Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
July 5, 2023
Case Laws in this Newsletter:
GST
Income Tax
Benami Property
Customs
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Levy of GST - service of agreeing to tolerate an act or a situation? - Deduction of the amount equivalent to salary for the tenure of notice period not served as a compensation for the breach of the terms of the employment agreement by the employees in accordance with the appointment letter - such amounts recovered by the employer are not taxable as consideration for the service of agreeing to tolerate an act or a situation - AAR
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Rejection of claim for refund of the un-utilised input tax credit - the appellate authority could not have travelled beyond the allegation of the show cause notice as pointed out earlier, the show cause notice itself is defective on account of non-consideration of the submission of the appellant to the memo dated 27.01.2022 and non-consideration of the documents which were produced by the appellant alongwith its response to the said show cause notice - Matter restored back - HC
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Supply of service or not - bus transportation facility provided to the employees - perquisites provided by the ‘employer’ to the ‘employee’ in terms of contractual agreement entered into between the employer and the employee, will not be subjected to GST when the same is provided in terms of the contract between the employer and employee - the deduction for bus transportation facility would not be considered as a ‘supply’ - AAR
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Classification of Geotextile-Stratex - a product of high end polyester yarn - On going through the manufacturing process, end use of StrataTex HSR® as is mentioned in the application, it is found that the appropriate classification of the product would be Tariff Item 59119032. - AAR
Income Tax
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TCS on foreign remittances - CBDT issued Circular to remove difficulty in implementation of changes relating to Tax Collection at Source (TCS) on Liberalised Remittance Scheme (LRS) and on purchase of overseas tour program package
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TDS u/s 195 - taxability of the freight income earned by the principal relatable to transportation of cargo and goods - Denial of exemption under Article 8 of DTAA between India and Germany - Once the income is held as not taxable in India, TDS is not required to be deducted - HC
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Taxability of foreign income in India - business connection’ in India or not? - subscription services - ITAT came to the factual finding that the arrangement between assessee and the subscribers was for the provision of services for standard facility and not for “rendering of any technical, managerial or consultancy services” as provided in section 9(1)(vii) r/w Explanation 2 of the Act - Subscription fees not to be treated in the nature of fees for technical services (FTS) - Revenue appeal dismissed - HC
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Accrual of income in India - existence of PE - business profits attributable to the PE - Entire profits from supply of equipments and software cannot be attributed to the PE. The departmental authorities have not demonstrated in any financial terms, what is the exact role of the PE in earning the receipts and to what extent. Only that part of the receipts, which can be linked to the activities of the branch office, can be brought to tax in India by attributing to the PE. - AT
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Assessment u/s 153A - Addition u/s 68 - search u/s 132 - Interpretation of the notings found in the diary - the entries/notings found in diary can be safely terms as “dumb documents” - a dumb document cannot form a basis for the addition. - AT
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Revision u/s 263 - income offered during the course of survey - Applicable rate of tax - the explanation offered by the assessee during the course of survey regarding the source of such income and thereafter, has assessed the income under the head “business income”. The view so taken by the Assessing officer is after due application of mind and therefore cannot be held as unsustainable in the eyes of law. - normal tax rate are applicable and the tax rate as per section 115BBE not applicable - Revision order set aside - AT
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Revision u/s 263 - Exemption u/s 11 - Receipt of corpus donation - donor itself is registered as a charitable trust/society under section 12AA of the Act. Therefore, there cannot be any doubt regarding the genuineness of the donor. Thus, the allegation of learned CIT that AO has not made proper inquiry with regard to the receipt of corpus donation is found to be contrary to facts and materials on record - AO, having passed the assessment order after conducting proper inquiry and applying his mind with due diligence - such assessment order cannot be considered to be erroneous and prejudicial to the interest of Revenue - AT
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Levy of penalty u/s 272A(1)(d) - non-compliance to the notice issued to the assessee - this is the first year of shifting of issuance of notice and framing of assessments in electronic mode by the department - the reasons adduced by the assessee expressing his inability to attend to the notices, constitute reasonable cause within the meaning of section 273B - No penalty - AT
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Revision u/s 263 - Assessee has regular dealings with these related persons/entities and necessary confirmation is on record and therefore, the findings of the ld PCIT that no documents have been filed by the assessee is not borne out of records. As regarding, the advances given by the assessee during the year, the assessee during the assessment proceedings has submitted that no advances were given during the year and therefore, the findings of the ld PCIT is again not borne out of records. - Order passed u/s 263 set aside - AT
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Reopening of assessment u/s 147 - reasonable belief - AO has observed that in the data-base of the Income Tax Department, these seven companies are branded as accommodation providers. How these sweeping statements could help the ld. Assessing Officer to doubt the case of the assessee. It is not ascertainable when this data-base was prepared, what is the foundation of the data-base, whether any opportunity to contest, such an observation has been granted or not, not only to the assessee but to those companies, who have been branded as an entry provider - whatever information has been referred by the ld. Assessing Officer, it is vague and incomplete - AT
Customs
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Effective rate of Agriculture Infrastructure and Development Cess for specified goods - Notification No. 11/2021-Customs dated 01.02.2021 in order to prescribe the AIDC rate for liquified Propane and liquified Butane, amended - Notification
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Effective rates of customs duty and IGST for goods imported into India - Prescribe a concessional BCD on liquified Propane and liquified Butane - Notification No. 50/2017 -Customs dated 30.06.2017 amended - Notification
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Import duty leviable on Liquified Propane and Liquified Butane increased - Seeks to amend the First Schedule of the Customs Tariff Act. - Notification
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Mandatory additional qualifiers in import/export declarations in respect of certain products extended to 01.10.2023 - Declaration of IUPAC name and CAS number of the constituent chemicals, for imports under the chapters 28, 29, 32, 38 and 39 - Circular
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Allocation of quantities of raw pet-coke (RPC) - Increased allocation to Sanvira was set aside by the Division Bench of HC - From all the facts, it is evident that Sanvira kept on contending that its capacity was 3,30,000 MTPA. The minutes of the meeting dated 13.02.2020, also allude to the previous attempts by Sanvira, to have its capacity increased, as on 09.10.2018 in an effort to secure more allocation. All such contentions were rejected. In this background, the view expressed by the single judge, that the principle for allocation was changed somewhat in the public notice, dated 17.04.2020, is not tenable. - SC
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Confiscation - Smuggling of Betel Nuts - discharge of burden to prove u/s 123 of Customs Act - The betel nut is not notified under Section 123 of the Customs Act, 1962 and therefore, the burden of proof lies with the department to prove the same. It’s not just enough to prove by negative inference of the documents produced by the appellant on microscopic analysis to find fault. Allegation requires to be proved by cogent and positive evidence. - AT
DGFT
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Procedure for allocation of quota for export of broken rice on humanitarian and food security grounds, based on requests received from Governments of other Countries. - Trade Notice
FEMA
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Appointment of Adjudicating Authority under FEMA Act - Officer not below the rank of Assistant Director of the Directorate of Enforcement to file complaint before the AA appointed for the purpose of holding inquiry u/s 16(1) - Notification
Service Tax
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Construction of residential complex - allegation of suppressed receipts - While theoretically, the petitioner may be right, it is the case of the assessing officer that the veil is to be lifted and the true receipts from the constructions are to be determined. The response of the assessee does not reveal any satisfactory explanation in regard to the difference in land cost vis-a-vis the construction agreement and sale deeds - Matter restored back - HC
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Management, Maintenance and Repair Services - activity of maintenance of documents and keeping documents as secured (safe custody) - the appellant while maintaining and restoring those documents was charging its clients viz. banks/Financial Institutes for the same, for keeping those documents in its safe custody/security also appellant was receiving consideration - while doing this activity for their clients, the appellants were actually rendering the service of ‘Maintenance, Management or Repair Service’. - AT
Central Excise
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Cenvat credit on capital goods - No credit was availed in the initial (first) year - Whole of the credit (100% credit) was availed in the subsequent year - There is neither restriction nor compulsion to avail and utilize Cenvat credit on capital goods in the initial year of receipt of capital goods. - The contention of the department that the Appellant contravened the provisions of Cenvat credit by not utilizing 50% of the capital goods in the first years of its receipt is misconceived and not tenable in the eyes of law - AT
VAT
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Reversal of input tax credit against the supply - Without furnishing any details to the assessee, the authorities could not have directed reversal of the input tax credit, which was availed by the assessee - The assessee was compelled to pay the amount and without prejudice to their rights have paid the amount - Order is unsustainable - Authorities directed to return the amount of reversal of ITC - HC
Case Laws:
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GST
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2023 (7) TMI 150
Condonation of delay in filing appeal - case of petitioner is that he was precluded from filing a statutory appeal under Section 170 of the GST Act within the permitted time period of four months - HELD THAT:- This Court in Penuel Nexus Pvt. Ltd v. Additional Commissioner and others [ 2023 (6) TMI 941 - KERALA HIGH COURT ] has categorically held that an appeal under Section 107(4) of the Act cannot be filed beyond the prescribed time period, in view of the stipulations in the enactment. Now what the petitioner could not do directly by filing an appeal, cannot be permitted to be done in a writ petition filed under Article 226 of the Constitution of India, that too to decide on disputed questions of fact i.e, Ext. P5 show cause notice and Ext. P5(a) assessment order were allegedly not served on him - there are no extra-ordinary circumstance made out in the writ petition warranting interference with Exts. P5 and P5(a) by invoking the plenary powers of this Court under Article 226 of the Constitution of India. Petition dismissed.
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2023 (7) TMI 149
Rectification of mistake - inadvertent error occurred while making submissions - Furnishing of Bank Account - HELD THAT:- The paragraph 8 of the order dated 16th June, 2023 shall be substituted as required. This order shall form part of the order dated 16 th June, 2023.
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2023 (7) TMI 148
Seeking grant of Anticipatory Bail - no proposal for seeking permission for arrest of the applicant / accused - HELD THAT:- Issue notice. The matter requires consideration - List on 13.07.2023.
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2023 (7) TMI 147
Seeking permission for withdrawal of petition - petitioner submits that this writ petition may be dismissed as not pressed with liberty to the petitioner to challenge the order dated 01.05.2023 passed by the 2nd respondent in a separate proceedings - HELD THAT:- Writ petition is dismissed as not pressed with liberty as prayed for.
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2023 (7) TMI 146
Rejection of partial claim of the petitioners with regard to interest on delayed receipt of refund of IGST paid on exports - HELD THAT:- Considering the facts and circumstances of the case, the respondent/Adjudicating Authority is directed to re-consider the representation of the petitioners dated 14th January, 2023 being Annexure P-5 to the writ petition with regard to its claim of interest on delayed receipt of refund of IGST paid on exports in question and pass an order in accordance with law and after giving an opportunity of hearing to the petitioners or its authoirsed representative, within four weeks from the date of communication of this order. Petition disposed off.
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2023 (7) TMI 145
Rejection of claim for refund of the un-utilised input tax credit - rejection on the ground that additional place of business was never in the possession of the appellant - HELD THAT:- On a reading of the order passed by the Appellate Authority, it is found that the Appellate Authority has proceeded on a different footing by restricting the consideration of the grounds of appeal with reference to the correctness of the order passed by the original authority. The Appellate Authority has recorded a finding that he has reason to believe that the evidence does not prove the claim of the appellant that the goods were exported and, therefore, the refund claim is not sustainable. It is rather doubtful as to whether the appellate authority could have rendered such findings since the appellant has already received input tax credit for valid export. This is also one of the errors which has crept in. In any event, the appellate authority could not have travelled beyond the allegation of the show cause notice as pointed out earlier, the show cause notice itself is defective on account of non-consideration of the submission of the appellant to the memo dated 27.01.2022 and non-consideration of the documents which were produced by the appellant alongwith its response to the said show cause notice. The matter shall stand remitted to the Original Authority. The Original Authority shall allow the assessee to submit additional explanation to the allegations contained in the show cause notice dated 28th August, 2021 and file additional documents and after which an opportunity of personal hearing to the authorized representative of the appellant shall be afforded - petition allowed.
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2023 (7) TMI 144
Levy of tax and penalty - absence of E-way - generation of the new e-way bill in connection with the second vehicle (where goods were shifted subsequent to breakdown of first vehicle) in question - HELD THAT:- The case of the petitioner as made out in this with petition regarding the break down of the vehicle in question and generation of new e-way bill generated in respect of the same goods in question within three minutes after the interception of the vehicle in question by the respondents, has not been properly considered by the Appellate Authority for rejection and dismissal of the appeal on this ground is too much technical in this case as appears to this court from the facts and circumstances of the case. The impugned order dated 12th September, 2022 along with the rectification order dated 16th November, 2022 are set aside and the matter is remanded back to the Appellate Authority concerned to pass a fresh speaking order in accordance with law after giving an opportunity of hearing to the petitioner or its authorised representative - Petition allowed by way of remand.
