed by the Proper Officer under Section 74 (9) of the said Act dated 13th March, 2024, which had been passed subsequent to the demise of the registered taxpayer, is unenforceable and has to be declared as such. The order passed by the Proper Officer on 13th March, 2024 stands set aside - petition disposed off. 2024 (7) TMI 1160 Refund of GST claim under Inverted Duty Structure - applicability of CBEC Circular No.135/05/2020-GST - HELD THAT:- The provisions of the GST enactments being applicable pan India, the Department cannot take a different stand and such stand would be contrary to the ratio of the Hon ble Supreme Court in KUSUM INGOTS ALLOYS LTD. VERSUS UNION OF INDIA [ 2004 (4) TMI 342 - SUPREME COURT] . Therefore, the impugned order denying the benefit of the refund on account of the Inverted Duty Structure to the petitioner is unsustainable. The impugned order is set aside and the case is remitted back to the respondent to pass a fresh order in the light of the above mentioned orders santioning for the refund to the petitioner. This exercise shall be completed within a period of three months from the date of receipt of a copy of this order. Petition allowed by way of remand. 2024 (7) TMI 1159 Violation of principle sof natural justice - petitioner's contentions were not taken into account - mismatch between the petitioner's GSTR 3B returns and the auto populated GSTR 2A - HELD THAT:- The third respondent did not discuss the petitioner's explanation for classifying it as a farm tractor or record reasons for rejecting such explanation. As regards the ITC mismatch issue, in the petitioner's reply, the petitioner refers to the issuance of invoices after the end of the financial year. On this issue, the third respondent records that the petitioner had stated that ITC matching was not a mandatory requirement for the period July 2017 to March 2019. This was not the contention of the petitioner in the reply. Thus, on both these issues, the petitioner's contentions were not dealt with in the impugned order. For such reason, a remand is necessary. The impugned order dated 24.04.2024 is partly set aside only insofar as the ITC mismatch issue and the rate of tax difference / classification issue are concerned. Consequently, the third respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within three months from the date of receipt of a copy of this order. Petition disposed off. 2024 (7) TMI 1158 Violation of principles of natural justice - SCN was not communicated through any other mode - petitioner was unaware of proceedings and could not participate in the same - adjudications are challenged primarily on the ground of non-issuance of notice in Form ASMT 10 - what is the consequence of non-compliance? - Does it vitiate the subsequent adjudication either under Sections 73 or 74? - HELD THAT:- he factual question as to whether the respective petitioner's returns were selected for scrutiny under Section 61 has limited significance. This contention was advanced on the basis that the subject description in the impugned order refers to scrutiny of returns and the discovery of discrepancies. On examining the preceding show cause notice, there is no reference to scrutiny under Section 61. Instead, data from the GSTR-01 and GSTR-3B returns are set out to indicate the mismatch. From the material on record, it is not possible to record a definitive conclusion that the petitioner's returns were selected for scrutiny under Section 61. In any event, nothing turns on the answer because such scrutiny was not the foundation for adjudication under Section 73. Both the show cause notice and the impugned order refer expressly to a scrutiny under Section 61 and to discrepancies being noticed. Thus, the two conditions necessary to trigger the obligation to issue the ASMT-10 notice were fulfilled in this case. As a consequence of not issuing the ASMT-10 notice, any conclusions drawn in course of scrutiny would stand vitiated and cannot be the basis for adjudication. In this case, the show cause notice specifies the outward supply value from the petitioner's GSTR-3B returns and the purchase value as reflected in the auto-populated GSTR-2A. Since the petitioner was provided an opportunity to show cause, it cannot be said that the adjudication was based only on the scrutiny under Section 61 or that the petitioner was prejudiced. The tax proposal was confirmed because the tax payer failed to reply. Since the petitioner asserted that such failure to participate was on account of not being aware of proceedings, the interest of justice warrants that an opportunity be provided to the petitioner to contest the tax demand on merits by putting the petitioner on terms. The impugned assessment order dated 11.04.2024 in W.P.No.13507 of 2024 is set aside on condition that the petitioner remits 10% of the disputed tax demand within fifteen days from the date of receipt of a copy of this order. Within the said period, the petitioner is permitted to submit a reply to the show cause notice - The impugned assessment order dated 23.12.2023 in W.P.No.15330 of 2024 is aside aside by remanding the matter for reconsideration - Petition disposed off. 2024 (7) TMI 1157 Maintainability of appeal - time limitation - Cancellation of GST registration of petitioner - petitioner preferred an appeal against the impugned cancellation order before the Appellate Authority on 09.09.2022, however the same was not entertained as it was filed after the expiry of the stipulated period for filling such appeals - HELD THAT:- It is material to note that the GST registration of the petitioner was cancelled by the impugned cancellation order with retrospective effect, however, no adverse action to the said effect was proposed in the impugned SCN. The impugned cancellation order also does not set out any reason for cancelling the petitioner s GST registration with retrospective effect. It is relevant to note that the Supreme Court in IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION [ 2022 (1) TMI 385 - SC ORDER] had condoned the delay in cases where the period of limitation expired prior to 28.02.2022. It is considered apposite to set aside the impugned order and remand the matter to the Appellate Authority to decide the petitioner s appeal afresh on merits, uninfluenced by the question of delay, after affording an opportunity of personal hearing to the petitioner - petition disposed off by way of remand. 2024 (7) TMI 1156 Cancellation of registration of the petitioner - order passed without assigning any reasons - time limittaion - HELD THAT:- The Co-ordinate Bench of this Court in case of AGGARWAL DYEING AND PRINTING WORKS VERSUS STATE OF GUJARAT 2 OTHER (S) [ 2022 (4) TMI 864 - GUJARAT HIGH COURT] has issued the guidelines to the respondent-authorities by holding that ' Our concern is that on account of procedural lapses, the High Court should not be flooded with writ applications. The procedural aspects should be looked into by the authority concerned very scrupulously and deligently. Why unnecessarily give any dealer a chance to make a complaint before this Court when it could have been easily avoided by the department.' The impugned orders passed by the appellate authority as well as the Assessing Officer are hereby quashed and set aside and the matter is remanded back to the Assessing Officer to issue fresh show cause notice with particulars of reasons incorporated with details and thereafter to provide reasonable opportunity of hearing to the writ applicants, and to pass appropriate speaking orders on merits. Petition disposed off. 2024 (7) TMI 1155 Challenge to assessment order - impugned order records that the petitioner has neither replied to the show cause notice nor has appeared during personal hearings - violation of principles of natural justice - HELD THAT:- Considering the fact that the petitioner has opportunity to request the second respondent to exercise the discretion under Section 161 of the GST Act, 2017, the Court is of the view that the impugned order is unsustainable in the manner, in which, it has been passed. Under these circumstances, the impugned order is quashed and the case is remitted back to the second respondent to pass fresh orders on merits and in accordance with law. Petition disposed off by way of remand. 2024 (7) TMI 1154 Maintainability of appeal - time limitation - pre-deposit - appeal rejected on the ground that they had been filed beyond time and also that the pre-deposit of 10% of the disputed tax, required to be paid under Section 107 of the Central Goods and Services Act, 2017, had not been paid - HELD THAT:- The Hon ble Division Bench after noticing Rule 108 (1) of the AP GST Rules, 2017, stipulating the method of pre-deposit as well as the provisions of Section 107 (1) of the AP GST Act which requires pre-deposit to be made under GST APL-01 had directed the Appellate Authority to consider the question of whether there was a technical difficulty in making payment under APL-01 and to pass orders thereafter. This would mean that the Appellate Authority was required to ascertain whether there was a technical glitch which shut out the petitioners from making the necessary pre-deposits and to accept the payment made under DRC-03 as payment under APL-01. However, the Appellate Authority, without going into the question as to whether there was a technical glitch or not, had simply decided that, payment made under a wrong head is not sufficient compliance of the requirements of Rule 108 of the AP GST Rules r/w Section 107 of the AP GST Act. The matters are remanded back to the 2nd respondent-Appellate Authority for fresh consideration - petition allowed by way of remand. 2024 (7) TMI 1153 Levy of penalty - transportation of goods - violation of Rule 129 of the SGST Rules, 2017 - HELD THAT:- The power of detention as well as seizure can be exercised only when the goods were not accompanying with the genuine documents provided under the Act. The genuineness of the documents has not been disputed at any stage. Observation/allegation has been made that at the time of interception / detention of the goods in question, the driver of the vehicle has only produced tax invoice and e-way bill dated 11.07.2023 and 13.07.2023, but none of the documents as prescribed under the Act has been referred or even brought on record before this Court in support of the said contention. Once the documents accompanying the goods were found to be genuine the goods ought not be have been seized. The impugned order dated 06.03.2024 cannot be sustained in the eyes of law and is hereby quashed - petition allowed. 2024 (7) TMI 1152 Input tax credit - Time limitation - period July 2017 to March 2019 - Section 6(2)(b) of the CGST Act and RGST Act 2017 - HELD THAT:- Taking into consideration the submissions of learned counsel for the petitioner that in respect of the same transaction, an ITC claim of the petitioner pertaining to the assessment period July 2017 to March 2019, based on similar set of transactions, already a notice under Section 73 of the CGST Act 2017 has been issued by Central Goods and Services Tax Authorities, subsequent notice by the State Authorities under RGST Act 2017 in respect of the same matter is barred under Section 6(2)(b) of the CGST Act and RGST Act 2017, respondent Nos.2,3 4 are restrained from proceedings further pursuant to impugned show cause notice dated 31.01.2024. Issue notice to respondent Nos.2,3 4 on payment of PF and notice within one week, returnable within three weeks. 2024 (7) TMI 1151 Irregular availment of ITC on inward supplies received from registered persons during the period 2018-19 and 2019-20 - whether the petitioner was required to pay late fee for delayed filing of annual returns? - HELD THAT:- Since the petitioner has already filed reply to the show cause notice, this Court would not like to entertain the present writ petition filed against the show cause notice. It is for the competent authority to decide the issue. Once the issue has been decided, the petitioner will have remedy as provided under the statute. The show cause notice issued is neither without jurisdiction nor against law. This Court would not like to entertain the present writ petition, which is hereby dismissed. 2024 (7) TMI 1150 Seeking direction upon the respondents authority concerned to bear the additional tax liability for execution of subsisting Government contracts either awarded in the pre-GST regime or in the post GST regime without updating the Schedule of Rates (SOR) incorporating the applicable GST while preparing Bill of Quantities (BOQ) for inviting the bids - HED THAT:- This writ petition is disposed of by giving liberty to the petitioner to file appropriate representation, before the Additional Chief Secretary, Finance Department, Government of West Bengal within four weeks from date. On receipt of such representation the Additional Chief Secretary, Finance Department shall take a final decision within four months from the date of receipt of such representation after consulting with all other relevant departments concerned. 2024 (7) TMI 1149 Levy of service tax on the amount of salaries and perquisites relating to expats under Manpower Recruitment or Supply Agency Service - HELD THAT:- Since the petitioners have already represented and have taken time as such before the Revenue on 20.11.2023 that they are in the process of collating the documents to prepare a comprehensive response, the necessary response be filed by 15.01.2024. The respondents shall then take a decision on the same. In case any adverse order is passed against the petitioners during the pendency of the writ petition, the respondents shall not take any coercive steps to recover the amount. Adjourned to 13.02.2024. 