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TMI Tax Updates - e-Newsletter
August 13, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Profiteering - Sanitary Napkin - allegation is that the Respondent did not pass on the benefit of exemption of GST on Sanitary Napkin by way of commensurate reduction in price - , since the recipients of the benefit, as determined, other than the Applicant, are not identifiable, the Respondent is directed to deposit an amount of Rs. 2,094/- in two equal parts of Rs. 1047/-each in the Central Consumer Welfare Fund and the Uttar Pradesh Consumer Welfare Fund as per the provisions of Rule 133 (3) (e) of the CGST Rules 2017, along with interest payable @ 18% to be calculated from the dates on which the above amount was realized by the Respondent from, his recipients till the date of its deposit in the said fund. - NAPA
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Profiteering - construction service - This benefit was required to be passed on to the recipients. Thus. Section 171 of the CGST, 2017 has been contravened by the Respondent, inasmuch as the additional benefit of ITC @5.86% of the base price received by the Respondent during the period 01.07.2017 to 31.03.2019, was required to be passed on by the Respondent to 17 recipients - NAPA
Income Tax
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Payment of interest u/s 244A on the amount of refund payable to the assessee - CIT(A) concluded that the claim of ‘interest’ by the respondent for the refund amounts to 'interest on interest' and held that it is beyond the scope of Section 244A - ITAT allowed the claim - the assessee has been found entitled to refund of money deposited by it upon re-computation by the Revenue and interest thereon is liable to be paid under Section 244A(1)(b) - HC
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Rental income from letting out of the factory building - Profits and gains of business or profession OR Income from Other Sources - the intention of the assessee was to lease out both the assets to the same lessee and the usage of the two assets was inseparable. - The income earned by the assessee, under both the streams, have rightly been held to be assessable u/s 56(2)(iii) which provide for assessment of income as Income from other sources - AT
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Jurisdiction of AO to issue notice u/s 143(2) - notice u/s 143(2) was issued by one AO and the assessment has been completed by another AO - The provisions of sub-section (4) of section 127 will be applicable only when there is an order under section 127 of the Act. Since the Department was not able to show any order passed under section 127 of the Act, this argument of the ld. Counsel for the assessee is also accepted. - AT
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Accrual of income - Difference between the receipts as per books and form No.26AS - Assessee has shown turnover of Rs.10.09 crores, declaring GP at 9.16% and Net Profit of 3% during the year. Having disclosed such huge turnover, and disclosed appropriate net profit and having duly explained the difference in the turnover, as reflected in its books and in Form No.26AS there is no reason to believe that the assessee had wrongly not disclosed sales on these very small amount of Rs.3.00 lakhs and Rs.21 lakhs (approximately) from the aforesaid two parties. - AT
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Revision u/s 263 - the AO also mentioned in the order that “The Documents as submitted by the assessee were examined and placed on record”, however no remark on the issue has been made by the AO in assessment order, therefore this shall be considered that the AO was satisfied with the enquiries made. Our considered view on this issue is that, if Pr. CIT/CIT is of the view that any enquiry is necessary in the matter, then he should either himself make such enquiry or may get such enquiry conducted. - Revision order quashed - AT
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Rectification u/s 154 - Deduction u/s 80IB - audit report in Form-10CCB was not filed along with the return of income - The ld. CIT(A) has rejected the appeals by holding that there was no mistake apparent from record. However, while holding so, he escaped the contents of Circular No.689 dated 24.8.1994 which clearly directs the Officers to allow rectification u/s. 154 for non filing of audit report or other evidence which could not be filed with the return of income. - Rectification allowed - AT
Customs
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Denial of refund - Non adhering to the instruction given by the CBEC - The CBEC circular and the instructions bind the Customs Authorities. In any case, the Customs Authorities are bound by the various decisions referred above, not to mention the solemn assurance on behalf of the Union of India that in the future, adequate care would be taken to follow the law laid down by this Court scrupulously. - HC
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Eligibility for exemption - it is undisputed that they intercepted boats used by the Coast Guard Ministry of Defence Government of India is only for security of the costal border of the country and the boats are not used for any other purpose. It is also undisputed that the said interceptor boat are equipped with arms and ammunition, therefore, it is absolutely without any doubt that the interceptor boat is a warship - Benefit of exemption available - AT
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Refund claim - refund rejected on the ground that the bills of entry under which assessments were made were not assailed - refund of duty is a mechanical process of returning the excess duty paid. The officer sanctioning refund cannot sit in judgment or modify the assessment by the assessing officer. Any modification to the assessment is possible either by an appeal before the Commissioner (Appeals) or by issue of a notice under section 28. It was, therefore, held that no refund can be sanctioned so as to modify the assessment of bill of entry. - AT
Service Tax
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Refund claim - time limitation - The authorities and for that matter this Tribunal, being creatures of the statute cannot extend the period of limitation or pass an order to the effect that delayed submission of refund would not disentitled to the refund, even if it pertains to refund of duty paid, which is subsequently, held to be non-payable. - AT
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Extended period of limitation - works contract - suppression of facts or not - Unless the adjudicating authority had come to a conclusion that the extended period of limitation was rightly invoked in the show cause notice, it could not have confirmed the demand for any period beyond the normal period of limitation. - It is, therefore, clear that the suppression of facts should be deliberate and in taxation laws it can have only one meaning, namely that the correct information was not disclosed deliberately to escape payment of duty. - AT
Central Excise
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Absolute Confiscation - cash seized from the residential premise of Director of M/s PML and from the residence of alleged broker/agent for cenvatable invoices - When two authorities of the Department i.e. the Adjudicating Authority as well as the Appellate Authority have given categorical findings against the allegations made in the show cause notice giving cogent reasons, the Department is attempting to take the issue back to the beginning by filing these appeals. The Department has not made any case for confiscation of cash seized - AT
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Extended period of limitation - Reversal of CENVAT Credit - It is well settled law that onus is on the Department to prove that extended period of limitation is invokable by adducing evidence. In the present case, no such evidence has been adduced by the Department. - AT
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Lesser sanction of refund claim and non-payment of interest - The department was required to sanction the amount as claimed in the original refund application, which was rejected by the original authority, but the Appeal of the Appellant was ultimately allowed by the Tribunal. The department is directed to refund the amount, as claimed in the original refund application filed by the respective Appellants. - Interest also directed to be paid - AT
VAT
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Validity of demand - order has been passed without proper notice to petitioner - Before passing any order, a personal hearing shall be given to petitioner with atleast seven working days advance notice. After the personal hearing, petitioner, should they wish to file written submissions recording what transpired during the hearing, those written submissions shall be submitted within three days after the personal hearing. The order to be passed shall be a well reasoned order discussing every submission made by petitioner and the order shall give a finding on every submission made by petitioner - HC
Case Laws:
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GST
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2022 (8) TMI 531
Profiteering - purchase of Flat - allegation is that the Respondent had not passed on the full benefit of ITC to them by way of commensurate reduction in prices - contravention of provisions of section 171 of CGST Act - interest - penalty - HELD THAT:- The Applicant No. 1 and 2 had filed complaint against Respondent alleging that the Respondent had not passed on the benefit of ITC to them by way of commensurate reduction in prices on the purchase of Flat No.s 1002 1003 respectively in his The Elegance Project which was being executed by the Respondent at Partap Nagar in Jaipur. The said complaint was examined by the Standing Committee on Anti-Profiteering and forwarded to the DGAP for detailed investigation, who vide his investigation Report dated 30.12.2020 furnished to this Authority, had stated that the The Elegance , Project of the Respondent, was constructed under Joint Development Agreement (JDA) with M/s Jaipur Constructions M/s GPM Infrastructure Pvt. Ltd. under revenue sharing basis at 50:50 ratio. Construction of project was to carried out by the Respondent on his own account and own expenses. Since the entire cost of all purchases of inputs, capital goods and input services for construction of all units of the impugned project was incurred by the Respondent hence he had availed Input Tax Credit on tax paid on said inputs, capital goods and input services during pre and post GST periods. The DGAP had also found that since the Respondent has not reduced the basic prices of his flats/units by 4.80% due to the additional benefit of ITC and had charged GST at the increased rate of 12% on the pre-GST basic prices hence he has contravened the provisions of Section 171 of the CGST Act, 2017 and Rules made thereunder. The DGAP had observed that as mentioned above, the benefit of Rs. 16,49,897/- was required to be passed on to 39 flat buyers/customers/recipients including Applicants by the Respondent for the period from 01.07.2017 to 31.03.2019 if not already passed on. Since, the ratios calculated by the DGAP are based on the factual record submitted by the Respondent, hence the computation made by the DGAP can be relied upon while computing the profiteered amount. The above methodology has been approved by this Authority in all the cases where the benefit of ITC was required to be passed on to the flat buyers / customers / recipients. The above methodology is appropriate, logical, reasonable, and in consonance with the provisions of Section 171 of the CGST Act, 2017. Interest - HELD THAT:- Since the home buyers/customers/recipients are identifiable as per the documents placed on record, the Respondent is directed to pass on an amount of Rs. 16,49,897/- to 39 home buyers/customers/recipients, out of which the amount required to be passed on to the Applicant No. 1 and 2 is Rs. 1,08,480/- and 1,55,904/- respectively if already not passed on. Such amount shall be passed on/ returned along with the interest @ 18% per annum from the dates from which the above amount was collected by him from them till the payment is made, as prescribed under Rule 133 of the CGST Rules, 2017 within a period of 3 months from the date of passing of this order as per the details mentioned in Annexure-21 22 attached with the Report dated 31.12.2020. The details of the homebuyers/customers/ recipients along with profiteered amount due to each of them is attached as Annexure A to this Order. Penalty - HELD THAT:- The Authority finds that, vide Section 112 of the Finance Act, 2019 specific penalty provisions have been added for violation of the provisions of Section 171 (1) which have come in to force w.e.f. 01.01.2020, by inserting Section 171 (3A). Since, no penalty provisions were in existence between the period from 01.07.2017 to the period of investigation and to which this Order is passed, when the Respondent had violated the provisions of Section 171 (1), the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent retrospectively for such period. This Order having been passed today falls within the limitation prescribed under Rule 133(1) of the CGST Rules, 2017. Application disposed off.
