Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
July 27, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
FEMA
Service Tax
Central Excise
Indian Laws
Highlights / Catch Notes
GST
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Goods detained due to technical error in E-Tax Invoice generation, despite compliance. No discrepancy found. Mere human error. Proceedings unjustified without mens rea.
Goods detained on ground of non-generation of E-Tax Invoice as per Rule 48 of GST Rules before movement; all required documents u/r 138A accompanied goods; technical error by petitioner in not generating E-Tax Invoice; no discrepancy in quality/quantity of goods; error a human error; prior to 01.08.2022, dealers with annual turnover over Rs. 20 crores required to issue E-Waybill; in absence of finding on mens rea, proceedings u/s 129(3) cannot be initiated; impugned orders quashed; writ petition allowed.
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GST registration cancelled retrospectively without reasons, violating natural justice. Cancellation order set aside. Proper officer's power not arbitrary.
Failure to file returns for a continuous period of six months led to cancellation of GST registration. Cancellation order did not specify reasons for retrospective cancellation from registration date, violating principles of natural justice. Proper officer's power to cancel registration from a date cannot be arbitrary, must be informed by reason. Impugned order set aside, matter remanded to Appellate Authority to decide afresh on merits after providing opportunity of hearing, uninfluenced by delay question.
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Non-receipt of show cause notice violated natural justice. Order set aside, fresh hearing ordered. Authorities must provide all documents within 2 weeks.
Violation of principles of natural justice occurred due to non-receipt of show cause notice (SCN). Petitioner disputed receiving SCN, repeatedly mentioned non-receipt, and claimed it was untraceable. Despite petitioner's requests on three occasions, respondent failed to provide copy of SCN without prejudice to their stance of earlier service. Impugned order set aside, matter remanded to adjudicating authority for fresh consideration. Respondent directed to provide copy of SCN and other communications sought by petitioner within two weeks.
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GST authorities redesigned portal, but issued notice before change. Court allows petition, sets aside order & remands for fresh review.
Time limit u/s 73(10) of CGST Act for passing order u/s 73(9) - GST authorities re-designed portal to ensure 'View Notices' and 'View Additional Notices' tabs under one heading, but impugned show cause notice issued before portal redesign. Present petition allowed, impugned order set aside, matter remanded to adjudicating authority for fresh consideration - petition allowed by way of remand.
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Petitioner's GST registration cancellation challenged. Court ordered verification of additional business place within 3 weeks for restoration.
Cancellation of GST Registration of petitioner challenged. Petitioner had additional place of business registered and reflected in GST certificate. Application rejected on ground reasons for revocation not covered under Amnesty Scheme. Court disposed petition directing respondents to verify within three weeks if petitioner carrying business from additional place. Subject to petitioner applying for rectification of principal place in accordance with law after registration restored, if additional place found operational.
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Cancellation of GST registration quashed due to lack of reasoning, violation of natural justice. Constitutional remedy available despite time-bar.
Impugned orders cancelling GST registration set aside due to non-application of mind, lack of reasons, violation of natural justice principles. Time limitation bars appeal remedy but not constitutional remedy under Article 226 when valuable rights affected by arbitrary order sans reasoning. Petition allowed, cancellation orders quashed.
Income Tax
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Depreciation on non-compete fees allowed. Divergent HC views. Supreme Court to decide. Penalty u/s 271(1)(c) can't be imposed.
Penalty u/s 271(1)(c) was imposed for disallowance of depreciation on non-compete fees. The CIT(A) relied on Sharp Business System [2012 (11) TMI 324 - Delhi High Court], which is under challenge before the Supreme Court. Pepsico India Holding Pvt. Ltd. [2024 (4) TMI 1154 - Delhi High Court] allowed depreciation on non-compete fees after considering Sharp Business System. Different High Courts have divergent views on allowability of depreciation on non-compete fees, and the matter is pending before the Supreme Court. Considering the contentious issue, provisions of Section 271(1)(c) cannot be attracted. Assessee's appeal allowed.
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Assessment order deemed complete only upon communication, not mere signing. Order unpronounced/unpublished ineffective.
The reassessment proceeding shall be deemed completed only upon communication of the impugned assessment order to the assessee, not merely when the order was passed. The order cannot be considered passed unless pronounced, published, or the affected party has means of knowing it. Keeping the signed order in file without communicating is insufficient. The reassessment proceeding for AY 2003-2004 was completed on 05-04-2007 when the order was served, beyond the limitation period prescribed u/s 153(2). Availability of statutory appeal does not bar entertaining a writ petition under Article 226 in certain exceptions like violation of statutory provisions, natural justice, lack of jurisdiction, or pure legal controversy. The impugned assessment orders were quashed for violating section 153(2) of the Income Tax Act, 1961.
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Agricultural land exemption restricted to rural areas. "Urban agricultural land" under "capital asset". MAT can't include exempt agri income.
Section 2(1-A) amended retrospectively to restrict agricultural land exemption to rural areas, introducing concept of "urban agricultural land" under "capital asset" definition. Tribunal refused to admit additional grounds on merits of Section 115JB MAT computation. Once agricultural land income exempt, cannot be added to book profits for MAT. Tribunal should have allowed submissions before dismissing grounds. HC allowed appeal, set aside Tribunal order, answered legal question in appellant's favor.
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High Court quashed reassessment notice beyond limitation & notice by Joint AO outside faceless scheme as illegal.
The High Court held that the notice u/s 148 of the Income Tax Act issued on April 4, 2022, was beyond the prescribed period of limitation, rendering the consequent actions illegal. Mere issuance of a notice u/s 148A for conducting an inquiry before issuing a notice u/s 148 cannot be read within the ambit of the first proviso to Section 149(1). Additionally, the notice issued on August 27, 2022, by the Joint Assessing Officer (JAO) fell outside the faceless assessment scheme u/s 151A, as it was not issued by the National Faceless Assessment Centre as required under the scheme. Consequently, the assessee's appeal was allowed.
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Mentality of tax evasion, non-cooperation for 20 years, wilful default. Compounding rejected as belated after conviction. Paying dues /= compounding.
Appellant's conduct showed mentality of evading taxes, not cooperating from filing return till assessment. Though penalty order was in 2002, appellant did not file compounding application even after that date or before conviction in 2019, dragging issue for 20 years. Default termed wilful. Circular No.25/2019 did not intend to extend compounding benefit to all who applied by 31.12.2019. Rejection of compounding application upheld as appellant's application was belated and no scope for compounding after conviction under direct tax laws. Paying tax, penalty and interest does not entitle compounding. Authorities rightly rejected compounding application.
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Writ allows submitting grievance petition on arrears adjustments. Assessing officer to consider petition, grant hearing & dispose within 2 months.
Writ petition disposed of, permitting petitioner to submit consolidated grievance petition before assessing officer regarding adjustments against alleged arrears from previous assessment years, including contentions about unlawful adjustments without demand notices. Assessing officer to consider grievance petition, provide reasonable opportunity and personal hearing to petitioner, and dispose of it by speaking order within two months from receipt.
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Appellate authority to hear appeal promptly. Recovery proceedings against appellant to be kept on hold until appeal disposal or stay.
Pending disposal of stay petition or appeal, whichever is earlier, by appellate authority, recovery proceedings against appellant for recovery of confirmed amounts shall be kept in abeyance. Application for early hearing of appeal shall be considered by appellate authority. Impugned judgment modified to this limited extent, rest of directions unaltered.
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LTCG deductions u/s 54B allowed if capital gain utilized for new asset before filing return u/s 139(4). Investment made till filing date eligible.
LTCG deductions claimed u/s 54B are allowed if the capital gain is utilized for purchasing a new asset before the date of furnishing the return of income u/s 139, including the extended time limit u/s 139(4). When an assessee files a return subsequent to the due date u/s 139(1) but within the extended time limit u/s 139(4), the benefit of investment made up to the date of furnishing the return cannot be denied. In the instant case, the assessee paid the seller on 29.03.2017 and filed the return on the same date, satisfying the requirement of Section 54B(2) for utilizing capital gains before furnishing the return u/s 139(4).
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Flat allotment surrender = capital loss, not income; 'Right to acquire' = capital asset; Sec 50C/56(2)(X) inapplicable; Voluntary claim withdrawal pre-AO confrontation = no penalty.
Assessee surrendered allotment of flats, received refund from builder, and claimed long-term capital loss. Held: Assessee acquired 'right to acquire' flats, a capital asset. Surrender of this right constitutes transfer, attracting capital gains computation. Section 50C and 56(2)(X) inapplicable as transfer involved 'right', not land/building. Capital loss carry forward allowed. Penalty under 271(1)(c) not imposable for withdrawing expense claim voluntarily before confrontation by AO, as it would discourage return defect disclosure and violate fairness in tax administration when interest on differential tax paid. Assessee's honesty cannot attract penalties. ITAT allowed assessee's appeal.
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Funds remitted from HK to NRE account with FIRC evidence. Tribunal: Source outside India proved, no Indian income/business link. AO's addition deleted.
Non-resident assessee remitted funds from Hong Kong bank account to NRE account in India, submitted Foreign Inward Remittance Certificate. Tribunal held assessee discharged onus regarding source of funds being outside India, residential status not disputed, no allegation of Indian income or business connection. Addition by assessing officer deleted, appeal allowed.
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Addition limited to parties in WhatsApp chat. GP 8.60% on undisclosed sales Rs. 26,58,600 & Rs. 6,11,043. Partial relief on undisclosed sales.
Addition restricted to parties mentioned in WhatsApp chat; estimation of gross profit (GP) at 8.60% on undisclosed sales of Rs. 26,58,600 and Rs. 6,11,043 confirmed; partial relief granted to assessee regarding undisclosed sales addition based on evidence; Appellate Tribunal's decision followed principles of natural justice and legal precedents.
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Short-term capital gains from share trading rightly taxed as business income. Investment claim rejected due to separate account, delivery-based transactions & prior acceptance of capital gains.
The assessee's short-term capital gains from share trading were rightly treated as business income. Mere mention of shares as investments does not grant benefit under Circular No.4 of 2007. Separate account maintenance, delivery-based transactions, and acceptance of capital gains in preceding years were not sufficient to establish share trading as investments. The assessee was eligible for deduction u/s 80IC as the manufacturing unit was located in a notified area, fulfilling conditions. Disallowance of 20% of milk purchases was unjustified as expenses were duly debited, and net profit ratio was considered for assessment in subsequent years. The Tribunal allowed the assessee's claim, finding no justification for discrediting purchases on an ad hoc basis.
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Delay of 1154 days in filing appeal not condoned. Reasons like leaving tax matters to CA, ignorance & busy with agriculture/household not "sufficient cause". Casual approach won't suffice.
Delay of 1154 days in filing appeal before Commissioner of Income Tax (Appeals) was not condoned as reasons given, such as leaving income tax matters in hands of Chartered Accountant, ignorance of law, and being busy with agricultural and household activities, did not constitute "sufficient cause" u/s 249(3). Appellant remained inactive and grossly negligent after receiving assessment order, lacking due diligence. Such casual and lackadaisical approach against assessment order and consequential delay in filing appeal would not constitute "sufficient cause" u/s 249(3). Decision of Commissioner of Income Tax (Appeals) refusing to condone delay upheld.
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Tax residency upheld for Mauritius company; control, management in Mauritius. Eligible for Indo-Mauritius tax treaty benefit.
The assessee company was denied exemption under Article 13(3B) and 13(4) of the India-Mauritius Treaty, and its capital gains from sale of shares, futures, and options were taxed, as its control and management were found to lie outside Mauritius in UAE, with the beneficial owner being a UAE resident. However, the CIT(A) held the assessee eligible for the India-Mauritius treaty benefit. The ITAT upheld the CIT(A)'s decision, finding no conclusive evidence that the assessee's control and management were outside Mauritius or that the beneficial owner was a UAE resident. The assessee had Mauritius-resident directors, held board meetings in Mauritius, had a valid TRC, Category 1 Global Business License, and SEBI registration, proving its Mauritius tax residency. The protocol amending the treaty was not applicable as it had not come into force. The ITAT relied on Supreme Court's Azadi Bachao Andolan case principles and CBDT Circular 789/2000 while interpreting the treaty.
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Unexplained income treated as advances rightly deleted; loan amounts recorded, supported by evidence. Assessee not owner of unrecorded assets. Double addition rightly deleted by CIT(A).
Section 69A addition for unexplained income treated as advances was rightly deleted as the loan amounts were recorded in books, supported by bank statements and confirmations, even if details of immovable property transaction were unavailable. The assessee was not the owner of unrecorded assets, satisfying Section 69A conditions. CIT(A) rightly deleted the addition after considering all aspects. Addition of Rs. 1.70 crores relating to Outstripe Suppliers Pvt. Ltd. transaction was part of Rs. 2 crores addition for the same transaction in the previous year, leading to double addition, hence rightly deleted by CIT(A).
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Addition on estimated turnover after rejecting books; notices to verify purchases unserved. Penalty deleted as addition was estimate-based.
Penalty u/s 271(c) was imposed on additions of 25% of non-verifiable purchases debited to the trading account. The addition was made on estimation of total turnover after rejecting the books of accounts. Notices u/s 133(6) were issued to various purchase parties, but all were returned by the postal authority, and the assessee did not produce the parties to confirm the same. The lower authorities observed that the revenue did not establish that the assessee had concealed or submitted inaccurate particulars of income to attract Section 271(1)(c). The addition was admittedly made on an estimate basis. The ratio of the judgment in Parasamal Babulal Jain and various ITAT pronouncements covered the assessee's case. Since the addition was made on an estimate basis, the penalty was rightly deleted by the CIT(A). The ITAT found no illegality in the CIT(A)'s order and confirmed it, deciding against the revenue.
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Premium on redemption of privately placed NCDs is interest income, not capital gains. Long-term capital loss set-off restored. No perquisite on flat purchase.
Correct head of income for premium on redemption of privately placed non-convertible debentures (NCDs) is interest income under Income from Other Sources, not capital gains, as NCDs are debt instruments and redemption amounts to realization of money advanced by creditor. Set-off of long-term capital loss against long-term capital gains restored to Assessing Officer for fresh computation. Disallowance u/s 14A relating to exempt income to be computed considering dividend yielding investments only as per precedent. No employer-employee relationship in tripartite agreement for flat purchase, hence no perquisite u/s 17(2)(iii)(a) for difference between actual cost and stamp duty value unless actual fair market value established.