2024 (7) TMI 1148 Levy of GST or exempt from GST - amount paid to the Forest department as Abhivahan permission shulk - Scope of continuous supply of service u/s 2 (33) of the CGST Act 2017. Whether the amount paid to the Forest Department as Abhivahan Permission Shulk is liable to be taxed under GST or exempt as per SI. No. 4 and 5 of the Notification No. 12/2017-Central Tax (Rate), dated 28.06.2017? - HELD THAT:- The Abhivahan Shulk as collected by the Chhattisgarh Forest Department from the appellant is in lieu of granting permission for movement of Forest produce viz. coal from the forest area of Chhattisgarh state. The permit charges collected by forest department is used by (he forest officials keep a watch on the mining activity and also to assess the quantity and type of mineral being quarried to carry out survey and also keep constant watch on the movement of the produce, and is not related to Urban forestry, protection of the environment and promotion of the ecological aspect or Social forestry or farm forestry . Therefore, Abhivahan Shulk has neither any connection with Urban forestry, protection of the environment and promotion of the ecological aspect [functions entrusted and as specified under SI. No. 8 to municipalities in the Eleventh Schedule read with Article 243W oi the Constitution of India] nor with Social forestry and farm forestry [functions entrusted and as specified under SI No 6 to Panchayats in the twelfth Schedule read with Article 243G of the Constitution of India] - the said Abhivahan permission shulk paid by the appellant is not eligible for NII. rate of GST, as provided under SI No. 4 5 of Notification No. 12/2017-Central Tax (Rate), dated 28.06.2017. Whether each transaction of Abhivahan Shulk, being less than Rs. 5000/- per transaction, is exempt under SI. No. 9 of the Notification No. 12/2017-Central Tax (Rate), dated 28.06.2017, as it is not covered by the definition of continuous supply of service u/s 2 (33) of the CGST Act 2017? - HELD THAT:- The appellant is a power generating company. The main raw material for generation of power is coal. The coal mines are situated in a forest area, and the appellant is paying Transit Fees or Abhivahan Shulk throughout the year on recurring basis to the Forest Department for issuance of transit pass whenever the Coal is cleared from the forest area, This is not a single transaction rather it's a supply of the entire coal regularly to their power plants from the said coal block located in the forest and for which permission is granted by the Forest department. It is just for administrative convenience that vehicle wise Abhivahan Permission Shulk or Transit Fee is being paid by the applicant to the Forest Department Therefore, the said service squarely falls under the category of supply of continuous service as per Section 2 (33) of CGST Act. 2017. The applicant is not eligible for exemption as provided under SI. No. 9 of Notification No. 12/2017-Central Tax (Rate), dated 28.06.2017, as the Abhivahan Permission Shulk paid to the forest department is more than five thousand rupees in a financial year. Income Tax 2024 (7) TMI 1147 Delay in filling SLP - TDS u/s 195 - scope of amendment of Finance Act, 2010 in section 9 - Liability to deduct tax on payments made on sub-contract work done - outsourcing a portion of on-site work to its subsidiary in China - default u/s 201(1) 201(1A) - as decided by HC [ 2023 (6) TMI 773 - KARNATAKA HIGH COURT] person mentioned in section 195 of the Income Tax Act cannot be expected to do the impossible, namely, to apply the expanded definition of royalty inserted by explanation 4 to section 9(1)(vi) of the Income Tax Act, for the assessment years in question, at a time when such explanation was not actually and factually in the statute. HELD THAT:- There is a gross delay of 296 days in filing this Special Leave Petition. Even otherwise, we do not find any merit in the matter. Special Leave Petition is dismissed both on the ground of delay as well as on merits. 2024 (7) TMI 1146 Reopening of assessment u/s 147 - Notice issued after the expiry of four years - gain on sale of land - treating the land in question as stock in trade or capital asset - As decided by HC 2023 (9) TMI 437 - BOMBAY HIGH COURT] there was no failure to disclose any material fact, on that ground alone the notice issued u/s 148 has to be quashed - HELD THAT:- Following the order dated [ 2023 (11) TMI 291 - SC ORDER] passed by this Court in SLP, this Special Leave Petition is also dismissed. 2024 (7) TMI 1145 Validity of reassessment proceeding u/s 147/148 - difference between lack of jurisdiction and irregular exercise of power/jurisdiction by the AO -reassessment triggered when the CBI search was made at others premises, not the assessee and certain documents were found at the place of one J.K. Jain - whether the AO has passed the final order in reassessment on the dictates/directions of the superior authority? - ITAT in its judgment has arrived to the finding considering various material available on record that the AO has passed the order against the assessee on the dictates of his superiors. HELD THAT:- It is quite pertinent to mention that how these proceedings against the assessee has been conducted the series of event started on 03.05.91 when the CBI has conducted the search in premises of J.K. Jain. After it the Income Tax Department in exercise of its power under Section 132A of the IT Act, called for these documents and material seized from the CBI. The assesee was asessesed at Bhilai, therefore, the said material was handed over to the AO sitting at Bhilai on 20.03.95. AO issued notice to assesee for reopening. The return of income was filled by the assesee on 06.06.95 however, the AO did not do anything till 20.12.95. On 20.12.95 the AO went to Delhi on receipt of some message of the DDIT (Inv.), amazingly the purpose of visit was for discussion about the case. The records of the proceedings clearly shows that the AO was taking instructions on each and every hearing and dictates was clearly given to him. Letter dated 30.01.96 which was written to the Commissioner of Income Tax, Central Revenue Building, Napier Town Jabalpur clearly shows that even the questionnaire was prepared on instruction of his superiors and same was even sent to Delhi for confirmation this clearly shows how far the AO was taking directions from his superior and not acted independently. In the said letter the AO has clearly written that though he has drafted the skeleton of the order but he want guidance of the higher authorities so that legal infirmity in the assessment can be taken care of these phrases speaks a dozen about how far the AO was conducting the proceedings independently and with open mind. Tribunal has given the detail account of the series of event which has various instances how these proceedings were influenced by the superior authorities sitting at Delhi and Jabalpur. The proceedings before the AO gets vitiated when he start discussing about the merits of the case or in which manner he should conduct the proceedings. As decided in M/S GREENWORLD CORPORATION AND M/S THE GREEN WORLD CORPORATION VERSUS ITO, PARWANOO ANR. [ 2009 (5) TMI 14 - SUPREME COURT] while making the orders of assessment the assessing officer shall be bound by the statutory circulars issued by CBDT but it is another thing to say that the assessing authority exercising quasi-judicial function keeping in view the scheme contained in the Act, would lose its independence to pass an independent order of assessment. AO has duty to act judicially and independently and its judgment cannot be controlled by the superior authority - The officers sitting at Delhi and Jabalpur has even interfered in the order especially the guidance has been sought by the AO to deal with the grounds raised by the assessee. Thus, the tribunal has rightly concluded that the AO has passed the order of reassessment on the dictates of the higher authorities sitting at Delhi and Jabalpur. Once having held that the reassessment started at the dictation of the higher authorities and thereafter, during reassessment process too continuous instructions were imparted and even the AO obtained instructions, therefore, the end result would be same as the bias would exist. Decision of reassessment, reassessment thereafter is at the dictation of higher authorities then the order itself would be outcome of bias and authority having original jurisdiction would not be able to come to save them under the shell. The entirety of facts cannot be fragmented in peace meal and entire state of affairs are to be considered as a whole. Even otherwise the court cannot condone the delay of the proceedings which is not before it as limitation for framing of reassessment order section 147/143 (3) which, in terms of section 153 of the Act (as then applicable) lapsed on 31.03.1997. Decided in favour of assessee. 2024 (7) TMI 1144 Reopening of assessment u/s 147 - mere change of opinion - differential amount i.e. difference between the amounts reflected in the balance-sheet and income offered in the profit and loss account has escaped assessment - HELD THAT:- It is apt to take note of the admitted fact that the case of the petitioner was selected for scrutiny and the then AO after having considered details furnished by the petitioner such as, export sale as well as benefit in the form of duty drawback, duty of customs or central excise repaid and repayable, cash assistance, vide order, framed the assessment under the provision of section 143 (3) meaning thereby, in our view, AO was in possession with all the relevant material including the profit and loss account as well as the balance-sheet at the time when the assessment order was framed u/s 143 (3) of the Act. Therefore, Revenue was well within their possession of all the relevant materials and thereby it is difficult to hold that the petitioner has not fully and truly disclosed the material facts. When the then AO has framed the assessment under the provisions of section 143 (3) of the Act, all the documents were furnished by the petitioner and therefore now in absence of any new and/or tangible material, keeping in mind the contents of the reasons recorded if notice u/s 148 is issued on the same material, in our considered opinion, the same is nothing but the mere change of opinion which is not permissible in eye of law. In absence of failure on the part of the petitioner to disclose fully and truly all material facts, the notice u/s 148 is issued beyond the period of four years the same is not even otherwise permissible. Assessee appeal allowed. 2024 (7) TMI 1143 Validity of Reopening of assessment - legality of notice u/s 148 and the order rejecting objections - Revenue has sought to reopen the assessment on the sole basis that the profit being the difference between purchase and sale of commodities over national multi commodities exchange, though derived but not reflected in the return of income - HELD THAT:- As per the undisputed fact that the petitioner has already submitted a contract note dated 01.10.2011 issued by Star Commodities with regard to the transaction in which it is alleged that the income has escaped assessment. Considering the ledger account of Star Commodities produced, the very income has already been reflected. Further, on perusal it has been found that the Bank Statement of the Union Bank of India for the period between 01.04.2011 to 31.03.2012 wherein the said amount has been reflected. Keeping in mind the aforesaid material on record, in our considered opinion, the entire base of reopening that income escaped assessment is not correct. The reasons so recorded and the notice u/s 148 is nothing but a sheer non application of mind by the Revenue. Thus, we therefor hold that a notice u/s 148 of the Act cannot be said to be legal in the eye of law. Decided in favour of assessee. 2024 (7) TMI 1142 Nature of expenditure - expenses on power and fuel and lease rent for machines taken on hire - revenue u/s capital expenditure - ITAT held it capital expenditure incurred by the assessee in connection with the establishment of the cement manufacturing unit at Bilaspur - CIT(A) treated the same as revenue expenditure. HELD THAT:- As perused the orders passed by this Court, we note that in fact for AY 1985-86 Division Bench of this Court dismissing the revenue s appeal, observed that the Tribunal had passed an order based on the order passed by the Tribunal in regard to the earlier assessment year 1984-85 and for the assessment year 1985-86, the revenue was unable to state whether the Revenue had preferred any appeal against the said order or had filed any reference against the same. In this view of the matter, the Division Bench observed that as the issue involved was purely based on a finding of fact, no substantial question of law has arisen and accordingly dismissed the appeal. Principle of consistency - We, find much substance in the contentions as urged on behalf of the assessee that the present proceedings would stand covered by not only the position taken by the revenue for AY 1984-85 subject matter of M/s. Raymond Woollen Mills Ltd. decided by the Tribunal, but also by the subsequent orders passed by this Court, for assessment years as noted by us hereinabove. Supreme Court in Godrej and Boyce Manufacturing Company Ltd. [ 2017 (5) TMI 403 - SUPREME COURT] wherein the Supreme Court reiterated the principles when it was observed that the need for consistency and certainty and existence of strong and compelling reasons for a departure from a settled position has to be spelt out, which conspicuously was stated to be absent in the case in hand before the Supreme Court. The Supreme Court reitereated the principles as laid down in M/s. Radhasoami Satsang, Saomi Bagh, Agra [ 1991 (11) TMI 2 - SUPREME COURT] wherein as held observed that strictly speaking res judicata does not apply to income tax proceedings and that each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found, as a fact one way or the other, and parties have allowed that position to be sustained by not challenging the order, it would not at all be appropriate to allow the position to be changed in a subsequent year. Assessee appeal allowed. 2024 (7) TMI 1141 Interest u/s 234A, 234B and 234C post Corporate Insolvency Resolution Process - as argued Tribunal which had authorised the Assessing Officer only to verify the inclusion of income tax due in the IRP, has without giving any notice to the Assessee unilaterally charged interest u/s 234A, 234B and 234C resulting in an enhancement of demand - HELD THAT:- In Ghanashyam Mishra Sons Pvt. Ltd. vs. Edelweiss Asset Reconstruction Company Ltd. Ors. [ 2021 (4) TMI 613 - SUPREME COURT ] and M/S. Ruchi Soya Industries Ltd. v. Union Of India Ors. [ 2022 (3) TMI 60 - SUPREME COURT ] as held that once a resolution plan is duly approved by the adjudicating authority under Section 31(1), the claims as provided in the resolution plan shall stand frozen and will be binding on the corporate debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the adjudicating authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan The amount has stood frozen by the operation of moratorium under IBC and also not part of the Resolution Plan. Hence, no claim can be made against the Petitioner. The charge of Interest amounting to Rs. 9,32,218.00 under section 234A, Rs. 10,79,21,201.00 under section 234B, Rs. 44,71,790.00 under Section 234C of the Income Tax Act does not survive. The order passed under Section 254 of the Income Tax Act giving effect to the order of the ITAT and the Notice of Demand u/s 156 are hereby quashed and the Petitioner be refunded an amount which was paid pertaing to the Assessment Year 2010-11. 2024 (7) TMI 1140 Estimation of income/NP - Determination of net profit in liquor trade - HELD THAT:- Insofar as the estimate is concerned AO placed reliance on the decision of M/s. Kanakadurga Wines [ 2012 (5) TMI 797 - ITAT HYDERABAD ] and other cases. As observed by the Hon'ble High Court, the profit percentage to be adopted differs from case to case. Apart from that fact, subsequently the privilege fees is introduced and according to the learned AR it reduced the profit margin. We are of the considered opinion that the estimate of net profit of the assessee at 3% of the turnover would meet the ends of justice. We accordingly direct the AO to recompute the income of the assessee. Appeal of assessee allowed. 