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2023 (7) TMI 143
Seeking release of detained goods - poppy seeds are the smuggled items or not - HELD THAT:- This Court finds that no purpose would be served by keeping the writ petition pending. Accordingly, the writ petition is disposed of by directing the respondent no. 3 to take appropriate steps for release of the vehicle along with the tea consignment in favour of the petitioner in accordance with law if there is no impediment for release the vehicle and tea consignment within a period of one week from the date of receipt of the copy of the order, subject to furnishing an undertaking that the petitioner shall produce the vehicle before the authority and will appear before the authority, as and when, if required, for further enquiry/investigation. Application disposed off.
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2023 (7) TMI 142
Classification of supply - supply of service or not - deduction of nominal amount by the applicant from the salary of the employees who are availing facility of food provided in the factory premises - levy of GST on the nominal amount to be deducted from the salaries of employees - ITC on GST charged by the CSP for providing the catering services - services by the way of non air conditioner bus transportation facility provided by transport service providers - ITC on GST charged by the transport service providers for providing the non air conditioned bus transportation services - levy of GST on salary deducted in lieu of notice period from the full and final settlement of the employees leaving the company without completing or serving the complete notice period as specified in the appointment letter. Whether the deduction of nominal amount made by the applicant from the employees who are availing food in the factory premises would be considered as a supply under the provisions of section 7 of the CGST Act, 2017? - HELD THAT:- In terms of Section 7 of the CGST Act, 2017, supply means all forms of supply of goods/services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business - the deduction made by the applicant from the employees who are availing food in the factory would not be considered as a supply under the provisions of section 7 of the CGST Act, 2017 - the issue regarding levy of GST on the nominal amount to be deducted from the salaries of employees is rendered infructuous. Whether Input Tax Credit of GST charged by the CSP would be eligible for availment by the applicant? - HELD THAT:- Input Tax Credit will be available to the appellant in respect of food and beverages as canteen facility is obligatorily to be provided under the Factories Act, 1948, read with Gujarat Factories Rules, 1963 as far as provision of canteen service for employees other than contract employees is concerned. It is further held that the ITC on GST charged by the CSP will be restricted to the extent of cost borne by the appellant only - Input Tax Credit will be available to the appellant in respect of canteen facility which is obligatory under the Factories Act, 1948, read with Gujarat Factories Rules, 1963. Whether the services by way of non air conditioned bus transportation facility provided by the TSP is supply of service by the applicant to its employees under the provisions of section 7 of the CGST Act, 2017? - HELD THAT:- In terms of Circular No. 172/04/2022-GST, it is clarified that perquisites provided by the employer to the employee in terms of contractual agreement entered into between the employer and the employee, will not be subjected to GST when the same is provided in terms of the contract between the employer and employee - the deduction for bus transportation facility would not be considered as a supply under the provisions of section 7 of the CGST Act, 2017. ITC on GST charged by the transport service providers for providing the non air conditioned bus transportation services - HELD THAT:- In terms of Section 16 of the CGST Act, 2017, ITC can be availed subject to the conditions and restrictions prescribed in the manner specified in section 49. The supply of the services in this case received by the applicant is used in the course of furtherance of their business and therefore prima facie they are eligible to take credit of GST charged by their suppliers. Section 17(5) which speaks of block credit - The amended section 17(5) wef 1.2.2019 has allowed availment of ITC on leasing, renting or hiring of motor vehicles for transportation of persons having approved seating capacity of more than 13 persons (including driver) - the applicant is eligible for ITC however subject to the condition that the buses they have hired is more than 13 seater, wef 1.2.2019. Levy of GST - Deduction of the amount equivalent to salary for the tenure of notice period not served as a compensation for the breach of the terms of the employment agreement by the employees in accordance with the appointment letter - HELD THAT:- The issue has already been clarified vide Circular no. 178/10/2022-GST dtd 3.8.2022, wherein it is stated such amounts recovered by the employer are not taxable as consideration for the service of agreeing to tolerate an act or a situation - the applicant is not liable to pay GST on the amounts deducted towards notice pay.
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2023 (7) TMI 141
Classification of proposed product - Geotextile-Stratex - classifiable under Tariff Item (TI) No. 60059000 or under TI 59119032 of the Customs Tariff Act, 1975? - HELD THAT:- Chapter 59 covers 'Impregnated, coated, covered or laminated textile fabrics; textile articles of a kind suitable for industrial use'. Further heading 59.11, covers 'textile products articles, for technical uses, specified in note 8 to this chapter'. Note 8 is already reproduced supra. Delving further it is found description knitted or woven Geo technical textile' and tariff items 5911 90 31, 591190 32, 5911 9039 and 5911 9040 which have been introduced in the Customs Tariff wef 1.5.2022 - Tariff Item 59119032 relating to geotextile conforming to IS 16391 and 16392 introduced wef 1.5.2022, is a specific entry. On going through the manufacturing process, end use of StrataTex HSR as is mentioned in the application, it is found that the appropriate classification of the product would be Tariff Item 59119032. The decision is also substantiated by the judgement in the case of MANGALA TEXTILES VERSUS COLLECTOR OF CENTRAL EXCISE, RAJKOT [ 2000 (3) TMI 134 - CEGAT, COURT NO. IV, NEW DELHI ] wherein it was held It is the well established Rule of Interpretation that a specific entry will have precedence over general entry.
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Income Tax
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2023 (7) TMI 140
Capital gain - transfer - revaluation of assets - partnership firm - retirement of one partner and reconstitution of firm with new partners - applicability of Section 45(4) of the Income Tax Act as introduced by the Finance Act, 1987 - As decided in assets so revalued and the credit into the capital accounts of the respective partners can be said to be transfer and which fall in the category of OTHERWISE and therefore, the provision of Section 45(4) inserted by Finance Act, 1987 w.e.f. 01.04.1988 shall be applicable - HELD THAT:- Applications for listing of the Review Petitions in the Open Court are rejected. In the Review Petitions, the judgment under challenge and the papers annexed therewith, we are satisfied that there is no error apparent on the face of the record, warranting reconsideration of the judgment impugned. Review Petitions are, accordingly, dismissed.
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2023 (7) TMI 139
TP adjustment - benchmarking technique - whether benchmarking should be done only on the associated enterprises transactions or for the entire turnover ? - HELD THAT:- As decided in ALSTOM PROJECTS INDIA LIMITED [ 2016 (12) TMI 1408 - BOMBAY HIGH COURT] , M/S TARA JEWELS EXPORTS PVT. LTD. [ 2015 (12) TMI 1130 - BOMBAY HIGH COURT] , M/S. THYSSEN KRUPP INDUSTRIES INDIA PVT. LTD. [ 2015 (12) TMI 1076 - BOMBAY HIGH COURT] , M/S. HINDUSTAN UNILEVER LTD [ 2016 (7) TMI 1245 - BOMBAY HIGH COURT] Courts have held that the benchmarking should be done only on the associated enterprises transactions and not for the entire turnover. ITAT was correct in holding that the TP adjustment should be proportionate to the value of international transaction. Proportionate adjustment claim even though the SLP on the similar filed by the Revenue has been admitted by the Hon ble Supreme Court in the case of Fire Stone International Pvt. Ltd. [ 2016 (8) TMI 1285 - SC ORDER] - Appeal in case of Firestone International P. Ltd was part of the appeals that was considered in Essar Teleholdings Ltd. [ 2018 (2) TMI 115 - SUPREME COURT] but what we find from the judgment of the Apex Court Essar Teleholdings Ltd. (supra) is that Revenue in its appeal in Firestone International P. Ltd (supra) has only raised the issue of disallowance under Section 14A and not regarding TP adjustment.2nd issue also cannot be considered as a substantial question of law.
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2023 (7) TMI 138
Disallowance u/s 14A r.w.r.8D - expenditure as incurred on earning the dividend income, that much of the expenditure which is attributable to the dividend income - HELD THAT:- If an expenditure incurred has no causal connection with the exempted income, then such an expenditure would obviously be treated as not related to the income that is exempted from tax, and such expenditure would be allowed as business expenditure. To put it differently, such expenditure would then be considered as incurred in respect of other income which is to be treated as part of the total income. Rule 8D provides for method for determining amount of expenditure in relation to income not includible in total income. In view of the judgment of Maxopp Investment Ltd [ 2018 (3) TMI 805 - SUPREME COURT] we hereby quash and set aside the order impugned passed by ITAT and direct the AO to give effect to this order passed by us. .
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2023 (7) TMI 137
Seeking refund due alongwith with interest u/s 244A till the date of actual payment - stay of demand granted adjusting 20% of all demands - HELD THAT:- Since there is a stay order granted on 27th December 2022 and 20% has already been adjusted against the refund due for AY2018-2019, respondents cannot adjust any amount against this refund due for AY 2015-2016. We direct respondent no. 1, who respondent no. 2 states is the person responsible, to ensure that the refund amount of Rs. 60,07,99,744/- alongwith interest, if any, in accordance with law, is credited to petitioner s account within one week from the date this order is uploaded. Also by an order dated 2nd March 2023 respondents were directed to refund the amount to petitioner alongwith interest in accordance with law. The affidavit in reply has been filed admitting Rs. 60,07,99,744/- as payable. Still the order dated 2nd March 2023 has not been complied with. Therefore, notice be issued to respondent no. 1, Director of Income Tax, CPC, returnable on 25th July 2023, as to why contempt proceedings should not be initiated against him. We are issuing contempt notice only against respondent no. 1 in view of what is stated in the affidavit in reply that the CPC is responsible for processing the refund.
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2023 (7) TMI 136
TDS u/s 195 - demand u/s 201(1) and interest u/s 201(1A) - taxability of the freight income earned by the principal relatable to transportation of cargo and goods - Denial of exemption under Article 8 of DTAA between India and Germany - It is petitioner s case that consistently the Income Tax Appellate Tribunal (ITAT) as well as High Courts have held that this income was not taxable under the DTAA HELD THAT:- Having considered GE India Technology Cen. (P.) Ltd. [ 2010 (9) TMI 7 - SUPREME COURT] the law is very clear in as much as the payer is bound to deduct tax only if the tax is exigible in India. If the tax is not exigible, there is no question of tax at source being deducted. This has been the position that has been followed and accepted by the Department since Assessment Year 2005-2006 until Assessment Year 2018-2019. We do not find anything contrary even in the impugned order. Moreover, the relationship between petitioner and the principal has also been accepted right from AY 2005-2006 until Assessment Year 2018-2019 that petitioner was only remitting to the principal the money that belonged to the principal. Even in the affidavit in reply, the only stand taken is the pendency of the appeal. Decided in favour of assessee.
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2023 (7) TMI 135
Legality of the Settlement Commission's order - Accrual of interest income - interest accrued as due on Government securities and debentures held by petitioner - case of respondents that as the applicant was following mercantile system of accounting for interest paid on securities and deposits it could not follow the cash system of accounting for corresponding income - HELD THAT:- We would agree with the CIT (D/R) s view. Income having accrued and corresponding expenditure having been reckoned on mercantile lasts, the interest income shall be taxed on accrual basis for both the years under consideration. In CREDIT SUISSE FIRST BOSTON (CYPRUS) LTD. [ 2012 (8) TMI 17 - BOMBAY HIGH COURT] court after considering various judgments came to the conclusion that the right to receive the interest on the Government securities vested in the respondent only on the due date mentioned in the securities. Consequently, the interest accrued on the securities only on the due date and cannot be said to have accrued to assessee on any date other than the dates stipulated therein. The court also rejected the contention of revenue that interest accrues for broken period between two consecutive dates stipulated in the agreement/ instrument for payment of interest. The court went on to hold that if the assessee held the security upto 31st March and sold the same thereafter, but before the date on which interest was payable as stipulated in the security, interest cannot be said to have accrued to the assessee. The Commission has not articulated as to why it did not agree with the submissions made by the assessee s representative. The Hon ble Apex Court in Assistant Commissioner of Income Tax, Rajkot vs. Saurashtra Kutch Stock Exchange Ltd. [ 2008 (9) TMI 11 - SUPREME COURT] has held that a judicial decision acts retrospectively. The Judges do not make law, they only discover or find the correct law. The law has always been the same and if a subsequent decision alters the earlier one, the later decision does not make a new law. It only discovers the correct principle of law which has to be applied retrospectively. The Hon ble Apex Court held that even an earlier decision of the court operated for quite sometime, the decision rendered later on would have retrospective effect, clarifying the legal position which was earlier not correctly understood. We should also note, in our view no reasons have been given by the Settlement Commission. In Jyotendrasinhji [ 1993 (4) TMI 1 - SUPREME COURT] Revenue had argued that the Commission is not even required or obligated to pass a reasoned order. The Hon ble Apex Court held that the principle of natural justice (audi alteram partem) has been incorporated in Section 245 D itself which should mean, in our view, reasons have to be given. Reasons are live links between the mind of the decision taker to the controversy in question and the decision or conclusion arrived at. In the circumstances, on this issue we direct that the matter be sent to the Interim Board for Settlement constituted for the settlement of pending applications as contemplated under Section 245 AA of the Act. The Interim Board may pass such orders as it deems fit in accordance with law after hearing the parties.