Customs
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IGST exemption under EPCG Scheme rejected wrongly. Demands of duty, confiscation, penalties set aside as premature before license expiry.
IGST exemption availed under EPCG Scheme rejected. Demand of customs duty in lieu of IGST, confiscation, interest, penalties under Customs Act, 1962 confirmed. Allegation: Notification amended, payment in INR for services in Appendix 5D counted towards export obligation only if IGST exemption not availed. HELD: EPCG License issued on 21.01.2019, export obligation period till 20.01.2025. Proceedings premature before expiry of licensing period, impugned order confirming demands unjustified. Supreme Court judgment: Importers not meeting pre-import conditions to pay GST/Compensation Cess, can claim refund/avail Input Tax Credit. If IGST paid, available as Input Tax Credit, reducing net GST liability, revenue neutral. Confiscation of imported goods set aside. Penalties unwarranted. Impugned order set aside, appeal allowed.
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Appellant failed to advise client on SCOMET export authorization, wrongly relied on declaration. Penalty upheld, revocation set aside.
Violation of Regulation 10(d) of CBLR established - appellant obligated to advise client about authorization requirement for SCOMET item export, instead filed Shipping Bill. Appellant's reliance on client's declaration unacceptable - onus on appellant to know law. SCN not time-barred - issued within 80 days of receipt of correct offence report. Revocation of license, forfeiture of security deposit disproportionate considering no evidence of profiting, appellant out of work for a year. Penalty of Rs. 50,000/- upheld, revocation and forfeiture set aside. Appeal partly allowed.
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Imported 'Color Toner Black' excluded from anti-dumping duty on 'black toner powder' as color toners comprise CMYK colors.
The appellant's self-assessment u/s 17(1) of the Customs Act was rejected, and re-assessment was done u/s 17(4) through Notification No. 12/2021-Customs (ADD) dated 05.03.2021. The Tribunal held that the imported goods, described as 'Color Toner Black' in the Bill of Entry, were excluded from the anti-dumping duty levied on 'black toner in powder form' by the Notification dated 05.03.2021, as it explicitly excluded color toners. A color toner comprises four colors (CMYK), with 'K' denoting black. The Assistant Commissioner and Commissioner (Appeals) erred in failing to appreciate this distinction and the Notification's exclusion of color toners. Consequently, the Commissioner (Appeals)'s order dated 17.11.2022 was set aside, and the appeal was allowed.
FEMA
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Writ petition against FEMA penalty dismissed due to statutory remedies. No immunity from adjudication pre-insolvency. No breach of rights/natural justice. Authority empowered to penalize.
Writ petition challenging contravention of FEMA laws and penalty imposed held non-maintainable due to availability of alternative statutory remedies. Petitioner not granted immunity from adjudication proceedings initiated before insolvency resolution process. Exceptions for entertaining writ petitions like breach of fundamental rights or natural justice not applicable. Respondent authority possessed power to impose penalty. Mere withdrawal of recovery proceedings does not impact validity of penalty order. Writ petition dismissed as devoid of merits.
Corporate Law
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Investors failed to provide FEMA certificate, delaying refund under 'buy-back' clause. Despite deposit, non-compliance waived claim rights. Funds to be used for creditors' claims instead.
Petitioners sought refund of investment under 'buy-back' clause, but failed to furnish FEMA certificate, delaying release of deposited amount. Despite depositing investment amount per court's directions, petitioners didn't comply with formalities, waiving rights for claim before Official Liquidator. With much time elapsed, deposited amount with accrued interest to be utilized for satisfying secured creditors' claims instead of refund to petitioners. Application dismissed.
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ROC can strike off companies from register under old & new Companies Acts. New Act has detailed procedure & remedy for deregistration.
The court held that the Registrar of Companies (ROC) had the power to strike off the name of a company from the Register u/s 560(1)(6) of the old Companies Act, 1956, which is pari materia with Section 248 of the new Companies Act, 2013. The provisions under the old and new Acts are consistent, with the new Act providing a more detailed procedure for striking off and an effective remedy for dealing with deregistration of non-operational companies. The registers maintained under the old Act are deemed to be maintained under the new Act. The petitioner's remedy lies with the National Company Law Tribunal under Chapter XXVII of the Companies Act, 2013. Therefore, the application was dismissed.
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Peaceful vacant possession granted to applicant from Official Liquidator. Objector's rights terminated upon sub-lease termination. Leave granted to disclaim property.
Disclaimer of onerous property granted to the Official Liquidator to disclaim office space - peaceful, vacant possession to be handed over to applicant from Official Liquidator. Mortgage/charge enforceable only during subsistence of sub-lease. Company's account NPA since 31.12.2011, symbolic possession taken by PNB on 06.02.2013. Objector-PNB's rights terminated upon termination of sub-lease by applicant-IIPL. Objector cannot claim rights beyond company's sub-lease rights. Similar case of Stressed Assets Stabilization Fund. Leave granted to Official Liquidator to disclaim property, handover vacant possession to applicant within 45 days by removing padlocks/seals. Application disposed of.
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Court ordered company dissolution, discharged Liquidator u/s 481 as winding up couldn't proceed. Relied on Meghal Homes case.
Court ordered dissolution of company and discharged Official Liquidator as Liquidator u/s 481 of Companies Act, 1956 as Official Liquidator could not proceed further with winding up process. Relying on Supreme Court decision in Meghal Homes case, held that when affairs of company completely wound up or court finds Official Liquidator cannot proceed with winding up for want of funds or any other reason, court can dissolve company. Present case warranted ending liquidation proceedings, dissolving company in liquidation, and discharging Official Liquidator.
Indian Laws
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Cheque dishonor case: Summons issued. Scope of Sec 138 & 482 CrPC examined. Disputed facts, outstanding dues, security cheques.
Dishonor of cheque case - Issuance of summons - Cheque furnished as security covered u/s 138 of NI Act or not? - Scope and limited jurisdiction of High Court u/s 482 CrPC. Dispute based on books of accounts, complainant submitted invoices, ledger accounts, agreement. Accused contended cheques retained to recover outstanding dues. Complainant produced blank cheques given by accused as security. High Court prima facie opined difficulty in examining disputed facts at this stage. Issue whether cheques sent with purchase order discharged outstanding liability subject to trial. Outstanding dues existed on cheque issuance date. Entertaining quashing petition would result in finality without adducing evidence. Ingredients of Section 138 made out, complaint maintainable. No case for exercising extraordinary jurisdiction to quash criminal case. Petition dismissed.
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Appeal against arbitrator's decision on liquidated damages dismissed. Legal injury must be proved for both types of damages.
The court dismissed the appeal against the arbitrator's decision not to levy liquidated damages due to the failure to plead and demonstrate legal injury. The court held that liquidated damages are no different from unliquidated damages, and in both cases, the aggrieved party must demonstrate legal injury. Liquidated damages represent the maximum amount payable, but u/s 74 of the Contract Act, reasonable compensation must be paid. Since there were no pleadings regarding the imposition of liquidated damages, no leave could be granted at the second stage of scrutiny. The appeal was dismissed, and costs were quantified at Rs. 20,000/-.
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Courts reluctant to quash cases with substantial compliance. No mini-trial u/s 482 CrPC. Allegations proved at trial.
The principles of exercising jurisdiction u/s 482 of Cr.P.C. were laid down, wherein the courts should be reluctant to quash proceedings even if one or two ingredients are not satisfied if there is substantial compliance with the requirements of the offence. The High Court cannot conduct a mini-trial while exercising jurisdiction u/s 482 of Cr.P.C., and allegations must be proved during trial. In the present case, the Magistrate passed an order after examining the cheque, notice, affidavit, and other documents, satisfying the provisions of Section 202 of Cr.P.C. The submission of non-compliance with Section 202 of Cr.P.C. is unacceptable. The petition fails and is dismissed.
IBC
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Impleadment allowed sans prior notice; court's discretion. Appellant's contention rejected. Appeal dismissed for lack of merits.
Impleadment application allowed without prior notice to appellant, who was sought to be impleaded, as court has exclusive prerogative to determine necessity of party's impleadment for effective adjudication. Appellant's contention regarding lack of prior notice rejected, as impleadment is court's discretion. Appeal dismissed for lacking merits.
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Doctrine of necessity invoked to grant chance to deposit balance & avoid liquidation, enabling Corporate Debtor revival.
Doctrine of necessity invoked to grant opportunity to deposit balance amount into liquidation account to avoid liquidation and enable Corporate Debtor to revive as going concern. Section 60(5) of Insolvency and Bankruptcy Code, 2016 empowers Tribunal to pass appropriate order to meet Code's objective despite contrary provisions. Appellant granted last chance to deposit amount within one month, failing which relaxation lapses and liquidator can seek alternate buyer as per law. Appeal disposed of.
Central Excise
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Penalty u/r 26(2) quashed; appellant vindicated. Invoices valid, goods received, duty paid.
The appellant was issued penalty u/r 26(2) of Central Excise Rules, 2002, alleging that second stage dealers based in Jaipur were issuing cenvatable invoices to the main noticee without delivering goods, which were purchased from first stage dealers and manufactured by non-existent or non-working manufacturers. The Commissioner (Appeals) recorded categorical findings that the main noticee had duly received goods and made duty payment. Tribunal held that when the demand for cenvat credit itself is not maintainable, there is no justification to affirm penalty on the appellant. Following the principles enunciated by Division Bench in Drolia Electrosteel case, where department accepted findings of Commissioner (Appeals), there is no justification to uphold penalty imposition on appellant. The impugned order was set aside and appeal allowed.
Articles
News
Case Laws:
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GST
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2024 (7) TMI 1304
Exemption under Notification No. 12 of 2017 dated 28 June, 2013 - Sr. No. 54(e) of N/N. 12 of 2017 dated 28 June, 2013 pertaining to loading, unloading, packing, storage or warehousing of agricultural produce namely tea - it was held by the High Court that 'This Hon ble Court be pleased to issue a Writ of Certiorari or any other appropriate writ, order or directions under Article 226 of the Constitution of India calling for the records of the Petitioners case and after examining the legality and validity thereof quash and set aside the impugned order dated 10.12.2018 passed by Respondent No. 6 under Section 101 of the CGST Act and the MGST Act'. HELD THAT:- Delay condoned. Issue notice to the respondents.
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2024 (7) TMI 1303
Levy of penalty - goods detained on the ground that E Tax Invoice was not generated as per Rule 48 of the Goods and Services Tax Rules, 2017 - existence of mens rea or not - HELD THAT:- It is admitted that while transiting the goods in question all documents as required under Rule 138 A of the Rules were accompanying with the goods. Only a technical error has been committed by the petitioner for not generating E Tax Invoice before movement of goods in question. It is not in dispute that Waybill was generated. It is not the case of the Revenue that there was any discrepancy with regard to quality and quantity of the goods as mentioned in Tax Invoice, E Waybill as well as G.Rs accompanying the goods. The error committed by the petitioner for not generating E Tax Invoice before movement of goods is a human error. It is also not in dispute that prior to 1st August, 2022 the dealers who were having annual turn over of more than Rs. 20 crores was required to issue E Waybill. In absence of any finding with regard to mens rea the proceeding under section 129(3) of the Act cannot be initiated. The impugned order dated 26.12.2022 passed by respondent no.4 as well as the order dated 26.5.2023 passed by respondent no.3 are hereby quashed. The writ petition is allowed.
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2024 (7) TMI 1302
Rejection of petitioner s appeal u/s 107 of CGST Act, 2017/DGST Act on the ground of delay - failure to file returns for a continuous period of six months - No reasons specified in cancellation order - violation of principles of natural justice - HELD THAT:- It is material to note that the SCN, whereby the petitioner was called upon to show cause as to why the petitioner s GST registration should not be cancelled, did not specifically state that the petitioner s registration was proposed to be cancelled from a retrospective date. The impugned cancellation order dated 21.08.2023, cancelling the petitioner s GST registration also does not specify any reason as to why the petitioner s GST registration has been cancelled with retrospective effect from 01.07.2017, being the date on which the petitioner was registered with the GST Authorities - In terms of Section 29(2) of CGST Act/DGST Act, the proper officer is empowered to cancel the registration from such date as he considers fit for the reasons as set out in Section 29 (2) of CGST Act/DGST Act. However, the said decision cannot be whimsical or arbitrary and must be informed by reason. It is considered apposite to set aside the impugned order dated 28.06.2024 and remand the matter to the Appellate Authority to decide it afresh on merits, uninfluenced by the question of delay, after affording the petitioner an opportunity of hearing - petition disposed off by way of remand.
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2024 (7) TMI 1301
Violation of principles of natural justice - non-receipt of SCN - HELD THAT:- Whilst the respondent asserts that the impugned SCN has been delivered, the petitioner disputes the same. It is not considered apposite to conduct an inquiry in regard to this question in these proceedings. This is because it is not disputed that the petitioner had repeatedly mentioned that it had not received the copy of the impugned SCN and in any event had claimed that the same is not traceable. As is evident from the above, the petitioner had requested for a copy of the impugned SCN and certain other communications on at least three occasions. There are no reason as to why the respondent could not forward a copy of the impugned SCN, without prejudice to their stand that the impugned SCN was served to the petitioner earlier. It is considered apposite to set aside the impugned order and remand the matter to the adjudicating authority for consideration afresh. The respondent shall provide the copy of the impugned SCN and the other communications, if any, as sought by the petitioner in its e-mail dated 15.12.2020 within a period of two weeks from date - petition disposed off by way of remand.
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2024 (7) TMI 1300
Time limit specified under Section 73 (10) of the CGST Act for passing an order under Section 73 (9) of the CGST Act - N/N. 9/2023-Central Tax dated 31.03.2023 - HELD THAT:- The GST Authorities have since addressed the issue and have re-designed the portal to ensure that View Notices tab and View Additional Notices tab was placed under one heading. However, it is not disputed that the impugned SCN was issued before the GST portal was re-designed. The present petition is allowed and the impugned order is set aside - The matter is remanded to the adjudicating authority for consideration afresh - petition allowed by way of remand.