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2022 (8) TMI 530
Profiteering - Sanitary Napkin - allegation is that the Respondent did not pass on the benefit of exemption of GST on Sanitary Napkin by way of commensurate reduction in price - contravention of of Section 171 of the Central Goods Service Tax Act - penalty - HELD THAT:- The Authority determines that the Respondent have profiteered by an amount of Rs. 2096/- as has been computed in Annexure 21 of the DGAP report for exemption of GST w.e.f. 27.07.2018 and had not been passed on to his Recipients by way of commensurate reduction in prices of Sanitary Napkins during the period of investigation i.e. 27.07.2018 to 31.10.2020. Further, since the recipients of the benefit, as determined, other than the Applicant, are not identifiable, the Respondent is directed to deposit an amount of Rs. 2,094/- in two equal parts of Rs. 1047/-each in the Central Consumer Welfare Fund and the Uttar Pradesh Consumer Welfare Fund as per the provisions of Rule 133 (3) (e) of the CGST Rules 2017, along with interest payable @ 18% to be calculated from the dates on which the above amount was realized by the Respondent from, his recipients till the date of its deposit in the said fund. The Respondent is also directed to whim/pass on the benefit of Rs. 1.78 along with interest @18% as prescribed to the Applicant. Penalty - HELD THAT:- The Respondent has denied the benefit of exemption of GST w.e.f. 27.07.2018 on Sanitary, Napkins Section to the customers in-contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and he has thus committed an offence Under Section 171 (3A) of the Act and therefore, he is liable for imposition of penalty under the provisions of the above Section. Section 171 (3A) of the CGST Act, 2017 has been inserted in the CGST Act, 2017 vide Section 112 of the Finance Act, 2019, and the same became operational w.e.f. 01.01.2020. As the period of investigation was 27.07.2018 to 31.10.2020, therefore, the Respondent is liable for imposition of penalty under the provisions of the above Section. Accordingly, notice be issued to him to explain why penalty as prescribed under Section 171 (3A) should not be imposed him. This Order having been passed today falls within the limitation prescribed under Rule 133(1) of the CGST Rules, 2017.
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2022 (8) TMI 529
Profiteering - construction service - allegation is that the Respondent had not passed on the benefit of ITC by way of commensurate reduction in the price - Contravention of Section 171 of the CGST Act, 2017 - interest - penalty - HELD THAT:- The Authority finds that the benefit of additional Input tax Credit of 5.86% of the turnover has accrued to the Respondent for the project Sanghvi Solitaire . This benefit was required to be passed on to the recipients. Thus. Section 171 of the CGST, 2017 has been contravened by the Respondent, inasmuch as the additional benefit of ITC @5.86% of the base price received by the Respondent during the period 01.07.2017 to 31.03.2019, was required to be passed on by the Respondent to 17 recipients including the Applicant no. These recipients are identifiable as per the documents provided by the Respondent, giving the names and addresses along with Unit no. allotted to such recipients - the Authority determines that the Respondent has profiteered an amount of Rs. 54,14,439/-. Interest - HELD THAT:- The Authority under Rule 133(3)(a) of the CGST Rules, 2017 orders that the Respondent shall reduce the prices to be realized from the buyers of the flats/customers commensurate with the benefit of ITC received by him. The details of the recipients and benefit which is required to be passed on to each recipient/ homebuyer (including Applicant No. 1) along with the details of the unit are contained in the Annexure A to this Order. The Authority directs that the profiteered amount as determined shall be passed on/returned by the Respondent to the recipients of supply along with interest @18%., as prescribed under Rule 133(3)(b) of the CGST Rules, 2017, from the date such amount was profiteered by the Respondent up till the date such amount is passed on/retuned to the respective recipient of supply (if not already passed on) within a period of three Months from the date of this Order failing which it shall he recovered as per the provisions of the CGST Act, 2017. Penalty - HELD THAT:- The Authority holds that the Respondent has committed an offence by violating the provisions of Section 171 (1) during the period from 01.07.2017 to 31.03.2019, and therefore, he is liable for imposition of penalty under the provisions of Section 171 (3A) of the above Act. However, persual of the provisions or the said Section 171 (3A) shows that it has been inserted in the CGST Act, 2017 w.e.f. 01.01.2020 vide Section 112 of the Finance Act, 2019 and it was not in operation during the period from 01.07.2017 to 31.03.2019 when the Respondent had committed the above violation. the said penalty under Section 171 (34) cannot he imposed on the Respondent retrospectively. This Order having been passed today falls within the limitation prescribed under Rule 133(1) of the CGST Rules, 2017. Application disposed off.
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Income Tax
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2022 (8) TMI 532
Payment of interest u/s 244A on the amount of refund payable to the assessee - CIT(A) concluded that the claim of interest by the respondent for the refund amounts to 'interest on interest' and held that it is beyond the scope of Section 244A - ITAT allowed the claim - contention of the Revenue that since the refunded amount was deposited by the assessee towards 'interest' due to the Revenue, any award of interest on the refund would amount to 'interest on interest' is factually incorrect - HELD THAT:- Revenue has not disputed that the payment of interest by the respondent u/s 234D and Section 220(2) was in pursuance of the demand raised by the Revenue, which demand subsequently has been found to be incorrect and the money has become due and payable by the Revenue to the assessee. It would be relevant to note here that in the judgment of Preeti N. Aggarwala [ 2017 (5) TMI 308 - DELHI HIGH COURT ] the predecessor Division Bench took note of the pending reference to the larger Bench in Sutlej Industries Limited [ 2016 (1) TMI 1353 - DELHI HIGH COURT ] and observed that the issue involved in the said reference pertains to refund of excess self assessment tax whereas, the issue determined in the judgment in Preeti N. Aggarwala (supra) was payment of interest on the amount of refund payable to the assessee u/s 220A. The issue arising in the present appeal is authoritatively answered by the predecessor Division Bench in Preeti N. Aggarwala [ 2017 (5) TMI 308 - DELHI HIGH COURT ] and we do not find any substance in the contention of the learned counsel for the Revenue that present appeal must await the decision of the larger Bench. The said judgment was also followed by the Supreme Court in the case of Universal Cable [ 2019 (12) TMI 1081 - SC ORDER ] to hold that there is reason to deny payment of interest to the deductor who has deducted the tax at source and deposited the same with the treasury. The Supreme Court rejected the submission of the Revenue that interest can only be granted to an assessee under Section 244A of the Act and not to a deductor of the tax at source. The judgment of the Supreme Court in the case of Gujarat Fluoro Chemicals [ 2013 (10) TMI 117 - SUPREME COURT ] arose on issue as regards payment of interest in the event of the failure of Revenue to refund the interest payable within the statutory period. The Supreme Court held that it is the interest provided under the statute which may be claimed by an assessee from the Revenue and no other interest on statutory interest is payable. In the present case, as noted above, the assessee has been found entitled to refund of money deposited by it upon re-computation by the Revenue and interest thereon is liable to be paid under Section 244A(1)(b) as held by this Court in Preeti N. Aggarwala (supra).
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2022 (8) TMI 528
Proportionate deduction u/s.80IB(10) - few residential units which undisputedly complied with the conditions of the said section - HELD THAT:- As decided in COSMOS DEVELOPERS [ 2013 (11) TMI 425 - ITAT MUMBAI] even if claim was to disallowed it should have been restricted to ten flats only. We also hold that AO was not justified in denying the entire claim made by the assessee. We find that the FAA had directed the AO to calculate disallowance on basis. In short, in our opinion, AO was not justified in disallowing the entire claim made u/s.80IB of the Act on both counts-delay in obtaining CC and size of flats. FAA has rightly held that assessee was eligible for proportionate deduction. - Decided against revenue.
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2022 (8) TMI 527
Deduction u/s 80IB(11C) - factual position found during search seizure proceedings u/s. 132 of the Act was not substantiate the claim of the assessee u/s. 80IB(11C) as the assessee was not satisfying all the conditions as laid down u/s. 80IB(11C) - CIT-A allowed deduction - HELD THAT:- From the perusal of the documents submitted before the Assessing Officer as well as before the CIT(A) it can be seen that the local authority i.e. Vadodara Municipal Corporation has issued certificate after verifying all the aspects related to 100 beds capacity in the Hospital and granted registration and permission to run the Medical Facility Centre (Hospital). Thus, there was no doubt as to the required condition of 100 beds Hospital in assessee s case as per the conditions laid down under Section 80IB(11C) - Besides this, the assessee has also submitted the Minutes of Understanding in respect of additional supply of expertise such as Doctors and Nurses with other Hospital. Thus, merely on the basis of statement which were later on retracted cannot be taken into account for determining not to grant deduction under Section 80IB(11C) of the Act to the assessee. The CIT(A) has rightly deleted this addition. - Decided against revenue. Unexplained investment u/s 69A - unexplained bullion - As per assessee bullion was then converted into Gold Kada Jewellery and the making charges was also paid by the assessee in cash which is also duly accounted for - HELD THAT:- It is pertinent to note that bullion purchased by the assessee has been properly reflected in the books of account and the Balance Sheet with the detailed explanation given in Schedule-D. From the perusal of records, it can be seen that all the purchases made is in the cash mode still the bills were properly maintained by the assessee and the said evidence were produced before the Assessing Officer as well as before the CIT(A). Thus, the assessee has explained investments and also explained the conversion of that investment into jewellery in the later years. Thus, this cannot be termed as unexplained investment under Section 69A - CIT(A) has overlooked the evidences produced by the assessee and hence appeal of the assessee is allowed.
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2022 (8) TMI 526
Addition u/s 68 - addition of cash deposit made in the bank account as unexplained - HELD THAT:- We noted that the assessee has tried to explain the cash deposits made in to the bank i.e., Royal Bank of Scotland to the tune of Rs.12 lakhs in cash. The assessee tried to explain that this Rs.12 lakhs was received as advance by assessee for sale of agricultural land at Thirupullani and the claim was fully supported by agreements. The assessee has received advance from sale of agricultural land at Thirupullani from six persons. On query from the Bench, now the ld.counsel for the assessee could not explain the sources of these persons namely Mrs.Asilallyas, etc., as mentioned above. Neither he could explain whether alleged sale of land by agreements through which these advances were received were fructified or not or the advances were returned back. Since, the assessee could not answer anything, we had no alternative except to confirm the order of CIT(A) confirming the addition. Hence, we dismiss this appeal of assessee.