2024 (7) TMI 1139 Refund on account of excess DDT - payments by way of DDT were paid by the assessee company on distribution of dividend - HELD THAT:- It is the case of the assessee that while the assessee has paid DDT u/s 115-O of the Act at applicable rate under the Act which is 12.5% + surcharge + cess for A.Ys. 2005-06 and 2006-07 and 15% + surcharge + cess for remaining years in appeal, the assessee in terms of Article 10(2)(a) of DTAA between India and Mauritius is liable to pay lower rate of tax, i.e. 5% on dividend payable to the shareholder (tax resident of Mauritius) and consequently assessee is entitled to refund of excess tax collected by the revenue on dividend distributed and paid to the Holding company (a tax resident of Mauritius). Assessee has thus alleged that the Revenue Authorities have wrongfully retained excess tax paid on remittance of dividend and thus wrongfully denied the benefit of treaty available to the assessee. We straightaway take note of the special bench decision in the case of Total Oil [ 2023 (4) TMI 988 - ITAT MUMBAI (SB)] In that case, the assessee M/s Total Oil India Private Ltd., an Indian Co., declared/paid dividend for AY 2016-17. One of the shareholders to whom dividend was to be paid was a Non Resident (Tax resident of France). Similar plea was raised in that case that the rate at which tax under 115-O of the Act had to be paid could not be more than the rate at which dividend could be taxed in the hands of the Non Resident shareholder in India under the DTAA between India and France as the rate of tax prescribed in the DTAA is generally less than the rate prescribed in section 115-O. On nuanced analysis, the Special bench formed a view that dividend declared by a domestic company to a non resident should be taxed at the rate given u/s 115-O and not the beneficial rates given under DTAA for Non Residents unless the contracting state to which the treaty intends to extend the treaty protection to the domestic company. It thus observed that wherever the Contracting States to a tax treaty intend to extend the treaty protection to the domestic company paying dividend distribution tax, only then, the domestic company can claim benefit of the DTAA, if any. No such protection has been shown to be extended in the instant case. The issue is thus squarely covered in favour of the revenue and against the assessee. In the instant case, the treaty benefit is thus not available in relation to provisions of 115-O of the Act. The provisions of section 237 is thus of no avail. Appeals of the Assessee are thus dismissed. 2024 (7) TMI 1138 Estimation of income - bogus purchases - HELD THAT:- After detailed discussion of the case and the legal position as well as precedents on the subject issue, the Tribunal sustained addition @ 6% of the bogus purchases. The facts of the present appeal are similar and hence, it is squarely covered by the order of the Tribunal in the case of Pankaj K. Choudhary [ 2021 (10) TMI 653 - ITAT SURAT] Therefore, following the above decisions, we restrict the disallowance to 6% of the disputed bogus purchase. Decided in favour of assessee partly. 2024 (7) TMI 1137 Disallowance of financial expenses in proportion of purchase from bogus companies - AO disallowed the expenditure to the extent of paper transaction not backed by actual business - HELD THAT:- CIT(A) had disallowed the loss on circular transaction holding it to be artificial and managed and losses are fabricated, but on the other hand, he found that the financial charges to be incurred for the purpose of business, hence, to be allowed. The assessee has pleaded that the funds were required for working capital. But in case of paper transaction, there is no requirement of capital at all because there was neither any purchase nor was there any sale. However, the assessee has adopted this route to raise higher finance from the circular transaction. Since the discounting charges on letter of credits have been paid to bank, the genuinity is sacrosanct. The funds so raised have been used to augment the working capital required for delivery based business. The assessee had used the platform of circular trading to draw higher finance from the bank. There is no instance of any diversion of funds as pointed out by the AO. The funds from the discounted letter of credits are used for the purpose of business and is allowable under section 36(1)(iii) of the Act. There is no ground to interfere with the conclusions of CIT(A). Hence, the ground raised by the Revenue is dismissed. Assessment u/s 153A - Addition u/s 68 - In this case, the addition is not based on any incriminating evidences as evident from the assessment order. All the transactions were reflected in regular books of account. No incriminating evidences were unearthed. Neither there is any statement u/s 132(4) nor any corroborative evidences which goes against the assessee. Accordingly, no addition is sustainable in the absence of any incriminating document. DR pleaded that addition of ₹ 4 crore may be confirmed as transactions were not genuine. He, however, failed to pinpoint any incriminating evidence upon which the additions were made. Thus, all the grounds raised by the Revenue are dismissed. 2024 (7) TMI 1136 Validity of adjustments made in the intimation u/s 143(1) - period of limitation - Addition of payment of employees contribution to PF and ESIC beyond the due date - only objection of the assessee is that the decision of the Apex Court Checkmate Services Private Limited. [ 2022 (10) TMI 617 - SUPREME COURT] was applicable only in the case of scrutiny assessment and that no adjustment can be made on the basis of this decision while processing the return of income u/s 143(1) HELD THAT:- There is no dispute to the fact that return of the assessee for A.Y. 201920 was made with a refund claim. Thus, the extended time limit till 31.01.2024 was squarely applicable for processing the return of the assessee for this year. The return of the assessee was, in fact, processed on 31.03.2021, which was within the original extended time limit. Considering the fact that the CBDT had subsequently extended the time limit for processing the return till 31.01.2024; the intimation dated 31.03.2021, even though it was digitally signed and communicated on 01.04.2021, cannot be held as barred by limitation. Therefore, the legal ground raised by the assessee in this regard is rejected. Type of adjustment, as stipulated in the clauses (i) to (vi) of Section 143(1) - There is no dispute to the fact that any incorrect claim, if it was apparent from any information in the return, was liable for adjustment while processing the return. From the intimation sheet as sent by the CPC, it is found that the adjustment was categorically indicated. In fact, this annexure contains details of all the claims made by the assessee in the return of income and the computation as made by the CPC under Section 143(1) of the Act and the variance if any, is also indicated in respect of each item. Thus, the nature of adjustment as made by the CPC was very much reflected in the intimation. Further, the nature/type of adjust was also mentioned in the prior intimation sent to the assessee by the CPC, which is reproduced later in the order. In view of these facts, the ground as taken by the assessee is dismissed. No prior intimation given to the assessee before making the adjustment - There cannot be any doubt that the email ID account [email protected] on which this communication was sent belonged to the assessee and that the assessee was duly communicated about the adjustments before the processing of the return. In fact, the intimation dated 31.03.2021, which is subject matter of this appeal, was also sent on the same email ID [email protected] . Therefore the contention of the assessee that the email [email protected] was an unrelated email ID is not found correct. CPC had all along made all communication with the assessee on this email ID only. Hence, the contention that the prior intimation sent on this email was not legally valid can t be accepted. The intimation u/s 143(1) sent to the assessee on this email ID was well received by the assessee. So the earlier communication regarding proposed adjustments u/s 143(1)(a) of the Act before processing of the return of income for the A.Y. 2019-20 sent on this email ID was legally valid intimation. In fact the assessee has not come clean before us and has tried to misrepresent the facts. Decided against assessee. 2024 (7) TMI 1135 Revision u/s 263 - disallowance of payment made to Life insurance Corporation of India ('LIC') towards superannuation fund u/s 40A(9) - HELD THAT:- Tax Audit Report, in From 3CD, has mentioned that certain contribution made by the assessee would be disallowable u/s 40A(9). This was, in fact, one of the reasons to reopen the case of the assessee. In the queries raised by AO during re-assessment proceedings, It was objected to by AO that the bank statement furnished by the assessee do not identify the name of the holder of the bank account or bank number. The contribution receipts were in the name of M/s Invensys India Pvt. Ltd. and the same do not pertain to the assessee company. The evidences furnished by the assessee do not support the claim of the assessee. Assessee clarified that erstwhile name of the company was changed from M/s Invensys India Pvt. Ltd. to present name as evidenced by certificate of ROC showing name change of the assessee company. Assessee also furnished bank statement highlighting two payments out of four payments. AO chose not to make any addition / disallowance, in this regard. However, the proposal made by the Tax Auditor apparently has not been considered and the issue whether the funds were approved fund or not was not addressed. Therefore, it could be concluded that though a specific query was raised on the issue as flagged by revisionary authority, the same was not adjudicated by AO properly with full facts and with due application of mind as required. Firstly, AO overlooked the reporting made by Tax Auditor. Secondly, the assessee only furnished partial receipts in support of the claim. The issue whether the fund was approved fund was not examined / verified. Therefore, we would conclude that it was a case of inadequate enquiry which justifies invocation of revisionary powers u/s 263. AR, has submitted that the claim could alternatively be allowed on merits u/s 37(1). Reliance has been placed on certain decisions, in this regard allowing similar claim of the assessee. AR also submitted that fund went out of control of the assessee and therefore, the deduction thereof could be allowed to the assessee. Considering the same, we modify the directions given in the impugned order and direct Ld. AO to verify the claim of the assessee and examine deductibility of the expenditure. The assessee is directed to substantiate the same. All the issues are kept open. Our adjudication as aforesaid shall not be construed as any expression on the merits of the case. 2024 (7) TMI 1134 Erroneous approval granted u/s 153D - addition made on account of seized jewellery treating the same as unexplained investment - HELD THAT:- Solemn object of entrusting the duty of Approval of assessment in search case is that the Additional CIT, with his experience and maturity of understanding should at least minimally scrutinize the seized documents and any other material forming the foundation of Assessment. It is elementary that whenever any statutory obligation is cast upon any statutory authority, such authority is required to discharge its obligation not mechanically, not even formally but after due application of mind. Thus, the obligation of granting Approval acts as an inbuilt protection to the taxpayer against arbitrary or unjust exercise of discretion by the AO. The approval granted u/s 153D of the Act should necessarily reflect due application of mind and if the same is subjected to judicial scrutiny, it should stand for itself and should be self-defending. There are long line of judicial precedents which provides guidance in applying the law in this regard. Approval granted by the superior authority in mechanical manner defeats the very purpose of obtaining approval u/s 153D of the Act. Such perfunctory approval has no legal sanctity in the eyes of the law. In the case of Serajuddin and Co [ 2023 (11) TMI 1254 - SC ORDER] dismissed the Appeal filed by the Department of Revenue against the order [ 2023 (3) TMI 785 - ORISSA HIGH COURT] wherein the Hon ble High Court had quashed the Assessment Order on the ground of inadequacy in procedure adopted for issuing approval u/s 153D of the Act by expressing discordant note on such mechanical exercise of responsibility placed on designated authority u/s 153D of the Act. Hence, considering the above facts and circumstances, we find considerable force in the plea raised by the Assessees in the Ground No. 1 of the Appeal which is against erroneous approval granted u/s 153D of the Act. In our opinion the approvals so granted under the shelter of section 153D does not pass the test of legitimacy. Thus, the impugned Assessment order in consequence to such inexplicable approval lacks legitimacy. The impugned assessment in captioned appeal is non-est and a nullity and hence liable to be quashed accordingly, the impugned assessment order and the order of the CIT(A) is hereby set aside by allowing Ground No. 1 of the Assessee. 2024 (7) TMI 1133 Legal validity of the order u/s 143(3) - Period of limitation - reckoning of six years period - search was conducted for initiating proceeding u/s 153C - HELD THAT:- The date of recording of the satisfaction will be the deemed date for the possession of the seized documents, which is 30.06.2022 in the present case and the date of search and six years period would be reckoned from this date i.e. 30.06.2022. Therefore, there is merit in the submission of the assessee that the assessment year relevant for previous year in which search was conducted in the case of the assessee will be AY 2023-24 and the six assessment years immediately preceding the assessment year relevant for the previous year in which search was conducted for initiating proceeding u/s 153C of the Act will be AY 2018-19 to 2022-23. Therefore, it is held that in the present case, the assessment for AY 2021-22 should have been carried out by issuing notice u/s 153C of the Act and not u/s 143(2) of the Act as done by the AO in this case. No other contrary facts or decision was brought on record by the Ld. DR Therefore, it is held that the assessment order dated 29.12.2022 passed u/s 143(3) of the Act by the issuance of notice u/s 143(2) of the Act dated 30.06.2022 is bad in law and hence the notice u/s 143(2) of the Act, dated 30.06.2022 and the consequent assessment order dated 29.12.2022 passed u/s 143(3) of the Act are hereby quashed. The additional grounds filed by the assessee are allowed. 2024 (7) TMI 1132 Revision u/s 263 - Validity of order passed by the Ld. AO u/s 147 r.w.s 144B - course of action was required to be taken u/s 153C OR 148 - appellant was reopened u/s 147 after getting approval u/s 151 and notice u/s 148 was issued requiring the assessee to file income tax return - HELD THAT:- We find that the whole case has been framed based on material found during the search. Meaning thereby, the course of action was required to be taken u/s 153C and not u/s 148. This view has been accepted Sri Dinakara Suvarna [ 2023 (6) TMI 1175 - SC ORDER] - In our view, the AO has erred in invoking the reassessment proceedings u/s 147 and as such, the subsequent cause of action based on invalid order is held to be without jurisdiction. Our view gets support from the judgment delivered in the case of Badal Prakash Jindal [ 2023 (3) TMI 268 - ORISSA HIGH COURT] The revenue in the present case has not been able to prove as to how the order passed by the Assessing officer was erroneous and prejudicial to the interests of the revenue as the PCIT has not been able to prove non-application of mind by the AO particularly considering the fact that the order of Kapil Romanna was passed on 29.09.2021 and that the order of the appellant u/s 147 was passed on 24.03.2022 after considering the order of Kapil Romanna. It has been stated by the AO of Kapil Romanna in the said order passed u/s 153A that he has failed to identify the parties from whom the unsecured loan was raised. It is also mentioned that no PAN No, address and other details were furnished by Kapil Romanna. Consequently, Kapil Romanna has never identified the parties from whom the loan was raised, and the addition has been made in his hands u/s 68. Mere allegation that the AO has passed the order without application of mind would not be legally justified to set aside the assessment order by way of invoking section 263 of the Act. Considering the factual matrix and the judicial precedents, we do not concur with the PCIT that the AO did not verify the transactions appearing in the ledger account seized during search on Homeland group and that the order was passed without application of mind. Accordingly, we hold that the PCIT finding, and observation are infirm and perverse to the facts on record. Therefore, we hold that this is not a fit case for invoking the provisions of section 263 of the Act. We hold that the order passed under section 263 is bad in law and it is quashed. Decided in favour of assessee. 