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2024 (7) TMI 1299
Time limit specified under Section 73 (10) of the CGST Act for passing an order under Section 73 (9) of the CGST Act - N/N. 9/2023-Central Tax dated 31.03.2023 - HELD THAT:- The GST Authorities have since addressed the issue and have re-designed the portal to ensure that View Notices tab and View Additional Notices tab was placed under one heading. However, it is not disputed that the impugned SCN was issued before the GST portal was re-designed. The present petition is allowed and the impugned order is set aside - The matter is remanded to the adjudicating authority for consideration afresh - petition allowed by way of remand.
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2024 (7) TMI 1298
Cancellation of petitioner s GST registration - default in filing returns for a consecutive period of six months - petitioner s application for condonation of delay in filing an application for revocation of the impugned cancellation order was rejected - HELD THAT:- The petitioner does not dispute that he has defaulted in compliance with the provisions of Section 39 of the CGST Act and had not filed the returns as required. However, he has set out an explanation for the same and undertakes that all returns will be filed and outstanding dues will be paid. In TVL. SUGUNA CUTPIECE CENTER VERSUS THE APPELLATE DEPUTY COMMISSIONER (ST) (GST) , THE ASSISTANT COMMISSIONER (CIRCLE) , SALEM BAZAAR. [ 2022 (2) TMI 933 - MADRAS HIGH COURT] , the Hon ble High Court of Madras has considered import of the actions of cancellation of the Taxpayer s GST Registration and noticed that department s object cannot be to preclude taxpayers from carrying on their business. The respondents are directed to restore the petitioner s GST Registration. However, this is subject to the condition that the petitioner shall immediately within a period of one week of the petitioner s GST Registration being restored, file the necessary returns and pay all its dues along with interest - petition allowed.
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2024 (7) TMI 1297
Revoking the order cancelling its GST Registration - Rejection on the ground of delay - HELD THAT:- Concededly, the petitioner s appeal was delayed by six days; that is, it was six days beyond the stipulated period of three months provided under Section 107 (1) of the CGST Act. Moreover, the petitioner provided the explanation for such delay. He submitted that the concerned GST officer has raised a ticket for rectification of the order dated 04.11.2023 under Section 161 of the CGST Act and the same was also communicated to the petitioner. The petitioner was thus hopeful that its grievance could be resolved by a rectification order. A plain reading of the impugned order indicates that the said explanation was not considered. It is relevant to note that in terms of Section 107 (4) of the CGST Act, the Appellate Authority has the power to condone the delay in filing the appeal by one month. Thus concededly, the delay in filing the appeal could be condoned by the Appellate Authority. However, the Appellate Authority did not examine whether the petitioner was prevented by sufficient cause in filing its appeal and failed to exercise its power for condoning the delay in filing the appeal - the impugned Order-in-Appeal dated 08.05.2024 set aside and the matter remanded to the Appellate Authority for consideration on merits. Petition allowed by way of remand.
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2024 (7) TMI 1296
Cancellation of GST Registration of petitioner - petitioner also had an additional place of business, which was registered and was reflected in its GST registration certificate - application rejected on the ground that the reasons for revocation were not covered under the Amnesty Scheme - HELD THAT:- The learned counsel appearing for the respondents has secured instructions and submits that the petitioner s additional place of business would be verified and if the petitioner s contention that it has been carrying on its business from the said place, is found to be correct, the petitioner s GST Registration would then be restored. This is also subject to the petitioner applying for rectification of its principal place of business in accordance with law, immediately after its registration is restored. The present petition is disposed of by directing the respondents to verify whether the petitioner has been carrying on its business from its additional place of business [18, Suraj Kund Road, Pul Pehladpur, South-East Delhi, Delhi 110044] within a period of three weeks from date.
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2024 (7) TMI 1295
Challenge to order cancelling the registration of the petitioner's proprietorship - order dismissed on the ground of time limitation - total non application of mind by the authority concerned while cancelling the G.S.T registration of the petitioner - sufficient reasons for passing of the order not given - violation of principles of natural justice - HELD THAT:- Bar of limitation may bar the remedy of appeal but it does not bar the petitioner's right to seek his constitutional remedy under Article 226 of the Constitution of India, particularly when the impugned order affects valuable rights of the petitioner and the same has been passed without assigning any reason. The orders dated 21.01.2021 passed by the Assistant Commissioner, Sector 8, Lucknow and 13.07.2022 passed by the Additional Commissioner, Grade-2 (Appeal) State Tax, Judicial Block-3, Lucknow are hereby set aside - Petition allowed.
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Income Tax
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2024 (7) TMI 1305
Penalty u/s 271(1)(c) - disallowance of depreciation on non-compete fees - HELD THAT:- In quantum proceedings, the Ld. CIT(A) has relied on the decision of Sharp Business System [ 2012 (11) TMI 324 - DELHI HIGH COURT] and the said Judgment is under challenge before the Hon'ble Supreme Court. As decided in Pepsico India Holding Pvt. Ltd. [ 2024 (4) TMI 1154 - DELHI HIGH COURT] allowed the claim of depreciation on non compete fee after considering the Judgment of Sharp Business System Vs. CIT [ supra]. As observed above, there are different views by the Jurisdictional High Court and other High Courts on the issue of allowability of claim of the depreciation on non compete fees which is highly contentious and the lis is pending before the Hon'ble Supreme Court. Therefore, in our considered opinion, the provisions of Section 271(1)(c) cannot be attracted against the Assessee. - Assessee appeal allowed.
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2024 (7) TMI 1294
Delay filling appeal before Supreme court - Revision u/s 263 set aside by ITAT confirmed by HC [ 2022 (11) TMI 1448 - CALCUTTA HIGH COURT] - HELD THAT:- There is gross delay of 484 days in filing the Special Leave Petition. The explanation offered for seeking condonation of delay is not satisfactory and therefore, not sufficient in law to be condoned. Consequently, the application seeking condonation of delay is dismissed. Department has been consistently filing Special Leave Petitions before this Court even when there is gross delay of hundreds of days. It appears that there is no immediate attention bestowed on the cases so as to seek urgent relief and possibly, despite enormous delay, the Special Leave Petitions have been filed only to seek an imprimatur of this Court in the cases. We do not appreciate this practice of the Department in doing so. It is necessary that the Department takes into consideration only those cases which are fit enough and have merit to be filed before this Court expeditiously and does not make it a habit to assail almost every order or judgment which is otherwise correct in law and facts and file Special Leave Petitions belatedly. This Special Leave Petition is dismissed on the ground of delay.
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2024 (7) TMI 1293
Delay filling SLP - Applicability of provisions of Section 206AA of Act relating to deducting of tax at higher rate in the absence of Permanent Account Number to the payments made to Non Resident Companies The High Court [ 2023 (6) TMI 1406 - KARNATAKA HIGH COURT] dismissed the appeal both on the ground of delay as there was 273 days delay in filing the appeal as well as on merits. There is also a delay of 255 days in filing this special leave petition. HELD THAT:- We are not satisfied with the explanation offered by the petitioners for seeking condonation of delay in filing the special leave petition. In the circumstances, the special leave petition is dismissed on delay keeping open the question of law. In dismissing this special leave petition, we have followed the judgment of this Court in Postmaster General and Ors. vs. Living Media India Ltd. and Anr [ 2012 (4) TMI 341 - SUPREME COURT ] and other cases which have followed the aforesaid judgment. Pending application(s), if any, shall also stand disposed of.
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2024 (7) TMI 1292
Validity of reassessment proceedings - period of limitation prescribed u/s 153(2) - whether the reassessment made by ITO without communicating the order of reassessment and the demand notice of the said reassessment within time can be treated as a valid assessment made within the period of limitation prescribed under section 153(2)? - HELD THAT:- The question that arose for consideration is whether the said reassessment proceeding shall be deemed to be completed when the impugned order of assessment was passed on 28-12-2006 or whether such proceeding shall be deemed to be completed only after communication of the impugned assessment order to the assessee on 05-01-2007. This issue is no longer res-integra and the same has been decided by the Hon'ble Apex Court and various High Courts of the country in a catena of its decisions that the order of any authority cannot be said to be passed unless it is in some way pronounced or published or the party affected has the means of knowing it and that it is not enough if the order is made, signed, and kept in the file, because such order may be liable to change at the hands of the authority who may modify it, or even destroy it, before it is made known, based on subsequent information, thinking or change of opinion. It is hereby held that the proceeding of the reassessment of the Return submitted by the assessee for the AY 2003-2004 shall be deemed to be completed only on 05-04-2007 when the assessment order was served/ communicated to the representative of the assessee and the same was not completed within the period prescribed under section 153(2) of the Act. Objection raised by the DSGI about the maintainability of the present writ petition on ground of availability of filing a statutory appeal u/s 246 - It is to be pointed out that it is a settled principle of law that availability of an alternative and effective remedy does not exclude or completely barred the High Court from entertaining a writ petition under Article 226 of the Constitution of India. The normal rule is that a writ petition under Article 226 of the Constitution ought not to be entertained if alternate statutory remedies are available, however, there are certain exceptions to this rule. Some of the exceptions are where the statutory authority has not acted in accordance with the provisions of the enactment in question, or in defiance of the fundamental principle of judicial procedure, or has resorted to invoke the provisions which are repealed, or when an order has been passed in total violation of the principles of natural justice, or where the writ petition seeks enforcement of any of the fundamental rights, or where the order or proceeding are wholly without jurisdiction, or where the vires of an act is challenged or where the controversy is purely a legal one and it does not involve disputed question of facts but only question of law then such writ petition should be decided by the High Court instead of dismissing the petition on ground of an alternative remedy being available. Writ petition allowed by quashing and setting aside the impugned assessment orders passed by the AO as being illegal and violative of the provisions of section 153(2) of the Income Tax Act, 1961.
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2024 (7) TMI 1291
MAT computation u/s 115JB - income of agricultural land as exempt from tax - as claimed that the profit from the sale of that property would be exempt from taxation since it constituted a sale of agricultural land and would thus not fall within the ambit of the expression capital asset as defined by Section 2(14) - HELD THAT:- As not disputed that the land constituted rural agricultural land and would not fall within the scope of Section 2(14) (iii). Section 2(1-A) came to be amended with retrospective effect from 01 April 1970 and in terms of which agricultural land, though broadly excluded from the definition of a capital asset, was conceptually amended and the statute thereafter for the purposes of exemption restricting the same to rural agricultural land only. According to definition of capital asset was also amended pursuant to which the concept of urban agricultural land came to be introduced and specifically included within the meaning of the expression capital asset . Tribunal appears to have not only refused to admit the additional grounds which was sought to be urged, it also and simultaneously appears to have ruled on the merits of the question which stood raised as read coming to the issue of 115JB as raised in ground no.3, we find that, firstly neither the issue of computation or taxation of book profit u/s. 115JB has been raised by the AO, nor such grounds were raised in the original grounds of appeal by the Department. Apart from that, once AO has not treated the said gain for the purposes of book profit then by way of such ground the issue cannot be raised by the Department. Otherwise also when the income of agricultural land is exempt from tax, then the said exempt income cannot be added to the books profit while calculating the MAT u/s.115JB. Thus, the said ground raised by the Revenue cannot be entertained and same is dismissed. We are of the opinion that since the question which was raised was purely legal, the Tribunal would have been well advised to have accorded an opportunity to respective sides to address submissions on the merits before proceeding to hold that the same could not be entertained. We, allow the instant appeal and answer the question framed for our consideration in the negative and in favour of the appellant. The order of the Tribunal is hereby set aside.
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2024 (7) TMI 1290
Validity of reopening of assessment - Notice beyond expiry of the period of limitation as Section 149 (1) (b) HELD THAT:- The legislature has clearly provided for the applicability of the provisions of Section 148 or Section 143(1) or Section 143C and has categorically avoided any procedural steps, as Section 148A would contemplate. Thus, in our opinion, mere issuance of the notice under Section 148A which is a provision for conducting inquiry by providing an opportunity before issuance of notice under Section 148 cannot be read within the ambit of the first proviso to sub-section (1) of Section 149. In this view of the matter, we are clearly of the opinion that the impugned notice as issued to the Petitioner dated 4th April, 2022 u/s148 of the Act was issued beyond the prescribed period of limitation and hence, the consequent actions as taken thereunder would also be required to be held illegal. Validity of notice being issued by the JAO - applicability of provisions of Section 151A - As provisions of the faceless assessment of income escaping assessment as provided for under Section 151A and the scheme in that regard notified by the Central Government being Notification dated 29th March, 2022 [Notification No.18/2022/F. No.370142/16/2022-TPL], which provides that the assessment, reassessment or recomputation under Section 147 of the Act and the issuance of notice under Section 148 of the Act shall be through automated allocation, in accordance with risk management strategy formulated by the Board as referred to in Section 148 of the Act for issuance of notice and in a faceless manner, to the extent provided under Section 144B of the Act. The Court held that in the said case, as the notice impugned therein dated 27th August, 2022 was issued by the JAO and not by the National Faceless Assessment Centre, the same would fall outside the faceless scheme. Assessee appeal allowed.