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2022 (8) TMI 525
Rental income from letting out of the factory building - Profits and gains of business or profession OR Income from Other Sources - HELD THAT:- Assessee has ceased its business operations and leased out factory building and Plant Machinery to one lessee under two separate agreements. However, the terms and conditions of both the leases are pari-materia the same. The terms of the lease agreements led to formation of belief that the intention of the assessee was to lease out both the assets together to the same person and for the same period. The separate agreements could only be considered as the deeds of convenience deigned to suit the requirements. As long as the Machinery was housed in the factory building and that too in operational condition, the building could not be let out to some other person. Considering this factual matrix, Ld. CIT(A) reached a conclusion that the letting of the two assets was inseparable. In para 4.2.6 of the impugned order, the Ld. CIT(A) has tabulated the lease tenure and lease rental to the received under the two agreement. The perusal of the same would show that the terms and conditions go hand-in-hand which would support the conclusion that the intention of the assessee was to lease out both the assets to the same lessee and the usage of the two assets was inseparable. Therefore, the conclusion of Ld. CIT(A) could not be faulted with. The income earned by the assessee, under both the streams, have rightly been held to be assessable u/s 56(2)(iii) which provide for assessment of income as Income from other sources where the assessee lets on hire machinery, plant or furniture belonging to him and also buildings, and the letting of the buildings is inseparable from the letting of the said machinery, plant or furniture, the income from such letting, if it is not chargeable to income- tax under the head Profits and gains of business or profession . Therefore, we confirm the stand of Ld. CIT(A) in the impugned order. The appeal stand dismissed.
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2022 (8) TMI 524
Reopening of assessment u/s 147 - assessment was reopened beyond four years from the end of the relevant assessment year - Eligibility of reasons to believe - HELD THAT:- As the assessment order passed under section 143(3) r.w.s. 153B(1)(b) r.w.s. 147 of the Act, which was solely based on third party information and not subjected to any further scrutiny, respectfully following the decision in the case of CIT v. Odeon Builders Pvt. Ltd. [ 2014 (9) TMI 100 - ITAT DELHI] the reassessment order passed by the Assessing Officer is quashed. Moreover, on the second count, in the reasons recorded, since there was no finding of the AO that there was a failure on the part of the assessee in disclosing fully and truly the material facts for assessment, the reassessment order passed by the AO is also bad in law and the same is quashed. On identical facts, similar assessment order passed under section 143(3) r.w.s. 147 for the assessment year 2012-13 is also quashed. Since we have quashed the reassessment order for both the assessment years, no separate findings are being given on another ground raised by the assessee on merits. Appeal of assessee allowed.
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2022 (8) TMI 523
Capital gain earned by the assessee on sale of agricultural land - Nature of land - assessee purchased the land as agricultural land, held them as agricultural land, used them for agricultural activities and finally sold them as agricultural lands only - HELD THAT:- We find that very detailed findings / reasoning has been rendered by the coordinate bench in the case of the Joint Owner[ 2016 (3) TMI 491 - ITAT CHENNAI] . After weighing all the surrounding circumstances as well as after considering the various judicial pronouncements, the bench reached a finding that the land could not be held to be an agricultural land. No change in facts have been demonstrated before us and facts are pari-materia the same in the present case before us. Nothing has been shown to us that the aforesaid order has been reversed in any manner by any higher judicial authority. Therefore, we see no reason to deviate from the findings of coordinate bench as above. Respectfully following the same, we reverse the order of Ld. CIT(A) and restore the assessment framed by Ld. AO.
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2022 (8) TMI 522
Delay in payment of Employee's contribution to PF and ESIC u/s 36(1) (va) - scope of amendment to section 43B - HELD THAT:- We are of the considered opinion that the issue relating to delayed deposit of EPF / ESI has already been dealt with by various Hon ble High Courts including the jurisdictional Hon ble Bombay High Court in CIT vs Ghatge Patil Transport Ltd [ 2014 (10) TMI 402 - BOMBAY HIGH COURT] wherein it was held that the decision of the Hon ble Apex Court in CIT vs Alom Extrusions Ltd [ 2009 (11) TMI 27 - SUPREME COURT] that the amendment to section 43B of I.T. Act was applicable to both employer s as well as employees contribution. Furthermore, the amendment brought out in the Finance Act, 2021 was only prospective and not retrospective thereby was applicable only to assessment year 2021-22 onwards and to subsequent years. The same has been reiterated by the decision of various Benches of the Tribunal. Thus we are of the considered opinion that the contribution towards EPF / ESI paid after the specified due date under the relevant Acts, but nevertheless paid before the due date of filing of the return of income under section 139(1) of the Act, is allowable. The Assessing Officer is directed to allow the deduction as claimed. Ground 1 of the assessee succeeds. Not giving credit to TDS - HELD THAT:- From the copies of accounts furnished by the assessee, it transpires that the receipts from which the TDS was effected was considered for the impugned assessment year while computing the total income. The assessee has offered the corresponding income to tax for the impugned assessment year and the claim of TDS pertinent to the same was made in the return of income. Assessee submitted that inspite of the direction from the Ld.CIT(A), the same has not been considered by the Assessing Officer till date. We therefore, direct the learned Assessing Officer to verify the availability of such credit in Form 26AS of the assessee for the impugned year and allow the same as per the provisions of Rule 37BA.
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2022 (8) TMI 521
TP Adjustment - inclusion/exclusion of certain comparables in/from the list of comparables - HELD THAT:- Insync Analytics India Pvt. Ltd - RPTs of this company are more than 50% in the current year and about 100% in the preceding two years. The company is albeit functionally comparable but has controlled transactions. The TPO has set out certain filters to be applied on page 4 of his order. One of the filters is that the companies with RPTs of less than 25% are selected. Since this company is failing the RPT filter applied by the TPO himself, which is otherwise also well recognized and approved by various Hon'ble High Courts, we hold that this company cannot be included in the list of comparables because of breaching the filter. We, therefore, direct to exclude it. CES limited - It is rendering both BPO and KPO services, discussing this issue at page 19 of the order. In view of the fact that the assessee is engaged in rendering only BPO services, CES Limited providing both BPO and KPO services, cannot therefore be held as comparable. We, therefore, direct to delete this company from the list of comparables. Domex e-data Pvt. Ltd - From the portion of the Directors' report, it is graphically clear that, apart from rendering IT enabled services, this company is also engaged in providing software development services. Though its revenue has been shown in a combined manner under one head of IT enabled services, but the above description of the activities makes it clear that it is also engaged in software development. As the assessee is engaged only in IT enabled services and not in software development, we order to exclude it from the list of comparables. Treatment of Foreign Exchange Fluctuation (forex) loss as non-operating - HELD THAT:- It is undisputed even from the DRP directions that the forex gain pertains to business revenue of the assessee company. It has been held in several decisions rendered by the various courts of the country including in Pr. CIT Vs. BC Management Services Pvt. Ltd. [ 2017 (12) TMI 255 - DELHI HIGH COURT] that foreign exchange gain or loss should be considered as operating in determining the operating margin. In view of the above precedent, we hold that the forex gain should be treated as an item of operating revenue. This ground, is therefore, allowed.
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2022 (8) TMI 520
Disallowance of exemption u/s 11/12 - no evidence was filed by the assessee demonstrating that the form 10B was filed electronically - AR before us contended that the assessee has made sufficient compliance by furnishing the audit report in form 10B in physical form - benefit of exemption u/s 11 cannot be denied merely on the reasoning that such audit report was not filed electronically - HELD THAT:- Where Form 10B is uploaded after the submission of Return of Income, returns are processed without giving benefit of sec. 11 of the Act. The total income becomes subjected to tax without providing any benefit under section 11 of the Act. In the present case, the form 10B was not filed by the assessee electronically but the same was filed before the Ld. CIT-A physically. CIT-A did not consider the same. In this regard, we refer to the decision in CIT v. Gujarat Oil and Allied Industries Ltd.[ 1992 (9) TMI 67 - GUJARAT HIGH COURT ] wherein it is held that the provision regarding furnishing of audit report with the return has to be treated as a procedural proviso. It is directory in nature and its substantial compliance would suffice. In that case, the assessee had not produced the audit report along with the return of income but produced the same before the completion of the assessment - benefit of exemption should not be denied merely on account of delay in furnishing the same and it is permissible for the assessee to produce the audit report at a later stage either before the Income-tax Officer or before the appellate authority by assigning sufficient cause - we hold that the substantial compliance has been made by the assessee by furnishing the audit report in the requisite form before the Ld. CIT-A. Thus, we set aside the order of the Ld. CIT-A and direct the AO to allow the benefit available to the assessee under section 11 of the Act as per the provisions of law. Hence, the ground of appeal of the assessee is allowed.
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2022 (8) TMI 519
Addition made to the total income while processing assessment u/s 143(1)(a) - applicability of provisions of sec. 10(10D) - assessee surrendered insurance policy and received surrendered value - assessee surrendered insurance policy and received surrendered value - A.R submitted that the surrender value of amount received by the assessee should not have been taxed in the hands of the assessee - HELD THAT:- As the assessee has not earned any income on surrender of insurance policy. On the contrary, the assessee has only incurred loss - However, it is required to be examined as to whether the assessee has claimed deduction u/s 80C of the Act in respect of premium paid on this insurance product. If the assessee has not claimed deduction u/s 80C of the Act in respect of premium amount paid on this insurance product, then the above said loss should be treated as Capital loss and nothing should be brought to tax, since it supports the stand of the assessee that he has treated these payments as his investment. On the contrary, if the assessee has claimed deduction of the premium amount paid on this insurance product, then the AO is required to deal with the surrender value in accordance with law. Since this matter requires verification, we set aside the order passed by Ld CIT(A) and restore the same to the file of the AO for examining this issue - Appeal filed by the assessee is treated as allowed for statistical purposes.
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2022 (8) TMI 518
Excess sugar cane price paid to its members and non-members - AO disallowed the payment made over and above FRP price as it was not contractual liability and it was nothing but distribution of profit - HELD THAT:- We set aside this issue to the file of Assessing Officer for re-adjudication in the light of the Hon ble Supreme Court s decision in the case of Krishna Sahakari Sakhar Karkhana Ltd. [ 2012 (11) TMI 669 - SUPREME COURT] . Accordingly, the grounds of appeal raised by the assessee are allowed for statistical purpose.
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2022 (8) TMI 517
Belated payment of Employee s Provident Fund (EPD) and Employee s State Insurance Scheme (ESI) - Scope of amendment - HELD THAT:- A s amendment brought out by Finance Act 2021 is concerned, notes on clauses to the Finance Bill 2021 clearly states that the amendment will take effect from 1st April 2021 and will apply in relation to the assessment year 2021-22 and subsequent assessment year we are of the view that the amendment brought out by Finance Act 2021 does not apply to the assessment year under consideration. Before us, Revenue has not placed any material on record to demonstrate that the aforesaid order cited hereinabove has been overruled/stayed/set aside by higher judicial forum. In view of the aforesaid facts, we are of the view that the AO was not justified in denying the deduction claimed by the assessee on account of late deposit of PF/ESI/EPF, albeit before filing the return of income. Admittedly in the matter, the Revenue had not contended that the assessee has deposited the contribution after the filing of the return of income. In view of the above, respectfully following the decision of the Hon ble High Court cited hereinabove, we allow the appeal filed by the assessee.