2024 (7) TMI 1131 Reopening of assessment - Bogus purchases - prima facie reason at the initial stage of reopening - HELD THAT:- In the present case, the AO has received credible information from the Investigation Wing and ED about money laundering and foreign outward remittances by twelve entities of Hassanfatta group from their bank accounts to Dubai and Hong Kong based companies on strength of fake documents. Assessee had purchased from four of these companies. The assessee had also purchased from other three concerns of Hassanfatta group. Such details are given in the assessment order and have also been briefly discussed in the facts of the case of this order. Even, CIT(A) has found that assessee had transaction with the Hasanfatta group. Therefore, the Assessing Officer had credible information which had live link with the reason to believe . The decisions relied upon by the Ld. AR are distinguishable on facts and in any case are of non-jurisdictional Tribunals and Hon ble Courts. On the other hand, we have direct decisions i.e., Keshav Diamonds Pvt. Ltd. [ 2021 (4) TMI 224 - GUJARAT HIGH COURT] Pushpak Bullion [ 2017 (8) TMI 961 - GUJARAT HIGH COURT] , Peass Industrial Engineers Pvt. Ltd. [ 2016 (8) TMI 277 - GUJARAT HIGH COURT] and Sajani Jewels [ 2016 (6) TMI 741 - GUJARAT HIGH COURT] supporting case of Revenue. Revenue is further supported by the decisions of the Hon ble Supreme Court Raymand Woolan Mills Ltd., [ 1997 (12) TMI 12 - SUPREME COURT] which is the law of land in view of Article 141 of the Constitution. In view of the above facts, and respectfully following the decisions cited (supra), the ground of the appeal raised by appellant is dismissed. Estimation of income - Bogus purchases - It is clear that the issue is squarely covered by the decision Pankaj K. Chaudhary [ 2021 (10) TMI 653 - ITAT SURAT] and there is no change in facts and law and since Revenue is unable to produce any material to controvert the aforesaid findings, thus sustain addition @ 6% of the bogus purchase of the appellant. Addition u/s 69 - unexplained loans given - Section 69 is related to unexplained investment, which are not recorded in the books of account maintained by the appellant. In the present case, these are duly recorded in the books of assessee and such finding by the CIT(A) has not been disproved by Revenue by adducing necessary evidence. Hence, the advances cannot come under the purview of the Section 69 of the Act. We may also refer to the decision of Ayachi Chandrashekar Narsangji [ 2013 (12) TMI 372 - GUJARAT HIGH COURT] where the Hon ble court held that where the department has accepted repayment of loan in subsequent year, no addition was to be made in current year on account of cash credit. Addition of transactions in penny stock - assessee has submitted that the AO has made the addition without any basis or proper inquiry - HELD THAT:- The entire investment of Birla Pacific Madspa Ltd. and M/s Orissa Mineral Development Co.Ltd. has been added though payment was made from disclosed bank account. The assessee has made loss of Rs. 1,86,641/- in the transaction of Birla Pacific Madspa Ltd. but AO has added the total investment of Rs. 53,06,816/-. Similarly, there was loss of Rs. 35,11,427/- in the trading of M/s Orissa Mineral Development Co.Ltd. which is a PSU. We find that the Ld.CIT(A) has duly discussed the facts in proper perspective and given the decision which is proper and logical. We find no reason to interfere in the findings of Ld.CIT(A). Accordingly, both grounds of Revenue are dismissed. 2024 (7) TMI 1130 Denial of deduction u/s. 80P(2)(d) - interest received - DR contended that interest income earned by a co-operative society on deposits made out of surplus funds with co-operative banks qualifies for deduction both u/s 80P(2)(a)(i) and section 80P(2)(d) - HELD THAT:- In the present case, the interest received by the Appellant from Punjab State Cooperative Agricultural Development Bank, Chandigarh, clearly falls within the ambit of Section 80P(2)(d). It is income derived by the Appellant from its investments with another cooperative society, namely, Punjab State Cooperative Agricultural Development Bank (SADB). In our view, the statutory provision u/s 80P(2)(d) is unambiguous and explicit in its scope. It allows for a deduction in respect of interest income derived from investments with other cooperative societies. The interest received by the Appellant squarely meets this criterion and is therefore eligible for deduction u/s 80P(2)(d).Accordingly, the CIT(A) ought to have recognized the eligibility of the interest received by the Appellant for deduction u/s 80P(2)(d). In the present case, the interest being received by the Appellant from Punjab State Cooperative Agricultural Development Bank, Chandigarh, which clearly falls within the ambit of Section 80P(2)(d). Thus, it is the income derived by the Appellant from its investments with another cooperative society, namely, Punjab State Cooperative Agricultural Development Bank (SADB). We accept that the grievance of the appellant is justified and accordingly following the coordinate bench and judicial precedent, we hold that appellant is eligible for deduction u/s 80P(2)(d) of the Act and therefore, the addition is deleted. Disallowance of payment to Gratuity Fund - CIT(A) has observed that Gratuity Fund allowable as per Rule at 8.33% and Excess contribution to Gratuity Fund has been disallowed - AR submitted that Id. CIT (Appeals) has ignored the fact that such payment of gratuity was according to the terms, conditions and directions of the Head office - HELD THAT:- As we hold that since the AO disallowed the excess contribution to gratuity fund contributed by the appellant during the Assessment Year 2020-21 amounting to Rs. 36,981/- and rightly added back to the total income of the appellant under the head income from other sources. We find no perversity in the order of the ld. CIT(A) on the issue of confirmation of amount of Rs. 36,981/- on account of excess payment of gratuity and thus, this ground of appeal is rejected. 2024 (7) TMI 1129 Revision u/s 263 - allowability of carry forward losses and depreciation - HELD THAT:- Appellant s contention that for the AY 2019-20 assessee company has a profit which is required to be set off against the business loss of AY 2018-19 and also the remaining quantum of profits from business deserves to be set off against brought forward unabsorbed depreciation from AY 2013-14 to AY 2018-19. It has been averred that once this setting off is carried out, then there remains no taxable income for AY 2019-20. As mentioned earlier, the CIT(A) has laid considerable emphasis on the part of Section 263(1), explanation thereof whereby under Clause (a), it is mentioned that the reopening can be attracted in case an order has been passed without making inquiries or verification which should have been done. On a careful consideration of this issue, it is evident that once the issue of carry forward of depreciation is no longer a debatable matter with the law laid down by the Hon'ble Apex Court [ 1995 (9) TMI 2 - SUPREME COURT] , then there would be a considerable quantum of carried forward unabsorbed depreciation to merit a comfortable setting off of the income under consideration. It is felt that the Pr. CIT giving directions for revision u/s 263 of the Act merely for the sake of carrying out inquiries is an exercise in futility which deserves to be avoided. Considering this the order u/s 263 of the Act is hereby quashed. Appeal filed by the assessee is allowed. 2024 (7) TMI 1128 Non grant of credit of TDS for want of Form 16A - tax was not deposited by the deductor to the account of the Central Government - HELD THAT:- No discrepancy or anomaly has been pointed out in the documents and submission placed on record by the assessee. No independent verification or inquiry has been made from the deductor with respect to the tax deducted at source of the assessee despite the fact that assessee had furnished the complete details Name, TAN etc. to the AO as well as CIT(A). It is also not the case of the AO or CIT(A) that the corresponding income has not been declared by the assessee. Now only because the tax was not deposited by the deductor to the account of the Central Government, the assessee has been denied the credit of tax deducted and a corresponding demand has been raised. Denial of such benefit of credit is complete contravention to provisions of Section 205 of the Act. It is clear from the provisions of Section 205 of the Act that in cases where tax has been deducted from the income of the assessee, no further tax shall be called upon from the assessee. The natural corollary to same being that assessee has a right to get the credit of that TDS amount qua the demand against him. Reliance is placed on the following judicial pronouncements wherein it has been held that once tax has been deducted, it s the responsibility of the deductor to deposit the same with the government, deductee cannot be penalized and demand can not be raised on short fall of TDS on deductee. See SANJAY SUDAN [ 2023 (2) TMI 1079 - DELHI HIGH COURT] INCREDIBLE UNIQUE BUILDCON PRIVATE LIMITED [ 2023 (10) TMI 625 - DELHI HIGH COURT] INCREDIBLE UNIQUE BUILDCON PRIVATE LIMITED [ 2023 (6) TMI 1135 - DELHI HIGH COURT] , JASJIT SINGH [ 2023 (12) TMI 34 - DELHI HIGH COURT] . Thus we are of considered view that CIT(A) has fallen in error to misinterpret the judgement relied upon by the assessee by holding that there is merely bar on recovery of demand but does not lay down law for giving credit of TDS in respect of the amount which is not reflected in the 26AS form. The bar on recovery of such disputed TDS is specific and the credit of same to be given to assessee is natural consequence. Further, we are of firm view that inability of an assessee to procure form 16A, due to intentional mischief of the deductor cannot be basis to refuse grant of credit of TDS or the refund arising consequent to giving credit, if assessee is otherwise eligible for same. This issue in all the appeals is decided in favour of assessee. Error in in computing the demand - As we find that issue requires examination of certain facts and consequential effects, which are of arithmetical nature. Accordingly, the second issue of AY 2017-18 is allowed for statistical purposes. The AO shall make necessary verification and pass an order accordingly. 2024 (7) TMI 1127 Cash credit u/s 68 r.w.s. 115BBE - cash deposit during demonetization period - Assessee failure to maintain books of accounts u/s 44AD - HELD THAT:- In case of Surinder Pal Anand [ 2010 (6) TMI 404 - PUNJAB AND HARYANA HIGH COURT] as held that where under special provision of Section 44AD, exemption from maintaining of books of account has been provided and presumptive tax @ 8 per cent of the gross receipts itself is the basis for determining the taxable income, the assessee was not under obligation to explain individual entry of cash deposit in the bank unless such entry had no nexus with the gross receipts. Assessee holds the drug licence for wholesale and retail sale of veterinary medicines and has filed his return of income declaring gross receipts u/s 44AD of the Act. The return of income so filed by the assessee has been accepted by the AO meaning thereby that both the applicability of section 44AD and non-maintenance of books of accounts as well as particulars in the return of income so filed has been accepted which includes the gross receipts from sale of medicines. At the same time, only thing which has to be satisfied by the assessee is that cash so deposited in the bank account has the necessary nexus with the sales and gross receipts so disclosed by the assessee. We find that the assessee has shown cash sales in the month of October 2016 and cash sales of Rs 19,46,845/- in the month of November 2016 and cash of Rs 33,00,000/- has been deposited in the month of November 2016 and the fact that the source of cash so deposited is out of the sales made has been duly reported by the assessee to the Revenue authorities as mandated in terms of filings relating to acceptance of SBN Notes during the demonization period and thereafter, during the course of assessment proceedings, the assessee has also filed sales vouchers of cash sales along with copy of cash book for necessary verification of the AO. The fact that the cash receipts for the month of October have been deposited in the very next month in November cannot be a reason to dispute rather it supports the case of the assessee by satisfying the proximity test and the nexus which the assessee has established between the sales and the deposits, this coupled with the fact that there was epidemic regarding FMD disease and winter season resulting in increase sales in these two months has not been totally discarded by the AO and the ld CIT(A) and the fact that the sales have been duly reported and forms part of VAT filing and VAT assessment shows that sales cannot be disputed. The decision in case of J.M.J Essential Oil Company [ 2022 (7) TMI 1017 - HIMACHAL PRADESH HIGH COURT] doesn t support the case of the Revenue as in that case, there were cash sales only in a particular month and there was sufficient material on record to show cash sales were fabricated unlike the present case, where the assessee is regularly undertaking cash sales and there are no material on record to establish the sales so reported are fabricated except suspicion due to high sales vis- -vis other months and which cannot be a ground to dispute the sales, rather, in the instant case, the assessee has produced the necessary sale vouchers and cash book. We therefore find that the assessee has made the necessary and timely disclosure regarding the source of cash deposited in the SBN notes during the demonetization period and the nexus has been duly established between the sales and cash deposits and in view of the same, we find that there is no justifiable basis to make addition of Rs 23 lacs which already stand disclosed and reported as part of gross receipts u/s 44AD and accepted by the AO resulting in double addition which clearly can t be sustained in the eyes of law. In the result, the addition so made is hereby directed to be deleted. Appeal of the assessee is allowed. 