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2024 (7) TMI 1289
Compounding of offences - order denying the benefit of compounding of offences u/s 279(2) of the Act solely on the ground of prior conviction of the appellant - whether the contention of the appellant that the authorities ought not to have rejected his compounding application, which contention was also negatived by the learned Judge, is correct or not? - HELD THAT:- With regard to the conduct of the assessee, it is seen that right from the year 1997 the conduct is not good. At each and every point of time, the appellant was dragging on the issue thus having mentality trying only to evade the taxes and not otherwise. The respondent also commented about the conduct of the appellant in not extending his co-operation right from filing of return of income voluntarily till the date of completion of assessment u/s 144 of the Act. Since the financial year in which the offences were committed is 1996-1997 (AY 1997-98) and the assessment proceedings were going on, the appellant could have very well filed the compounding application during this period. Here it has to be underlined that even though the penalty order under the Act was passed on 04.02.2002 and the same was confirmed by the CIT(A) on 10.12.2002, the appellant had not filed the compounding application even after that date. As further seen from the records that the appellant had not filed the compounding application even before 06.03.2019, the date on which the appellant was convicted by the Court, when he had ample time. Thus, for almost 20 years, he kept on dragging the issue. Therefore, this Court is of the considered view that it cannot be stated that the application for compounding was rejected on the sole ground that the appellant was convicted by the Court, but for multiple reasons. The default committed by the appellant has to be termed as wilful. The claim of the appellant that Circular No.25 of 2019 dated 09.09.2019 had intended to extend the benefit of compounding to all persons who had applied on or before 31.12.2019 is not correct, in view of the terms of the Guidelines and Circular mentioned aforesaid. In Umayal Ramanathan's case [ 2009 (4) TMI 36 - MADRAS HIGH COURT] and Inbavalli's case [ 2016 (9) TMI 209 - MADRAS HIGH COURT] , the Court had not taken note of the aforementioned Circular issued u/s 119 of the Income Tax Act, 1961, specifically in the context of compounding of offences. The learned Judge has correctly held that the Circular of the Board also makes it clear that there is no scope for compounding of the offences, if there was a conviction of the person by a Court of law under Direct Tax Laws and that the application filed by the appellant was belated. Of course, finally the appellant has paid the tax, penalty and interest, but that would not mean that he is entitled for compounding of the offence. Judge has also correctly held that by paying the tax, penalty and interest, the appellant has done no favour for the revenue. Thus, the rejection of the compounding application of the appellant by the authorities and confirmation of the same by the learned Judge, cannot be interfered with by this court.
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2024 (7) TMI 1288
Seeking Refund remained unpaid - Adjustments made against alleged arrears from previous assessment years - petitioner submitted that the respondent has unlawfully made adjustments against alleged arrears from previous assessment years and the petitioner did not receive intimations or demand notices in respect of the adjustments made - All these adjustments were made after the writ petition was filed and it is unclear from paragraph 5 of the counter as to whether these adjustments were made after issuing demand notices in relation thereto. HELD THAT:- WP disposed of by permitting the petitioner to submit a consolidated grievance petition before the jurisdictional assessing officer not only in respect of assessment year 2009-2010 but also in respect of other assessment years in relation to which adjustments were made. Such grievance petition shall be submitted within a period of 15 days from the date of receipt of a copy of this order. Upon receipt thereof, the assessing officer is directed to consider the grievance petition, including contentions regarding the unlawful adjustments without issuing demand notices, provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter dispose of such grievance petition by a speaking order. This exercise shall be completed within a period of two months from the date of receipt of the grievance petition.
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2024 (7) TMI 1287
Validity of recovery steps for recovery of the amounts confirmed against it by the order - appellant has preferred stay petition before the 2nd and 3rd respondent seeking out of turn hearing of the appeal. In the meantime, coercive steps were taken for realisation of the demands - Single Judge disposed of the writ petition with a direction to the 2nd respondent to consider and pass appropriate order on stay application, however, did not grant stay of recovery proceedings pending disposal of the stay petition by the said respondent. HELD THAT:- Since the learned Single Judge had relegated the appellant to the alternative remedy before the statutory authority, it was incumbent upon the learned Judge to protect the appellant from recovery proceedings pending disposal of the petitions by the respondent appellate authority. Accordingly, we modify the impugned judgment of the learned Single Judge to the limited extent of clarifying that pending disposal of the stay petition or appeal, whichever is earlier by the appellate authority, the recovery proceedings against the appellant for recovery of the amounts confirmed against it by Ext.P13 order shall be kept in abeyance. Ext.P19 application for early hearing of the appeal shall also be considered by the 3rd respondent in accordance with law. Save for this limited modification, the rest of the directions in the impugned judgment are not interfered with.
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2024 (7) TMI 1286
TP Adjustment - AMP expenses incurred - characterized as an international transaction under the provision of Section 92B or not? - HELD THAT:- As in Maruti Suzuki India Ltd. [ 2015 (12) TMI 634 - DELHI HIGH COURT ] held that the AMP expenses incurred could not be characterized as an international transaction under the provision of Section 92B of the Act and deleted the addition. Assessee appeal allowed.
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2024 (7) TMI 1285
Estimation of income - bogus purchases - disallowance of purchases to the extent of 12.05% on account of purchase from non-genuine parties - HELD THAT:- The assessee is engaged in trading in Ferrous and Non-ferrous Metals. Since, the assessee failed to discharge onus of proving the genuineness of the transactions in question, the AO has rightly proceeded to make the addition of profit element embedded in the total bogus purchases. Considering the nature of business of the assessee and other relevant facts as well as the judicial pronouncements, we deem it reasonable to estimate the profit @5% of the total non-genuine purchases. Addition to the extent of 5% which works out is sustained. Thus, appeal of the assessee is partly allowed.
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2024 (7) TMI 1284
Revision u/s 263 - genuineness of the business and source of cash deposits and credits entries - HELD THAT:- We are of the view that now when the order passed by the Pr. CIT u/s. 263 of the Act had been quashed by the Tribunal, therefore, the consequential assessment order passed by the A.O u/s.143(3) r.w.s. 263 cannot survive on a standalone basis and is liable to meet the same fate. Accordingly, as the order passed by the A.O u/s. 143(3) r.w.s. 263 does no more survive pursuant to quashing of the order passed u/s. 263 therefore, the Pr. CIT could not have assumed jurisdiction to revise the same vide his order passed u/s. 263 of the Act dated 21.03.2024. It transpires that the Pr. CIT vide his order passed u/s. 263 of the Act dated 18.03.2021 had set-aside the original assessment order passed u/s. 143(3) of the Act dated 30.11.2017 with a direction to make adequate enquiries as regards the genuineness of business; and source of cash deposits and all credits entries in the backdrop of Sections 68/69A of the Act. We are of the view that as the original assessment order u/s. 143(3) as set-aside with a direction to look into certain specific issues, therefore, the consequential assessment order so passed by the A.O could not have been held to be erroneous for the reason that he had wrongly allowed the assessee's claim for deduction of depreciation i.e. an issue which had not formed a basis for setting aside of the original assessment order. We are of the view that now when the scope of jurisdiction of the A.O in the course of set-aside proceedings was circumscribed by the directions of the Pr. CIT u/s. 263 therefore, he was divested from dealing with any such stray issue which did not flow from the aforementioned directions. CIT had referred to the failure of the A.O to allow the assessee's claim for depreciation while framing the original assessment u/s. 143(3). This order passed u/s. 263 as seeking to revise the original assessment framed u/s. 143(3), then, the same being barred by limitation could not have validly been done by him vide the impugned order passed u/s. 263. We, thus, in terms of our aforesaid observations quash the order passed by the Pr. CIT u/s. 263 - Appeal of the assessee is allowed.
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2024 (7) TMI 1283
LTCG - Deductions claimed u/s 54B - whether the capital gain was utilized for the purchase of new asset before the date of furnishing return of income u/s 139? - HELD THAT:- In the present case, we are concerned with the utilization of capital gains by purchase of new asset for which the legislature has referred to Section 139 of the Act and not 139(1) of the Act, which is referred to for deposit in capital gain scheme. Thus, a reasonable view may be taken to say that Section 139 would cover extended time limit provided u/s 139(4) of the Act in case of purchase of new agricultural land. Thus, when an assessee furnishes return subsequent to due date of filing return u/s 139(1) but within the extended time limit u/s 139(4), the benefit of investment made up to the date of furnishing of return of income prior to filing return u/s 139(4) cannot be denied. In the instant case, assessee has paid to the seller, Sri Laxmanbhai Hamirbhai Rabari on 29.03.2017 and filed the return of income on 29.03.2017. Accordingly, we hold that the capital gains utilized towards purchase of new asset before furnishing of return of income u/s 139(4) will be deemed to be sufficient compliance of Section 54B(2) of the Act. Ground raised by the assessee is allowed.
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2024 (7) TMI 1282
Long Term Capital Loss - assessee approached builder that assessee is desirous to cancel the allotment of the above flats and builder refunded assessee - assessee offered long term capital loss on the surrender of allotment letters - as argued consideration received by the assessee, cost of acquisition and fact of surrender of capital asset squarely prove that there is a transfer of a capital asset for consideration which has cost of acquisition and therefore, there has to be a computation of capital gain on such transfer. HELD THAT:- In the cancellation letter sale consideration is mentioned. Thus, the assessee has acquired by way of allotment, right to acquire two flats in his name. This 'right to acquire' these two flats is naturally a capital asset. On surrender or extinguishment by cancellation letters of such capital asset, it has been surrendered and assessee loose right to acquire these two flats. Therefore, there is a transfer of capital asset. On the transfer of capital asset, assessee has also received consideration. The capital asset was also acquired at a total cost of ₹ 3,36,60,000/- for each flat. The right to acquire was acquired on 20th September, 2010, on transfer of such right naturally the capital gain arises in the hands of the assessee. The consideration received by the assessee, cost of acquisition and fact of surrender of capital asset squarely prove that there is a transfer of a capital asset for consideration which has cost of acquisition and therefore, there has to be a computation of capital gain on such transfer. AO was submitted both the cancellation letter where the amount of consideration received by the assessee is duly mentioned. Therefore according to us, on transfer of right to acquire these flats, has resulted in to a long term capital loss in the hands of the assessee and same dserves to be allowed. CIT (A) agreed that there is a transfer and capital gain is chargeable, however, he held that provisions of Section 50C of the Act and Section 56(2)(X) of the Act applies. This observation of the CIT (A) clearly shows that computation of capital gain is required to be made on these transactions. Whether on this transaction, provision of Section 50C of the Act applies or not ? - The Provisions of Section 50C of the Act applies only when capital assets transferred is ' land or building or both. In this case assessee has transferred 'right to acquire' the flats. Thus, Provision of Section 50C of the Act does not apply. Further, as Provisions of Section 50C of the Act does not apply, naturally, the provisions of Section 56(2)(X)(b) of the Act also do not apply. Accordingly, solitary ground raised in this appeal is allowed and AO is directed to allow carry forward of capital loss. Penalty u/s 271(1)(c) - difference in Income in return u/s 148 and original return as concealed income when no additional income was offered but just claim of an expense was withdrawn voluntarily before any confrontation by AO - HELD THAT:- To invoke the penal provisions of the Act against an assessee in such a situation would throw to the winds the elements of fairness in tax administration and discourage assessees from disclosing defects in their tax returns before their Assessing Authorities. This is more so when, as in the present case, the assessee had also paid the interest on the differential tax to cover the period of delay in payment thereof. The payment of statutory interest having compensated the exchequer adequately, to further penalise the assessee would tantamount to an act of overkill and would be antithetical to the rule of law. We are of the firm view that the honesty of an assessee cannot attract the penal provisions under the I.T. Act and that, in the instant case, the essential pre-conditions for the invocation of the provisions of Section 271(1) (c) of the I.T. Act against the assessee were not established. Assessee appeal of allowed.
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2024 (7) TMI 1281
Penalty u/s 271(1)(c) - claim of the assessee respondent as regards deductions claimed u/s 54B allowed - HELD THAT:- Admittedly, the quantum addition, on being challenged by the assessee before this Appellate Tribunal has been set aside [ 2019 (8) TMI 983 - ITAT JAIPUR] filed by the assessee and thereby allowing deductions claimed u/s 54B of the Act. When the claim of the assessee as regards deductions u/s 54B of the Act has been allowed by this Appellate Tribunal subsequent to passing of the order of penalty there is merit in the contention raised on behalf of the assessee that the penalty order has been rightly set aside by CIT(A). Decided in favour of assessee.
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2024 (7) TMI 1280
Unexplained money u/s 69A r.w.s. 115BBE - assessee was a non-resident of Israel and had remitted funds from his bank account with Hang Seng Bank, Hong Kong to his NRE bank account in HDFC in India - assessee had also submitted copy of Foreign Inward Remittance Certificate to show that the funds had been commuted by the assessee from his overseas bank account with Hang Seng Bank in Hong Kong to NRE bank account with HDFC Bank, India. HELD THAT:- The residential status of the assessee, being a non-resident is not in dispute, there is no allegation that the assessee had any business connection India or that the amount remitted by the assessee from his overseas bank account in Hong Kong to his NRE bank account in India is coming out of income earned by the assessee in India, the copy of passport and other documents confirm that the assessee was a non-resident during the year under consideration, the assessee has furnished Foreign Inward Remittance Certificate to establish that the money had been remitted by the assessee from his bank account held with Hang Seng Bank, Hong Kong to his NRE account in India, in our considered view, the assessee has discharged the primary onus regarding the source of funds being outside of India and accordingly, the addition made by the assessing officer is liable to be deleted looking into the instant facts. Appeal of the assessee is allowed.
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2024 (7) TMI 1279
Addition made on the basis of sale made outside of the books of account - HELD THAT:- It is true that on the basis of Whatsapp chat, AO has brought out some of the parties on record to whom the Assessee has made sales outside the books of account. As no other incriminating document was found in the case of other parties, therefore, action of the CIT(A) in restricting the addition to the parties whose names figure in Whatsapp chat is very much logical and justified. We have also considered the various case laws brought on record by Assessee as well as CIT(A) on this issue in support of their arguments. The addition could be confirmed only on sales made outside the books made to the parties which figures in the Whatsapp chat only. CIT(A) s action of restricting the addition made on the basis of sales made during the year under consideration outside the books of account to parties which figures in the Whatsapp chat only are justified and therefore, Assessee s appeal on this Ground of appeal is allowed. Estimation of GP - Addition made on the basis of sales outside the books of account - The confirmation of addition of entire amount of sales made outside the books of account to other parties by the ld. CIT(A) does not look logical or justified. It is because whatever sales of cycle parts have been made to these parties outside the books of account, must have been procured / purchased / manufactured by the Assessee firm outside the books of account only. In this case, the addition of GP ratio of 8.60% of such sales of Rs. 26,58,600/- could only be sustained along with addition of G.P. on the sales made to M/s Dhanawat to the tune of Rs. 6,11,043/-. We confirm the addition of 8.60% (GP ratio declared by the Assessee) on total sales of Rs. 26,58,600/- + Rs. 6,11,043/- as calculated and confirmed by the CIT(A). Thus, Assessee s appeal on this Ground is partly allowed.