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2022 (8) TMI 516
Estimation of profit - estimation of income @18.8% - determination of estimation of average profit earned - HELD THAT:- Assessee is a concern of Shakti Group and above said group is carrying on three projects namely Shakti Villa, Shree Rudra and Shakti Lake City. During search revenue had found incriminating material relating to the above projects and Assessing Officer has estimated the profit in the project Shakti Lake City @45.76% and he adopted the same percentage to estimate the profit in the other projects also. AO has estimated the profit in Shree Rudra project also @45.76% and we observe that Ld.CIT(A) considered the submissions and after verifying the records, he determined the average profit earned by the group in the project Shakti Lake City @18.8%. CIT(A) estimated the same percentage of profit in the case of Shree Rudra also, considering the fact that AO also treated all the projects run by the group are similar. Since the Coordinate Bench has adjudicated the issue involved in the case of Shri Parth Vinod Gadhiya and the project of Shakti Lake City and Coordinate Bench sustained the findings of the CIT(A) in the case of above project. Therefore, the project involved in this case are also part of the same and similar projects carried on by the assessee, we deem it fit and proper to sustain the findings of the CIT(A) and we do not find any reason to disturb the findings of the Ld.CIT(A) in this project also.
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2022 (8) TMI 515
Jurisdiction of AO to issue notice u/s 143(2) - notice u/s 143(2) was issued by one AO and the assessment has been completed by another AO - HELD THAT:- As notice u/s 143(2) has been issued by one AO and the assessment has been concluded by an another AO, which means that the AO who issued the notice under section 143(2) did not complete the assessment and, therefore, the argument with regard to concurrent jurisdiction is not tenable. As a natural corollary, therefore, the order passed by the AO is also not tenable in view of the fact that the notice under section 143(2) was issued by one AO and the assessment has been completed by another AO. Transfer of case u/s 127 - Power to transfer cases is contained in section 127 and the analysis of above provisions, as contained in section 127(1), demonstrates that the Principal Director General/ Principal Chief Commissioner or Chief Commissioner or Commissioner, may, after recording his reason for doing so, transfer any case from one or more Assessing Officers to another Assessing Officers subordinate to them. Sub section (4) of Section 127 empowers such Officer to transfer a case under subsection (1) or (2) at any stage of the proceedings and any such transfer shall not render necessary reissuance of any notice already issued by the Assessing Officer from whom the case is transferred. The provisions of sub-section (4) of section 127 will be applicable only when there is an order under section 127 of the Act. Since the Department was not able to show any order passed under section 127 of the Act, this argument of the ld. Counsel for the assessee is also accepted. Grounds no. 1 to 3 taken by the assessee are allowed. As such, the assessment order is held to be void ab initio and is quashed. Nothing further thus survives for decision and the rest of the Grounds are rejected as infructuous.
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2022 (8) TMI 514
Revision u/s 263 - AO was required to disallow the indexation and deduction claimed u/s 54F which he failed to do - HELD THAT:- Merely, the assessee has made it sellable and divided into plots that activity itself will not change the capital asset into business asset. The appreciation in the price is done over a period of holding by the assessee in the same character and therefore, on sale of that asset the relevant benefit of the capital assets cannot be considered as business profit. This sale transactions cannot be considered in isolation without considering the intention of the assessee so far holding it as capital asset, consequent to that income arising from that asset also in the nature of capital gain. AO has called for all the details related to capital gain and details on which the deduction u/s. 54F was claimed verified and taken a view is based on the facts supported by records placed before AO and he has applied his mind on the issue. Thus, we our considered view the AO has made inquiry call for the records upon which he has passed the order and that order cannot be revised merely there is another view possible. At this juncture we would like to rely on the CBDT s circular F.No.225/12/2016/ITA.II dated 02.05.2016 which state that once the stand taken by the assessee in a particular Assessment Year, shall remain applicable in subsequent year also and the taxpayers shall not be allowed to adopt a different / contrary stand in this regard in the subsequent years. This circular is issued by the CBDT to avoid litigation which the department should not use to create litigations. Thus, the view taken by the assessee that a particular investment is of capital in nature and declared the same since the amount invested same subsequent to that at the time of sale merely the assessee, he divided in to small plot to sell that capital asset cannot be termed as business assets. As in our considered view, as the A.O while framing the assessment had taken a plausible view, and treated the gain as Capital Gain and consequent thereupon allowed the assesseeıs claim for deduction under section 54F of the Act also. Therefore, the Pr. CIT was in error in exercising his revisional jurisdiction u/s 263 for dislodging the same. Accordingly, we find no justification on the part of the Pr. CIT, who in exercise of his powers under Sec. 263 had dislodged the view that was taken by the A.O as regards chargeability of gain and consequent there upon allowability of deduction on the capital gain, we set-aside his order and restore the order passed by the A.O under Sec. 143(3) - Assessee appeal allowed
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2022 (8) TMI 513
Accrual of income - Difference between the receipts as per books and form No.26AS as revenue receipt liable to tax in this year - difference as being on account of the assessee not booking the relevant invoices in its books as sales either for the reason that it had reflected the same was WIP or had booked the same in the subsequent year, and had also explained the reason for doing so, and substantiated the same also with the copy of ledger account of the parties - CIT-A has rejected the explanation, primarily for the reason that since the assessee followed the accrual method of accounting, and the job was completed and bill raised by the assessee, the corresponding sales should have been booked in the impugned year only - HELD THAT:- Even as per the accrual system of accounting, the income is said to have been accrued only when the other party accepts its liability with respect to the bills raised on it. Until then no income is said to be accrued. Even going by the logic of the ld.CIT(A) we find that the assessee had rightly booked income on account of bills which he had demonstrated, were accepted by the CONCORD Biotech Ltd. in the subsequent year. This, income accrued to the assessee in the subsequent year only when the bills were passed and accepted by the CONCORD Biotech Ltd.. With regard to these bills, therefore, the assessee had rightly booked the amounts in the subsequent year, and no addition was called for to be made to the income of the assessee in respect of these bills in the impugned year. As for remaining amounts relating both the Apple Wood Estate Ltd. and CONCORD Biotech Ltd. which the assessee had explained that it had booked this amount in its WIP and not as sales of the year,we find that it had substantiated its explanation by producing copy of its ledger account reflecting the same. We see no reason to reject this explanation of the assessee. Nothing has been pointed out by the Revenue as to why the assessee was wrong in booking these amounts, as its WIP. In view of the same, the addition on account of this difference pertaining to Apple Wood Estate Ltd. and CONCORD Biotech Ltd. is also not sustainable. In any case had reflected sales from these parties from Apple Wood Estate Ltd. and CONCORD Biotech Ltd.. Difference noted was to the extent of Rs.3.31 lakhs in the case of Apple Wood Estate Ltd. which is not even one percent of the total sales booked from the Apple Wood Estate Ltd. and Rs.21.93 lakhs in the case of CONCORD Biotech Ltd. which is approximately 20% of the sales. Assessee has shown turnover of Rs.10.09 crores, declaring GP at 9.16% and Net Profit of 3% during the year. Having disclosed such huge turnover, and disclosed appropriate net profit and having duly explained the difference in the turnover, as reflected in its books and in Form No.26AS there is no reason to believe that the assessee had wrongly not disclosed sales on these very small amount of Rs.3.00 lakhs and Rs.21 lakhs (approximately) from the aforesaid two parties. In view of the above, we direct the deletion of addition on account of difference in sales as reflected in the books of the assessee, and that in Form 26AS The ground of appeal of the assessee is allowed.
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2022 (8) TMI 512
Disallowance of deduction claimed u/s 10A/10AA - AO rejected both the claims on the ground that the assessee has failed to comply with various conditions prescribed in those sections for allowing deduction - HELD THAT:- We restore three issues, viz.,Approval for foreign bank account, Nature of receipt of proceeds and Enquiries made through CBDT on genuineness of transactions to the file of Ld DRP, so that all of them may be examined together. Accordingly, we reject all other objections raised by the AO. After examining the above said three issues, the Ld DRP may issue appropriate directions to the AO on the issue of allowing deduction u/s 10A/10AA of the Act. Disallowance of expenses u/s 37(1) - assessee has voluntarily disallowed the above said expenses u/s 40(a)(i) / 40(a)(ia) of the Act for non-deduction of tax at source - HELD THAT:- As it is imperative for a concern, following mercantile system of accounting, to provide for all known expenses and losses as at the year end, even if the relevant bills have not been received. As per standard accounting practices, not providing for known expenses/losses would, in fact, distort the operating results of the business concern and it would not reflect true and fair profit of the year. It is the case of the assessee that it has provided for expenses for which services have been availed by it, meaning thereby, the liability to pay for those expenses has already accrued to the assessee. Accordingly, there should not be any reason to disallow the expenses u/s 37(1) of the Act. However, as noticed earlier, the AO has disallowed the expenses for non-furnishing of details that were called for by the AO. Accordingly, in the interest of natural justice, we are of the view that the assessee may be provided with one more opportunity to furnish the details that were called for by the AO. Accordingly, we restore this issue to the file of the AO for examining it afresh. We also direct the assessee to furnish the details that were called for by the AO. Royalty payment - payments made for purchase of finished goods, purchase of capital goods tangible property, payment of royalty and payments for availing services - AO noticed that the assessee did not deduct TDS on payments - HELD THAT:- The Hon ble Supreme Court in Engineering Analysis Centre of Excellence [ 2021 (3) TMI 138 - SUPREME COURT] held this kind of payments do not fall under the category of Royalty under India- Singapore DTAA - such payments made for purchase of shrink wrapped software are not royalty within the meaning of India Singapore DTAA. We noticed that the Ld DRP has confirmed the disallowance by following the decision rendered by Hon ble Karnataka High Court in the case of Samsung Electronics [ 2011 (10) TMI 195 - KARNATAKA HIGH COURT] which has been overruled by Hon ble Supreme Court in the case of Engineering Analysis Centre of Excellence [ 2021 (3) TMI 138 - SUPREME COURT] Accordingly, we direct the AO to delete the disallowance of Rs.278.68 crores. With regard to the remaining disallowance following the decision rendered by the co-ordinate bench in AY 2013-14, we restore the same to the file of Ld DRP with similar directions. Disallowance relating to non-reconciliation of Professional charges narrated as Audit Journal Vouchers - HELD THAT:- A.R submitted that the AO has not made similar kind of disallowances in other years. However, we notice that the assessee has claimed a sum as Reclassification of expenses, but it could not fully furnished details reconciling the above said amount. We notice that the ld DRP has granted relief to the extent of details furnished and confirmed disallowance for want of details. Before us, the assessee could not furnish the details for the above said amount. Accordingly, we have no other option, but to confirm the disallowance. Disallowance of depreciation claimed on leased assets - HELD THAT:- We notice that this issue has been restored back to the file of AO with the direction to follow the decision rendered by Hon ble Supreme Court in the case of ICDS Ltd [ 2013 (1) TMI 344 - SUPREME COURT] . Following the same, we restore this issue to the file of AO with similar directions. Disallowance of foreign exchange loss - assessee has debited above said amount to the Profit and loss account and claimed the same as deduction - HELD THAT:- Unless the assessee submits relevant details before the AO, it will not be possible for the AO to decide about the allowability or otherwise of the claim. We notice that the assessee has submitted the details in a broad manner and further submitted the explanations/legal submissions. As rightly observed by Ld DRP, it is the responsibility of the assessee to furnish the details in support of its claim for deduction of expenses. If the assessee fails in its responsibility, then the tax authorities do not have any other option, but to disallow the claim. In the instant case, admittedly, the assessee has not furnished the required details. Accordingly, in the interest of natural justice, we are of the view that the assessee may be provided with an opportunity to furnish the relevant details before the AO. Accordingly, this issue is restored to the file of AO, who may examine this issue afresh. If the assessee fails to furnish the details to the satisfaction of the AO, then the AO may disallow the claim. Disallowance relating to purchase of shrink wrapped software to be deleted Disallowance of payment made to IBM Corporation - HELD THAT:- Disallowance has been made by the AO on the reasoning that the assessee has not proved that the tax was deducted at source from the above said payment. Before us also, the assessee did not furnish any details in this regard. Accordingly, we confirm the disallowance made by the AO. Disallowance made u/s 14A - HELD THAT:- Identical view has been expressed by Hon ble Delhi High Court in the case of PCIT vs. IL FS Energy Development Company Ltd [ 2017 (8) TMI 732 - DELHI HIGH COURT] . Since the assessee did not earn any exempt income during the year relevant to AY 2011-12, no disallowance u/s 14A can be made. Accordingly, we direct the AO to delete the disallowance made by him u/s 14A of the Act.