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2023 (7) TMI 134
Taxability of foreign income in India - business connection in India or not? - subscription services are provided by the said Hong Kong Company - The website facilitates Indian suppliers to do business online through a global trade market place. - India and Hong Kong do not have a DTAA - as argued assessee has a very limited role which is merely confined to providing facility of posting and advertising or displaying of the information about the product and services in the Electronic Form - benefit of the India-Singapore DTAA - Whether assessee is merely an intermediary between the Indian subscribers and one Alibaba.com Hong Kong Limited? - ITAT came to the conclusion that when Infomedia is not a dependent agent, then, in view of Explanation 2, r/w proviso to section 9(1)(i), the income of the assessee cannot be held to be deemed to accrue or arise in India in terms of section 9(1)(i) of the Act HELD THAT:- ITAT has come to the conclusion that activities highlighted by the AO are not carried out by the assessee at all and the services provided by the assessee to the Indian Customers were merely that of displaying / storing of data of Indian Subscribers, such services are limited to provision of E-commerce platform for advertising of products or services in India. ITAT came to the factual finding that the arrangement between assessee and the subscribers was for the provision of services for standard facility and not for rendering of any technical, managerial or consultancy services as provided in section 9(1)(vii) r/w Explanation 2 of the Act. ITAT has also relied upon the judgment of Kotak Securities Ltd. [ 2016 (3) TMI 1026 - SUPREME COURT ] constant human endeavour or human intervention is essential requirement for treating the rendering of services as technical . If any technology or a process has been put to operation automatically, wherein it operates without much human interface or intervention, then such technology per se cannot be held as rendering of technical services by human skills. Where there is a standard facility made available for public at large, without giving any special or exclusive services whether to a particular client or class of clients, then it cannot be brought within the ambit of technical services as stipulated in Explanation 2 to section 9(1)(vii). Therefore, on facts, even these grounds of the Revenue were correctly rejected in coming to a finding that no technical services had been provided by the Assessee to treat the subscription fees as to be in the nature of fees for technical services The entire subject matter of the appeal is fact based and in our view, no substantial question of law arises.
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2023 (7) TMI 133
Reopening of assessment u/s 147 - cash deposit made by the assessee in his bank account - reason to believe - whether there was prima-facie some material on the basis of which the Department could reopen the case? - HELD THAT:- We observe that in the instant set of facts, there was a substantial cash deposit made by the assessee in his bank account. Assessee has been non-filer of income tax return. It is a well-settled principle of law that for initiation of proceedings u/s 147 of the Act, only a prima facie belief has to be formed by the assessing officer that the income has escaped assessment. In the case of Raymond Woollen Mills Ltd. [ 1997 (12) TMI 12 - SUPREME COURT] observed that the Court has only to see whether there was prima-facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage. In the instant case AO had sufficient material to form a prima facie belief that there was escapement of income in the instant set of facts. Therefore, we find no infirmity in the order of Ld. CIT(Appeals) when he held that proceedings u/s 147 of the Act were validly initiated, looking into the facts of the instant case. Decided against assessee. Unexplained cash deposits in bank account - As considering the well-established legal proposition that was only the profit element embedded in any receipts which may be taxed in the hands of the assessee, it would be fair to estimate profit @10% of the total cash deposits in the hands of the assessee, which may be subject to tax in the hands of the assessee. In the case of President Industries [ 1999 (4) TMI 8 - GUJARAT HIGH COURT] held that the entire cash deposit should not be added to the income of the assessee had only the element of profit element should be considered as the taxable income of the assessee. The above proposition was also followed in the case of Dineshbhai Mathai Vala [ 2015 (4) TMI 712 - ITAT AHMEDABAD] - Accordingly, in the interest of justice 10% of the total deposits may be taken as a taxable income and thus taxed in the hands of the assessee.
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2023 (7) TMI 132
Estimation of income - applying commission @ 8% of total cash deposit - Non rejecting books of account - HELD THAT:- As the assessee has proved the fact that he is engaged in business of recharge of prepaid coupons of Idea Cellular Limited in the name of Vatshal Enterprises. The assessee has also placed on record the TDS certificate in the form of 26AS wherein total tax is deducted at source. There is no dispute about business of assessee. The assessee furnished complete books of account. The books of account of assessee was not rejected. The nature of business of assessee is also not doubted. The ld. CIT(A) directed the AO to estimate the income in respect of cash deposit between 01/06/2016 to 22/12/2016, which is already offered by assessee by including its commission income in his commission received @ 2% in his return of income. CIT(A) directed the Assessing Officer to estimate the commission without any basis. If the direction of ld. CIT(A) is followed, it would amount to double taxation of the same income. The Hon'ble Madras High Court in PCIT Vs. Marg Ltd. [ 2017 (7) TMI 823 - MADRAS HIGH COURT ] held that profit of assessee cannot be estimated without rejecting its books of account. Thus no justification in the direction of ld. CIT(A) to further estimate the income on the deposits between 01/06/2016 to 22/12/2016 which is not in consonance with the decision in PCIT Vs Marg Limited (supra). Even otherwise, the assessee has already included his commission income while filing return of income. In view of aforesaid discussion, the grounds of appeal raised by assessee are allowed.
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2023 (7) TMI 131
Royalty Receipts - existence of PE and the taxability of the receipts from supply of software - addition under the domestic law as well as India USA DTAA - assessee is a non-resident corporate entity and a tax resident of USA - DTAA - HELD THAT:- The issue is no more res integra in view of the decision of Engineering Analysis Centre of Excellence Pvt. Ltd. [ 2021 (3) TMI 138 - SUPREME COURT] that receipts from Reliance Infocomm Ltd. are not taxable as royalty income, either under the domestic law or India USA DTAA. More so, when the agreement between the parties makes it clear that the ownership rights over the software remains with the licensor. Thus, for the aforestated reasons, we hold that the amount received by the assessee from Reliance Infocomm Ltd. is not taxable as royalty income. Certain other receipts, though, not in the nature of royalty, are business profits and are attributable to the PE - assessee has sold telecommunication equipments along with software to Indian telecommunication companies and telecommunication hardware and software were not supplied by the assessee directly to the Indian customers from outside India - HELD THAT:- It is borne out from record that the head office has directly supplied the hardware and software from outside the territory of India. Neither manufacturing nor any other activities relating to the hardware and software supply has taken place in India. In such a scenario, the profit/income from offshore supply of equipments and software cannot be attributed to the PE, as, only such part of income relating to operation carried out in India can be attributed to the PE and taxed in India. Entire profits from supply of equipments and software cannot be attributed to the PE. The departmental authorities have not demonstrated in any financial terms, what is the exact role of the PE in earning the receipts and to what extent. Only that part of the receipts, which can be linked to the activities of the branch office, can be brought to tax in India by attributing to the PE. Instead of undertaking any such exercises, the departmental authorities have attributed the entire receipts to the PE, which in our view, is unsustainable. Accordingly, we hold that the receipts from Bharti Telenet Services Ltd. and Tata Teleservices Ltd., even though, may be in the nature of business profits, but cannot be attributed to the PE. Disallowance being employees contribution to Provident Fund (PF) and Employees State Insurance (ESI) paid beyond the due date - As we direct the Assessing Officer to verify, whether the amount in dispute was remitted to the Government account within the grace period provided under the PF and ESI Act. If on such verification, the AO funds assessee s claim to be correct, the addition should be deleted. Levy of interest u/s 234B - HELD THAT:- We accept assessee s claim and hold that no interest under section 234B of the Act can be charged as the assessee, being a non-resident company was not liable to pay advance tax, since, the payer is under an obligation to withhold tax u/s 195 of the Act while making payment to the assessee. Accordingly, AO is directed to delete the interest charged under section 234B of the Act.
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2023 (7) TMI 130
Disallowance of expenses u/s 37(1) - expenses towards general public utility - HELD THAT:- As present assessee made payment towards general public utility to various schools, welfare bodies, religious samitiee s etc in the locality where its factories or other business premises are located. These expenses ultimately help/benefit in carrying on the business of the assessee. Thus, we hereby direct the AO to delete the addition made by him. Decided in favour of assessee. Disallowance on account of loss of loans advances - assessee in accordance with the arbitration award has written of the sum being difference between amount due as per books of assessee and claim awarded by the arbitrator in the profit and loss account of as not recoverable - HELD THAT:- Loss to the assessee was known at the time of signing the audited financial statements. The accounting principles also provide if it is likely that a contingency will result in a loss to the enterprise, then it is prudent to provide for that loss in the financial statements. Thus, the assessee cannot be denied the deduction as discussed above merely for the reason that the order of the arbitrator was passed after the balance sheet date. Thus, it is transpired that the assessee was known to the fact of the loss in accordance with the award of the arbitration before filing the return of income. Therefore, the event for writing off the loss certainly occurred after the balance sheet date but before signing the financial statements and filing the income tax return. Whether the loan advanced by the assessee to Shri Babubhai Ramanlal Patel who is engaged in the activity of structural engineering works is capital in nature or it is trading advance? - The act of advancing loan on interest is one of the business activities of the assessee. Moreover, we note that even advances given in the year 1996-97 and the element of interest thereon has been offered to tax under the head business which was also accepted by the revenue in the earlier years. Thus, in the year consideration, it cannot be said that the advances given by the assessee based on interest was on capital account. Assessee is engaged in the business of moneylending and therefore once the amount lent in normal course of business become irrecoverable/bad. The benefit of deduction as business loss to the assessee cannot be denied on the reasoning that there was no license available to it for carrying out the money-lending business. As the assessee extended loans and advances to impugned party in earlier years and charged interest at specified rate and account of the party was further debited with accrued interest. Now the assessee has written off part amount as irrecoverable in the books of account. As in the case of T.R.F. Ltd [ 2010 (2) TMI 211 - SUPREME COURT] held that the assessee is not required to establish that the debt has become irrecoverable as such mere writing off as irrecoverable is sufficient to claim the deduction - assessee cannot be denied the claim merely on the reasoning that the assessee has not been able to take necessary steps for the recovery of the loan/interest from the party. Whether the assessee has adopted the colourable device by writing off the loan/interest as not recoverable to avoid the tax liability? - From the reading of the order of the AO, no detail is forthcoming about the land purchased by the group of the assessee at the alleged nominal price. AO was expected to prove the impugned transaction of the purchase of land by the group company of the assessee based on the documentary evidence suggesting that the land has been purchased by the group company at the nominal price which has ultimately resulted the low-income tax liability on the assessee. Thus, in the absence of necessary details, we re not inclined to confirm the order of the authorities below. Accordingly, we set aside the finding of the learned CIT-A and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee hereby allowed. Disallowance on account of provision for doubtful loans and advances - HELD THAT:- In the case of the present assessee both the lower authority being the AO and CIT(A) have given concurrent finding that the amount claimed as deduction represents provision only and no amount of bad debt or part thereof is written off as irrecoverable in the books of account. Thus, considering the fact that the amount of bad debt or part thereof was not written off as irrecoverable in the year consideration therefore we hold that the assessee is not eligible to claim the deduction of bad debt in the year under consideration. However, the assessee will be eligible to claim deduction of the same in the year in which bad debts actually written off as irrecoverable i.e. A.Y. 2010-11 as claimed by the learned AR subject to verification. Hence, the grounds of the appeal of the assessee is hereby dismissed in the light of the above discussion. Deduction u/s 80IA - deduction not claimed at the time of filing the return of income since total income was declared at Rs. NIL - HELD THAT:- Only AO who has no power under the statute to entertain a claim of deduction otherwise than by filing a revised return. However, there is no restriction on the power of the CIT(A) and ITAT being quasi-judicial authority. Thus, CIT(A) should have accepted the claim of the assessee by extending the benefit of deduction envisaged under the provisions of section 80IA of the Act. Accordingly, we set aside the finding of the learned CIT(A) and direct the AO allow the deduction to the assessee under section 80IA of the Act as per the provisions of law. Hence, the ground of appeal of the assessee is hereby allowed. Exclusion of sales tax benefit from the computation of minimum alternate tax under the provisions of section 115JB - HELD THAT:- As decided in Ankit Metal Power Ltd [ 2019 (7) TMI 878 - CALCUTTA HIGH COURT] once any receipt which is not income under the provision of section 2(24) of the Act i.e. not liable to be tax then such receipt cannot be included in the book profit under section 115JB - thus we direct the AO to exclude the sales tax benefit from the computation of book profit u/s 115JB - additional ground of appeal of the assessee allowed. Disallowances of interest expenses on deep