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2024 (7) TMI 1278
Correct head of income - treating short term capital gain as business income - HELD THAT:- In the case of the present assessee, it is second year of the business and half way through the financial year, the trading was initiated in shares. Thus, by merely mentioning the shares to be the investments, benefit of Circular No.4 of 2007 dated 15.06.2007 cannot be granted. Then, in the judgement in the case of Indi Stock (P) Ltd. [ 2022 (10) TMI 130 - CALCUTTA HIGH COURT ] again the assessee was found to be maintaining separate account for trading in shares and stock-in-trade and the assessee was found to have purchased shares by way of investments only and debited cost to the investment account. Then in the order in ACIT vs. Jignesh Madhukant Mehta [ 2017 (5) TMI 1644 - ITAT MUMBAI ] it was found that the assessee had undertaken delivery based transactions. In the order in the case of Second Leasing (P) Ltd. [ 2018 (6) TMI 405 - ITAT DELHI ] again in the preceding years income arising on sale of investments was accepted by the AO as capital gains and all the transactions was delivery based. Therefore, we are of the considered view that the claim of assessee was investing its own funds which were lying idle is not in itself sufficient to establish that the trading in shares was done as investments to earn capital gain Exemption u/s 80IC for business income - differences in balances of tax audit does not entail a disallowance of claim of Sec 80IC, if all the conditions are fulfilled - as pointed out that Section 80IC claims were accepted in subsequent years - HELD THAT:- CIT(A) has not disputed the fact that the assessee company was located in a geographical area which was covered by the CBDT Notification for the purpose of benefit u/s 80IC of the Act. Before us, the ld. AR has demonstrated on the basis of copies of Notification available with special reference that areas of Salempur Mehdood and Rawli Mehdood fall in the notified industrial areas. As we go through the assessment order for AY 2012-13, copy of which is available, it appears that the manufacturing activity and income of the assessee from the business of manufacture of milk and milk based products is not disputed at all and, during AY 2012-13, on the basis of particulars of sales and net profit of the assessee company for AY 2010-11 and 2009-10, the AO had re-determined the NP ratio to make an addition. Thus, there is no justification in findings of CIT(A) that the manufacturing activity of the assessee itself is doubtful. Disallowing @ 20% out of the total purchases of milk - HELD THAT:- Tax authorities have fallen in error in making ad hoc disallowance without pointing out any error in the books of account of the assessee. As we go through the books of account of the assessee in the form of tax audit report available and audit report in Form 10CCB available and audited financial statements available, we find that the assessee has maintained a composite trading and profit loss account for the year ending 31st March, 2010 and all expenses of the nature like advertisement expenses, director s remuneration, interest expenses, machine running maintenance, salary, staff welfare expenses, vehicle running and maintenance expenses, have been debited and which have not been doubted. We are of the considered view that the nature of business of the assessee primarily requires electricity consumption and fuel expenses which along with substantial purchases stands allowed. Thus, there is no justification to doubt the purchases by accepting the sales and the income. As, we have observed on the basis of assessment order for AY 2012-13, the assessee s net profit ratio for AY 2010-11 have been considered for making an assessment of the net profit for AY 2012-13. Thus, there is no justification to discredit the purchases on ad hoc basis. Accordingly, we allow this ground.
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2024 (7) TMI 1277
Delay in filing the appeal before CIT(A) - appeal after a delay of 1154 days - reasons given are that appellant has left all income tax matter in the hands of CA; that he was ignorant of law and that he was busy in agricultural and household activities - HELD THAT:- It would not constitute sufficient cause within the meaning of Section 249(3) of the Act. It is thus crystal clear that after receiving the assessment order, the appellant has remained inactive and was grossly negligent. There was no due diligence on the part of the assessee. Such casual and lackadaisical approach against the assessment order and consequential filing of appeal before CIT(A) would not constitute sufficient cause within the meaning of section 249(3) of the Act. In view of the above facts and respectfully following the authoritative precedents cited, no reasons to interfere with the decision of CIT(A) in refusing to condone the delay in filing appeal before CIT(A). The ground is accordingly dismissed.
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2024 (7) TMI 1276
Demand u/s 201(1) - assessee in default in respect of the payments made by the assessee to BDA without deducting TDS - HELD THAT:- AO has taken into consideration some amounts received by the BDA from the departments other than the assessee and therefore, the calculation mistakes/errors cannot be ruled out. The assessee has now filed the certificate in Form No.26A. Thus, all these factual aspects of the matter are required to be properly verified while computing the quantum of default if any made by the assessee. The assessee has relied upon the order of the Co-ordinate Bench in case of District Organiser Tribal Welfare, Ujjain Vs ITO [ 2013 (6) TMI 934 - ITAT INDORE] for the assessment year 2008-09 however, it is pertinent to note that the factual point that the BDA is also retaining some percentage on account of supervision charges was not brought to the notice of the Tribunal in the said case. Since the impugned orders were passed by the CIT(A) ex-parte therefore, these relevant details as well as the certificate in Form No.26A were not produced before the CIT(A) and consequently the same remained unexamined. Hence, in the facts and circumstances of the case and in the interest of justice the impugned orders of CIT(A) are set aside and the matters are remanded to the record of the A.O for fresh adjudication after considering the relevant details as well as certificates issued u/s 26A and verification of the factual mistake as pointed out by the assessee. Appeals of the assessee are allowed for statistical purposes.
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2024 (7) TMI 1275
Taxability of income in India - Denial of exemption u/Article 13(3B) and 13(4) of the India-Mauritius Treaty and brought to tax - since the control and management of the assessee company lies outside Mauritius and in UAE, the beneficial owner being resident of UAE, the assessee company is not entitled to avail benefit of India- Mauritius Treaty - Taxing the entire capital gain derived from sale of shares and futures and options etc. - CIT(A) holding that the assessee is eligible for availing benefit of India- Mauritius tax treaty HELD THAT:- On perusal of materials on record we agree with the aforesaid factual finding of learned First Appellate Authority. The information received from SEBI, which has been reproduced in the assessment order, clearly indicates that it did not pertain to assessment year under dispute but to subsequent assessment years. Therefore, no conclusion regarding control and management of the assessee company or beneficial ownership for the impugned current year can be drawn based on such documentary evidences. TRC certificate, Category 1 Global Business License, and SEBI registration clearly demonstrate that the assessee is a genuine tax resident of Mauritius. Except the information received from SEBI, the Assessing Officer has failed to bring on record any adverse material which can establish beyond any shadow of doubt that the control and management of the assessee was outside Mauritius and the beneficial owner was a resident of UAE. Information available with the AO clearly suggests that in the year under consideration the assessee had three directors, all residents of Mauritius. Even, sample copies of Board Resolutions furnished in the paper book demonstrate that Board meetings were conducted in Mauritius. The very fact that the assessee has continued its business activities in India proves that it is not a fly by night operator created only for the purpose of availing Treaty benefits. In so far as applicability of protocol dated 07.03.2024 amending the India-Mauritius Treaty, undisputedly as per Article 3(1) to the protocol, it will come into force only after each of the contracting States notify it. On a specific query from the Bench, learned Departmental Representative fairly submitted that the process mentioned in Article 3(1) of the protocol is yet to be finalized. Thus, when the protocol is yet to come into force, it cannot be made applicable. Judicial precedents relied upon by the learned counsel for the assessee, they are based upon the broad principles set out by the Hon ble Supreme Court in case of Azadi Bachao Andolan [ 2003 (10) TMI 5 - SUPREME COURT] while interpreting CBDT Circular no. 789 dated 13.04.2004. The ratio laid down in the judicial precedents clearly applies to assessee s case. Thus, on over all consideration of facts and materials on record we do not find any infirmity in the decision of learned First Appellate Authority. Decided against revenue.
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2024 (7) TMI 1274
LTCG - Deduction u/s 54F - circle rate of the property - Claim of the appellant that the circle rate of the property should not have been taken by the AO u/s 50C as on 01.09.2008 as the 'Agreement to Sale' was made in the month of August and part payment has already been received in June, has been rejected by CIT(A) - HELD THAT:- We are of the considered view that First Proviso to Section 50C as inserted by Finance Act 2016 w.e.f 01.04.2017, certainly applies to the present facts and circumstances as the agreement was executed prior to the amendment but with intention to seal the deal and transaction of payment of earnest money of Rs. Ten Lac, was by way of cheques. The Bank account statements filed corroborate the same. The retrospective application of this First Proviso, as been upheld in CIT, Chennai Vs. Shri Vummudi [ 2020 (10) TMI 517 - MADRAS HIGH COURT] as relied by ld. AR. The CIT(A) has also fallen in error to hold that application is prospective. Deduction u/s 54F - Tax authorities below have fallen in error in not considering the agreement to sell as an investment in a house for the purpose of section 54F when whole of the amount stood paid and possession delivered. Thus we consider it an appropriate case to set aside the findings on issue of computation of capital gains to the files of AO with directions to take into consideration the aforesaid conclusions of this Bench and complete the re-computation of the capital gains afresh. An opportunity of hearing be given to the assessee for the same.
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2024 (7) TMI 1273
Deduction u/s 80)(2)(d) - interest income from co-operative banks/societies - As per the AO, such income was not available for deduction u/s 80P(2)(d) - CIT(A) confirmed the order of the AO but directed the AO to allow the cost incurred by the assessee against the impugned income - HELD THAT:- There is no ambiguity to the fact that the interest income earned by the assessee from nationalized bank/co-operative banks are not available for deduction u/s 80P(2)(d) of the Act, but the cost incurred against such income should be considered for calculating the amount of interest income from nationalized bank/cooperative banks. As such the net interest income should only be disallowed and not gross interest income while calculating the eligible amount of deduction u/s 80P(2)(d) of the Act. Therefore, in the interest of justice and fair play, we are setting aside the issue to the file of the AO to calculate the cost incurred by the assessee against the impugned income after giving opportunity to the assessee. Interest earned by the assessee from the co-operative society is eligible for deduction u/s 80P(2)(d) of the Act. While calculating the interest from the co-operative society, the principles laid down in the case of Kerala State Co-operative Agricultural and Rural Bank Ltd., [ 2023 (9) TMI 761 - SUPREME COURT ] should also be considered by the AO. With this observation, the ground of appeal filed by the assessee is hereby allowed for statistical purposes.
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2024 (7) TMI 1272
Addition u/s 69A - unexplained income as advances taken - HELD THAT:- In the present case admittedly though there was an error of punching of the date in the books of account, but loan amount given, and loan amount taken from two different parties was recorded in the books of accounts of the assessee supported by the bank statement and confirmation of those parties. It is immaterial for the application of section 69A of the act that assessee could not submit the detail of the transaction of advances for immovable property which did not materialize. Therefore, it cannot be said that assessee is owner of the asset which is not recorded in the books of account of the assessee. Therefore, the provisions of Section 69A are not satisfied as the assessee is not found to be the owner of any sum, which is not recorded in the books of account of the assessee. CIT A has considered all the aspects of the above transaction and thereafter deleted the addition made u/s 69A of the act by the learned assessing officer with reasons. No infirmity is pointed out in the order of the first appellate authority. Therefore, we do not have any hesitation in upholding the order of the learned first appellate authority. Accordingly, we do not find any merit in the appeal of the learned AO. Addition on account of transaction with Outstripe Suppliers Pvt. Ltd. - HELD THAT:- The amount of ₹1.70 crores is part of the transaction of ₹2 crores which was part of the addition of ₹2 crores made in A.Y. 2015-16. As we have upheld the order of the learned CIT (A) deleting the addition of ₹2 crore, we also confirmed the order of the learned CIT (A) deleting the addition of ₹1.70 crores for the reason that it is part of the same transaction of ₹2 crores and further, it amounts to double addition of ₹1.70 crores made by the AO. Accordingly, we do not find any merit in the appeal of the learned Assessing Officer for this year.
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2024 (7) TMI 1271
Penalty u/s. 271(c) - additions of @25% of non-verifiable purchases debited to the trading account - HELD THAT:- Addition was made on estimation of total turnover after rejecting the books of accounts. Notice u/s. 133(6) were also issued to the various purchase parties and all the notice were returned by the postal authority and the assessee has not produced the party to confirm the same. These observation of the lower authorities shows that it is not established by the revenue that the assessee had concealed the particulars of income or has submitted inaccurate particulars of income so as to attract Section 271(1)(c) of the Act. Admittedly, the addition has been made on estimate basis, therefore, the ratio of judgment of Parasamal Babulal Jain [ 2011 (9) TMI 398 - KARNATAKA HIGH COURT ] and various pronouncements of the judicial ITAT covers the facts of the present case of the assessee. Since the addition was made on the estimate basis and for the aforesaid discussion, the penalty is not sustainable and rightly deleted by the CIT(A). We find no illegality in the order of the Ld. CIT(A) and same is accordingly confirmed. Decided against revenue.
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2024 (7) TMI 1270
Addition of unsecured loans u/s 68 - assessee failed to prove the creditworthiness of the creditor - CIT(A) deleted addition - HELD THAT:- This is for the precise reason that it had filed it s rejoinder containing additional details/evidence before the CIT(A)- NFAC which had nowhere been put to factual verification at the AO s end during remand proceedings. Assessee is found to have very well missed the bus by not filing all the relevant details before the AO in remand proceedings. Mr. Joshi at this stage drew strong parallels between the impugned loan entry vis- -vis other amounts received. His case is that the AO had adopted pick and choose method in adding only the loan in question of Rs.99 lakhs. We see no merit in assessee s arguments for the reason already quoted hereinabove that the department has not been able to get all the corresponding bank accounts et., verified at the AO s end. We accordingly deem it appropriate in these facts and circumstances to restore the Revenue s instant former substantive grounds back to the AO for his afresh appropriate adjudication as per law, subject to the rider that it shall be the taxpayer s risk and responsibility only to plead and prove all the relevant facts in consequential proceedings, within three effective opportunities of hearing. The Revenue instant first and foremost grievance is accepted for statistical purposes. Addition of penalty paid to the owners by the assessee - HELD THAT:- AO s remand report indeed expressed agreement with the assessee s explanation that the foregoing amount was incurred wholly and exclusively for the purpose of redevelopment of project since the payments were made to the already existing tenants for their temporary transit alternative accommodation. We thus quote Smt. B. Jayalaxmi [ 2018 (8) TMI 208 - MADRAS HIGH COURT ] and DN Purnesh [ 2020 (9) TMI 731 - KARNATAKA HIGH COURT ] that the Revenue could hardly be held as an aggrieved party once the assessing authority submits a favourable remand report before the CIT(A)-NFAC and accordingly reject the Revenue s instant second latter substantive ground in very terms.