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2022 (8) TMI 511
TP Adjustment - rejecting the combined transaction approach - comparing gross margin of controlled transaction with another controlled transaction - applying resale price method and comparing gross margin from international transaction pertaining to import of CBUs with the international transaction pertaining to import of spares - adjustment for differences in function, asset and risk profile of the spares segment vis- -vis CBU segment - rejecting the separate transactional net margin method search - HELD THAT:- As transactions of import of completely built unit (CBU) and import of spare parts were closely and inter-linked to the manufacture of passenger car by the assessee and the said activity is to be bench marked on an aggregate basis along with other transactions under the umbrella of manufacturing activity. The ld. D.R. also could not demonstrate or bring on record any facts or difference evidences and therefore, we are of the considered view, respectfully following the aforestated judgment on the same facts and circumstances and on same parity of reasoning, ground Nos. 3, 5, 6, 7 and 8 stand allowed. Entity-widen manufacturing activity - rejection of certain additional Indian companies and accepted certain inappropriate Indian companies as comparables - HELD THAT:- Hon ble Delhi High Court in Nokia Siemens Network India P. Ltd. [ 2019 (8) TMI 167 - DELHI HIGH COURT] that a comparable cannot be rejected merely on the ground that it is recurring losses if the industry in which the comparable operating itself is incurring loss. Following this view, we direct the A.O/T.P.O to include HML as comparable in respect to the assessee company. As in any case what has been consistently held by the Tribunal and we are also in conformity that RPT filter of 15% should be adopted. In both the cases of comparables selected by the T.P.O., M M have RPT from 25% to 30% and in case of TML the aggregate cost or revenue side transaction on a standalone basis are less than 30% as applied by the T.P.O. Therefore, in both these cases, the RPT filter is more than 15%. Accordingly, we direct the A.O/T.P.O to exclude the companies M M and TML from the final set of comparables with respect to the assessee company. Computation of operating margin of the assessee at entity level without taking into consideration the excess custom duty paid on imports by assessee vis- -vis comparable companies - HELD THAT:- The assessee before us placed reliance on judicial decisions of Demag Cranes Companies (India) Pvt. Ltd.[ 2017 (10) TMI 1471 - ITAT PUNE] and Skoda Auto India Pvt. Ltd. Vs. ACIT [ 2019 (6) TMI 663 - ITAT PUNE] and prayed that the issue may be remanded back to the file of the A.O/T.P.O for re-computation of the operating margin of assessee after taking into consideration the excess custom duty paid on imports as non-operating in nature. The ld. D.R did not raise any objection in this regard. In view of the matter, this issue is restored to the file of the A.O/T.P.O to conduct the aforesaid exercise while complying with the principles of natural justice. Computation of operating margin of the assessee at entity level, without excluding additional cost on account of abnormal foreign exchange rate movement - HELD THAT:- As the assessee prays that the issue may be remitted back to the file of the A.O/T.P.O and he may be directed to re-compute the operating margin of MB (India) after making appropriate adjustment for abnormal movement in exchange rate treating it as non-operating in nature. The ld. D.R did not raise any objection. Computation of operating margin of the assessee at entity level without excluding extra-ordinary expenses on account of excess demurrage/detention charges and litigation claim - HELD THAT:- The assessee prayed that the learned A.O/T.P.O be directed to re-compute operating margin of the assessee after making appropriate adjustment for extra ordinary cost of demurrage/detention charges and litigation expenses treating it as non-operating expenditure. The ld. D.R did not raise any objection if this issue is remitted to the file of the A.O/T.P.O. In view thereof, we remand this issue to the file of the A.O/T.P.O as per the aforesaid prayer made by the assessee and re-adjudicate as per law applying with the principles of natural justice. Disallowance of expenditure incurred on homologation - Revenue or capital expenditure - HELD THAT:- As decided in own case [ 2019 (8) TMI 443 - ITAT PUNE] Homologation expenses are held as revenue expenditure. Ground stands allowed.
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2022 (8) TMI 510
Revision u/s 263 - As per CIT assessee has not complied with the provisions of section 54 and 54EC while claiming exemption under these sections of The Act under the heat Long Term Capital Gains and certain expenses which were considered as cost of flat are disallowable - PCIT has observed that the AO should have examined when actually the property after completion was handed over to the assessee so as to comply with provisions of section 54 as for exemption under section 54 the construction should have been completed within a period of 3 years - HELD THAT:- There is no doubt that enquiry on the limited scrutiny issue was initiated by the AO and duly responded by the assessee, the AO also mentioned in the order that The Documents as submitted by the assessee were examined and placed on record , however no remark on the issue has been made by the AO in assessment order, therefore this shall be considered that the AO was satisfied with the enquiries made. Our considered view on this issue is that, if Pr. CIT/CIT is of the view that any enquiry is necessary in the matter, then he should either himself make such enquiry or may get such enquiry conducted. For the purpose of exercising jurisdiction u/s 263 the conclusion that the order of the AO is erroneous and prejudicial to the interest of the revenue has to be preceded by some minimal enquiry by Pr. CIT/CIT. If the Pr. CIT/CIT is of the view that the AO did not undertake any enquiry, it becomes incumbent on the Pr. CIT/CIT to conduct such enquiry. If the Pr. CIT/CIT does not conduct such basic exercise then the Pr. CIT/CIT is not justified in setting aside the order u/s. 263 of the Act. Decision of Hon'ble Delhi High Court in the case of CIT Vs. Hindustan Marketing and Advertising Company Limited [ 2010 (9) TMI 352 - DELHI HIGH COURT] is relevant in this case where the Hon'ble Delhi High Court has held that where the ITO had made reasonable detailed enquiries, had collected relevant material and discussed various facts of case with assessee, order of CIT to direct fresh assessment by going deeper into the matter would not form a valid or legal basis to exercise jurisdiction u/s 263. As on perusal of the fact of the case it is explicitly clear that this case cannot be said to be a case of no enquiry or inadequate enquiry, therefore, proceedings initiated u/s 263 by the Ld PCIT holding the order of AO as erroneous and prejudicial to the interest of revenue are not sustainable, hence quashed. Assessee appeal allowed.
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2022 (8) TMI 509
Rectification u/s 154 - Deduction u/s 80IB - Deduction denied as audit report in Form-10CCB was not filed along with the return of income and was only filed after the intimation u/s. 143(1) was issued - assessee, on receipt of intimation u/s. 143(1), filed application u/s. 154 after uploading the copy of audit report in Form-10CCB, which was rejected by CPC and therefore, appeal was filed before ld. CIT(A) against the order passed by the CPC u/s. 154 which again was dismissed by ld. CIT(A) by holding that no mistake was apparent from the record - HELD THAT:- As it is undisputed fact that the claim of the assessee u/s. 80IB has not been allowed by the authorities below only because of the reason that the audit report in Form-10CCB was not filed along with return of income and was only filed after receipt of intimation u/s. 143(1) and therefore, the assessee filed rectification applications u/s. 154 of the Act after uploading Form-10CCB which was rejected by CPC. The ld. CIT(A) has rejected the appeals by holding that there was no mistake apparent from record. However, while holding so, he escaped the contents of Circular No.689 dated 24.8.1994 which clearly directs the Officers to allow rectification u/s. 154 for non filing of audit report or other evidence which could not be filed with the return of income. Also taking cognizance of this circular the Hon'ble High Court of Karnataka in the case of ITO vs. Smt. Mandira D Vakharia[ 2000 (11) TMI 48 - KARNATAKA HIGH COURT] has decided similar issue in favour of the assessee - We merit in the arguments of assessee and therefore, the appeals of the assessee are allowed.