discount bonds (DDBs) - CIT(A) deleted the disallowance - HELD THAT:- The issue on hand is covered in favour of the assessee by the order of this tribunal in its own case of the assessee for A.Y. 2002-03 held that assessee is entitled to proportionately claim the expenditure discount/interest on the DDBS on accrual basis in the year under appeal, we direct the AO to correctly work out the amount of deduction to the extent it relates to the year under appeal. Addition of interest written back in the books on repurchase of DDBs - assessee before the CIT(A) contended that interest expenses claimed in earlier years on pro-rata basis has been allowed by the ITAT - HELD THAT:- As AO while passing effect giving order has not allowed the excessive claim - CIT(A) in view the above directed the AO to verify the fact whether interest was allowed more than actual cost, then the same should be added to the income of the year otherwise no addition is to be made. No infirmity in the order of the learned CIT(A). As such, the learned CIT(A) rightly held that if claim of interest on 175 DDB allowed is more than actual interest cost incurred on buyback, then such excess interest should be added to the total income otherwise no addition is required to be made on the same if the interest claimed is not more than actual interest cost. Hence, the ground of appeal of the Revenue is hereby dismissed. Disallowance of sales tax benefit - HELD THAT:- As decided in assessee own case [ 2016 (6) TMI 1023 - GUJARAT HIGH COURT] wherein issues involved in these appeals are squarely covered by the decisions of this Court in Birla VXL Ltd. [ 2013 (7) TMI 655 - GUJARAT HIGH COURT] and in Munjal Auto Industries Ltd [ 2013 (10) TMI 650 - GUJARAT HIGH COURT] . Therefore, the questions of law posed for our consideration in these appeals are answered in favour of the assessee. Addition on account of set-off of losses and unabsorbed depreciation of a unit of Core Healthcare Ltd. merged with the assessee - HELD THAT:- Issue decided in favour of assessee as in own case AY 2005-06 . TDS u/s 194C - Disallowance of transportation charges u/s 40(a)(ia) - transportation charges paid by the assessee to the GAIL - HELD THAT:- Transportation charges paid by the assessee to the GAIL is not in the nature of work contract for the purpose of section 194C of the Act, therefore no default committed by the assessee. Hence the ground of appeal of the revenue is hereby dismissed. Disallowance of depreciation on heavy vehicles - HELD THAT:- We uphold the order of the ld. CIT-A and direct the AO to allow the depreciation to the assessee on closing WDV as decided in A.Y. 2003-04. Addition for the waiver of the loan - whether the waiver of loan is chargeable in the hands of the assessee either under the provisions of section 28(iv) of the Act or section 41(1) ? - HELD THAT:- There remains no ambiguity to the fact that the waiver of loan cannot be made subject to tax under the provisions of section 28 (iv) of the Act. Whether such waiver of loan can be brought to tax under the provisions of section 41(1)? - To bring any item under the net of income in pursuance to the provisions of section 41(1) of the Act, there has to be recovery either in cash or in-kind in respect of loss, expenditure or trading liability which was allowed as deduction in any of the assessment year. Thus, first, we have to see whether the waiver of loan in the given case represents the loan for the acquisition of the capital assets or it represents the working capital loan. Again, if the loan is capital loan, used for the purpose of the fixed assets, then the assessee cannot be made subject to tax under the provisions of section 41(1) of the Act. CIT(A) held that no addition is required to be made either under section 28(iv) or under section 41(1) of the Act. The finding of learned CIT(A) has nowhere been controverted by the learned DR based on cogent material. Hence, considering the finding of learned CIT(A) that the nature of loan was for capital assets, we hold that no addition under section 41 of the Act is required to made on waiver of such capital loan. With regards to the interest, the assessee has clearly stated before the authorities below that the assessee was not allowed the deduction of unpaid interest expenses by virtue of the provisions of section 43(B). It is the precondition for attracting the provisions of section 41(1) of the Act that the assessee must have been allowed the deduction in respect of any expenditure, loss, or trading liability. But in the given case such condition was not complied with as far as unpaid interest is concerned and therefore, we are of the view that the assessee cannot be made subject to tax on account of waiver of interest on the loan as it was never allowed deduction to the assessee in any of the assessment year. Decided against revenue. Addition on account of liabilities transferred to capital account - assessee during the year under consideration, on merger transferred the liabilities being custom duty, demurrage and detention and sales tax liabilities to capital reserve - whether the writing off the statutory liabilities being custom duty, demurrage, detention, and sales tax amounting is chargeable in the hands of the assessee either under the provisions of section 28(iv) of the Act or section 41(1) of the Act? - HELD THAT:- To bring any item under the net of income in pursuance to the provisions of section 41(1) of the Act, there must be recovery either in cash or in-kind in respect of loss, expenditure or trading liability which was allowed as deduction in any of the assessment year. CIT(A) has given clear finding that the deduction on account of impugned statutory liability was never allowed to the assessee. Thus, the very first precondition to invoke the provision of section 41(1) of the Act is not satisfied. Therefore, we do not find any infirmity in the order of the learned CIT(A). Hence the ground of appeal of the Revenue is hereby dismissed. Addition on account of difference between assets and liabilities taken on merger - HELD THAT:- Surplus of assets cannot be taxed under section 28(iv) because firstly, such surplus does not arise from carrying on the business, secondly, it is not in the nature of income to be covered u/s 2(24), thirdly, increase in assets and liabilities creating some benefit to the transferee is in the capital field as it is relatable to the non-trading assets and it only affects capital structure of the transferee company. Disallowance u/s 14A r.w. rule 8D - sufficiency of own funds - HELD THAT:- As in the case on hand the assessee company has an interest free fund more against the total investment yielding exempted income. Thus, considering the above discussion, no disallowances of interest expense in warranted in the given facts. Disallowance of administrative expenses - The contention of the assessee cannot be accepted that no expenditure in relation to the investment was incurred. Therefore, the disallowance of administrative as per rule 8D of the income tax rule needs to be made but such disallowances cannot exceed the amount of exempted income. Therefore, we direct the AO to restrict the disallowance of administrative expenses as per rule 8D of income Tax Rules. Hence, the ground appeal of the revenue is partly allowed. Disallowance of product registration expense - HELD THAT:- We note that issue on hand is covered in favour of the assessee by the order of Torrent Pharma Ltd. [ 2013 (4) TMI 570 - GUJARAT HIGH COURT] held that expenses for foreign country registration was for business purpose only, because the same helped the assessee in marketing its products in the foreign countries and promoting the sales. Calculating the income under MAT on account of the disallowance under section 14A of the Act - HELD THAT:- Special Bench in the case of ACIT vs. Vireet Investment Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] has held that the disallowance made u/s 14A r.w.r. 8D cannot be the subject matter of disallowance while determining the net profit u/s 115JB of the Act. Thus we hold that the disallowances made under the provisions of Sec. 14A r.w.r. 8D of the IT Rules, cannot be applied to the provision of Sec. 115JB. Determine the disallowance as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently - As there is no mechanism provided under the clause (f) to Explanation-1 of Sec. 115JB of the Act to make the disallowance independently. Therefore our action for restoring back the issue to the file of AO would unnecessarily cause further litigation. Thus we limit the disallowance on an ad-hoc basis @ 1 % of the exempted income as per the clause (f) to Explanation-1 of Sec. 115JB of the Act subject to the maximum adjustment made by the AO. Thus, the ground of appeal of the Revenue is partly allowed. TP Adjustment - Addition of guaranteed fee - international transaction or not? - HELD THAT:- We find that in the case of PCIT vs. Redington [ 2020 (12) TMI 516 - MADRAS HIGH COURT] has held that corporate guarantee is covered under the limb of international transaction and having bearing on profit and loss account. Bank/corporate guarantee is an international transaction. Therefore, the same has to be bench marked for determining the ALP. Determine the benchmarking for working out the ALP of the impugned international transaction - As extension of corporate/guarantee to AEs is an international transaction which needs to be benchmarked and in view of several order of the tribunal as referred above 0.5% commission on the value of corporate/ bank guarantee will serve the justice to both the assessee and the Revenue. Thus, in view of the above, the ground of appeal of the revenue is hereby partly allowed. Disallowance of project expense paid IFCI - HELD THAT:- Appellant is one of the leading manufacturer of Soda Ash in the country. Accordingly, ash is generated in large quantity which will be used in production of cement as backward integration, hence which is part of the same business. We are not inclined to agree with the contentions of the Id.A.O. as appellant paid consultation fee to IFCI regarding feasibility of study to know updated status of cement industry in India. Accordingly, payment made to IFCI is rightly claimed by the appellant as consultation expenses.The assessee is eligible for the deduction of such expenses under the provisions of section 37. Delayed employee contribution towards ESI/EPF - HELD THAT:- Payment under section 36(1)(va) would be allowed in respect to the payment of employee contribution towards ESI/EPF if such payment is made on/before due date as specified under the relevant Act (i.e. 15 days from the month for which salary is due). Thus, the payment made by the assessee on account of employee contribution towards ESI/EPF after the due date stands disallowed in view of the judgment in the case of M/s Checkmate Facility and Electronics Solutions Pvt. Ltd. [ 2018 (10) TMI 994 - GUJARAT HIGH COURT] . We uphold the order of the lower authorities. Hence the ground of appeal of the assessee is dismissed. Disallowance of previous year adjustment - HELD THAT:- In the present case, The assessee is only claiming expenditure, which was left out at the time of filing of original income tax return and in any event, the Assessing Officer has power to make upward or downward adjustments in the income returned filed by the assessee and when the assessee had not claimed certain expenditures clearly evident from the records and it comes to the knowledge of the Assessing Officer at the time of assessment proceedings, the AO should grant relief to the assessee. Likewise, CBDT's in its Circular No.14 (XL-35), dated April 11, 1955, directed that the Assessing Officer must not take advantage of the ignorance of the assessee as to his rights. In view of the above and after considering the facts in totality, we set aside the finding of the ld. CIT-A and direct the AO to delete the addition made by him. Hence, the ground of appeal of the assessee is hereby allowed. Interest under section 244A - HELD THAT:- As relying on case of Karsanbhai Kacharabhai Patel HUF [ 2022 (12) TMI 1083 - ITAT AHMEDABAD] assessee is entitled to additional compensation of interest under section 244A of the Act on account of delay in the issue of refund
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2023 (7) TMI 129
Assessment u/s 153A - Addition u/s 68 - search u/s 132 - unsecured loans were in the nature of accommodation entries and these loans were received after giving equivalent amount of cash to mediator for providing the accommodation entries - HELD THAT:- As undisputed no regular assessment proceedings were pending as on date of search for the assessment year 2012-13. Therefore, it is a case of unabated assessment. Therefore, in the case of unabated assessment, in the absence of any incriminating material the concluded assessment cannot be disturbed. Then, we proceed to examine whether or not any incriminating material was found by the Department as result of search and seizure operations. As gone through the notings found in the seized material i.e. Diary of 2009 certain payments as well as receipts were recorded without recording the dates and full details. It is not even a record of daily transactions. Certainly it does not form part of books of account regularly maintained by it in the course of business. It is not clearly depicted from the said entries on standalone basis that a transaction had taken place, which gives rise to any taxable event for the reason that there is no indication from the entries found therein that a transaction was undertaken during the previous year relevant to the assessment year under consideration giving rise to the taxable event. The entries are non-speaking, it cannot be concluded that it represents the undisclosed income of the assessee for the reason that the entries does not disclose four components required to be satisfied to constitute a taxable event. On mere perusal of the statement recorded of the assessee u/s 132(4) it would be evident that the assessee was examined and confronted on the statements given by Shri Praveen Agarwal, Shri Anuj Agarwal and Shri Jeevendra Mishra recorded during the course of search and seizure proceedings in their case. The assessee was never examined on the notings found in the Diary - Therefore, in view of the legal position discussed supra the statement recorded from the assessee u/s 132(4) cannot be considered as incriminating material to be used for the purpose of assessment to be made pursuant to notice u/s 153A of the Act. Mere statement of the assessee cannot form the basis to make addition in the assessment under 153A r.w.s. 143(3) of the Act. Unexplained expenditure - AO had failed to bring on record any conclusive evidence to prove that the assessee had made investment in purchase of lands over and above the stated consideration and received on-money consideration on sale of property. Therefore, in our considered opinion, the findings of the Assessing Officer as well as the ld. CIT(A) are based on surmises and conjectures not based on any material/evidence, accordingly, the orders of the AO and CIT(A) are hereby reversed direct the AO to delete the addition on account of on-money payment and on account of on-money receipt. Interpretation of the notings found in the diary - The first is the taxable event which attracts the levy, the second is the person on whom the levy is imposed and who is obliged to pay the tax. The third is the assessment year in which charge of income-tax is levied. The fourth is the total income of the previous year and the fifth is the rate or rates at which tax is to be imposed. The rates are prescribed in the annual Finance Act. Therefore, this component has no value in determining total income on the basis of seized document. Therefore, the entries/notings found in diary can be safely terms as dumb documents in view of the legal position discussed by us in the assessee s own appeal for the assessment year 2012-13 that a dumb document cannot form a basis for the addition.