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2024 (7) TMI 1269
Correct head of income - interest income representing premium on redemption of Non-Convertible Debentures [NCDs] - capital gain or income from other sources - HELD THAT:- Learned counsel is fair enough in stating at the Bar that this tribunal s coordinate bench s order in assessee s appeal [ 2024 (4) TMI 1152 - ITAT MUMBAI] for assessment year 2010-2011 dated 15.04.2024 as held NCDs under consideration are privately placed debentures and they are not listed in the stock exchange. Further, the assessee herein has not sold the NCDs in the open market. The assessee has only surrendered the NCDs to the SPVs, viz., M/s Bhishma Realty Ltd and M/s Capricorn Realty Ltd, for redemption. Thus, it is a case of realization of money advanced by a creditor, since debentures are debt instruments only. Thus, the question of generation of capital gains will not arise, when the debentures are redeemed by the issuing companies. Further, what is received by the assessee in the form of premium is nothing but interest income only. Accordingly, we are of the view that the Ld CIT(A) was legally correct in holding that the premium/surplus received by the assessee is interest income assessable under the head Income from Other Sources. - Decided in favour of revenue. Set-off of long term capital loss against long term capital gains - In view of foregoing adjudication, is restored back to the learned Assessing Officer for his afresh computation as per law in very terms once learned counsel is equally fair in not disputing the fact that the assessee had computed the impugned losses under the head capital gains long and short; and sought to set-off the same against the long term capital gains arising from redemption/transfer of non-convertible debentures (supra). Disallowance u/s 14A - computation of administrative expenditure disallowance relating to exempt income u/sec.14A read with Rule 8D(2)(iii) - HELD THAT:- We first of all see no such distinction either in sec.14A nor in Rule 8D drawing a distinction between the categories of portfolios; whatsoever. Coming to the assessee s reliance of this tribunal s foregoing decision Vineet Investments [ 2017 (6) TMI 1124 - ITAT DELHI] we find that the learned coordinate bench had dealt with assessment year 2008-2009 whereas Rule 8D was applicable w.e.f. 01.04.2008 onwards. The same stands distinguished in very terms. Computation of the impugned disallowance(s) - Revenue could hardly dispute that Vineet Investments [ 2017 (6) TMI 1124 - ITAT DELHI] have settled the issue that such a disallowance has to be computed after considering the dividend yielding investments only. We find from a perusal of the assessee s paper book he had filed the corresponding list of dividend yielding investments in the lower appellate proceedings. The same appears to have not been considered of the lower appellate discussion. Faced with this situation, we direct the AO to compute the impugned administrative disallowance afresh in very terms. This assessee s fourth and fifth substantive grounds are partly accepted for statistical purposes in above terms. Ordered accordingly. Action invoking sec.17(2)(iii)(a) assessing perquisites - difference between actual cost of purchase of the concerned flat and stamp value adopted by the state authority(ies) - HELD THAT:- We first of all note that there is no employer-employee relationship regarding the assessee s purchase of the flat herein once it is a tripartite agreement amongst owner/company, developer and himself [director]. There is no material in the case file which could indicate that the owner/company had in any way unilaterally borne the corresponding difference figure in it s books of accounts or otherwise; as the case may be. We wish to observe that the employer-employee relationship in service jurisprudence is always a bilateral one whereas the facts of the instant case involve a developer as well. This tribunal s learned coordinate bench s order in Keshavji Bhuralal Gala [ 2018 (1) TMI 971 - ITAT MUMBAI] as further rejected the Revenue s very stand stating as in the absence of any enquiry conducted by the Assessing Officer to demonstrate that the value adopted for stamp duty purpose is the actual fair market value of the properties sold, it cannot be said that a benefit in the nature of perquisite as provided under section 17(2)(iii) of the Act has been given to the assessee by the company.
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Customs
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2024 (7) TMI 1268
Rejection of IGST exemption availed by the Appellant under EPCG Scheme as per Notification No. 16/2015-Cus. dtd. 01.04.2015, as amended by N/N. 79/2018-Cus. dtd. 13.10.2017 - confirmation of demand of custom duty in lieu of IGST - confisacation - interest - penalties u/s 112(a) and (b)(iii) of the of Customs Act, 1962 and penalty of 5,00,000 u/s 114AA of the Act. The allegation of the department in the present matter is that Customs N/N. 16/2015-Cus. dtd. 01.04.2015 was amended by Customs N/N. 79/2017-Cus. dtd. 13.10.2017 to the effect that after amendment, as per para 3(c)(II)(d) of the said amended Custom Notification, payment received in Rupee terms (INR) for such services as notified in Appendix 5D shall also be counted towards discharge of export obligation under the EPCG, only in Authorization where exemption for Integrated Tax and Goods and Services (IGST) compensation cess is not availed. HELD THAT:- The EPCG License was issued to the Appellant on 21.01.2019 and under the terms of the said License, the Appellant was required to meet its export obligation within a period of 6 years, i.e by 20.01.2025. We also find that this fact has neither been disputed in the show cause notice nor in the impugned order passed by the Ld. Commissioner. The department has to initiate the proceedings only after the expiry of the licencing period. Therefore, any proceeding prior to this period is purely premature and the impugned order confirming demands before the expiry of the licencing period is not justified and correct in law. Such actions, therefore, cannot be sustained. Para 5.2 of Circular No. 16/2023-Cus dtd. 07.06.2023 state that as per the Hon ble Supreme Court s judgment in the case of UNION OF INDIA ORS. VERSUS COSMO FILMS LIMITED [ 2023 (5) TMI 42 - SUPREME COURT] , importer of goods, who do not meet the pre-import conditions, are required to pay GST and Compensation Cess, as the case may be. However, the Hon ble Court also permitted the assesses to claim refund or avail Input Tax Credit, while specifically stating that a Bill of Entry rather than a challan would be prescribed documents for this purpose. In view of the above judgment, it is clear that if IGST is paid by the Appellant, same shall be available as Input Tax credit to the Appellant and to that extent net liability of GST shall stand reduced while paying the GST by the Appellant. Therefore it is an exercise of revenue neutral for this reason demand does not exist - the demand on the point of revenue neutrality also set aside. The confiscation of the imported goods cannot sustain and it is hereby set aside. On the basis of discussions above, it is also held that penalty imposed on both the appellants is unwarranted - The impugned order is set aside - appeal allowed.
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2024 (7) TMI 1267
Violation of Regulation 10(d) of CBLR - SCN time-barred as asserted by the learned counsel for the appellant, or not - penalty of revocation of licence - forfeiture of security deposit - imposition of penalty. Violation of Regulation 10(d) - HELD THAT:- The restriction on export in this case is evident as it was part of the Foreign Trade Policy and export of Triethanolamine to Mozambique required an authorization. When the client wanted to export this chemical to Mozambique, it was the obligation of the appellant under Regulation 10 (d) to advise the client about the requirement of authorization. Instead of advising the client, the appellant filed the Shipping Bill for its export. The appellant s submission on this count is that the client had given a declaration that Triethanolamine is not a SCOMET item and had also given a declaration that it was being exported for use in soil testing. This submission cannot be accepted. Firstly, it is the appellant who should know the law and advise the client and the appellant cannot depend on the client to say if Triethanolamine was a SCOMET item or not. If the appellant had checked the list of SCOMET items, it would have been evident that it was clearly a SCOMET item. Secondly, any declaration by the client cannot prevail over the law - the appellant had clearly violated Regulation 10(d) of CBLR 2018. Time Limitation - SCN time barred or not - another submission of the appellant is that the SCN was issued 255 days after the receipt of the offence report and hence it was time-barred - HELD THAT:- The Commissioner could not have proceeded against the appellant at that stage when the offence report did not name the appellant at all. So, a clarification was sought by letter dated 8.8.2022 which was followed by a reminder on 4.11.2022. Thereafter, the Assistant Commissioner issued a corrigendum dated 17.11.2022 indicating the correct name of the Customs Broker which was the appellant. This corrigendum was received by the Commissioner on 18.11.2022 and the SCN under CBLR 2018 was issued on 6.2.2023, i.e., within 80 days of the receipt of the correct offence report - the submission of the appellant that the SCN was issued after 255 days of receiving the Offence Report contrary to facts recorded in the impugned order. The SCN was, therefore, not time-barred. If the appellant violated Regulation 10(d), is the penalty of revocation of licence, forfeiture of security deposit, and imposition of a penalty of Rs. 50,000/- upon the appellant proportionate to the violation? - HELD THAT:- On the question of proportionality of action against the appellant, we find an attempt to export SCOMET item without the required authorization is a serious violation. In this case, it cannot even be said to be a mere oversight because the exporter had given a declaration stating that it was not a SCOMET item and therefore, the possibility of it being a SCOMET item was evident- all that the appellant had to do was to refer the policy where Triethanolamine was explicitly indicated as a SCOMET item. He should then have advised the exporter accordingly - there is no evidence of the appellant profiting from this attempted export of Triethanolamine valued at about Rs. 500/. Action has been taken against both the exporter and the appellant under the provisions of Customs Act and penalty of Rs. 5,000/- was imposed on the appellant under section 114(i). The appellant has been without a licence since 26.7.2023 which means out of work for about an year - the ends of justice is met if the penalty of Rs. 50,000/-imposed on the appellant is upheld but the revocation of licence and forfeiture of security deposit are set aside. The revocation of licence and forfeiture of security deposit of the appellant in the impugned order are set aside but imposition of penalty on the appellant is upheld - the appeal is partly allowed.
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2024 (7) TMI 1266
Levy of ADD - self-assessment done by the appellant under section 17(1) of the Customs Act was rejected and re-assessment was done under section 17(4) - N/N. 12/2021-Customs (ADD) dated 05.03.2021 - HELD THAT:- It is not in dispute that what was imported by the appellant, as stated in the Bill of Entry, is Color Toner Black . Though, it is correct that the Anti-Dumping Notification dated 05.03.2021, levied anti-dumping duty on black toner in powder form , but the Notification also mentions that black toner in powder form would exclude a color toner - It would be seen that a color toner is excluded from levy of anti-dumping duty under the Notification dated 05.03.2021. A color toner has four colors CMYK. K denotes black color. What was imported by the appellant was black color toner for color printers and not a black toner for black and white printers which, as noticed above, attracted anti-dumping duty. The Assistant Commissioner merely noticed that the goods imported by the appellant were black toner in powder form and completely failed to appreciate that the Anti-Dumping Notification itself stipulated that black toner in powder form would exclude a color toner. This fact was specifically pleaded by the appellant in reply to the query raised by the Assistant Commissioner. The Commissioner (Appeals) observed that the distinction sought to be drawn by the appellant was artificial in nature and also failed to appreciate that the Anti-Dumping Notification itself excluded a color toner from levy of anti-dumping duty. The Commissioner (Appeals) also fell in error in observing that in common parlance color toner is different from black toner . A color toner has four different color toners, namely CMYK, and a black color toner is one of the four color toners constituting a color toner - thus, it has to be held that black color toner would not be subjected to levy of anti-dumping duty under the Notification dated 05.03.2021. The order dated 17.11.2022 passed by the Commissioner (Appeals) cannot be sustained and is set aside - Appeal allowed.
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Corporate Laws
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2024 (7) TMI 1265
Seeking release of an amount under Section 151 of the Code of Civil Procedure, 1908 - right of the petitioners to seek refund of their investment in terms of the buy-back clause in the contract - HELD THAT:- Although, there is merit in the plea advanced by the learned counsel for the applicants that the right of the petitioners to seek refund of their investment in terms of the buy-back clause in the contract dated 04.04.2010 with the respondent company had crystallized on 24.04.2014, much before the winding up order was passed appointing a Provisional Liquidator on 22.07.2016. However, what turns the table against the petitioners is the fact that they neither furnished the requisite certificate from FEMA nor came out with the plea that such certificate was not required, and thereby evidently delaying the release of the amount deposited with the Registrar General of the High Court, on their own fault. It is manifest that the amount towards investment had been deposited with the Registrar General pursuant to the directions dated 24.04.2014, but the petitioners also failed to comply with the necessary formalities, and eventually waived their rights in lieu of placing a claim for the said amount before the Official Liquidator. The fact that no claim is lodged before the Official Liquidator is another story. Indeed, the amount is lying deposited in this Court out of the reach of the stakeholders. However, since much water has flown over the last ten years or so, the amount deposited should rather be utilised for satisfying the claims of the secured creditors. The amount, which has been deposited with the Registrar General, may be reclaimed by the Official Liquidator with accrued interest and the same may be brought within the corpus of the funds of the company (in liquidation) to be utilised for satisfaction of the claims of the secured stakeholders in accordance with law - Application dismissed.
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2024 (7) TMI 1264
Seeeking restoration of the name of the petitioner company to the Register of Companies maintained by the respondent/Registrar of Companies (ROC) - Section 560 (6) of the Companies Act, 1956 - HELD THAT:- The action that was earlier taken by the Registrar vide order dated 29.06.2007 was pursuant to and issued in terms of Section 560 (1) (6) of the old Act, which provision is effectively pari materia with Section 248 of the new enactment. Under the old Act, the Registrar had the power to proceed with striking off the name of a company from the Register on finding reasonable cause to believe that the company is not carrying on business or is otherwise not in operation. Likewise, under Section 248 of the new Act, where the company is not carrying on any business operation for a period two immediately preceding financial years, the Registrar has the power to proceed with striking off the name of the company from the Register of Companies. It is clearly brought forth that the provisions under which action was earlier taken under the old Act, as also the action subsequently taken under the new Act, are not inconsistent with one another. The new enactment rather provides for a more detailed procedure for striking off the name of a company as also an effective remedy for dealing with the de-registration of a company, which is not running its business or in operation. Further, the registers maintained under the old Act are also deemed to be registers maintained under the new Act and can be relied upon for seeking any legal remedy. The remedy of the petitioner lies with the National Company Law Tribunal in view of Chapter XXVII of the Companies Act, 2013. Therefore, the application moved by the petitioner is hereby dismissed.