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2022 (8) TMI 487
Revision u/s 263 - principles of mutuality - CIT(A) enhanced the assessment by denying the mutuality principles and computed the total income on commercial manner - HELD THAT:- Department accepted the ld. CIT(A)'s finding that the assessee is a mutual association and its receipts from members are exempt on the principles of mutuality. In the Asst Years 2004-05, 2007-08 and 2008-09, AO did not dispute that the assessee is a mutual association. However, it was held that the amounts received by the assessee by way of sponsorship fee of an event conducted for the members and for supply of food to members by an outside caterer was not exempt on the principles of mutuality. Both issues were decided in favour of the assessee by this Tribunal vide its common order dated 21.3.2016 for the Asst Years 2004 05, 2007-08 and 2008-09 vide paragraphs 11, 16 and 23 of the order. The assessee has always been treated as Mutual Association since its inception for decades upto AY 2008-09 by the department as is evident from the tabulation handed over by the ld. AR at the time of hearing. As submitted that this has continued even in the subsequent years i.e. Assessment Year 2016-17 to 2018-19 wherein the Ld. AO in the scrutiny assessment treated the assessee as a mutual association and accordingly has accepted Principle of Mutuality in respect of majority of receipts as claimed by the assessee. Taxability of Catering Revenue - addition made on account of club share income of assessee from caterer, on the ground that the same was exempt under principle of mutuality - HELD THAT:- Hon'ble Bombay High Court [ 2019 (6) TMI 447 - BOMBAY HIGH COURT] has affirmed the finding of this Tribunal in allowing 'Catering Revenue' as income exempt from tax under the principle of Mutuality. Hence, the said issue of applicability of mutuality principle is further covered/ settled in favour of assessee. Hence the observation made by the ld. PCIT in this regard is totally untenable in the eyes of law. Revenue from holding Cricket Matches - Hon'ble Supreme Court in assessee's own case [ 1968 (8) TMI 200 - SUPREME COURT] had duly considered the issue relating to holding of cricket matches and had clearly laid down that the activity of cricket cannot be held in the nature of trade or business. In any case, we find that the ld. PCIT had only stated that the assessee could have earned more revenue from holding cricket matches. This is only a mere surmise and conjecture on the part of the ld. PCIT. The law is very well settled that no proceedings could be initiated on an assessee merely on surmise and conjecture. We hold that there is no reason for the ld. AO to take a divergent view while framing the assessment for the year under consideration. Hence we are unable to persuade ourselves to agree to the contention of the ld. PCIT that the order of the ld. AO is erroneous. Hence initiation of revision proceedings u/s 263 of the Act deserves to be quashed on this count itself as cumulative twin conditions for invoking section 263 proceedings are not satisfied in this case. Transactions with Non-Members not offered to tax according to ld. PCIT - We have gone through the computation of total income of the assessee for the year under consideration together with the respective returns. We find that the assessee had duly offered the interest income and capital gains to tax in the revised return of income. We find that the ld. PCIT had proceeded completely on incorrect assumption of fact. We hold that the ld. PCIT has grossly erred in stating that the transactions with non-members have not been offered to tax by the assessee. All these facts were duly brought to the knowledge of the ld. PCIT in the reply given to the show cause notice issued u/s 263 of the Act. None of the factual submissions had been considered by the ld. PCIT while passing the revision order u/s 263 of the Act. This goes to prove the complete non-application of mind on the part of the ld. PCIT in the instant case, while invoking his revisionary jurisdiction u/s 263 of the Act. Hence the order of the ld. PCIT u/s 263 of the Act deserves to be quashed on this count also in respect of this issue. Enquiries carried out by the ld. AO in original scrutiny assessment proceedings - As it could be safely concluded that the assessment order has been passed after due application of mind and after making adequate and requisite enquiries by the Ld. AO and accordingly the said order cannot be held to be erroneous and prejudicial to the interests of the Revenue only because the Ld. PCIT takes a different view of the matter. We have already held hereinabove that the view taken by the ld. PCIT is grossly incorrect on various counts. In any case, once a possible view has been taken by the ld. AO in the assessment proceedings, the same cannot be subject matter of revision by the ld. PCIT in the section 263 proceedings, merely because the ld. PCIT is of a different view on the same set of facts. Reliance in this regard is placed on the decision of Hon ble Jurisdictional High Court in the case of CIT vs. Gabriel India Ltd. [ 1993 (4) TMI 55 - BOMBAY HIGH COURT] which has been approved by the Hon'ble Supreme Court in Malabar Industrial Co Ltd vs. CIT [ 2000 (2) TMI 10 - SUPREME COURT] PCIT has directed the conduct of a roving and fishing inquiry which is not permissible in law - Merely calling for information to see whether there is potential reason to hold that assessment erroneous and prejudicial to the interest of revenue, constitutes a roving or fishing inquiry. Reliance in this regard is placed on the decision of Hon ble Delhi High Court in the case of CIT vs. International Travel House Ltd [ 2010 (9) TMI 347 - DELHI HIGH COURT] it has been held that the PCIT is not permitted to exercise his revisional powers to conduct a roving or a fishing inquiry with a view to detecting alleged potential sources of income. Thus we hold that the ld. PCIT had grossly erred in invoking revisionary jurisdiction u/s 263 of the Act for more than one reason as detailed supra. Accordingly, the revision order passed by him u/s 263 of the Act is hereby quashed. Accordingly, the grounds raised by the assessee are allowed.
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Customs
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2022 (8) TMI 508
Maintainability of petition - availability of alternate and efficacious remedy of appeal - Denial of refund - Non adhering to the instruction given by the CBEC - seeking refund/restoration of the bank guarantee and maintenance of the status quo till final disposal of the appeal pending in the Customs, Excise and Service Tax appellate Tribunal - HELD THAT:- In the undisputed facts from the record, the remedy of appeal can hardly be regarded as efficacious to seek redress against the coercive action of encashment of the Bank Guarantee - Admittedly, the Order in Original dated 30.06.2020 was issued on 06.07.2020 but served on the petitioner only on 15.07.2020. The order states that any person aggrieved by the same may prefer an appeal to the Appellate Tribunal under Section 129(3) of Customs Act, 1962 within three months from the date of the communication of the order with the Assistant Registrar, Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Western Bench, Mumbai. In NG. ENTERPRISES VERSUS COMMISSIONER OF CUSTOMS (APPEALS), NEW DELHI [ 2000 (5) TMI 53 - HIGH COURT OF DELHI] , the Division Bench of the Delhi High Court, by referring to the Board's circular dated 02.06.1998, held that the revenue could not be permitted to take a stand contrary to the instructions issued by the Board. It is a different matter that an assessed can contest the validity or legality of a departmental instruction. But that right cannot be conceded to the Department, more so when others have acted according to such instructions. The circular, in terms, provided that coercive measures to recover duty demanded as a result of adjudication ought not to be taken until the Commissioner's disposal of the stay application. Moreover, the Circular took cognizance of the Bombay High Court ruling that no coercive action should be taken to realize the dues during the pendency of the stay application before appellate authorities. In the present case, the respondents have acted not only in breach of the Circular of CBEC, which was binding on them but also in breach of the law laid down by the several decisions referred to above. The CBEC circular and the instructions bind the Customs Authorities. In any case, the Customs Authorities are bound by the various decisions referred above, not to mention the solemn assurance on behalf of the Union of India that in the future, adequate care would be taken to follow the law laid down by this Court scrupulously. Therefore, the impugned action is unsustainable. The Commissioner of Customs (respondent no.2) are directed to circulate this judgment and order to all Assistant Commissioners or adjudicating Officers so that in future, there are no similar instances of breach of CBEC instructions or the disobedience of judicial orders - appeal disposed off.
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2022 (8) TMI 507
Eligibility for exemption N/N. 12/2012-Cust (Sr. No. 460 or 469A) - goods imported and supplied as a B D spares of Interceptor Boats to Cost Guard, Government of India - exemption denied only on the ground that the interceptor boats manufactured and supplied by the appellant is not a warship - HELD THAT:- The interceptor boat supplied by the appellant is indeed a warship. Moreover, it is undisputed that they intercepted boats used by the Coast Guard Ministry of Defence Government of India is only for security of the costal border of the country and the boats are not used for any other purpose. It is also undisputed that the said interceptor boat are equipped with arms and ammunition, therefore, it is absolutely without any doubt that the interceptor boat is a warship. From the N/N. 12/2012-Cust (Sr. No. 460 or 469A), it can be seen that the spare parts supplied for warship is clearly exempted under Notification 12/2012-Cust. Accordingly, we have no hesitation to hold that the appellant are clearly eligible for exemption Notification No. 12/2012-Cus (Sr. No. 460). In this position, we do not find it necessary to examine the eligibility of the exemption Notification No. 12/2012-Cust (Sr. No. 469A).
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2022 (8) TMI 506
Refund claim - refund rejected on the ground that the bills of entry under which assessments were made were not assailed and unless the bills of entry were modified the refund cannot be sanctioned - if bills of entry have been self-assessed and goods are cleared on the basis of such self-assessment can a refund be sanctioned without self-assessed bills of entry being assailed and modified? - HELD THAT:- Prior to 2011, assessment under Section 17 had to be done by the proper officer only. After 2011 section 17 has been amended and a system of self-assessment by the assessee has been introduced. This self-assessment under Section 17 (1) is subject to re-assessment under Section 17 (5) by the proper officer. It often happens that the Customs Risk Management System [RMS] selects some bills of entry only for assessment by the proper officer and other bills of entry are cleared on the basis of self assessment itself. Assessment is a quasi-judicial order which can be appealed against before the Commissioner (Appeals) by the importer or Revenue whether or not any speaking order is passed while assessing the bills of entry. Similarly, shipping bills in respect of exports can also be appealed against both by the Revenue and by the importers/ exporters - if duty has been paid in excess, a refund can be claimed under section 27 which is not a quasi-judicial, procedure to re-open the assessment. It has been held in the case of Priya Blue [ 2004 (9) TMI 105 - SUPREME COURT ] and Flock India [ 2000 (8) TMI 88 - SUPREME COURT ] that a refund can be sanctioned only if it follows from the assessment already made. If duty is paid in excess of the assessment the same can be refunded. Thus, refund of duty is a mechanical process of returning the excess duty paid. The officer sanctioning refund cannot sit in judgment or modify the assessment by the assessing officer. Any modification to the assessment is possible either by an appeal before the Commissioner (Appeals) or by issue of a notice under section 28. It was, therefore, held that no refund can be sanctioned so as to modify the assessment of bill of entry. As the issue is now settled by the Constitution Bench of the Supreme Court in ITC [ 2019 (9) TMI 802 - SUPREME COURT ] that no refund can be sanctioned even in cases of self-assessment without assailed the bill of entry - the refund cannot be sanctioned without assailing the self assessed bills of entry - Appeal allowed.
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Corporate Laws
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2022 (8) TMI 505
Seeking direction to transfer the petitions and other proceedings in its present stage, before the Hon'ble Principal Bench at New Delhi - HELD THAT:- The entire gamut of the investigation arises from the transaction of Adarsh Credit 85 Cooperative Society Limited (ACCSL) which allegedly took money from public and several key persons concerned with this society, allegedly siphoned off amounts to various individuals and group companies. Taking note of the factors which has been stated by the applicant and keeping in mind the fraud alleged which is to the extent of ₹ 5003 Crores and the various proceedings pending before different NCLT Benches, the interim Orders those have been passed and the applications which have been filed and likely to be filed by the interveners, it will be appropriate in the interest of applicant/Union of India as well as the various respondents to have a common Bench for hearing of all the matters on merits. The plea of prejudice to respondents is a mirage. The various Company Petitions pending before different bench of Chandigarh, Jaipur, Ahmedabad, Kolkata, Chennai and Allahabad as set out in the prayer are directed to be transferred to New Delhi Bench along with all interim applications and case files. Thereafter, all the Company Petitions as mentioned in the prayer will be transferred to a Special Bench consisting of Sh. Dharminder Singh, Member (Judicial) with Sh. Binod Kumar Sinha, Member (Technical). Petition disposed off.