2024 (7) TMI 1126 TP adjustment - notional interest on receivables on account of issuance of Non-Convertible Cumulative Redeemable Preference Shares - Recharacterizing transaction of Non-Convertible Cumulative Redeemable Preference Shares (NCCRPS) as quasi equity - HELD THAT:- Since it is already considered as the capital finance transaction as per the definition of international transaction u/s 92B, we are inclined to accept partial finding of the Transfer Pricing Officer that it is a quasi-capital and its cost has to be benchmarked in the international market. In the given case, the Transfer Pricing Officer has already observed that the cost of capital of the assessee is at 9.945% based on the Balance Sheet submitted by the assessee. Since it is an international transaction we cannot benchmark the same at the Indian market rate and as held in the various judicial pronouncements, the international transactions have to be benchmarked at the cost of capital based on the respective Libor rate. In this case, the preference shares are issued for a period of 7 years, however, it is redeemed within 3 years. Therefore, the bench-marking has to be undertaken by adopting the 3 years LIBOR rate. It is normal on the part of the various banks to charge the interest on the basis of Libor rate plus certain basis points considering the risk factors involved in financing the same. However, in the given case assessee has taken financing from its own AE. Therefore, the benchmark has to be done based on the Libor rate i.e., LIBOR + basis points + adjustment of risk factor, considering the fact that the AE has invested in India without any collateral securities. In this case, the cost involved in the capital financing is 8.5% of dividend. Therefore, it has to be benchmarked on the basis of Libor rate available on the date of issue of preference shares. Accordingly, we direct the Assessing Officer to benchmark the same by adopting the Libor rate (3 years quote) basis as indicated above. Since assessee has incurred the cost of 8.5% in comparison to the LIBOR rate, accordingly, we direct the Assessing Officer / Transfer Pricing Officer to benchmark the same and determine the ALP i.e., the difference of dividend of 8.5% and the LIBOR rate as per above discussion. Accordingly, we are inclined to allow the Ground No.1 raised by the assessee for statistical purpose. Accounting of lease - Deduction under the head any other amount liable as deduction in schedule BP of the returned income, which included principle lease payment of finance - considering the submissions that assessee is not the owner and assessee has to return the assets after the completion of the lease period, tax authorities held that the assessee has claimed portion of principal amount of the installment paid against the assets taken on Finance Lease. Therefore, the principal amount component is a capital in nature and not allowable as revenue expenses u/s 37(1) - HELD THAT:- As discussed the various aspects of recognizing the Leases and the case law relied by the assessee are relating to operating lease which is distinct from finance lease, where the main distinction is that in operating lease, the ownership remains with the lessor whereas in the finance lease, the ownership passes on to lessee. Assessee has to explain the various values declared in the depreciation schedule as well as the value adopted in the Computation sheet before AO, even we are not in a position to understand since it was not explained at the time of hearing. In our view, the method adopted by the assessee in following the Accounting standard and calculating the depreciation seems to be right however, the method to claim differently for computation of Income tax i.e., claim the principal repayment instead of relevant depreciation may not be right method. Therefore, it needs proper explanation and verification of various figures declared by the assessee in Depreciation schedule and computation sheet. The right method is to claim only the depreciation as per the depreciation schedule prepared under Income Tax Act because the assessee is the deemed owner of the assets and it has rightly recognized in its books of account. The assessee cannot bifurcate the claim under the I.T. Act separately for interest depreciation. Therefore, we direct A.O to allow only the depreciation on the assets under I.T. Act. Accordingly, we deem it fit and proper to remit this issue back to the file of the Assessing Officer to recheck the claim of assessee as per IND-AS 17 [AS-19] and at the same time we also direct the assessee to explain the accounting of leases properly before the AO and we direct AO to verify the same, after verifying the same allow the depreciation as per the above direction after providing adequate opportunity of being heard to the assessee. Accordingly, this ground of appeal is allowed for statistical purpose. Employees Share Option Scheme [ESOP] - AO rejected the submissions of the assessee and observed that ESOP expenses debited by the assessee in its profit and loss account is not crystalized in the previous year as the same is contingent, notional and capital in nature, hence he rejected the claim of the assessee - HELD THAT:- Hon ble Karnataka High Court in the case of CIT v. Biocon Ltd [ 2020 (11) TMI 779 - KARNATAKA HIGH COURT] has decided the issue in favour of assessee and respectfully following the above decision the Coordinate Bench of this Tribunal in assessee s own case for the A.Y. 2015-16 [ 2023 (5) TMI 1354 - ITAT MUMBAI] has decided the issue in favour of assessee as held that incurring of the expenditure by the assessee entitles him for deduction under Section 37(1) of the Act subject to fulfillment of the condition.The deduction of discount on ESOP over the vesting period is in accordance with the accounting in the books of accounts, which has been prepared in accordance with Securities And Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. Additional claim on ESOP raised by the assessee the similar issue was considered by the Coordinate Bench in A.Y. 2015-16 [ 2023 (5) TMI 1354 - ITAT MUMBAI] and remitted the issue back to the file of the Assessing Officer / Ld. DRP to verify claim of the assessee. Disallowance u/s 14A - assessee has invested substantial amount in investments yielding exempt income in equities and mutual funds - HELD THAT:- As we observe that Assessing Officer has invoked the provisions of section 14A r.w. Rule 8D of I.T. Rules and determined the disallowance by applying 1% of the annual average of the monthly average of opening and closing balance of value of investments mechanically. We observe that AO has taken total value of average investments which may include those investments which has not generated any exempt income in the above said total investments made by the assessee, however, it is settled position of law that the AO has to consider only those investments which has actually yielded exempt income - remit this issue back to the file of the AO to consider those investments which has actually yielded the exempt income. Accordingly, Ground allowed for statistical purpose. Adjustment made in the book profit u/s 115JB for disallowance u/s 14A - Section 14A disallowance cannot be part of clause (f) of Explanation (ii) of section 115JB of the Act. We observe that in the case of ACIT v. Vireet Investments Private Limited [ 2017 (6) TMI 1124 - ITAT DELHI] held that the computation under clause (f) of Explanation 1 to section 115JB(2) is to be made without resorting to the computation as contemplated u/s. 14A r.w. Rule 8D of the I.T Rules, 1962. Thus we direct assessing officer to delete the above adjustment made in the book profit u/s 115JB. Adjustment of dividend distribution tax - As at the time of hearing, assessee submitted that this issue is decided by the Tribunal against the assessee. Therefore, we dismiss the ground raised by the assessee. Short grant of TDS credit - Since this issue is factual matter which needs verification on the part of the Assessing Officer, we deem it fit and proper to remit this issue back to the file of the Assessing Officer to verify the claim of the assessee and allow the same as per law. Accordingly, this ground of appeal is allowed for statistical purpose. Addition u/s 68 - cash deposit in Specified Bank Note (SBN) during demonetization period - HELD THAT:- Since assessee is in the business of travel agent and tourism where it is dealing in foreign exchange conversion and relevant remittances being authorized dealer across India. As discussed earlier it has 39 branches across India and during demonetization period it has deposited huge cash generated by the 39 branches of the specific bank notes. Since the assessee is in this line of business and dealing in cash transactions it may have carried cash balances which was subsequently deposited through 39 branches in the respective banks. Since it is an authorised dealer assessee is required to maintain books of accounts and details of cash deposits and remittances across the branches and it has to report back to the RBI in regular intervals. Therefore, assessee must be having details of closing cash balances across the branches. These details may be submitted before AO for verification to prove that assessee had sufficient cash balances in the above said specific bank notes and which assessee has deposited across the branches. Ground raised by the assessee allowed for statistical purpose. Determine the value of assets for the purpose of Finance Lease in the books of accounts of the assessee - cars on Finance Lease from Lessors - HELD THAT:- Since the assessee has already recognize the values of vehicle in their books, there is no need to revalue or valuation report, the assessee has already adopted the value of the assets, it needs to continue to adopt the same and at the time of foreclosure, the assessee has to settle the value based on the value of assets along with the penalty if there is any as per the lease agreement. Therefore, we are directing the Assessing Officer to adopt the value as per the Balance sheet and reject the valuation submitted by the assessee. Still the Assessing Officer has to verify the recording of lease transaction and relevant adoption of depreciation claim as per the law and adopt the same here for the value for recognizing the value for foreclosure, as such there should not be any difference to the value in the depreciation schedule. Therefore, the controversy of valuation of vehicle will be addressed and the value of assets as on the date of foreclosure in the Balance Sheet of the assessee will be the actual value as per depreciation schedule on the date of foreclosure. Therefore, this ground of appeal also remitted back. Depreciation claim on property Let out - AO observed that premises were let out by the assessee, then how is that depreciation is allowable on the same under the Profits and Gains from Business or Profession - period of addition was considered as less than 180 days the depreciation is worked out as 50% of allowable depreciation - tenant has vacated the portion of office premises and the assessee has occupied the building and claimed the depreciation for the period of reoccupation by the assessee - HELD THAT:- The tenancy rights were surrendered at the fag end of the previous year. However, the ownership of the building is still with the assessee and it is not relevant whether assessee occupies the building for the purpose of business or not. It is evident that assessee is owner of the property and it has renovated for the purpose of utilizing the same for its own business, as such assessee is in possession of the building which is under renovation that itself shows that it is under the control of the assessee and it will be used for the purpose of business. Once it has become ready to be occupied by the assessee for running its own business and with that it fulfills the conditions of sec 32, the depreciation is automatically applicable. Therefore, the assessee has claimed only the depreciation for the period after surrender of the tenancy rights by the tenant. Therefore, it is not relevant whether actually utilizes for the remaining period, as long as it is in its position and the depreciation can be claimed for utilization as well as based on the concept of passage of time during which the property was in its control and possession. Therefore, the above said depreciation cannot be denied to the assessee. Accordingly, this ground of appeal is allowed. Claim of indexation while computing book profit - assessee has reduced the indexation cost acquisition of transfer of shares while calculating the book profit u/s 115JB - HELD THAT:- While claiming the benefit, the assessee acknowledged that this transfer of shares is exempt from tax u/s 10(38) of the Act and relied on the decision of Hon ble Karnataka High Court in the case of Best Trading and Agencies Ltd (supra) wherein it was held that indexation benefit should be allowed. It was held that the indexation benefit was allowed for the reason that the assessee company was established as SPV for transfer of Land and Building. Further it was held that indexed cost of acquisition is a claim allowed by sec.48 to arrive at the income taxable as per sec.45 at the rates provided u/s 112. Further, it was held that the assessee has to be given the benefit of indexed cost of acquisition as considering the profits on sale of land without giving the benefit of indexed cost of acquisition results in taking the income other than actual/real income. Since the Hon ble court allowed the indexation while determining the book profit u/s 115JB. As decided in Karnataka State Industrial [ 2017 (1) TMI 675 - ITAT BANGALORE] assessee-company is entitled to the benefit of indexation while calculating long-term capital gains which are to be considered for the purpose of computing tax liability u/s 115JB. 2024 (7) TMI 1125 Rejection of registration u/s 12A and approval u/s 80G(5) - earlier registration was granted to the assessee was withdrawn on the ground of involvement of money laundering and Violation of the law on account of non-payment of loan to the bank, short fall of TDS as per the audit report, outstanding/belated payment of PF ESIC, non-payment of GST on rent receipt and the retirement benefit of employee s are not accounted as per AS-15 - meantime due to amendment in the provisions of section 12A of the Act the assessee again applied for registration under the new law and provisional registration u/s 12AB and approval u/s 80G(5) HELD THAT:- As regards the cancelation of the registration granted earlier u/s 12AA of the Act. we find that the said cancelation order has been set aside by this tribunal vide order [ 2023 (6) TMI 1404 - ITAT RAIPUR ] as considered rival submissions since the cancellation of registration u/s 12A is restored we are of the considered view that since, the provisional registration u/s 12AA(i)(ac)(vi) and 80G(v)(iv) of I.T. Act has already been granted by ld. PCIT on 10.03.2022, therefore, the activities of the assessee societies are considered as genuine. We are inclined to set aside the order of ld. CIT(E) withdrawing the approval to the assessee society u/s 10(23C)(vi) and direct ld. CIT(E) to restore approval u/s 10(23C)(vi) to the assessee society. Non-payment of interest on outstanding loans to Central Bank of India - Non-payment of loan to the bank is clearly a default on the part of the assessee of its contractual obligation however, that default of repayment of loan itself would not be considered as a non-compliance of any other law time being in force in terms of section 12AB(1)(b)(i). To understand the violation of non-compliance of any other law time being in force it has to be seen in the context of violation of provisions of law governing the activities of the institution or trust for achieving its objects or violation of the provisions of law which governs or regulates the institution or trust itself. The non-payment of the loan of the bank does amount to violation of any law which governs or regulates the activities of the assesse in achieving the objects. A non-performance of contractual obligation would not constitute non- compliance of such requirement of any other law for time being in force. Since the matter of recovery of outstanding loan is still pending for adjudication before DRT therefore, neither it is undisputed violation nor has this default of payment attained finality. Therefore, this ground of rejecting the application has no legs to stand. Non- deduction or payment of TDS - Though there was non-payment of TDS and short deduction of TDS by the assessee on certain payments of interest however, the said deficient payment was