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2024 (7) TMI 1263
Disclaimer of Onerous property - Praying for leave to be granted to the Official Liquidator to disclaim the office space - praying for peaceful, vacant and khas possession of the sub-demised office space to the applicant from the Official Liquidator - HELD THAT:- Any mortgage or charge over the property in question would exist and be enforceable in law only so long as the sub-lease was subsisting in favour of the company (in liquidation) envisaging observance and performance of all stipulations as contained in the sub-lease. As the narrative unfolds, loans were taken from the consortium of the banks, including PNB, by the company (in liquidation) and evidently its account became a Non Performing Asset w.e.f. 31.12.2011 and symbolic possession was taken over by PNB on 06.02.2013. The objections espoused by the objector - PNB to the CO. APPLs. 517/2018 and 60/2022 cannot be sustained in law. The objector-PNB cannot claim right in the property beyond what was available to the company (in liquidation) during the subsistence of the sub-lease rights. In other words, since the rights of the bank to seek forfeiture of the mortgaged property flew from the rights of the sub-lessee i.e. the company (in liquidation), on the termination of such rights at the behest of the applicant-IIPL, nothing survived in favour of the objector-PNB, so as to lay its claim over the property for the remainder of the period of the lease. Incidentally, the facts of this case are similar to what came up for consideration before Supreme Court in the case of Stressed Assets Stabilization Fund [ 2019 (10) TMI 1526 - SUPREME COURT ], wherein the loans were obtained by the lessee on the strength of mortgage of title deeds of the leased industrial property, but subsequently, the company went into liquidation. The West Bengal Small Industries Development Corporation Limited, which was the original lessor terminated the lease as the lessee had ceased to carry on manufacturing activities beyond the stipulated acceptable period. Thus, leave is granted to the Official Liquidator to disclaim the entire sub-demised office space containing super built-up area of 16523 sq. feet on the 15th floor of the building Infinite Benchmark constructed on the demised plot of land number G-1 in Block No. EP GP, Sector V of Bidhannagar in the District of North 24-Parganas within Police Station Bidhannagar (East), Salt Lake City, Kolkata-700 091, and handover the peaceful, vacant and khas possession of the property to the applicant-IIPL by removing padlocks and/or seals put by the Official Liquidator or by PNB upon the same, within 45 days from today. Application disposed off.
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2024 (7) TMI 1262
Seeking dissolution of company and that the Official Liquidator be discharged as its Liquidator - Section 481 of the Companies Act, 1956 - HELD THAT:- This Court is of the opinion that these liquidation proceedings warrant a quietus, and the company (in liquidation) should be dissolved as the Official Liquidator cannot proceed any further with the winding up process. It would be expedient to invite reference to the decision of the Supreme Court in Meghal Homes (P) Ltd. v. Shree Niwas Girni K.K. Samiti Ors. [ 2007 (8) TMI 447 - SUPREME COURT] where it was held that ' When the affairs of the Company have been completely wound up or the court finds that the Official Liquidator cannot proceed with the winding up of the Company for want of funds or for any other reason, the court can make an order dissolving the Company from the date of that order. This puts an end to the winding up process.' Thus, relying on the decision of the Supreme Court in Meghal Homes as also the import of Section 481 (1) of the Act, besides the facts and circumstances of the present case, these liquidation proceedings warrant to be brought to an end - The company (in liquidation) M/s. Spack Tunrkey Projects (P) Ltd., stands dissolved and the Official Liquidator is hereby discharged as its Liquidator. The present application is allowed.
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Insolvency & Bankruptcy
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2024 (7) TMI 1261
Impleadment as a party to the proceedings - necessary party to the proceedings or not - whether the Impleadment Application, as it has been preferred by the Respondent No.1 could at all have been allowed without there being a notice issued to him, who was sought to be impleaded in order to enable him to put forth his views on whether at all he happens to be the necessary party to the proceedings or not? HELD THAT:- As far as the aspect of impleadment is concerned from the perspective of the Appellant, that there was no prior notice given to him, it is an aspect which has already been dealt with, coupled with the fact since the issue of impleadment being exclusive prerogative of the court because it is the court which has to determine the necessity of the party to be introduced in the proceedings as to whether if at all it is the necessary party to decide the case effectively, there are no error in the Impugned Judgment under challenge allowing the Impleadment Application. The Appeal lacks merits and the same is accordingly dismissed.
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2024 (7) TMI 1260
Doctrine of necessity - Seeking stay of order directing liquidation of the Corporate Debtor and the appointment of the liquidator, in order to enable the Appellant to deposit the balance amount into the liquidation account of the Corporate Debtor - directing the liquidator to put on hold the liquidation proceedings was rejected - HELD THAT:- Looking at the concept of the doctrine of necessity , which has to be read in accordance with the provisions contained under section 60(5) of I B Code, 2016, it provides for meeting out such inevitable circumstances in form of the powers vested with the Tribunals and particularly the NCLT as referred to in sub-section (5) of section 60 of I B Code, 2016, to pass any appropriate order for fruitfully disposing of any application or proceedings in order to meet the purpose of CIRP, as against the Corporate Debtor. In the instant case owing to the Resolution Plan which was submitted by the Appellant and approved by NCLT, the Corporate Debtor was expected to revive back in and to reach the status of being a going concern. When the provisions contained under section 60 sub-section (5) of I B Code, 2016, it starts with a non-obstinate clause, that means it has an overriding effect to any of the provisions to the contrary, of the Code as contained therein and that the exercise of inherent powers have been vested with the Tribunal to carry out the exceptions in order to meet out the objective of the Code in order to avoid liquidation and to enable the Corporate Debtor to transition into position of being a going concern. In that eventuality, though admittedly the law is not in favour of the Appellant, because he has not put a challenge to the order of appointment of liquidator, but since the liquidator himself supports the contention of the Appellant, the Appellant is granted a last opportunity to deposit the amount, which is to be positively deposited within a period of one month and if the said deposit is not made by the Appellant within the aforesaid time frame, the relaxation which has been granted to the Appellant in the light of the provisions contained under section 60(5) of I B Code, 2016, will automatically lapse and it will open for the liquidator to seek for an appropriate alternate buyer by resorting to the procedure prescribed under law. Appeal disposed off.
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FEMA
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2024 (7) TMI 1259
Maintainability of the writ petition - Contravention of the FEMA laws - Declaring Petitioner guilty of contravention of the provisions u/s 10(6) of the Foreign Exchange Management Act - penalty imposed - HELD THAT:- In respect of preliminary objection as to the maintainability of the writ petition, the learned Senior Panel Counsel appearing for the first respondent relied upon the judgment of the Hon'ble Supreme Court of India reported in the case of Raj Kumar Shivhare Vs. Assistant Director [ 2010 (4) TMI 432 - SUPREME COURT ] - Therefore, the writ petition itself is not maintainable since, there is alternative remedy provided u/s 16(1), 19(1) and 35 of the FEMA. That apart, the petitioner was not granted any immunity from the adjudication proceedings initiated under the provisions of FEMA. Whereas as per the order passed by the NCLT, the company had immunity from regulatory or administrative proceedings but not adjudicating proceedings as per Section 43 of FEMA. Further the proceedings arising in relation to the provisions of Section 13 of FEMA shall not abate by the reason of insolvency of the person liable under that Section. Further, the adjudication proceedings were initiated by way of issuing show cause notice dated 31.03.2017. It is much before the corporate insolvency resolution process. Though the learned Senior Counsel appearing for the petitioner relied upon the judgment of M/s. Commercial Steel Limited [ 2021 (9) TMI 480 - SUPREME COURT ] in respect of maintainability of the writ petition, which held that when the existence of an alternate remedy is not an absolute bar to the maintainability of a writ petition under Article 226 of the Constitution of India. But the writ petition can be entertained in exceptional circumstances where there is a breach of fundamental rights, a violation of principles of natural justice, an excess of jurisdiction or a challenge to the vires of the statute of delegated legislation. But none of the exceptions as stated above is applicable to the petitioner herein, since there is no breach of fundamental right and the petitioner was duly served with show cause notice and given opportunity of hearing. Further the first respondent has power to impose the penalty. Second respondent submitted that the recovery of penalty amount by the proceeding dated 28.02.2020 was challenged before this Court in [ 2024 (1) TMI 1305 - MADRAS HIGHT COURT] . Subsequently, the recovery of penalty proceeding was withdrawn and therefore, the writ petition was also dismissed as withdrawn by this Court, by an order. However, insofar as the penalty imposed on the petitioner has not been withdrawn so far. Therefore, this Court finds no infirmity or illegality in the order passed by the first respondent. This writ petition is devoid of merits and liable to be dismissed. WP dismissed.
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Service Tax
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2024 (7) TMI 1258
Condonation of delay in filing appeal - sufficient reasons for delay or not - Demand of service tax on ross-border transactions - place of provision of services - remittances made to their branches and offices abroad - consideration for taxable service procured from outside the taxable territory - the CESTAT set aside the demand - HELD THAT:- There is a gross delay of 371 days in filing this civil appeal. The explanation offered in order to seek condonation of delay is not satisfying. There are no merit in this civil appeal - the civil appeal stands dismissed both on the ground of delay as well as on merits.
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2024 (7) TMI 1257
Refund/ rebate of CENVAT credit - rejection on the grounds that the refund claims are time barred under Notification No.27/2012 - whether the appellants were supplying merely Intermediary Services ? Time Limitation - HELD THAT:- It is found that the appellants have complied with the conditions laid down under N/N. 27/2012 in a substantial manner. Refund claims cannot be held to be barred by limitation merely because certain documents have not been appended, more so, for the reasons beyond their control. It is opined that filing of the initial refund claim, substantially complying to the provisions of law and placing on record their claim before the Department, is in time; therefore, it is found that in the instant case, the refund claims are not barred by limitation. Whether the services provided by the appellant fall under Intermediary Services ? - HELD THAT:- The learned Commissioner (Appeals) in the impugned order has not given any findings on the issue; he has simply remanded the case back to the original authority with a direction to give findings on the issue despite the fact that the original authority has given elaborate findings on the issue - the learned Commissioner (Appeals) has deprived this Bench of an opportunity to analyse the legality of his findings on the issue. Since the Commissioner (Appeals) has not given any findings on the issue, it will be in the interest of justice that the case should travel back to the Commissioner (Appeals) to go through the findings given by the original authority and to decide the issue on merits on the basis of his own interpretation of law by giving findings on the issue. Both the appeals are partly allowed holding that the refund/ rebate claims filed by the appellants are not barred by limitation; the appeals are remanded back to the Commissioner (Appeals) with a direction to give his own findings on the issue as to whether the appellants have Exported Services or have merely provided Intermediary Services .
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2024 (7) TMI 1256
Failure to discharge appropriate service tax on the consideration received by them for the various projects - appellant discharged service tax under Commercial or Industrial Construction Services (CICS) upto 30.06.2012 and thereafter paid the service tax under Works Contract Service (WCS) - HELD THAT:- The department has confirmed demand for the period 01.07.2012 to 31.03.2013 under the category of CICS. Undisputedly, the appellant has availed the benefit of Notification No.1/2006 and 30/2012 for the reason that they have used materials for providing the construction services. In the case of Bhayana Builders [ 2018 (2) TMI 1325 - SUPREME COURT] , the Hon ble Apex Court held that even if free materials are provided, the abatement would be eligible. The Department has taken a view that the appellant has not furnished evidence to show that materials were used for providing construction service for which reason abatement has been denied. The Ld. Counsel submitted that the appellant would be able to furnish sufficient evidence to establish that the contracts are composite in nature and would not fall under the category of CICS. From the submissions made by both sides, it is opined that the matter requires to be remanded to the adjudicating authority who is directed to consider all issues afresh. Needless to say that if the contracts are composite in nature, the appellant would be eligible for the abatement. The original authority is directed to consider the applicability of the Tribunal s decision in the case of R.R. Thulasi Builders (I) Pvt. Ltd. Vs CGST Central Excise, Salem [ 2024 (7) TMI 1067 - CESTAT CHENNAI ] as well as Real Value Promoters Pvt. Ltd. Vs CGST Central Excise, Chennai [ 2018 (9) TMI 1149 - CESTAT CHENNAI] and Jain Housing Construction Ltd. Vs CST, Chennai [ 2023 (2) TMI 1044 - CESTAT CHENNAI] which is maintained by the Hon ble Apex Court in [ 2023 (9) TMI 816 - SC ORDER] . The appellant shall be given opportunity of hearing as well as liberty to furnish evidence. The appeal is allowed by way of remand to the adjudicating authority.
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2024 (7) TMI 1255
Levy of service tax - incentives / discounts received by the appellant from the manufacturer of cars and lubricants viz. Volkswagen - requirement to pay an amount collected @ 5% / 6% / 7% of the value of trading activity under Rule 6 of CENVAT Credit Rules, 2004, when the appellant had paid the entire credit attributable to input services utilized for trading activity - CENVAT Credit on various input services - levy of penalty. Levy of service tax - incentives / discounts received by the appellant from the manufacturer of cars and lubricants viz. Volkswagen - HELD THAT:- The facts not in dispute are that the appellant are authorized dealers of Volkswagen brand cars and also providing services of cars of the said brand. On purchase of the cars from the manufacturer Volkswagen Limited, they received various discounts / incentives on achieving the sales target during the relevant period. Applicability of service tax on trade discount / incentives received by an authorized automobile dealer from the manufacturer, is no more res integra and covered by a recent judgment of this Tribunal in the case of M/S PREM MOTORS PRIVATE LIMITED VERSUS COMMISSIONER, CENTRAL EXCISE CGST-JAIPUR [ 2023 (2) TMI 990 - CESTAT NEW DELHI] wherein the Tribunal scrutinizing the case laws on the subject observed ' the activity undertaken by the appellant is for the sale and purchase of the vehicle and the incentives are in the nature of trade discounts. The incentives, therefore form part of the sale price of the vehicles and have no correlation with the services to be rendered by the appellant. That in terms of the dealership agreement, the appellant purchases the vehicles from MSIL and sells the same to its end customers.' Applicability of 5% / 6%/7% of the value of the trading activity under Rule 6(3)(i) of Cenvat Credit Rules, 2004 - HELD THAT:- The appellant has reversed the total credit attributable to input services that had been used in providing trading activity; therefore considering the Notification No.13/2016-CE(NT) dated 01.03.2016 issued subsequently, wherein it is prescribed that in the event an assessee pays the amount of cenvat credit attributable to exempted products calculated as per Rule 3A of the CENVAT Credit Rules, the appropriate officer competent to adjudicate the case may allow the manufacture or provider of output services to follow the procedure and pay the amount referred to in clause (ii) of sub-rule (3), calculated for each of the month with interest. Therefore, to ascertain the amount of cenvat credit attributable to input services used in trading activity be determined along with interest - Taking note of the argument of the appellant that they have already paid/reversed Rs.42,30,802/- against Challan No.00244 dated 08.01.2018which is in excess of Rs.10,42,813/-, the matter needs to be remanded to the adjudicating authority to ascertain the said fact and recompute the liability with interest. Imposition of penalty - HELD THAT:- The major part of the demand has been set aside and on the issue of applicability of Rule 6, it is observed that the appellant had already reversed the attributable cenvat credit which is in excess of Rs.10,42,813/- than the amount payable by them as claimed by them; therefore imposition of penalty under Section 78 of the Finance Act or Rule 15(3) of the CENVAT Credit Rules, is unwarranted and accordingly set aside. The confirmation of demand of Rs.3,03,50,663/- on various incentives / discounts with interest and penalty and the amount of Rs.3,84,28,721/- confirmed under Rule 6(3) of Cenvat Credit Rules, 2004 being 5%/6%/7% of the value of the exempted services are set aside - the penalties imposed on the appellant are set aside - the matter is remanded to the adjudicating authority for the purpose of verification/scrutinization. Appeal disposed off by way of remand.