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Insolvency & Bankruptcy
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2022 (8) TMI 504
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence od debt and dispute or not - HELD THAT:- The applicant clearly comes within the definition of Financial Creditor. The material placed on record as state confirms that respondent has debt due and has committed default in repayment of the outstanding financial debt. On a perusal of Form-I filed under Section 7 of the Code read with Rule 4 of the Rules shows that the form is complete and there is no infirmity in the same. It is also seen that there is no disciplinary proceeding pending against the proposed Interim Resolution Professional. The present application is complete in all respect. The applicant financial creditor is entitled to move the application against the corporate debtor in view of admitted outstanding financial debt and default of the same by the corporate debtor. The default in repayment of the financial debt is not refuted by the Corporate Debtor. In terms of Section 7(5)(a) of the Code, the present application is hereby, admitted - Moratorium declared.
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2022 (8) TMI 503
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - petitioners are entitled to maintain the present petition being homebuyers and meet the threshold limit of 100 of such allottees or 10% of the total number of such Allottees, or not - doctrine of indoor management - lifting of corporate veil - existence of debt and dispute or not - Whether the present petition is hopelessly time barred? - HELD THAT:- The cause of action or default in the case of homebuyers arises only when the agreed/promised date of possession as per the builder buyer agreement has lapsed and till date the possession is not handed over. Given the fact that the default is for the date of possession only, the limitation for the said period does not end because the date of possession does not arrive, until and unless the project is completed and the possession is handed over to the homebuyers/petitioners, thereby, resulting in a continuing/recurring cause of action - the present petition filed under Section 7 of the Code, 2016 qualifies the test of limitation since the possession of the units in the project 'Casa Italia' are not handed over till date, which is in breach of the Builder Buyer Agreement and therefore, amounts to continuing default committed by the Corporate Debtor. Whether the petitioners are entitled to maintain the present petition being homebuyers and meet the threshold limit of 100 of such allottees or 10% of the total number of such Allottees? - HELD THAT:- In order to initiate the CIRP against a corporate debtor on an application filed by financial creditors who are allottees under Section 7 of the Code, 2016, it must primarily qualify the threshold limit of not less than 100 of such allottees under the same real estate project or not less than 10% of the total number of such allottees under the same real estate project, whichever is less as envisaged under second proviso to the Section 7(1) of the Code - this instant petition has been jointly filed by 26 allottees out of total of 69 allottees i.e., more than 10% in the 'Casa Italia' project, which satisfies the criteria as provided in second proviso to the Section 7(1) of the Code, 2016. Whether there was any relation between M/s. Cosmic Structures Ltd. and the Corporate Debtor i.e. M/s. Som Resorts Pvt. Ltd. and whether M/s. Cosmic Structures Ltd. was entitled to receive the amount from the Petitioners on behalf of the Respondent Corporate Debtor to book the units in project 'Casa Italia'? - Whether there was any default on the part of the Respondent Corporate Debtor in completion of the project 'Casa Italia' and in repayment of the amount to the Petitioners and whether on that basis corporate insolvency resolution proceedings can be initiated against this Corporate Debtor? - HELD THAT:- The rule as to agency is expressed in maxim qui facit per alium, facit per se . It is founded on a contract, express or implied, by which one of the parties confides to the other, the management of some business to be transacted in his name or on his account and by which the other assumes to do the business and renders an account of it. With regard to Corporate Debtor's contention that the allotment agreements were entered into between the petitioners and M/s. Cosmic Structures Limited directly as well as the payments were made directly to M/s. Cosmic Structures Limited without the knowledge or intimation to the corporate debtor, and accordingly no debt whatsoever is due and payable by the respondent to the petitioner, it is opined that the marketing agreement dated 10.10.2013 between the corporate debtor and M/s. Cosmic Structures Limited is a matter of internal affairs of the corporate debtor and the petitioners being outsider are not privy to the internal affairs of the corporate debtor and doctrine of indoor management applies herein, therefore, it is not open to the corporate debtor to take advantage of such irregularity at the cost of the petitioners. The principle of lifting the 'corporate veil' is an exception to the distinct corporate personality of a company or its members and is well recognized not only to unravel tax evasion but also where protection of public interest is of paramount importance and the corporate entity makes an attempt to evade legal obligations, than, lifting of veil is necessary to prevent the corporate entities to misuse the principle of distinct corporate personality. It is neither necessary nor desirable to enumerate the classes of cases where lifting the veil is permissible, since that must necessarily depend on the relevant statutory or other provisions, the object sought to be achieved, the impugned conduct, the involvement of the element of the public interest, the effect on parties who may be affected etc. - The doctrine of lifting the corporate veil can be invoked, if the public interest so requires or if there is allegation of violation of law by using the device of a corporate entity. Thus, M/s. Cosmic Structures Limited was indirectly controlled by the same directors, who are controlling the management of the corporate debtor and ultimate beneficiary of the impugned transaction is the respondent corporate debtor i.e., M/s. Som Resorts Private Limited herein. Thus, the instant petition is filed in the proforma prescribed under Section 7 of the Code, 2016 read with Rule 4(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 and is complete. There is a debt of more than Rs. 1 crore i.e., above the threshold limit as envisaged under Section 4 of the Code, 2016 and the same is in default. Petition admitted - moratorium declared.
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2022 (8) TMI 502
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - Personal Guarantors to Corporate Debtor - existence of debt and dispute or not - HELD THAT:- The relevant documents annexed with the application and the affidavits of service placed on record have been examined. It is observed that prima facie, the respondent has committed default in making repayment of the loan amount of Rs. 2,59,70,606/- for which the respondent has given personal guarantee to the applicant financial creditor on the behalf of the corporate debtor. The demand notice has been served to the respondent/personal guarantor Ms. Ritu Bhatia by registered post, which was returned with the remark 'none resides'. It is further observed that vide the order dated 23.08.2021 of this Tribunal, notice was published in the Business Standard, Delhi Edition on 05.07.2022 as and by way of substituted service. It is made known to everyone that from the date of filing this Application (08.03.2021) by the Applicant/Financial Creditor, the interim-moratorium commences as is stipulated under Section 96(1)(a) of the Code, 2016 in relation to all the debts of the personal guarantor and shall cease to have effect on the date of admission of this Application and during the interim-moratorium period the following are prohibited. Petition admitted - List the matter on 23.09.2022.
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Service Tax
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2022 (8) TMI 501
Time Limitation - CENVAT Credit of Service Tax paid - telephone services - security service - advertisement service - man power supply service - maintenance and repair services - common input services utilised for both taxable services as well as trading of goods - non-maintenance of separate records - applicability of Rule 6 (3) of CCR 2004 - penalty - HELD THAT:- On perusal of records, there is no positive evidence adduced by the department to establish that there is fraud, collusion or suppression of facts on the part of the appellant. The issue as to whether trading is exempted service or not being interpretational in nature, the invocation of extended period cannot sustain - the show cause notice in regard to the demand of wrongly availed cenvat credit is time-barred and requires to be set aside. Penalty - HELD THAT:- There is no evidence to show that there has been fraud, collusion or suppression of facts on the part of the appellant, the penalty imposed cannot sustain. Penalty imposed in this regard is set aside without disturbing the demand of service tax along with interest - the impugned order is modified to the extent of setting aside the demand alleging wrongly availed cenvat credit and also setting aside penalty in respect of the demand of service tax - appeal allowed in part.
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2022 (8) TMI 500
Refund claim - time limitation - limitation of time prescribed under the bill ended on 14.05.2016 whereas the appellant have filed the impugned refund claim on 19.06.2017 - applicability of provisions of Section 102 (3) of Finance Act, 1944, which provides that refund claim should be filed within a period of six months on the date of enactment of the Finance Bill, 2016 - HELD THAT:- The refund claim needs to be filed within a period of 6 months from the date on which the Finance Bill, 2016 receives the assent of the president. The appellants have filed the impugned refund claim on 19.06.2017 much after the presidential assent to the amendment has been accorded. It is not a case of the appellant that they were not aware of the legal provisions in this regard. It is on record that a similar claim has been made by the appellant for Rs.1, 33,257/- on 08.11.2016. It is not possible to accept the contention that if a refund filed first is within time, the subsequent refunds should also be treated to have been filed in time. Each claim of refund is a separate application and needs to be treated separate; has to be sanctioned separately. The proposition of the applicant leads to absurd conclusions as the sanctity of limitation is lost. Therefore, the appellant s claim that the subsequent refund filed on 19.06.2017 be treated as part of the refund claim filed on 08.11.2016 cannot be accepted. It is found that if a statute prescribed the limitation such limitation has to be observed by the concerned while seeking refund. The authorities and for that matter this Tribunal, being creatures of the statute cannot extend the period of limitation or pass an order to the effect that delayed submission of refund would not disentitled to the refund, even if it pertains to refund of duty paid, which is subsequently, held to be non-payable. There are no merit in the submissions of the appellant - appeal dismissed.
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2022 (8) TMI 499
CENVAT Credit - duty paying documents - debit notes are valid documents for availment of Cenvat credit of Service Tax or not - Rule 9 of the Cenvat Credit Rules, 2004 - levy of penalty u/s 78 of FA - HELD THAT:- As per clause (f) of Rule 9 of the Cenvat Credit Rules, 2004, an invoice issued by a provider of input service is a valid document for availment of Cenvat credit - In the present case of the Appellant, the heading of the document as seen from sample copies attached with the appeal paper book though are nomenclated as debit notes but they contain all the disclosures as required in a tax invoice as per Rule 4A of the Service Tax Rules, 1994. Further it is not in dispute that the services have not been consumed/utilised by the Appellant and no such allegation had been made out in the SCN issued - Cenvat credit cannot be denied to the Appellants and thus the appeal succeeds to that extent and the demand is quashed. Levy of penalty u/s 78 of FA - HELD THAT:- As regards service tax liability under RCM, since the amount has been paid with interest before issuance of the SCN itself, no penalty under section 78 can be imposed in the present case of the Appellant, being a settled jurisprudence. Appeal allowed - decided in favor of appellant.