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2023 (7) TMI 128
Disallowance of loss on Cut and Polished Diamonds on the ground that qualitative details were not furnished by the assessee - HELD THAT:- As decided in Khandwala Gems Trading Corporation [ 1995 (5) TMI 80 - ITAT JAIPUR] in case of precious stones the sales value will undoubtedly differ from quality to quality, but in such cases, each stone is of different quality and its value is so subjective that it may be valued differently by different valuers. Hence, in such cases, unless there is strong evidence to hold otherwise, the sales as shown have to be accepted when quantitatively there is no discrepancy. As regards non-production of parties, it is not a sufficient ground to draw an adverse inference, particularly when the addresses given by the assessee tallied with those available with the bankers of those parties and with the sales-tax authorities. It would be too much to expect the assessee to do anything more in case of its customers. With regard to AO's contention that sales to these three parties have been made at lower prices, it is a mere statement of opinion by the AO not supported by any direct or indirect evidence. Also not in dispute that the sales made by the assessee were through banking channels. Thus AO cannot disallow the claim of loss, when the Assessing officer has not pointed out any specific defect or short comings on the trading transactions. D.R. appearing for the Revenue could not place on record any contra view against the findings of the Ld. CIT(A). Thus the ground raised by the Revenue is devoid of merits and the same is liable to be rejected. Loss on sale of Gold bar - AO held that the sale rate on a particular date was Rs. 1520/- per gram whereas market rate was Rs. 1590 per gram - HELD THAT:- As seen from the assessment order, the market rate of Rs. 1590/- arrived by the A.O. were not supported by any credible evidence. Inquiries conducted by the A.O. by summoning purchasers by issuing notice u/s. 133(6) also has not given any untoward inferences. The AO has also not confronted the market price at 1590/- with any evidences to the assessee but however adopted this figure and disallowed Rs. 12,00,380/- on sale of Gold bar. In the case of CIT Vs. Sham Lal [ 1980 (4) TMI 69 - PUNJAB AND HARYANA HIGH COURT] held that the Revenue is not entitled to place reliance on the material which was brought on record behind back of the assessee. Any material placed on record without notice to the assessee cannot be relied upon by the Revenue. D.R. could not place before the appellate authorities, the market value as adopted by the Assessing Officer. Thus the ground raised by the Revenue is devoid of merits and the same is liable to be dismissed. Losses in respect of 22 carat Gold Ornaments sold by the assessee - A.O. has not made out a case that the sales are to the related persons only. Here also, the A.O. merely on doubts and suspicions made the disallowance, which in our considered view is not correct in law. The above findings of our is supported by case of Kamlesh Jhaveri [ 2017 (1) TMI 1759 - ITAT AHMEDABAD] wherein after considering the various judgments of the Hon ble High Courts held that the losses claimed by the assessee are genuine and cannot be termed as colourable with the intention to evasion of tax. Disallowances made by AO on claim of losses are devoid of merits - Decided in favour of assessee. Addition u/s 68 - unsecured loans and interest payment thereon - HELD THAT:- Revenue could not produce before us any contra findings arrived by the Ld. CIT(A). The Ld. D.R. could not deny the TDS on the interest paid by the assessee to the creditors. Further the above unsecured loans have been repaid in the subsequent assessment years and copies of the contra accounts placed which is also not disputed by the Ld. D.R. As relying on AYACHI CHANDRASHEKHAR NARSANGJI [ 2013 (12) TMI 372 - GUJARAT HIGH COURT ] and RANCHHOD JIVABHAI NAKHAVA [ 2012 (5) TMI 186 - GUJARAT HIGH COURT] additions made u/s. 68 and consequential interest expenses are hereby deleted.- Decided in favour of assessee.
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2023 (7) TMI 127
Estimation of income - Bogus purchases - addition of 12.5% made by AO - HELD THAT:- As considering prevalent gross profit in the business of ferrous and non ferrous metal trading which is to the tune of 5% to 8%, the addition made by the AO @ 12.5% of the bogus purchases appears to be fair and reasonable. Assessee has candidly admitted that addition @ 12.5% of the bogus purchases made by the AO may be upheld. So in view of the matter, the impugned order passed by the Ld. CIT(A) is hereby set aside and the order passed by the AO making the addition @ 12.5% of the bogus purchases is restored. Consequently, the appeal filed by the assessee is partly allowed.
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2023 (7) TMI 126
Addition of cash as found in the premises of the assessee - assessee explained that cash is related to his son in law - Statement and an acceptance letter were submitted by the son in law but later retracted from his statement and submitted that cash seized in apartment owned by assessee [FIL] related to elder son-in-law - CIT(A) rejected the appeal of the assessee on the ground that the ownership is still yet determined by the Hon ble High Court of Gujarat related to the matter of the CBI. The case is still pending and not yet decided - HELD THAT:- We find that the issue is not yet mature for determination of the ownership of the cash in both the assessee. The substantive assessment and protective assessment both are still alive for determination. Both the ld. Ars has filed new documents before the bench which is not yet verified by the ld. AO. So, the entire grounds of appeal of both the assessees are remitted back to the ld. AO for further adjudication considering the final determination of the Hon ble High Court.
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2023 (7) TMI 125
TP adjustment - comparable selection - HELD THAT:- Exclude Mind Tree Ltd. from the list of comparables to determine the ALP of international transactions as functionally dissimilar, diversified operation, significant R D spend, ownership of intangibles. L T Infotech Ltd be excluded as it is software product company and segmental information on SWD services was not available. Infobeans Technologies Ltd be excluded as it categorises the diversify services provided by this company under software development segment. We also note that this company is basically into application development for web and mobile and provides customised services to its offshore clients comprising. Entire revenue received by this comparable ease under one single segment of sale of software. This company also owns software licenses. This comparable cannot be considered to be functioning in 100% risk mitigated environment and is a full-fledged enterprise. Such a comparable cannot be compared with a captive service provider like assessee. Persistent Systems Ltd. and Infosys Ltd.to be excluded as cannot be considered to be functioning in 100% risk mitigated environment and is a full-fledged enterprise. Such a comparable cannot be compared with a captive service provider like assessee. Include I2T2 India Ltd. and Infomile Technologies Ltd. in the list of comparables for determining the ALP of international transactions.
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2023 (7) TMI 124
Revision u/s 263 - income offered during the course of survey - Applicable rate of tax - Normal rate of tax or such income is to be taxed u/s 115BBE - what is nature and source of income surrendered by the assessee during the course of survey? - PCIT held that the moment any income representing any excess stock/investment/receivables/cash/bullion etc is found during survey/search and not recorded at that point in time in books of accounts, the same being in nature of deemed income as mentioned u/s 68/69/69A/69B/69C etc, the provisions of section 115BBE are attracted HELD THAT:- The mere fact that survey/search proceedings have been initiated at the business premises of the assessee doesn t mandate the Assessing officer to automatically invoke the deeming provisions and before invoking the deeming provisions, he has to call for the explanation of the assessee and only where the explanation so offered is not found satisfactory, he can proceed and invoke the deeming provisions. There is difference between the undisclosed income and unexplained income and the deeming provisions are attracted in respect of undisclosed income however, the condition before invoking the same is that the assessee has either failed to disclose the nature and source of such income or the AO doesn t get satisfied with the explanation so offered by him and the relevant findings. In this case PCIT without taking into consideration the findings of the survey team, the documents found during the course of survey, the statement of the assessee company, the surrender letter and subsequent enquiry and examination conducted by the AO during the course of assessment proceedings has recorded a finding that the deeming provisions read with provisions of section 115BBE are applicable in the instant case. As the picture which is clearly emerging from the material available on record is the nature of surrender is excess cash arising out of his past business dealings and advance given to farmers against procurement of agriculture produce regularly dealt with by the assessee in normal course of its business and which have not been recorded in the books of accounts. Where the assessee has subsequently recorded the same in his books of accounts as part of business income, it cannot be said that the said action on part of the assessee is not in accordance with accepted accounting methodology and the nature of such income is other than business income. Deeming provisions are not applicable in the instant case - here a different point of view has been expressed by the ld PCIT though without any corroborative evidence, in any case, the same doesn t lead to the conclusion that the view taken by the Assessing officer as erroneous as the AO has taken into consideration the entirety of facts and circumstances of the case, the explanation offered by the assessee during the course of survey regarding the source of such income and thereafter, has assessed the income under the head business income . The view so taken by the Assessing officer is after due application of mind and therefore cannot be held as unsustainable in the eyes of law. Given that deeming provisions are not applicable in the instant case and consequently, normal tax rate are applicable and the tax rate as per section 115BBE, which is contingent on invocation of deeming provisions, doesn t arise. Decided in favour of assessee.
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2023 (7) TMI 123
Revision u/s 263 - Exemption u/s 11 - Receipt of corpus donation - HELD THAT:- As in the computation of income, the assessee has specifically mentioned the receipt of corpus donation - balance sheet forming part of the Tax Audit Report reflects the corpus donation. Assessee has furnished the return of income and bank statement of the donor. Perusal of the bank statements of the donor clearly reveals that on 02.04.2014, the assessee had received loan of Rs.1 crore, which was repaid back on 31.03.2015. Whereas, the assessee received an amount of Rs.1 crore towards corpus donation, which is reflected in the bank statement of donor. These are established facts on record, which cannot be ignored. It is also a fact that donor itself is registered as a charitable trust/society under section 12AA of the Act. Therefore, there cannot be any doubt regarding the genuineness of the donor. Thus, the allegation of learned CIT that AO has not made proper inquiry with regard to the receipt of corpus donation is found to be contrary to facts and materials on record. Contention of DR that the corpus donation was received in subsequent financial year, we must observe that though, the cheque was received by assessee in the financial year relevant to the assessment year under dispute, however, the money was realized on 04.04.2015, as reflected in the bank statement of M/s. Suran Protsahan. Therefore, such contention of learned Departmental Representative is not of much relevance. Thus we are of the view that the AO, having passed the assessment order after conducting proper inquiry and applying his mind with due diligence, such assessment order cannot be considered to be erroneous and prejudicial to the interest of Revenue. Accordingly, we quash the impugned order passed under section 263 of the Act and restore the order of Assessing Officer. Grounds are allowed.
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2023 (7) TMI 122
Levy of penalty u/s 272A(1)(d) - non-compliance to the notice issued to the assessee - eligibility of immunity u/s 273B - assessee had categorically denied the receipt of any statutory notices in electronic mode and that the email ID of advocate was mentioned in the return of income and his email ID was not mentioned thereon, hence the notices including the assessment orders were not received by the assessee - HELD THAT:-The various averments made by the assessee regarding the inability of the assessee to respond to the statutory notices were not found to be false by the revenue. In our considered opinion, this is the first year of shifting of issuance of notice and framing of assessments in electronic mode by the department, considering the totality of facts and circumstances of the case, the reasons adduced by the assessee expressing his inability to attend to the notices, constitute reasonable cause within the meaning of section 273B. Assessee has also been consistent with the stand taken before the ld. CIT(A) and this tribunal in adducing the reasons for not responding to the statutory notices. Reasons for non-compliance to the notices was not deliberate on the part of the assessee. Assessee was prevented from sufficient cause and hence would be entitled for immunity provided u/s 273B of the Act in the peculiar facts and circumstances of the instant case. Hence we direct the ld. AO to delete the penalty levied u/s 272A(1)(d) - Decided in favour of assessee.