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Central Excise
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2024 (7) TMI 1254
Method of Valuation - section 4 (on the transaction value) or under section 4A (on the RSP minus abatement)? - bulbs sold by the appellant to EESL - what should be reckoned as the RSP - it was held by CESTAT that 'The issue is found in favour of the appellant and against the Revenue, both on merits and on limitation' - HELD THAT:- There are no merit in the appeal and the same is accordingly dismissed.
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2024 (7) TMI 1253
Levy of of the central excise duty - sale of the old machinery (sold by the appellant) as scrap - Rule 3(5A) in CENVAT Credit Rules, 2004 - eligibility of the cenvat credit of the service tax availed on outward freight under GTA services - place of removal - Extended period of limitation - penalty. Levy of Central Excise Duty - sale of the old machinery (sold by the appellant) as scrap - Rule 3(5A) in CENVAT Credit Rules, 2004 - HELD THAT:- The machinery sold was capital goods and the provisions of Rule 3(5A)(b) clearly provides that if the capital goods are cleared as waste and scrap, the manufacturer shall pay an amount equal to the duty leviable on the transaction value - as observed by the Authorities below, the purchase bill and the sale bill, which are annexed along with the appeal here, do not show any correlation between the goods purchased and sold. The sale bill i.e. invoice no.180 dated 09.07.2016 do not provide any description as to the nature of the capital goods being sold. Though the appellant in the appeal has quoted the affidavit filed by Shri P.K. Mehra, Director of the appellant company to say that the said old and used machinery was sold in the year 2016 through the invoice no.180 dated 09.07.2016. However, neither the affidavit has any date nor does it specifies the period during which Shri P.K. Mehra was working as Director of the appellant company to show his bonafides as to his awareness of the sale and purchase. In any event, the appellant is liable to pay the duty in terms of the statutory provisions of Rule 3(5A)(b). Availing the cenvat credit of service tax paid on outward freight and utilizing the same towards the payment of duty - Place of removal - HELD THAT:- The Adjudicating Authority has observed that the appellant had availed the cenvat credit of an input service in ER-I Returns for the month of August, 2014, Feb. 2015, March, 2015, April, 2015, June, 2015, July and August, 2015, however, there was no reversal entries in the ER-I Returns and the service tax payable ledger accounts. Hence, the cenvat credit on outward freight was not admissible to the appellant and is liable to be recovered under the provisions of Rule 14 of CCR, 2014. The appellant having failed to pay the central excise duty and wrongly availed the cenvat credit is liable to pay the interest under Section 11AA of the Central Excise Act, 1944. Extended period of limitation - penalty - HELD THAT:- The cenvat credit of service tax taken by the appellant on the outward freight beyond the place of removal was knowingly and deliberately suppressed from the Department with intent to evade payment of duty and hence, the extended period of limitation has been rightly invoked and the penalty imposed thereon. There are no reason to interfere with the impugned order and the same is hereby affirmed - appeal dismissed.
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2024 (7) TMI 1252
Levy of Penalty u/r 26(2) of the Central Excise Rules, 2002 - it is alleged that the second stage dealers based in Jaipur were issuing cenvatable invoices to M/s. Amar Pratap Steel Pvt. Ltd. (main noticee) [APSPL] without delivering the goods - goods purchased from the first stage dealers and manufactured by non-existent or non-working manufacturers - HELD THAT:- In the given factual situation of the case, categorical findings have been recorded by the Commissioner (Appeals) in the case of APSPL, particularly that APSPL had duly received the goods as mentioned in the impugned invoices after making payment of duty, there is no justification in taking a contrary view on the same fact, which have been accepted by the Department and no appeal has been filed to challenge the same. In the circumstances, there is no reason to differ with the said order insofar as the appellant is concerned, who has been saddled with penalty of Rs.3,63,778/- under the Rule. When the demand in respect of the cenvat credit itself is not maintainable, there is no justification to affirm the penalty imposed on the appellant. In the case of Drolia Electrosteel P. Ltd. [ 2023 (11) TMI 10 - CESTAT NEW DELHI] , Learned Division Bench of this Tribunal was dealing with an identical situation, where the cenvat credit was denied and penalty was sought to be imposed on the allegations that DGCEI had investigated several manufacturers and traders including those who supplied the invoices, where the manufacturers indicated, either did not exist at all or had only supplied the documents to enable the manufacturers of the final products to take cenvat credit without actually supplying the goods. Following the principles enunciated by the Division Bench in the case of M/s. Drolia Electrosteel P.Ltd., which is binding on me and also in the given circumstances, when the department has accepted the findings as recorded by the Commissioner (Appeals) in the order dated 11.12.2019, there is no justification to uphold the imposition of penalty on the appellant. The impugned order, therefore, deserves to be set aside - The appeal is accordingly allowed.
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2024 (7) TMI 1251
Valuation of goods - value adopted by the 1st appellant for payment of duty on clearance of the goods to the 2nd appellant - requirement to discharge duty under Section 4 (1) (b) of Central Excise Act, 1944 read with Rule 10A (ii) of Central Excise Valuation (Determination of Retail Price of Excisable Goods) Rules, 2000 - Extended period of limitation - penalty. Valuation of goods - HELD THAT:- The Department has not done any inspection or verification at the premises of the 2nd appellant to conclude that further testing or repacking is being carried out on the products meant for exports. Without such investigation, the department cannot mechanically reject the consistent plea put forward by both appellants. In para 7 of the OIo No.12/2013 dated 26.4.2013 the statement given by the Senior manager of 2nd appellant (Sri Parthaarathy) is referred. It is deposed by him on 25.8.2009 before the Superintendent That their quality control department would carry out inspection of the products and then packing, palletization and shrink packing were done. As per section 2(f) of Central Excise Act, 1944, manufacture includes any process, incidental or ancillary to the completion of a manufactured product . Without quality control check, and inspection, the product cannot be said to be marketable. However, these aspects have not been considered by the original authority or the Commissioner (Appeals), Merely on the basis of difference in assessable value of the goods cleared by the 2nd appellant for export, the department has proceeded to issue SCN and confirm the demand. Extended period of limitation - revenue neutrality - HELD THAT:- The situation is entirely revenue-neutral. Even if the 1st appellant discharges duty as confirmed by the Department, the 2nd appellant would be eligible to avail credit of such duty. The SCN has been issued invoking extended period alleging suppression of facts. There is no positive act of suppression established by the Department. Further, both appellants have paid duty during the disputed period. This itself would show that the 1st appellant had no intention to evade payment of duty - The entire demand falls within the extended period. The appellants succeed on the ground of limitation. Penalty imposed under Rule 25 of Central Excise Rules, 2002 - HELD THAT:- Since it is already found that the demand of duty on 1st appellant does not sustain, the penalty imposed on the 2nd appellant is also unwarranted. The view is supported by the fact that the 2nd appellant would be eligible to avail credit of the duty paid by the 1st appellant and is a revenue neutral situation. In such circumstances, penalty imposed on the 2nd appellant is also set aside.
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Indian Laws
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2024 (7) TMI 1250
Dishonour of Cheque - issuance of summons - Cheque furnished as a security is covered under the provisions of Section 138 of N.I. Act or not? - Scope and limited jurisdiction of High Court under Section 482 of Cr.P.C. HELD THAT:- The entire dispute is based on the books of accounts. It needs to be noted that, at the time of filing the complaint, the complainant submitted 128 documents which are in the form of invoices, ledger accounts, agreement etc. In the affidavit-in-reply, it has been specifically contended that, upon the instructions, the cheques were retained so as to enable the complainant to recover the outstanding. The complainant has placed on record five blank cheques, drawn by the accused, in favour of complainant company to substantiate the stand taken by the accused that the questioned cheques were not given as a security. The said blank cheques were given as a security against the payment and same still in the custody of the complainat and they are not presented for encashment. This Court is of primafacie opinion that, at this stage, it is difficult to examine the disputed question of facts which are in the form of defences, cannot be examined and therefore, the issue as to whether the cheques which were sent along with the purchase order can be considered to be in discharge of an outstanding amount or not is a subject matter of trial, because on 17.04.2021, the total outstanding dues was Rs.2,08,68,924/- and therefore, prima-facie, it can be said that, there was an outstanding liability subsisting on the date of issuance of cheques - entertaining the quashing petition at this stage will result in finality without giving the parties an opportunity to adduce the evidence as merely on the basis of pleadings and the stand taken by the parties and considering the presumption in favour of the complainant and the burden of the accused to disprove the fact that on the date of issuance of cheques, there was no legal debt, legally it would be required to be determined by the trial court after evaluation of the evidence. This Court do not find substance in the submission made by learned counsel for the applicants-accused that the ingredients of Section 138 are not made out and the complaint under Section 138 of N.I. Act is not maintainable - no case is made out to exercise extraordinary jurisdiction and inherent powers of this Court to quash the Criminal Case pending on the file of Judicial Magistrate Court at Surat. The petition stands dismissed.
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2024 (7) TMI 1249
Dismissal of appellant s petition preferred under Section 34 of the Arbitration and Conciliation Act, 1996 - levy of liquidated damages on account of failure to plead and demonstrate legal injury - HELD THAT:- The learned Arbitrator has rightly concluded that there was no legal justification for the levy of liquidated damages on account of failure to plead and demonstrate legal injury. Liquidated damages, in law, are no different from unliquidated damages that an aggrieved party may claim. In both instances, the aggrieved party is required to demonstrate legal injury. Liquidated damages, as agreed to between the disputants, represents the maximum amount that can be paid to an aggrieved party. Since damages for breach of contract is paid as compensation, the law requires the defaulting party to pay, even under Section 74 of the Contract Act, reasonable compensation - no interference is called for with the judgment of the learned Single Judge. Since there are no pleadings on record concerning the imposition of liquidated damages by NTPC, no leave can be granted at the second stage of scrutiny. The appeal is dismissed. Costs are quantified at Rs. 20,000/-.
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2024 (7) TMI 1248
Dishonour of Cheque - challenge to summoning order and the complaint pending before the learned Trial Court - exercise of jurisdiction under Section 482 of Cr.P.C. - HELD THAT:- The principles of exercising the jurisdiction under Section 482 of Cr.P.C. were laid down by the Hon ble Supreme Court in Supriya Jain v. State of Haryana, [ 2023 (7) TMI 1436 - SUPREME COURT] wherein it was observed that ' Where the factual foundation for an offence has been laid down, the courts should be reluctant and should not hasten to quash the proceedings even on the premise that one or two ingredients have not been stated or do not appear to be satisfied if there is substantial compliance with the requirements of the offence.' It was laid down in CBI v. Aryan Singh, [ 2023 (4) TMI 1330 - SUPREME COURT] , that the High Court cannot conduct a mini-trial while exercising jurisdiction under Section 482 of Cr.P.C. The allegations are required to be proved during the trial by leading evidence. In the present case, the learned Magistrate passed an order after going through the cheque, notice, preliminary evidence in the form of an affidavit and other documents attached to the complaint. He was satisfied that there existed sufficient ground to proceed against the accused under Section 138 of N.I.Act. Hence, the accused was ordered to be summoned. It is apparent from the order that the learned Magistrate had not passed the order simply based on evidence but he has satisfied him by going through the documents, which is sufficient compliance with the provisions of Section 202 of Cr.P.C. as laid down in In re: Expeditious Trial of Cases [ 2021 (4) TMI 702 - SUPREME COURT] . Hence, the submission that there was noncompliance with section 202 of Cr.P.C. is not acceptable. The present petition fails and the same is dismissed.
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2024 (7) TMI 1247
Renewal of cash credit facility for MSME Unit - Section 13(4) of the SARFAESI Act - loan account classified as NPA - HELD THAT:- The petitioner submitted Ext.P12 representation before the respondents for immediate arrangement for regularization of credit facility. While Ext.P12 representation was pending before the respondents, the 2nd respondent issued Ext.P13 possession notice. The action of the respondents is high handed and against fundamental rights guaranteed to the petitioner under Article 14 of the Constitution India, contends the petitioner. The writ petition has been filed under Article 226 of the Constitution of India for issuance of proper directions for regularization of the loan account maintained with the 1st respondent and to stay further proceeding to Exts.P4 and P13 in the interest of justice. When the writ petition came up for admission, this Court passed an interim order dated 09.11.2023, staying all further proceedings against the petitioner for a period of one month on condition that the petitioner remits an amount of ₹20 lakhs within a period of one month. The petitioner submits that though the petitioner could not remit the amount within the stipulated period of one month. The amount has been remitted by 01.01.2024. The writ petition is therefore disposed of permitting the petitioner to prosecute his application before the Debts Recovery Tribunal-II, Ernakulam.
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