made good in the subsequent year and there is no outstanding in the subsequent years. Even otherwise the short deduction of TDS and belated payment of TDS does not amount to non-compliance with the requirement of any other law time being in force which is material for achieve the objects of the assessee. These noncompliance of deduction and payment of TDS are having their own remedies under the income Tax Act and subject matter of assessments. Hence, non-deduction or short deduction of TDS cannot be a ground for refusal of registration. Non deposit of PF and ESIC - Non-payment/delayed payment to the contribution to PF and ESI has consequential disallowance as per the provisions of income tax Act and are subject matter of assessment. Hence, the belated payments of PF ESIC cannot be held as non-compliance with the requirement of any other law time being in force as per the provisions of section 12AB(1)(b)(i). We may clarify that these default or delayed payments of PF ESIC as well as TDS are not in the nature of violation of provisions of law governing activity of the assessee or governing/regulating the assessee society itself are material for achieving the objects of assesse. Not making provisions for retirement benefit of the employees as per AS-15 - Though as a prudent employer it is required to make timely provision for retirement benefit of the employees so as to avoid the default in timely payment of retirement benefits. However, this is only an accounting requirement as per AS -15 issued by ICAI and there is no statutory requirement for making such provision by the assessee society. The only requirement is to pay the retiral benefit to the employees at the time of retirement. Therefore, non- making of the provisions of retirement benefit cannot be held as a non- compliance of requirement of any other law time being in force which is material for the purpose of achieving its objects. Not charging GST by the assessee on the rental income and thereby it was considered as non-compliance of requirement of other law time being in force - Government of India as vide this notification has exempted the entities registration u/s 12AA from GST hence, the assesse was not required to pay the GST and even was not required to register under the GST. Accordingly the said ground of CIT(E) is contrary to the notification no.12 of 2017 dated 13.06.2017 of Government of India. The registration granted u/s 12AA to the assesse society vide order dated 07.03.2003 and subsequent cancelled vide order dated 14.11.2018 has been restored by the tribunal and therefore, the said registration was still subsisting till the impugned order was passed by the CIT(E). Hence the assesse being registered u/s 12AA was exempt from the GST registered as per notification of Government of India and consequently no violation of any law time being in force. There is no dispute regarding the charitable objects of the assesse society and genuineness of the activity being already registered u/s 12A since 2003. Thus we set aside the impugned order of the CIT(A) and direct the CIT(E) to grant registration to assessee u/s 12AB as well as approval u/s 80G(5) of the Act. Assessee appeal allowed. Customs 2024 (7) TMI 1124 Export of non-Basmati White Rice - grievance of the petitioner- Company is that it has already entered into contract for supply of aforesaid rice to various foreign entities prior to issuance of notification (Annexure P-1) and if terms of the contract are not fulfilled, then of-course same will be create various hardship to the petitioner alongwith goodwill of his business - it was held by High Court that 'The respondents are directed to permit the petitioner to export the Non-basmati White Rice to foreign entities in compliance of contract entered into between them, to which letter of credit has been issued by the petitioner for supply of quantity' - HELD THAT:- Since, the impugned orders are interim orders, no interference required. SLP dismissed. 2024 (7) TMI 1123 Classificaton of goods - Violation of principles of natural justice - challenge to assessment order - contentions raised by the petitioner were not taken into consideration - order is non-speaking with regard to certain heads of claim - exercise of discretionary jurisdiction - Whether the impugned order warrants interference in exercise of discretionary jurisdiction? - HELD THAT:- The judgments relied upon by learned Additional Government Pleader in Bhagath Raja v. Union of India Ors [ 1967 (3) TMI 105 - SUPREME COURT ] and S.N.Mukherjee v. Union of India [ 1990 (8) TMI 345 - SUPREME COURT ] indicate that a quasi-judicial authority is required to record reasons. The rationale behind insisting on reasons is also set out in the said judgments. The judgments also add that such reasons need not be as elaborate as those in judgments of courts of law. By taking note of these principles, whether the order impugned herein contains reasons and whether the contentions raised by the petitioner were dealt with therein should be examined. Classification of goods - to be classified under CTH 8301 of the Customs Tariff Act or not - HELD THAT:- The reasons were specified in support of the conclusion, but vital contentions regarding GRI and the Explanatory Notes were not considered. In order to balance revenue interest, the impugned order dated 04.04.2024 is set aside on condition that the petitioner remits a sum of Rs. 1.75 crore as agreed to within four weeks from the date of receipt of a copy of this order. The sum of Rs. 1,75,00,000 exceeds 5% of the disputed tax demand under this head. The other heads of tax demand are not being reckoned in this regard because unreasoned conclusions were recorded - Subject to being satisfied that the said amount was received, the assessing officer is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within three months from the date of receipt of the petitioner's reply. Petition disposed off. 2024 (7) TMI 1122 Levy of penalty for non-fulfilment of the export obligation - Export Promotion Capital Goods (EPCG) authorizations - specific case of the petitioner/Company is that they were not served with any show cause notice and no opportunity of personal hearing was also given before passing the impugned order - violation of principles of natural justice - HELD THAT:- As repeatedly held by the Hon'ble Supreme Court of India and this Court in various decisions, the appeal remedy is not a complete for entertaining Writ Petition under Article 226 of the Constitution of India, when there is violation of principles of natural justice. Therefore, the Writ Petition is very much maintainable, since the petitioner was not served with any show cause notice and was not given an opportunity of personal hearing before passing the impugned order. On this sole ground, the impugned order cannot be sustained and it is liable to be quashed. The impugned order dated 24.08.2021 is hereby quashed - Petition allowed. 2024 (7) TMI 1121 Challenge to Exhibit P-4 notice issued under Section 150 of the Customs Act, 1962 - seizure of Gold and Liquor - disposal of the seized gold under Section 110 (1A) of the Act - no prosecution for any offence committed - HELD THAT:- The gold is not a perishable item. The petitioner has not been prosecuted for any offence committed by him. No charge sheet has been filed against him and he was not taken into custody. Merely on the ground of statement recorded under Section 110 of the Act, the gold items seized from the petitioner are being disposed of under Section 150 of the Act. The question whether without following the procedure for adjudication by issuing a show cause notice can be resorted to for disposal of the gold items came for consideration before the Delhi High Court in the case of ZHINET BANU NAZIR DADANY VERSUS UNION OF INDIA ANR. [ 2019 (5) TMI 1252 - DELHI HIGH COURT ]. Thus, merely on the ground of statement recorded under Section 110 of the Act, the authorities should not proceed to dispose of the seized items if the same are not perishable and before disposal, adjudication proceedings must preceed - the impugned notice under Section 150 of the Act in Exhibit P-4 is set aside. The respondents are directed to issue show cause notice to the petitioner and thereafter adjudicate the matter and proceed further. Petition disposed off. 2024 (7) TMI 1120 SCN for confiscation of goods imported - invocation of penalty u/s 114A of CA - import duty of fresh apples paid by way of scrips issued under the Focused Market Scheme (FMS), Focused Product Scheme (FPS) and Vishesh Krishi Gram Udyog Yojna (VKGUY) by DGFT - suppression of facts - time limitation - HELD THAT:- There is nothing on record to suggest any culpability on the part of the appellant for having debited the duty through scrips. It is common knowledge that such duty payment debits are required to be endorsed by the officers concerned. There are no justification for issuance of the show cause notice to the appellant under section 28(4) of the Customs Act invoking suppression and the larger period of limitation. It is on record that the appellant had voluntarily paid duty in cash along with interest, even prior to issuance of the show cause notice dated 10.04.2015. When both the Revenue officials as well as their own assessing system - the EDI, had accepted the initial debit of duty through scrips, which subsequently was made good in cash along with interest, the law itself provided for no show cause notice to be issued in terms of the provisions of said section 28 itself. There are no justification in the department s action, seeking to impose penalty, on the appellant in the aforesaid matter. It is imperative that to invoke larger period of limitation, intention to evade payment of duty need to be shown and fraud, suppression or misstatement etc. need to be expressly proven. None of these elements are noticeable in the matter - The department therefore cannot affix the blame for their own omissions on the importer, particularly so when it is established from records that no sooner the anomalous situation was brought to the notice of the appellant importer by the DRI, all duty payments were promptly made in cash along with interest. For reasons foregoing, we find no merits in the orders of the lower authority imposing penalty on the appellant under Section 114A, initially for an amount of Rs.23.00 Lakh and then subsequently enhancing it by way of corrigendum dated 14.12.2016 to Rs.1,72,61,089.00. The order of the lower authority holding the imported goods liable to confiscation and imposition of penalty under section 114A is set aside - Appeal allowed. 2024 (7) TMI 1119 Penalty u/s 112a(ii) of the Customs Act, 1962 - Smuggling - mis-declaration and undervaluation of goods - HELD THAT:- The extent of duty defrauded is anybody s guess as the importer had been regularly importing these goods for quite a bit of time. The forensic evidence retrieved to whatever extent is sufficient enough to establish the scale of undervaluation. This, was undertaken both in respect of past shipments as well as the current imports relevant to the present case, personally benefiting the importers along with others involved and defrauding the Government of its legitimate dues. The appellants have not been able to justify a case for waiver of penalty. However, considering the facts and circumstances of the case, that the appellant was playing upon the instructions of the importer though with self-serving intents; the fact that the appellants failed to discharge their obligation in law, the fact of filing the Bill of Entry on the basis of unsigned invoices and such other considerations as brought out in the investigations, the fact that digital mapping and cyber forensic examination and imaging of the appellant s hard disks and CPUs and laptops seized from their office revealed explosive documentary evidence exposing the entire racket, no case for completely setting aside the penal liabilities imposed is made out by the appellants. The ends of justice shall be met by imposing penalty of Rs.4.00 Lakh on M/s.Prethvisha Logistics Pvt.Ltd. and Rs.1.00 Lakh on Shri Palash Banerjee under Section 112(ii) of the Customs Act - appeal disposed off. FEMA 2024 (7) TMI 1118 Claim of interest on refund of Amount deposited - Penalty was Imposed under FEMA - refund of confiscated amount - Interest accrued on deposited amount by the respondents in the Nationalized Bank - legitimate right of the petitioner to receive interest on the amount that were lying with the Department for almost for 21 years - HELD THAT:- As there is no justification in the stand of the respondents in denying the interest, as Section 42 of the Foreign Exchange Regulation Act, 1973, makes it clear that in all other cases, such proceeds shall be paid to such person as may appear to other cases, such proceeds shall be paid to such person as may appear to the officer or the Court, who or which made the direction under subsection (1) to be entitled thereto in such currency and in such manner as he or it deems just together with interest at the rate of six per cent. per annum from the date on which such draft, cheque (including traveller's cheque) or other instrument came into his or its custody till the date of payment. By confiscating the amount, the respondents have made no favour to the petitioner. By returning the amount belatedly pursuant to the directions of this Court, the respondents have done no favour to the petitioner. The petitioner cannot be rubbed of the interest, which the petitioner would have earned, had the petitioner invested the amount in Fixed Deposit. All that the respondents have done is to comply with the order by refunding the amount that was illegally confiscated from the petitioner. There has to be a restitution and therefore, the interest is to be paid to the petitioner. Writ Petition is disposed of by directing the respondents to pay the interest to the petitioner on the confiscated amount from the date of confiscation up to the date of refund at the prevailing bank interest within a period of 3 months from the date of receipt of a copy of this order. No costs. PMLA 2024 (7) TMI 1117 Interpretation of statute - Section 88 of the Criminal Procedure Code - necessity of arrest before filing a complaint - HELD THAT:- It is not in dispute that the question of law raised in this appeal is covered by the dictum of this Court in TARSEM LAL VERSUS DIRECTORATE OF ENFORCEMENT JALANDHAR ZONAL OFFICE [ 2024 (5) TMI 837 - SUPREME COURT] , wherein, it has been held that if the accused person is not arrested prior to filing of the complaint, he has to only file a bond under Section 88, Cr.P.C., and, therefore, there is no need for arrest. The impugned order is set aside, and the appeal stands allowed. 