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2023 (7) TMI 121
Revision u/s 263 - unexplained expenses - HELD THAT:- It is not a case where the matter relating to expenses has not been enquired into by the AO or the details as called for were not submitted by the assessee and not examined by the AO. AO issued a detailed questionnaire and in response, the assessee submitted its reply and supporting documentation as called for and taking the same into consideration, AO has passed the assessment order holding that the assessee did furnish hand-made bills and vouchers but at the same time, he is not convinced with the genuineness and allowability of these expenses and he had gone ahead and disallowed certain expenses as so claimed by the assessee. The same shows that the AO did examine the matter and applied his mind to the submissions made by the assessee and after analyzing the documentation so produced, he accepted the claim of the expenses subject to certain disallowances - findings of the ld PCIT that no details of expenses have been filed during the course of assessment proceedings is not borne out of record and is in face of specific findings recorded by the AO disallowing certain expenses. Unsecured loans raised during the year, the assessee in its submissions before the AO has submitted that it has taken unsecured loan from related persons/entities namely Piyush Ruhela, Ruhela Constructions Company and Satish Ruheja and in support, the copy of ledger account detailing the transactions during the year and necessary confirmation have also been filed during the course of assessment proceedings. Assessee has regular dealings with these related persons/entities and necessary confirmation is on record and therefore, the findings of the ld PCIT that no documents have been filed by the assessee is not borne out of records. As regarding, the advances given by the assessee during the year, the assessee during the assessment proceedings has submitted that no advances were given during the year and therefore, the findings of the ld PCIT is again not borne out of records. We agree with the alternate contention of the ld AR that the matter has been duly examined by the AO as he has raised necessary queries on these points vide notice u/s 142(1) dt. 24/10/2019 and the assessee had filed detailed reply which were examined and after proper examination and verification thereof, the assessment order was passed by the AO. Therefore, we are not in agreement with the findings of the ld PCIT that the details so called for by the AO were not filed and verified by the AO and therefore, the order so passed by the AO cannot be held as erroneous in so far as prejudicial to the interest of the Revenue. We set-aside the order passed by the PCIT, the stay petition seeking stay on the set-aside proceedings consequential to order passed u/s 263 has become infructious - Appeal of the assessee is allowed.
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2023 (7) TMI 120
Assessment u/s 153A or reopening of assessment u/s 147 - whether proceeding initiated u/s 147 is completely bad in law' and without jurisdiction as it is a search and seizure case and in the impugned case proceeding could have been initiated only u/s 153 A ? - HELD THAT:- As Section 153A starts with an non-obstante clause, i.e. notwithstanding. Hence once a search has been conducted upon an assessee, then notice under section 153A is must and income is to be determined according to the Scheme of this Section as explained earlier. According to the assumption of the ld. Assessing Officer, no notice required to be issued under section 153A, therefore, he cannot take action under any other section in this A.Y. Reopening of assessment u/s 147 - scrutiny assessment u/s 143(3) - AO possessing any material, which can enable him to form a belief that income has escaped assessment or not? - whether AO has jurisdiction to issue notice upon the assessee u/s 148 for reopening of the assessment inspite of the fact that a search has been conducted upon the assessee under section 132? - HELD THAT:- Since in the present case, earlier scrutiny assessment under section 143(3) was made, thereafter assessment was reopened by issuance of a notice under section 148 of the Income Tax Act and again a reassessment order was passed on 18.12.2017 under section 143(3) read with section 147. Therefore, proviso to this section would puts an embargo upon the powers of AO to issue a notice upon the assessee unless he demonstrated that on account of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. In other words, the AO has to demonstrate how assessee has failed to disclose all material facts fully and truly which resulted the income escaped from taxation. The assessee itself has offered profit @ 3% and on the last contract at 3.14%. This total profit is around Rs. 2,01,96,284/-. It has been assessed to income and once it has been assessed to income, then it is to be construed that this ledger account must have been gone through by the ld. Assessing Officer in two scrutiny assessments, then whereas the failure or omission at the end of the assessee to disclose all material facts fully and truly. AO has observed that in the data-base of the Income Tax Department, these seven companies are branded as accommodation providers. How these sweeping statements could help the ld. Assessing Officer to doubt the case of the assessee. It is not ascertainable when this data-base was prepared, what is the foundation of the data-base, whether any opportunity to contest, such an observation has been granted or not, not only to the assessee but to those companies, who have been branded as an entry provider. This issue had ever travelled to independent adjudicating bodies like ITAT or Hon ble High Courts, which would have upheld that these companies were indulged in providing accommodation entries. Therefore, whatever information has been referred by the ld. Assessing Officer, it is vague and incomplete and on the basis of this information, the assessment of the assessee cannot be reopened again. Therefore, we quash the reopening of assessment and accordingly assessment order also. Bogus transaction - Whether any addition deserves to be made or not ? There is no evidence possessed by the Revenue to say that contracts assigned by the assessee is a bogus transaction. Addition of the gross contract receipt cannot be made without even determining whether the projects for which contracts were received by the assessee were completed or not. There is no evidence with the Revenue to demonstrate that this whole transaction is bogus and the total money was retained by the assessee. Thus gross addition cannot be made. As far as the finding of the ld. CIT(Appeals) is concerned, that income is to be re-determined out of these contracts on ad hoc basis. It is pertinent to note that assessee has been maintaining regular books of account. Section 145 of the Income Tax Act provides the method of accounting required to be adopted by an Assessing Officer. Sub-clause (3) of this section would contemplate if the ld. Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee, then he may reject the method of accounting or books of account, only thereafter he would proceed to estimate the income. No such steps have been taken by the authorities. The quantification at 6% is without any basis. The assessee itself has shown profit at 3% and 3.1% on last contract. This profit was not doubted in a scrutiny assessment as well as in a re-assessment proceeding. Then how it is to be disturbed in a one more of reassessment is not discernable from the finding. Therefore, the order of the ld. CIT(Appeals) justifying the additions computed at 6% of the contract receipt is not sustainable.
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2023 (7) TMI 119
Assessment of partnership firm - HELD THAT:- Considering the fact that the partner of assessee brought to notice of lower authorities regarding dissolution of partnership firm, we deem it proper to set aside the impugned order and restore the assessment to the AO to verify the veracity of claim of the assessee and frame assessment afresh in accordance with law. Thus, grounds raised by the assessee in this appeal are allowed for statistical purposes.
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2023 (7) TMI 118
Levy of penalty u/s. 271(1)(c) - Defective notice u/s 274 - non striking of irrelevant portion - assessee contended that the notice issued before imposing penalty was not accordance with law and on this ground the order imposing penalty should be quashed - HELD THAT:- The show cause notice u/s. 274 r.w.s 271 of the Act is defective as it does not spell out the grounds on which the penalty is sought to be imposed. The Hon ble Karnataka High Court in the case of CIT vs. SSA s Emerald Meadows [ 2015 (11) TMI 1620 - KARNATAKA HIGH COURT] following its own decision in the case of CIT vs Manjunatha Cotton and Ginning factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] took a view that imposing of penalty u/s 271(1)(c) of the Act is bad in law and invalid for the reason that the show cause notice u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealment of particulars of income or furnishing of inaccurate particulars of income. It is also noticed that as against the decision of the Hon ble Karnataka High Court the revenue preferred an appeal in SLP [ 2016 (8) TMI 1145 - SC ORDER] preferred by the department. Appeal by the assessee is allowed.
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Benami Property
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2023 (7) TMI 117
Benami transaction - Title over property - Whether the suit property was purchased by the elder brother (deceased) in the name of the plaintiff (Brother) as benami? - trial Court dismissed the suit on the ground that the plaintiff has not proved his income to purchase the suit property - property had been purchased in favour of other coparcener by another coparcener and the defendants are also perfected title by adverse possession and non suited plaintiff by dismissing the suit - HELD THAT:- The plaintiff in his evidence clearly spoken that since Subramanian was the eldest brother of the family and residing in the suit property, the invitation was printed in the name of the husband of the first defendant and house warming ceremony was performed in his name and the same cannot be a ground to hold that the entire benami transaction is proved. The plaintiff also clearly explained how the custody of the original documents came to his brother. The specific case of the plaintiff is that during the proceedings before the planning authorities, the first defendant's husband required all the original documents. Therefore, the plaintiff had handed over all the original documents of the property to his brother Subramanian. The very fact that the first defendant's husband had appeared in that proceedings as a Lawyer and he had not claimed any right or shown any animus or hostile intention at the relevant point of time to hold that the suit property is his absolute property. The explanation given by the plaintiff with regard to the custody of the original documents is more probable. If really the plaintiff is not having any right over the property what was the necessity for the first defendant to send Ex.A8 postal card to her uncle. Therefore, the contention of the defendants the suit property was all along treated as absolute property of Subramanian cannot be countenanced. The defendants had not established the source for the purchase of the property by the first defendant's husband. The fact that how the custody of the documents came to the hands of the first defendant's husband was also clearly established by the plaintiff. Subramanian was in fiduciary relationship with his younger brother, since he is the eldest brother of the family and also he is a Lawyer by profession. Therefore, keeping the documents in his custody particularly, when he had prosecuted certain matters before the authorities on behalf of the plaintiff is quite possible. As far as the motive is concerned, the very motive for benami transaction is to defeat the rights of the first wife. Even such motive is true, the first defendant's husband kept silent even after his first wife relinquished her right in the year 1971 and he had not asserted his right independently as a owner. Whereas, he stood only as an agent of the plaintiff. Therefore, the plea of benami transaction has to fail. Merely because the defendants are in possession of the suit property and paying the house tax in their name, that will not be sufficient to prove the benami transaction. Admittedly, the first defendant was a practicing Lawyer and he was inducted into the suit property and he was residing there. Hence, it is normal for him to pay house tax and water tax and keeping the receipts with him. Therefore, merely on the basis of production of these receipts by the defendants, it cannot be concluded that the entire transaction is benami transaction. As also urged before this Court that the plaintiff had not established the so called pro-note, under which he had borrowed the amount to pay the advance amount. When Ex.B1, sale deed was perused, it makes it clear that only the plaintiff had paid the entire sale consideration. To establish the contention of the defendants that the plaintiff has no income to pay the sale consideration, one of the attesting witnesses was alive even during trial, but the defendants had not even taken any steps to examine him. Similarly, the vendor of the suit property was also not examined. This Court is of the view that the finding of the trial Court that the defendants perfected title by adverse possession is also not correct. In order to prove the plea of adverse possession, hostile intention and animus on the part of the defendant's husband has to be established. When Subramanian himself has not shown any animus and hostile intention to hold that the suit property is his absolute property, the plea of adverse possession has to necessarily fail. Though various judgments have been placed by the learned counsel for the defendants with regard to his contentions, the fact remains that the above judgments are not applicable to the facts of the present case. The plea of benami transaction has not been established by the defendants. Accordingly, all the points are answered. The judgment of the trial Court is set aside and the suit is decreed for declaration and recovery of possession and also the accounts as prayed for.
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Customs
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2023 (7) TMI 116
Allocation of quantities of raw pet-coke (RPC) - Increased allocation to Sanvira was set aside by the Division Bench of HC - Notification No 42/2015-20 and Public Notice No 50/2015-20 - stipulating the manner in which DGFT would allocate the quota of RPC to eligible CPC manufacturing units within the given ceiling limit. HELD THAT:- The facts reveal that the order of this court had fixed the outer limit of import of RPC at 1.4 million tonnes per annum. This was based on the assessment by EPCA which evaluated the requirements of various industries and units, engaged in the production of diverse commodities and raw materials (such as steel, aluminium, cement, clinker and those of calciners). The EPCA took into consideration the availability of appropriate grade domestic pet-coke, the overall impact on the environment and climate, of such essentially polluting feed based on this detailed examination, reported to this court, that 1.4 MMT ought to be the cap for imported RPC. From all the facts, it is evident that Sanvira kept on contending that its capacity was 3,30,000 MTPA. The minutes of the meeting dated 13.02.2020, also allude to the previous attempts by Sanvira, to have its capacity increased, as on 09.10.2018 in an effort to secure more allocation. All such contentions were rejected. In this background, the view expressed by the single judge, that the principle for allocation was changed somewhat in the public notice, dated 17.04.2020, is not tenable. This court is of the considered opinion that the view expressed by the impugned judgment is correct. Barring the fact that a clarification was issued on 04.05.2020, by the APPCB, there was no change in circumstance; the material document to be considered was the CTO, which for the relevant period (i.e. as on 09.10.2018) was 2,00,000 MT per annum, for Sanvira. Even according to it, the claim for enhancement was made later, and the CTO for the increased capacity was issued on 26.12.2019 - there is no infirmity with the findings and conclusions of the Division Bench, in the impugned judgment. Appeal dismissed.
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2023 (7) TMI 115
Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - failure in adhering to the timelines prescribed in the Customs Broker Licencing Regulations, 2018 - refusal of the inquiry authority to allow cross-examination of the two individuals whose statements were proposed to be used against them - violation of principles of natural justice - HELD THAT:- It is noted that lack of any finding on each of the charges levelled against them. Both these records merely note the facts leading to the suspension, the statements of the employee and exporters and justification for not permitting cross-examination - there are no finding on the charges that could justify the conclusion that these were correctly held to be proved. It is not in dispute that the derelict individual was discharged from employment and relived of his directorship promptly. It is also not alleged anywhere that the other directors were parties to, or cognizant of, the scheme of deception to avail incentives undeservedly. Nor is there any evidence the appellant derived any financial compensation, small or large, from the exporter. Indeed, the impugned order is categorical solely on the vicarious role of the appellant in the entire mis-demeanour. Therefore, the finding of charges for breach of regulation 10 of Customs Broker Licencing Regulations, 2018 has no basis at all. The appellant cannot be held to have been in breach of regulation 10 of Customs Broker Licencing Regulations, 2018, on failure to ensure responsible discharge of duties by an employee, which has not been repelled in their submissions, the charge of breach of regulation 13(12) of Customs Broker Licencing Regulations, 2018 must be held as proved - Detriment must, invariably, be proportionate to the offence. In the light of the truncated findings of ours, interests of justice would be adequately served by confirming the penalty of ₹ 50,000 under regulation 17 of Customs Broker Licencing Regulations, 2018. The revocation of licence and forfeiture of security deposit ordered under regulation 18 of Customs Broker Licencing Regulations, 2018 are set aside. The impugned order modified - appeal allowed.
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2023 (7) TMI 114
Smuggling of foreign origin betel nuts - conspiracy, with insinuations of international collusion - burden to prove under section 123 of Customs Act, 1962 - absolute confiscation - penalty - denial of benefit of exemption in notification 26/2000- Cus dated 1st March 2000 - HELD THAT:- The goods, packed in loose form in gunny bags made of jute, marked with BUDIMAN-90 , were found to tally with declared weight but substantially fewer than the declared number of bags. It was Shri Gulam Farooq Noorani who apparently confessed to the investigators that the marking on the bags were that of an Indonesian entity, M/s Swee Choon Co Pte Ltd, that Shri Deepak Sadhwani was the financier of the consignment and that he had sourced and arranged documentation for enabling M/s Silver Export to file bills of entry. The two partners admitted that they were in receipt of payments for each such container. The denial of exemption was based on the finding that the goods, being of Indonesian origin, were not entitled to the concessional rate of duty, intended for betel nuts harvested in Sri Lanka and conforming to Customs Tariff (Determination of Origin of Goods under Free Trade Agreement between the Democratic Socialistic Republic of Sri Lanka and the Republic of India) Rules, 2000. The impugned goods were confiscated under the authority of section 111(h) and 111(o) of Customs Act, 1962 and Shri Gulam Farooq Noorani was proceeded with under the authority of section 2(26) and section 2(39) as well as section11 of Customs Act, 1962, along with the two partners of M/s Silver Exports as also liable for the duty, fine and penalty recoverable from M/s Silver Exports. The authenticity of declaration of Sri Lankan origin is to be established by submission of certificate of origin as provided for in rule 11 of Customs Tariff (Determination of Origin of Goods under Free Trade Agreement between the Democratic Socialistic Republic of Sri Lanka and the Republic of India) Rules, 2000. That the declaration in the four bills of entry, covering the goods under seizure at Nhava Sheva, as well as that of goods already cleared was so supported is not in dispute - Here is an institution of the State of a contracting party that places such premium on lack of trust in institutional mechanism established by the Agreement, and with overriding effect, as to superimpose conventional ascertainment relied upon in domestic investigations under the garb of implied national interest. To approve of such travesty, merely on the ground of noble intentions, is to put the stamp of approval on whittling of the authority of the State from within. Seizure of the consignment at Nagpur is a brazen act of intrusion. As pointed out by Learned Counsel, betel nuts are not included in section 123 of Customs Act, 1962. Implied resort to this particular exception to the principle of smuggling having to be established by customs authorities, by seizure of goods that were not in a customs area and requiring the owners to produce evidence of provenance, is contrary to Customs Act, 1962 - The scope of section 123 of Customs Act, 1962 has been implicitly expanded by executive overreach inasmuch as the enactment, presupposing illegal entry into the country has been invoked in relation to an agricultural product, predominantly originating in India, and, thereby, upturning the logic for existence of section 123 of Customs Act, 1962 on its head. The confiscation of 148.230 MT of betel nuts at Nhava Sheva under section 111 of Customs Act, 1962 is invalid for being consequent upon determination of origin in the absence of compliance with procedure laid down in Customs Tariff (Determination of Origin of Goods under Free Trade Agreement between the Democratic Socialistic Republic of Sri Lanka and the Republic of India) Rules, 2000. In the absence of that validating ascertainment, the liability to duty other than in accordance with exemption in notification no. 26/2002-Cus dated 1st March 2002 is contrary to law - Fines imposed under section 125 of Customs Act, 1962 are, therefore, set aside as also penalties under section 112 and 114AA of Customs Act, 1962. Confiscation of 106.11 MT of betel nuts at Nagpur under section 111 of Customs Act, 1962 is set aside. Penalties under section 112 and 114AA of Customs Act, 1962 are also set aside. Appeal allowed.
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2023 (7) TMI 113
Confiscation - Smuggling of Betel Nuts - discharge of burden to prove u/s 123 of Customs Act - whether Revenue has established the allegation that the seized betel nuts are of foreign origin and are smuggled? - HELD THAT:- Ongoing through the records of the case, it is seen that Appellant has submitted documents that the goods were imported from Myanmar under Indo Myanmar Trade Agreement at a concessional 5% Customs duty - It is found that the investigation has not adduced any evidence with regard to proving smuggled character of the goods, other than finding some contradictions in the documents produced by the Appellant. That from the circumstances leading to seizure, it is found that the place of loading being Silchar, Assam, place of detection being mainstream Assam and both the places are far away from Indo Myanmar Border in Mizoram. Betel nuts are produced hugely in Mizoram Assam. Directorate of Areca Nut and Spices Development (DANSD,), Ministry of Agriculture, Govt. of India, has published report regarding areca nut production in all the states of India including Mizoram and Assam. Report shows Assam is the second highest grower of Betel nuts and the Mizoram is the 8th highest grower in India. No prudent person on visual examination can ascertain as to whether the Betel nuts under seizure were of Myanmar origin and that too smuggled, when place of seizure is mainland of the country, far away from border - There existed no reasonable belief which is a pre-condition for making seizure under Section 110 of the Customs Act, 1962. The betel nut is not notified under Section 123 of the Customs Act, 1962 and therefore, the burden of proof lies with the department to prove the same. It s not just enough to prove by negative inference of the documents produced by the appellant on microscopic analysis to find fault. Allegation requires to be proved by cogent and positive evidence. Find that no such positive evidence has been put forth by the department. There is not even a reference or narration as to how and wherefrom the impugned goods are smuggled - Tribunal in the case of DHARMENDRA KR. JHA VERSUS COMMISSIONER OF CUSTOMS (P) , PATNA [ 2015 (11) TMI 1639 - CESTAT KOLKATA] held that betel nut is not a notified commodity under Section 123 of the Customs Act, Act 1962 and the onus is on the department that seized goods were in fact smuggled in to India. We find that the department has not discharged its burden. Seizure of impugned betel nut is not justified and needs to be set aside. Therefore, nothing survives in the case and appeal is liable to be allowed - appeal allowed.
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PMLA
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2023 (7) TMI 112
Money Laundering - seeking review of order of Supreme Court - SCN sought to be quashed on the ground that Bench constituted under clause (b) of sub-section (5) of section 6 of the PMLA, 2002, did not have a Judicial Member - HELD THAT:- The Supreme Court in numerous judgments has held very clearly that such practice of filing application for modification/clarification of judgment rendered must be deprecated as in actual what it seeks is a review or revision of the judgment which is not permissible. In INDIAN COUNCIL FOR ENVIRO-LEGAL ACTION VERSUS UNION OF INDIA OTHERS [ 2011 (7) TMI 1109 - SUPREME COURT ] the Supreme Court examined whether a final judgment of the Supreme Court could be reopened by merely filing interlocutory applications. It was held that a final judgment cannot be reopened by merely filing interlocutory applications where all possible legal remedies have been fully exhausted. In the case before the Supreme Court two interlocutory applications had been filed after the Supreme Court had pronounced the judgment. It was held that permitting the parties to reopen the concluded judgments by filing repeated I.As is clearly an abuse of the process of law and would have a far reaching adverse impact on the administration of justice. It was open for the applicant to have preferred a review petition before the learned Single Judge or an appeal before the Division Bench of this Court or even a Special Leave Petition before the Supreme Court against the judgment dated 22.09.2015 within the prescribed time if they were not satisfied with it - Even if this Court was to consider the application for modification/clarification as one filed under Section 482 Cr.P.C. which is the inherent power of this Court to prevent abuse of the process of any Court or otherwise to secure the ends of justice it cannot come to aid a litigant to abuse the process of administration of justice. Application dismissed.
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Service Tax
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2023 (7) TMI 111
Levy of Service tax - Composite Maintenance Contract - erection and installation of water treatment plants its repair etc. - it was held by CESTAT that The entire plant was handed over by TWAD Board to Appellant for operation and completing the contract to TWAD Board in rendering such activities, even if the Appellant undertakes the maintenance or repair services which are for self and the services of management, maintenance or repair are not attracted as the same is not provided to any client/customer and there are no hesitation in holding that the demand of service tax is not sustainable. HELD THAT:- Having gone through the impugned judgment and order passed by the Customs, Excise and Service Tax Appellate Tribunal, no interference of this Court is called for. The Appeals stand dismissed.
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2023 (7) TMI 110
Adjudication of show cause notice after much delay from the date of personal hearing - Construction of residential complex - quantification of the receipts offered towards construction - HELD THAT:- Department contended that, the onset of GST had itself brought with it, several difficulties including integration with technology and streamlining of processes, and hence all officers were required to address the difficulties on a real-time basis. This is what had led to the delay in adjudication. They would point out that this was not a case where the delay had been either wanton or wilfull, but the officer had been truly burdened with the pressure of work. On the ground of bar of limitation of delay in adjudication, I would agree with the petitioner that the reasons assigned for such delay on the part of the Department do not justify the same. However, in deciding matter whether such delay is fatal to the proceedings, it is urged that the Court take note of the merits of the issues as well. Suppression of Receipts - HELD THAT:- In the case of the first petitioner the issue that arose on merits related to the quantification of the receipts offered towards construction. The first petitioner, had entered into construction agreements, which were not required to be registered at that point in time and were, hence, unregistered-Registered sale deeds were executed - While the construction agreement reflected the value of the land as 'X', the registered sale deed reflects an amount less than 'X'. According to the Department, the difference between X and Y, in fact, represents receipts from construction services hitherto suppressed and hence, such alleged suppressed receipts were brought to tax. In arriving at this conclusion, the assessing authority has compared the value of land as adopted under the construction agreement and that, as adopted in the registered sale deeds. In the reply filed, the submission of the petitioners is legalistic, to state that land value could not be presumed to be suppressed receipts from construction services. While theoretically, the petitioner may be right, it is the case of the assessing officer that the veil is to be lifted and the true receipts from the constructions are to be determined. The response of the assessee does not reveal any satisfactory explanation in regard to the difference in land cost vis-a-vis the construction agreement and sale deeds. Works contract service - classification of services - HELD THAT:- As far as the case of the second petitioner is concerned, its case is that the classification of the service is itself incorrect and that the petitioner had constructed only individual villas, the receipts from which would not be amenable to tax at all. It has relied upon the judgment of the Hon'ble Supreme court in the case of Macro Marvel Projects Ltd v Commissioner of Service Tax [ 2008 (9) TMI 80 - CESTAT, CHENNAI] as well as other judgments that according to it, have not been considered in proper perspective. For the above reasons, and on a consideration of the rival contentions, the impugned order is set aside and this matter is remitted to the file of the respondent for de novo consideration as well. Petition disposed off.
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2023 (7) TMI 109
Appropriate forum of appeal - HC or SC - Taxability of service - Collection Agency Services in relation to Securitization deals originated prior to February, 2006 or not - invocation of Section 73(4) is instead of 73(1) of the Finance Act, 1994, mistakenly - Liquidity Facility is in breach of the exemption afforded to interest - HELD THAT:- From the perusal of Section 83 of the Finance Act, 1944, it is clear that Section 35G and Section 35L of the Central Excise Act, 1944 are made applicable in relation to service tax, as they apply to the rate of excise duty. Section 35G provides for Appeal to High Court. Sub-section (1) thereof clearly provides that an appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal on or after the 1st day of July, 2003, however, not being an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment, if the High Court is satisfied that the case involves a substantial question of law - there is clear exclusion in regard to appealability of an order not being an order relating to the determination of any question having a relation to the rate of duty of excise or to the value of goods for the purpose of assessment. On a cumulative reading of the provisions of Section 83 of the Finance Act, 1944 read with the provisions of Section 35G and 35L of the CE Act, it is opined that necessarily the law itself provides that an appeal would lie to the Supreme Court from an order passed by the Appellate Tribunal. The question which arises for determination is one having a relation to the rate of duty of excise or to the value of goods for purposes of assessment. The remedy for the appellant in terms of what has been provided for under section 35G(1) read with Section 35L(1)(b) would be to approach the Supreme Court by filing an appeal - appeal disposed off.