2024 (7) TMI 1116 Seeking grant of bail - money laundering - proceeds of crime - fraudulent acquisition of land which was in possession of Ministry of Defence, Government of India - reasons to believe - twin conditions laid down u/s 45 PMLA, 2002 - HELD THAT:- The documents seized according to the Enforcement Directorate manifested in a trail designating the role of the petitioner in the illegal acquisition and possession of 8.86 acres of land situated at Shanti Nagar, Baragain, Bariatu Road (near Lalu Khatal). It is, therefore, the case of the Enforcement Directorate that the provisions of PMLA, 2002 would apply since the petitioner had derived or obtained property as a result of a scheduled offence and had indulged himself in an activity connected with the said property. The factual aspects of the case would negate the submission of the learned Senior Counsel for the petitioner that there has been no schedule offence and, therefore, no case of money laundering is made out. The involvement of the petitioner as per the prosecuting agency is primarily through the angle of conspiracy though according to the Enforcement Directorate Section 120B was struck off in the formal FIR at the behest of the Police in spite of conspiracy playing a predominant role in the predicate offence which led to institution of Sadar P.S. Case No. 272 of 2023. The prelude to the entire episode culminating in submission of prosecution complaint and supplementary prosecution complaint by the Enforcement Directorate is the recovery of huge quantity of incriminating documents showing forgery, manipulation and tampering of government records and mutilation of government revenue records. Reasons to believe - HELD THAT:- The statement u/s 50 PMLA, 2002 is admissible in evidence as such statement is deemed to be recorded in a judicial proceeding as envisaged in sub-Section 4 of Section 50 PMLA, 2002. This Court is aware of the fact that meticulously delving into such evidence is the domain of the learned trial court and, therefore, only a fleeting reference has been made of the statements recorded u/s 50 PMLA, 2002 of the relevant persons. However, the same does not put an embargo upon the Court to disregard such statements in its totality particularly in a situation when the plea of bail of an accused is being considered. However, the contours of such statements can be taken into consideration in order to ascertain as to whether reason to believe that the petitioner is not guilty is fulfilled as enshrined in Section 45 PMLA, 2002. In Vijay Madanlal Choudhary Others versus Union of India [ 2022 (7) TMI 1316 - SUPREME COURT ], the broad probabilities based on the materials collected during investigation is to be considered and while reiterating the observations made in Ranjitsing Brahmajeetsing Sharma [ 2005 (4) TMI 566 - SUPREME COURT ], it was concluded thus ' The court while dealing with the application for grant of bail need not delve deep into the merits of the case and only a view of the court based on available material on record is required. The court will not weigh the evidence to find the guilt of the accused which is, of course, the work of Trial Court. The court is only required to place its view based on probability on the basis of reasonable material collected during investigation and the said view will not be taken into consideration by the Trial court in recording its finding of the guilt or acquittal during trial which is based on the evidence adduced during the trial.' The overall conspectus of the case based on broad probabilities does not specifically or indirectly assign the petitioner to be involved in the acquisition and possession as well as concealment of 8.86 acres of land at Shanti Nagar, Bargain, Ranchi connected to the proceeds of crime . None of the registers/revenue records bare imprint of the direct involvement of the petitioner in the acquisition and possession of the said land. As it has been noticed above, the statement of some of the persons u/s 50 PMLA, 2002 designated the petitioner in the acquisition and possession of the property in question in the year 2010 without any material worth consideration and for all this while none of the ousted persons had approached the competent authority by registering any complaint which has conveniently been discounted by the Enforcement Directorate that the approaches though made to the Police proved futile. The consequence of the findings recorded by this Court satisfies the condition as at Section 45 PMLA, 2002 to the effect that there is reason to believe that the petitioner is not guilty of the offence as alleged - Though the conduct of the petitioner has been sought to be highlighted by the Enforcement Directorate on account of the First Information Report instituted by the petitioner against the officials of the Enforcement Directorate but on an overall conspectus of the case there is no likelihood of the petitioner committing a similar nature of offence. The twin conditions as prescribed u/s 45 PMLA, 2002 having been fulfilled, this application is allowed. Accordingly, the petitioner is directed to be released on bail on furnishing bail bond of Rs. 50,000/- with two sureties of the like amount each, to the satisfaction of learned Additional Judicial Commissioner-I-cum-Special Judge, PMLA, Ranchi in connection with ECIR Case No. 06/2023, arising out of ECIR/RNZO/25/2023 dated 26.06.2023. Bail application allowed. Service Tax 2024 (7) TMI 1115 Classification of service - Tour Operator Service or travel agent service? - gross amount received by the Appellant in facilitating booking of hotel accommodation against commission - period from April, 2006 to March, 2011 - Extended period of limitation - HELD THAT:- A Bare reading of the above definitions of tour operator service would go to show that primary engagement or activity or business of a person is that of planning, scheduling, organising or arranging tours by any mode of transport covered by permit granted under the Motor Vehicle Act. 1988 or the rules made there under and in so doing i.e. while conducting tour arrangement, accommodation, if made, can be included within the definition of tour operator service but a stand alone provision for arrangement of accommodation in a hotel room can t alone put the service under the category of tour operator service - giving a proper meaning to the definition of tour operator service , which is admittedly not being carried out by the Appellant as a service provider, since conducting tour by tourist vehicle having permit is a condition precedent to include arrangement for accommodation and not such arrangement of accommodation would alone put the service in the category of tour operator service and therefore, SCN justifying activity of the Appellant falling under the category of tour operator service only because the word accommodation is used in the definition, is a mere allegation and substantiation of the same by the Commissioner is erroneous as not in conformity to the statutory provisions. Leviability of Service Tax on the alleged service of providing hotel accommodation by the Appellant - HELD THAT:- It is noticed that learned Commissioner had avoided to give his finding on this specific issue by taking the classification to tour operator in which, hotel room accommodation was stated to be a composite service activity despite the fact that in the reply to the SCN, specific averment regarding non-taxability of hotel room accommodation before dated 01.05.2011 was made in para 3 of the said reply. We are in incomplete agreement to the fact that hotel room accommodation has been brought to Service Tax net w.e.f. 01.05.2011 and the same is an independent levy that stands without any link to tour operator service , unless it is a component of the same main service namely tour operator service - it is required to be mentioned here that prohibition on double taxation has emerged from principle of equity law for which even no constitutional recognition is required though in the Indian scenario for various taxation statute like Income Tax Act under Section 90 91 and in Indirect Tax, Double taxation avoid Agreement (DTAA) among the nation including India is available to contend such punity actions. Invocation of extended period of limitation - HELD THAT:- It is a settled principle of law developed through several decisions of the Hon'ble Apex Court, one of which was delivered recently in the case of M/S CONTINENTAL FOUNDATION JOINT VENTURE SHOLDING, NATHPA HP VERSUS COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH-I [ 2007 (8) TMI 11 - SUPREME COURT] that when the facts are known to the parties, omission by one party to do what he might have done would not render it to suppression. In the instant case service tax itself is held to be not leviable. It is found that extended period is also not invocable in this proceeding since taxability of the service was not in existence in the statute book under which classification was made while confirming the demand under tour operator service . The order passed by the Commissioner of Service Tax VI, Mumbai is hereby set aside - Appeal allowed. CST, VAT & Sales Tax 2024 (7) TMI 1114 Exemption in relation to a turn-over - time limitation - contention of the petitioner is that the concerned F Forms relating to the disputed turn-over had been misplaced and could not be placed before the Assessing Officer in time - whether this Court can direct the 1st respondent-Assessing Authority to furnish a certified copy of the assessment order to enable the petitioner to file an appeal at this stage or whether the said filing of the appeal is now barred by limitation? - HELD THAT:- The period for passing the assessment order for the year 2015-2016 ended on 31.03.2020. The petitioner, which is a large Multi-National Company, cannot plead ignorance of the law or that the petitioner is awaiting an order despite the fact that the period for completing assessment had lapsed. Further, the contention, that the petitioner was under the impression that no demand was raised against the petitioner, cannot be accepted as such a conclusion could have been drawn only if an assessment order had been passed and served on the petitioner. The fact that the first step taken by the petitioner for the purpose of filing was only in June, 2022 when an application was made for a certified copy of the assessment order also militates against the version set up by the petitioner. The arguments that the service of the order by e-mail would not be proper service under Rule 64 of the Rules does not stand in view of the amendment to the said Rule. Further, the contention that service on the e-mail ID of the petitioner would not amount to proper service as the e-mail ID was inactive also cannot be accepted as it would be the duty of the petitioner to inform the Assessing Officer of any change in the e-mail ID. There are no reason to intervene or interfere in this case - the present Writ Petition is accordingly dismissed. Indian Laws 2024 (7) TMI 1113 Rejection of bail - illegal trade of supplying counterfeit Indian currency notes in Nepal - High Court took the view that no cognizance could have been taken by the trial court against the appellant in the absence of any valid sanction of prosecution for the offence under Section 16 of the UAP Act - HELD THAT:- It is trite law that an accused is entitled to a speedy trial. This Court in a catena of judgments has held that an accused or an undertrial has a fundamental right to speedy trial which is traceable to Article 21 of the Constitution of India. If the alleged offence is a serious one, it is all the more necessary for the prosecution to ensure that the trial is concluded expeditiously. When a trial gets prolonged, it is not open to the prosecution to oppose bail of the accused-undertrial on the ground that the charges are very serious. Bail cannot be denied only on the ground that the charges are very serious though there is no end in sight for the trial to conclude. In SHAHEEN WELFARE ASSOCIATION VERSUS UNION OF INDIA (UOI) AND ORS. [ 1996 (2) TMI 597 - SUPREME COURT] , this Court was considering a public interest litigation wherein certain reliefs were sought for undertrial prisoners charged with offences under the Terrorist and Disruptive Activities (Prevention) Act, 1987 (TADA Act) languishing in jail for considerable periods of time. This Court observed that while liberty of a citizen must be zealously safeguarded by the courts but, at the same time, in the context of stringent laws like the TADA Act, the interest of the victims and the collective interest of the community should also not be lost sight of. While balancing the competing interest, this Court observed that the ultimate justification for deprivation of liberty of an undertrial can only be on account of the accused-undertrial being found guilty of the offences for which he is charged and is being tried. If such a finding is not likely to be arrived at within a reasonable time, some relief(s) becomes necessary. Therefore, a pragmatic approach is required. This Court has, time and again, emphasized that right to life and personal liberty enshrined under Article 21 of the Constitution of India is overarching and sacrosanct. A constitutional court cannot be restrained from granting bail to an accused on account of restrictive statutory provisions in a penal statute if it finds that the right of the accused-undertrial under Article 21 of the Constitution of India has been infringed. In that event, such statutory restrictions would not come in the way. Even in the case of interpretation of a penal statute, howsoever stringent it may be, a constitutional court has to lean in favour of constitutionalism and the rule of law of which liberty is an intrinsic part. In the given facts of a particular case, a constitutional court may decline to grant bail. Appellant is directed to be released on bail subject to fulfilment of the conditions imposed - the impugned order is set aside - appeal disposed off. 2024 (7) TMI 1112 Dishonour of Cheque - insufficient funds - compounding of the offence - settlement of dispute - Section 147 of the Negotiable Instruments Act - HELD THAT:- Section 147 of the Negotiable Instruments Act, 1881 makes all offences under NI Act compoundable offences. This settlement agreement can be treated to be compounding of the offence. All the same, Section 320 (5) of CrPC provides that if compounding has to be done after conviction, then it can only be done with the leave of the Court where appeal against such conviction is pending. In cases where the accused relies upon some document for compounding the offence at the appellate stage, courts shall try to check the veracity of such document, which can be done in multiple ways. For the same, in the present matter, this Court vide order dated 18.03.2024 had asked the respondent-complainant to file an affidavit to bring on record whether or not any compromise has been reached between the parties. In Raj Reddy Kallem v. The State of Haryana Anr. [ 2024 (5) TMI 322 - SUPREME COURT ], this Court followed the same principles and quashed a conviction under the NI Act, by invoking its powers under Article 142, even though the complainant therein declined to give consent for compounding, observing that the accused has sufficiently compensated the complainant. The appellants are acquitted by setting aside the impugned order dated 01.04.2019 as well the Trial Court s order dated 16.10.2012 - appeal allowed. 2024 (7) TMI 1111 Quashing of criminal proceedings - Section 156(3) of Cr.P.C. - complainant failed to complete the work within the stipulated time due to which a show cause notice was issued to the complainant on 06.11.2017 seeking response for his failure to complete the work - HELD THAT:- Undeniably, the agreement contains an arbitration clause and the arbitration proceedings have already commenced between the parties. When the dispute started, the first letter alleging complainant s failure to perform the work was issued by the appellant. In response to this communication, the complainant sent his reply (Annexure P-3) admitting that the construction activities have stopped due to his financial condition on account of imposition of GST and other hindrances - the complainant having himself admitted its inability to perform the work and requesting to settle the account as early as on 23.11.2017, it is certainly a civil dispute arising out of contract. The impugned order(s) of the High Court is set aside and the petitions under Section 482 Cr.P.C. are allowed - Appeal allowed.
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TMI Tax Updates - e-Newsletter July 24, 2024

Highlights / Catch Notes

GST

CSD to file GST refund applications sequentially on portal. Upload invoices, bank details. Preview before submission. NIL claim if no refund.

Order u/s 74(9) post taxpayer's demise unenforceable. SCN issued, reply filed. Hearing on 7/2/24. 13/3/24 order set aside.

HC held GST dept can't deny refund on inverted duty citing SC's Kusum Ingots ratio. Impugned order set aside, fresh order for refund in 3 months.

Petitioner's contentions disregarded, GSTR mismatch unaddressed. Flawed order on ITC, classification. Opportunity for hearing ordered.

Lack of ASMT-10 notice invalidated scrutiny, not adjudication. Petitioner's silence confirmed tax demand. Chance to contest merits granted on 10% deposit.

Order upholding quashing of penalty for goods transport upheld. Seizure allowed only if documents not genuine under Act. Documents genuine.

Petitioner can file representation to Additional Chief Secretary on tax liability for govt contracts pre/post GST within 4 weeks. Decision in 4 months.

Expats' service tax on salaries & perks under manpower supply agency: Petitioners get time till 15.01.2024 to respond. No coercive recovery if adverse order.

Transit fee paid to Forest Dept. for coal movement not exempt under GST. Continuous service exceeding Rs. 5000/yr, ineligible for exemption.

Income Tax

AO reassessed on seized docs, dictated by superiors, no independence, bias. HC upheld ITAT: order on dictation, delay beyond limitation.

Income from commodity transactions disclosed; reopening of assessment invalid. Lack of factual basis & non-application of mind by Revenue.

Expenditure on power, fuel & hired machines treated as capital expenditure for cement unit by ITAT, contrary to Revenue.

Interest can't be charged post-CIRP if amount frozen by IBC moratorium & not in approved plan. Excluded claims extinguished.

Domestic company paid higher DDT on dividends to Mauritius holding co. instead of lower DTAA rate. Claimed refund but failed to show Mauritius extended treaty protection. Appeals dismissed.

Expenditure disallowed for bogus transactions, but financial charges allowed for genuine business. Order of CIT(A) sustained.

Delayed PF & ESIC payment addition upheld in 143(1) intimation, Checkmate case inapplicable. Limitation not breached. Adjustment valid despite email non-receipt. (1)

Approval u/s 153D must reflect due diligence, not mere formality. Scrutiny of seized docs mandatory. Safeguard against arbitrary assessment.

Assessment order invalid, notice u/s 153C mandatory post-search. 6-year period from seizure date. Assessee's grounds allowed.

Improper invocation of reassessment proceedings u/s 147 sans jurisdiction, as per precedents. Revenue failed to prove error.

Bogus purchases reopening upheld; money laundering suspected. 6% income estimation sustained. Unexplained loans deleted; recorded in books. Penny stock losses allowed; from disclosed bank accounts.

Interest income earned by a co-op society from deposits with another co-op bank is tax-deductible u/s 80P(2)(d). However, excess gratuity fund contribution is rightly disallowed.

Profit set off against business loss & unabsorbed depreciation, no taxable income. Reopening futile after SC ruling. Revision quashed.

Deductor's failure to deposit TDS can't deny credit to assessee. Declared income, no discrepancy found.

Cash deposits during demonetization; nexus with disclosed sales established. No double addition if already assessed u/s 44AD.

Transfer pricing adjustments & benchmarking required for quasi-equity transactions. Lease accounting differs for operating & finance leases. ESOP expenses deductible.

Non-profit's 12A & 80G registrations cancelled citing loan default, TDS delays, PF lapses, GST dues. Tribunal set aside 12A cancellation. Approvals directed to be granted.

Customs

Critical minerals exempted from customs duty & surcharge. Concessional 2.5% duty on graphite, quartz & silicon dioxide.

Revising Health Cess on certain items, exercising powers u/s 25(1) of Customs Act & Section 141 of Finance Act. Amending previous notification.

Customs duty exemptions extended till Mar'29 for some electronics. New items added to exemption list. 15% duty on PCB assemblies, chargers & mobiles.

Reduced rates for imported gold, silver & platinum under specific schemes from 9.35% to 4.35% effective 24/07/2024.

Govt revises Agriculture Infrastructure & Development Cess (AIDC) on precious metals & other items. Rates reduced substantially.

Duty-free import of commercial samples: value limit hiked from Rs. 1L to Rs. 3L/consignment. Effective 24/07/2024.

Customs rules amended for new exporters' subsidy review. Provisional assessment, guarantees allowed. Retrospective duty possible.

Court: Quasi-judicial bodies must record reasons; vital contentions overlooked. Order set aside on Rs. 1.75 cr deposit; fresh order after hearing.

Penalty for export violation quashed due to lack of show cause notice & hearing, violating natural justice principles.

Importer paid duty on apples via scrips, later paid cash+interest. No fraud/evasion proven. Penalty set aside. Goods not confiscatable.

Importers penalized for undervaluation & duty evasion racket. Forensic evidence exposed malpractice. Failed to justify waiver. Penalties upheld.

Bill

Union Budget 2024: Finance (No.2) Act, Budget Speech, Economic Survey highlights & news.

Budget

3 schemes: 1-month wage for new workforce, incentives for manufacturing jobs & EPFO contribution reimbursement for 2 years.

GST simplified tax, reduced burden on common man & logistics cost. Facilitated trade with amendments like liquor exemption & regularization.

Income Tax reforms: Simplification, digitalization, dispute resolution scheme. TDS rationalization, higher appeal limits. STT hike, buyback tax.

Capital gains tax: 20% on short-term gains, 12.5% on long-term gains. Higher exemption limit for long-term gains on financial assets.

Customs reforms boost manufacturing, value addition, exports & simplify taxation. Exemptions for minerals, drugs, key sectors. Duty cuts for mobiles, chargers & renewable energy.

Income tax relief for salaried & pensioners under new regime. Higher std deduction & family pension deduction. Revised tax slabs.

Indian Laws

Speedy trial a must; bail can't be denied solely on serious charges. Courts to uphold Article 21 over restrictive laws.

Criminal case quashed due to complainant's financial inability despite arbitration clause. Dispute arose from work delay, GST impact.

Service Tax

Tour operator service requires planning, scheduling tours; standalone hotel booking not covered. Hotel service taxable from 01.05.2011; prior exemption & double taxation avoidance discussed.

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TMI Tax Updates - e-Newsletter
July 24, 2024