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2023 (7) TMI 108
Classification of service - Business Support Service (BSS) or Legal Consultancy Service - levy of service tax - Management, Maintenance and Repair Services - extended period of limitation - penalty. Classification of services - Business Support Service (BSS) or Legal Consultancy Service? - income from legal and professional charges - HELD THAT:- The bare perusal of the definitions reveal that whenever a business entity gives any opinion or offers expert or professional advice or any other business entity in any branch of law it will be called as Legal Consultancy Service . However, when advice consultancy or assistance is provided purely to the banks/ financial institutions with respect to sanctioning of loans to their clients by way of verification of documents provided by the customers of these banks/financial institutes for the purpose of availing the credit facility, the service rendered, is for the appraisal of business reports with respect to the verification of the clients, of the banks/Financial Institutions, through concerned authorities. It is observed that though appellants were drafting and preparing legal reports but only for banks/financial institutions that too for ensuring the viability of loan and for verifying the property title documents for which such verification was sought by such banks. It is opined that such activity is nothing beyond a due diligence of financial records of the customers of these banks/ financial institutions. Thus it cannot a service provided as assistance in any branch of law. It actually becomes the service provided to a business entity/a financial institute/bank, to support the business or commerce of the said bank - These observations are sufficient for us to hold that the services, in question, have rightly been held to be the Business Support Service which is a taxable service. Any consideration received by the appellant for rendering such service is therefore liable to tax - there are no infirmity in the order under challenge when the demand of Rs. 16,19,972/- has been confirmed for the period from 2006-2007 to 2009-2010. Management, Maintenance and Repair Services - maintenance charges received for the services covered this category - HELD THAT:- Admittedly, generate income by way of maintenance charges towards the maintenance of documents and towards the security of documents by keeping the same at the premises of the appellants - the scope of the impugned service is to include reconditioning or restoration of any goods or equipments, except motor vehicles. Goods as per the dictionary meaning are the items which are meant for sale or for possession. Under Sale of Goods Act, 1930, any movable property except the actionable claims and money, stock and shares etc. are goods. The literal meaning of the word is that it connotes to anything which satisfies human desires provide utility and which can be produced or exchanged or consumed. Admittedly the appellant while maintaining and restoring those documents was charging its clients viz. banks/Financial Institutes for the same, for keeping those documents in its safe custody/security also appellant was receiving consideration - while doing this activity for their clients, the appellants were actually rendering the service of Maintenance, Management or Repair Service . Hence, there are no infirmity in the findings arrived at by the Adjudicating Authority while confirming the demand on this count. Extended period of limitation - HELD THAT:- The appellants were rendering Business Support Services and Management, Maintenance or Repair Service . Apparently neither appellants nor their main unit M/s JNG Properties Leasing Pvt. Ltd. are registered for providing later service, to that effect it sufficiently amounts to suppression of facts. It was definitely the obligation of the appellant to bring-forth the fact of non-registration for any other services except for Business Auxiliary Service to the notice of department. The silence definitely amount to suppression of fact, there are no infirmity when extended period of limitation has been invoked by the Department while issuing the show cause notice. Penalty - HELD THAT:- There are no infirmity in the detailed analysis given by the original Adjudicating Authority while imposing penalties under Section 76, 77 and 78 of the Finance Act which have duly been upheld by Commissioner (Appeals) in the order under challenge. However, the Commissioner (Appeals) has invoked proviso (ii) to Section 76 of the Act subject to verification on the basis of the fact that the entire demand was paid by the appellant at the initial stage only - there are no infirmity in the said realization also. Appeal dismissed.
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2023 (7) TMI 107
Non-payment of service tax - amount paid to foreign insurance companies for reinsurance as well as on the amount received by them from other insurance companies in the domestic sector - period May 06 to March-08 - Rule 2(i)(d)(iv) of the service tax rules, 1994 - HELD THAT:- The reinsurance premium was liable to service tax only w.e.f.01.05.2005 when the definition was amended to include re-insurer also as insurer. Thus, there were some confusion regarding payability of service tax on the re-insurance premium paid to foreign insurance companies. The issue became clear only after the issue of Taxation of Services (Provided from outside India and received in India ) Rules, 2006. After this, the Appellant has agreed their liability and paid service tax on the re-insurance premium paid by them to foreign companies. Thus, it is observed that there was no intention to evade payment of service tax on the part of the Appellant. In such cases, no penalty imposable under Section 78 of the Finance Act, 1994. Reliance placed in the case of M/S. C.C.I. LOGISTICS LIMITED VERSUS COMMISSIONER OF CGST CX, KOLKATA NORTH COMMISSIONERATE (ERSTWHILE SERVICE TAX-I KOLKATA COMMISSIONERATE) [ 2021 (6) TMI 546 - CESTAT KOLKATA ] where it was held that Since the tax amount alongwith interest has already been deposited by the assessee, I do not find any reason to uphold the penalty amount in absence of evidence of fraud or suppression with an intent to evade payment of tax. Hence, the penalty imposed is set aside. There was no mala fide intention on the part of the Appellant to evade payment of service tax. Accordingly, the penalty imposed under section 78 of the Finance Act, 1994, is liable to be set aside - there is no ingredient available in this case to impose penalty under section 76 of the Finance Act , 1994. Accordingly, the Department appeal is liable to be rejected - The department appeal is rejected.
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2023 (7) TMI 106
Recovery of short paid duty alongwith interest and penalty - SCN received beyond the maximum period of 5 (five) years as prescribed under the proviso to section 73 of Finance Act 1944 - extended period of limitation - HELD THAT:- The impugned Show Cause Notice was issued on 18th October, 2018 pursuant to an information received front the income tax department vide letter No.3381-3530 dated 07.06.2018 based on the said information the demand for the year 2013-14 and 2014-15 was being proposed vide the said Show Cause Notice of 2018. The further apparent fact from the earlier Final Order of this Tribunal dated 04.04.2022 is that it has already been held that the notice as was issued on 18.10.2018 was got served upon the appellant only on 25.09.2020. The order under challenge has been passed on 13.07.2022 pursuant to the directions vide the aforesaid Final Order dated 04.02.2022 to adjudicate the appeal based on the merits after providing the opportunity of hearing/representation to the appellant. In an earlier decision of this Bench in the case of M/s.Beno Prabhakar as brought to the notice by the ld. Counsel for the appellant, it was held that when it stands proved that SCN was not served upon the appellant within the statutory extended period the non-service thereof vitiates the entire demand. It is not merely the violation of principle of natural justice but the demand itself cannot sustain for it to be barred by time. Thus, it is held that the demand in question is not sustainable for the reason that the Show Cause Notice itself is barred by time as it could not be served upon the appellant within the maximum period of 5 (five) years - appeal allowed.
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Central Excise
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2023 (7) TMI 105
Cenvat credit on capital goods - No credit was availed in the initial (first) year - Whole of the credit (100% credit) was availed in the subsequent year - contravention of Rule 4(2)(a) of Cenvat Credit Rules 2004 on the ground of nonavailment and utilization of Cenvat Credit in its initial period - N/N. 32/99-CE dated 08.07.1999 - time limitation - HELD THAT:- The due date of filing of monthly Returns and Refund claim for the month of April, 2007 was 7th of May 2007. Had there been any dispute of wrong availment of Cenvat credit, the department should have issued the impugned show cause notice by 7th of May, 2008, whereas, the show cause notice was issued on the appellants on 17th November 2008 after a lapse of more than one year from the date of submission of first ER-I return and Refund claim under Notification No.32/99-CE dated 08.07.1999 - the impugned order-in-Original dated 31.12.2009 is not sustainable on the ground of limitation and liable to be set aside. A plain reading of the provisions of Rule 4(2)(a) of the Cenvat Credit Rules, 2004 makes it clear that a manufacturer can take credit in the financial in which the capital goods are received for an amount not exceeding 50% of the specified duty paid on the capital goods. The balance credit is permitted to be taken in any financial year subsequent to the financial year in which the capital goods were received in the factory of manufacture . There is neither restriction nor compulsion to avail and utilize Cenvat credit on capital goods in the initial year of receipt of capital goods. The Appellant at their discretion may or may not opt for avail and utilize the Cenvat credit on capital goods in the initial year. The contention of the department that the Appellant contravened the provisions of Cenvat credit by not utilizing 50% of the capital goods in the first years of its receipt is misconceived and not tenable in the eyes of law - the Appellant has not violated any provisions of the Cenvat Credit Rules, 2004, by foregoing the credit in the initial years of its receipt and availing the full credit in the subsequent year. There was no violation in the refund sanctioned to the Appellant - the impugned order is liable to be set aside on merit also - Appeal allowed.
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CST, VAT & Sales Tax
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2023 (7) TMI 104
Reversal of input tax credit against the supply - purchase of materials from a dealer whose registration has been cancelled - basis of the cancellation of registration of the selling dealer, not provided to appellant - violation of principles of natural justice - HELD THAT:- Admittedly, the details of such cancellation has not been furnished to the appellant. In any event, the appellant having availed the input tax credit against the inward supply cannot be directed to reverse the input tax credit by way of an email communication without mentioning as to what was the basis of the cancellation of registration of the selling dealer. There are no need to travel far to examine the correctness of the direction issued by the respondent department to the appellant, without furnishing any details to the appellant, the respondent could not have directed reversal of the input tax credit, which was availed by the appellant and it is informed that the appellant was compelled to pay the amount and without prejudice to their rights have paid the amount - the procedure adopted by the authority for directing reversal of the input tax credit and thereafter compelling the appellants to pay the amount is not sustainable in the eye of law but will be in violation of the principles of natural justice. Communication sent by the authority by an email dated 20th December, 2022 is set aside with a direction to the authority to remit the amount of input tax credit which was reversed by the appellant on effecting payment without prejudice to their right by transmitting the same amount in the appellants electronic credit ledger - Petition allowed.
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Indian Laws
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2023 (7) TMI 103
Non-grant of bail - petitioner has already completed 16 years 9 months and 18 days in actual custody - HELD THAT:- In the facts of the present case, when we called for the details arising from non-uploading of order dated 04.08.2022 vide order dated 08.05.2023, the Bench chooses to release the matter on 11.05.2023 - We are of the view that thereafter the matter was required to be handed over to another Bench, more so, in the manner it has proceeded even thereafter, simply being assigned to the same Bench and thereafter being concluded on that date by the same Bench. The appellant has been in custody for 16 years 9 months and 18 days (as on 09.04.2023). Despite the opposition by the learned counsel for the complainant, there are little option but to release the appellant on interim bail in the present case in view of what we had recorded aforesaid subject to the final judgment. The Bench is requested now assigned to take up the matter as expeditiously as possible - appeal stands disposed of.
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2023 (7) TMI 102
Allegation of Murder - whether the prosecution has succeeded in proving its case against the accused appellants, beyond reasonable doubt, on the basis of evidence led in the matter? - whether the conviction and sentence awarded to the two accused appellants is just and proper or not? HELD THAT:- The fact that PW-4 was a related and chance witness whose testimony needed a closure scrutiny has completely escaped the attention of the court below. The limited faculties of PW-4 at the advance age of 80 years has also been overlooked. The questions raised with regard to timing of incident as per the prosecution has also been overlooked only on the ground that couple of hours variation can be expected in the assessment of time. Though as a matter of prudence such difference can be ignored but where the prosecution case is seriously challenged on other parameters also the court will have to view the evidence in its entirety so as to determine whether the deposition of the witnesses contains a ring of truth around it. The delay occasioned in recording of the statement of PW-4 has also escaped the attention of the court below. In the case before the Supreme Court in RAJESH YADAV ANR. ETC. VERSUS STATE OF U.P. [ 2022 (2) TMI 1299 - SUPREME COURT] the witness had initially supported the prosecution case in the examination-inchief but turned hostile, later, at the stage of cross-examination. The Supreme Court has deprecated the adjournment of trial after the statement of witness is recorded in examination-in-chief as such time is utilized either to win over the witness or to extend threats etc. In the facts of the present case the witnesses who have turned hostile have not supported the prosecution case at the stage of examination-in-chief itself. The judgment of Supreme Court in Rajesh Yadav, therefore, though lays down important principle for guidance of the Court but is not shown to have relevance on the facts of this case. The first principle laid down by the Supreme Court for evaluation of ocular evidence is that the evidence of witness has to be read as a whole in order to ascertain that it has a ring of truth around it - the testimony of the sole eyewitness are examined on the touchstone of an interested chance witness and it is found that his testimony is shaky and does not inspire confidence of the Court. On the evaluation of evidence led by the prosecution in this case and on the basis of discussions held above, we find that it would not be safe to rely upon the testimony of sole eye-witness, namely PW-4, to convict the accused appellants under Section 302, 506 IPC. The finding returned by the court below with regard to guilt of the accused appellants is, therefore, liable to be reversed - the appellants are acquitted of the charges levelled against them. Since the appellants have already been released on bail by the Supreme Court, as such, their sureties and bonds shall stand discharged and they shall be set free, unless they are wanted in any other case, subject to compliance of section 437A Cr.P.C. Appeal allowed.
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