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2022 (8) TMI 498
Extended period of limitation - submission of appellant is that the extended period of limitation under the proviso to section 73 (1) of the Finance Act could not have been invoked - works contract - suppression of facts or not - HELD THAT:- The impugned order does not deal at all with the invocation of the extended period of limitation. It was absolutely necessary for the adjudicating authority to form an opinion that the appellant had deliberately suppressed material information with an intention to evade payment of service tax. Unless the adjudicating authority had come to a conclusion that the extended period of limitation was rightly invoked in the show cause notice, it could not have confirmed the demand for any period beyond the normal period of limitation. In PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX., BOMBAY [ 1995 (3) TMI 100 - SUPREME COURT] , the Supreme Court observed that section 11A of the Central Excise Act empowers the Department to reopen the proceedings if levy has been short levied or not levied within six months from the relevant date but the proviso carves out an exception and permits the authority to exercise this power within five years from the relevant date in the circumstances mentioned in the proviso, one of it being suppression of facts. It is, therefore, clear that the suppression of facts should be deliberate and in taxation laws it can have only one meaning, namely that the correct information was not disclosed deliberately to escape payment of duty. The confirmation of demand for the period beyond the normal period of limitation by invoking the proviso to section 73(1) of the Finance Act cannot be sustained - the impugned order to the extent it has confirmed the demand for the extended period of limitation is set aside. The confirmation of demand for the normal period is, however, sustained - appeal allowed in part.
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2022 (8) TMI 497
Classification of services - construction of various infrastructural related projects like Rehabilitation, National Games, Village projects, Sports Complex Construction, Construction of Car Parking etc. pursuant to Works Contract - Commercial or Industrial Construction Services or Works Contract Services? - period from 2006-07 to 2010-11 - HELD THAT:- It is noted that the contract is inclusive of supply of goods. The Ld. Commissioner while taking note of the fact that the construction services rendered by the Appellant is inclusive of supply of goods, has extended the benefit of abatement to exclude the value of goods so as to arrive at the assessable value for raising demand of service tax. The issue has already been examined in detail by the Tribunal in the case of M/S. URC CONSTRUCTION (P) LTD. VERSUS COMMISSIONER OF CENTRAL, SALEM [ 2017 (1) TMI 1363 - CESTAT CHENNAI] where it was held that Insofar as demand for subsequent period till 30th September 2008 is concerned, even as the services rendered by assessee are taxable for the period from 1st June 2007 to 30th September 2008 the narrow confines of the SCN do not permit confirmation of demand of tax on any service other than commercial or industrial construction service'. The instant demand of service tax under the category of Commercial or Industrial Construction cannot be sustained - Appeal allowed - decided in favor of appellant.
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2022 (8) TMI 496
Recovery of Service tax - Goods Transport Agency Service - Business Auxiliary Service - Manpower Recruitment Service or Supply Service - activity undertaken by the appellant in providing trucks for transportation of goods from railway siding in Gorakhpur to different parts of Nepal - extended period of limitation - penalty - HELD THAT:- On going through the sample challans and find that the said challans do contain details like truck number, driver name and particulars of the goods. The said challans do not mention separately the consignor and the consignee. It is submitted that the Nepali Traders engaged these trucks from the appellant and others for transporting their own goods for transportation from Gorakhpur to different places in Nepal. Thus, in the facts of the case, it appears that the consignor and consignees are same. Appellant referred to the speech of Hon ble Finance Minister on 08.07.2004 stating that there has been no intention of law makers to levy service tax on services provided by individual truck owner operators. It is found that under the circumstances, department s holding that the challans are consignment notes, is incorrect. The Department was confused where issuing show cause notice. In so far as the loading, unloading charges are concerned, the show cause notice considered them receipts for services rendered as Manpower Supply Agency . The impugned order treats them to be for the Goods Transport Agency Services . Penalties - HELD THAT:- The department has simply confirmed the service tax liability against the appellant without going into the details of arrangements between the appellant and his clients relying only on the documents like income tax returns, profit and loss account and balance sheet etc. The appellant s contention on the receipts being within exemption limits, over the years, is acceptable - the demand confirmed is not sustainable. Accordingly, the penalties imposed are not sustainable. The learned Commissioner (Appeals) has analyzed the issues correctly and has recorded correct findings. Even though, he decided the issue in the negative list regime, post 1.7.2012, the argument is valid for earlier period also and the impugned demand covers partly the period after 1.7.2012. Learned Commissioner has correctly evaluated the services rendered by the appellants. The Department has accepted the order. It cannot be said that the order has been accepted on monitory grounds, when an appeal against the earlier order passed is pending before this Bench. The appeal is allowed.
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Central Excise
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2022 (8) TMI 495
Absolute Confiscation - cash seized from the residential premise of Director of M/s PML and from the residence of alleged broker/agent for cenvatable invoices - levy of penalty u/r 26 of the Central Excise Rules 2004 invoking the provision of Section 121 of the Customs Act, 1962 - HELD THAT:- The application of Rule is inescapably linked to dealing in goods where the concerned person should have reasons to believe that the same are liable for confiscation. In this case, it is found that the main allegation of the Department is that the respondents M/s PML have availed CENVAT credit only on the basis of forged/doctored documents like invoices without purchasing, receiving or utilizing the material in the manufacture of their final product i.e. steel rolling machine . There is certain contradiction in the approach of the Department. On the one hand the Department s allegation is that there is no movement of goods and on the other hand seeks to impose penalty on the appellants for dealing with goods in an illegal manner - Such logic is not acceptable. The provisions of Rule 26 have not been satisfied to impose penalties. The learned Adjudicating Authority has found that the respondents herein have duly accounted for the cash seized from their premises and as they have not dealt in any manner with the goods that can be held liable for confiscation, no penalty is imposable on them. When two authorities of the Department i.e. the Adjudicating Authority as well as the Appellate Authority have given categorical findings against the allegations made in the show cause notice giving cogent reasons, the Department is attempting to take the issue back to the beginning by filing these appeals. The Department has not made any case for confiscation of cash seized from the premises of Shri Gurmeet Singh and Shri Preet Singh regarding seizure of case of Rs.17 lakh. The Adjudicating Authority as well as the Appellate Authority have convincingly rejected the contention made in the show cause notice and therefore, there are no reasons as to why the impugned order needs to be interfered with - Appeal dismissed - decided against Revenue.
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2022 (8) TMI 494
Clandestine Removal - shortages of finished goods vis- -vis stock recorded in the Daily Stock Account - retraction of statements - prescriptions of Section 9D of the Act, not adhered - levy of personal penalties - HELD THAT:- The Commissioner had erred by holding that the retractions were belated, did not inspire confidence of bona fides and that the claim of retraction was after-thought under legal advice. The Commissioner had also erred by relying upon a host of judicial decisions without discussing their individual factual situations, as is apparent from a bare perusal of paragraph no. 8.4 at pages 15-17 of the impugned order, and the said findings in this behalf are liable to be held as untenable. On a query from this Bench, the Ld.Advocate submitted that necessary averments as to the retraction of the aforesaid purported statements had been made in the replies to the show cause notices and other communications of the appellants/noticees - the adjudicating authority would not have reached a different conclusion in this regard, had the retractions been produced before him by the co-appellants/ deponents concerned. In any case, the inherent contradictions and discrepancies in the statements given by each co-appellant/ noticee, as elaborated in page nos. 11-13 of the Company s Written Submissions, militate against the evidentiary value attached to the purported incriminating statements, even if the original statements were to be held as admissible. Failure on part of the adjudicating authority to adhere to prescriptions of Section 9D of the Act - HELD THAT:- Section 9D(1) of the Act sets out the circumstances in which a statement made and signed before a Gazetted Central Excise officer shall be relevant for the purpose of proving the truth of the facts contained therein. If these circumstances are absent, the truth of the facts contained in the statement made during the course of enquiry/investigations before a Gazetted Central Excise officer, has to be proved by evidence other than the statement itself - the adjudicating authority could not have straightaway relied on the purported incriminating statements of Sri Sanjib Mahapatra, Sri Prahraj Swain and Sri Sanjay Gadodia aforesaid (assuming that the subsequent retractions were invalid) without legitimately invoking Section 9D(1)(a) of the Act. All the said purported statements, thus, have to be eschewed from consideration. Levy of personal penalties - HELD THAT:- As the principal demands against the Company have failed, the imposition of personal penalties against Sri Sanjay Gadodia, Sri Sanjib Mahapatra and Sri Prahraj Swain aforesaid cannot be sustained. Appeal allowed - decided in favor of appellant.
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2022 (8) TMI 493
Valuation - transaction value under section 4 (1) (a) of the Central Excise Act, 1944 - collection of some charges in the name of the Cylinder Holding Charges [CHC] from its customers if the customers do not return the re-usable cylinders within a specified period - inclusion in the assessable value or not - HELD THAT:- The appellant are not liable to pay central excise duty on the rental charges, as has been decided in its own case by the Tribunal in M/S LINDE INDIA LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2018 (12) TMI 1954 - CESTAT NEW DELHI] where it was held that similar issue came up before the Tribunal in the case of BOC INDIA LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, CHENNAI-I [ 2004 (1) TMI 246 - CESTAT, KOLKATA] wherein it was held that the said charges are not, in any way, related to or connected with the sale of the Gases. As such, the same cannot be said to be includible in the definition of the transaction value‟, as is appearing in the provisions of Section 4(3)(d). Additional Consideration for sale or not - HELD THAT:- The appellant is not charging CHC as a condition for sale of its gases. In fact, any customer can buy the gas without paying the CHC and return the cylinder within the time and in such a case no CHC will be payable by the customer to the appellant. If the customer delays returning the cylinder the appellant recovers CHC from the customer in the form of a penalty for delayed return of the cylinder. Central excise duty should be charged on the value of gas for delivery at time and place of removal i.e. at the factory gate. This price does not include the CHC. The CHC is charged only if, after delivery, the customer does not return the cylinder in time. Therefore, it cannot be called an additional consideration for sale but can only be a penalty for not returning the cylinder within time after the sale is completed. Thus, the CHC is not includable in the assessable value - appeal allowed - decided in favor of appellant.
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2022 (8) TMI 492
Reversal of CENVAT Credit - Appellant has used common inputs for manufacture of dutiable goods as well as exempted goods - requirement to pay 8%/10% of the value of the exempted goods i.e. medical oxygen - extended period of limitation - HELD THAT:- The entire case has been made out by the Department on the basis of ER-1 returns. There is no allegation in the show cause notice that the Department was not aware about the manufacturing activity of the Appellant i.e. Industrial Oxygen and Medical Oxygen. It is further observed that apart from the general aversion in the show cause notice, there is no evidence to show that central excise duty has not been paid by resorting to fraud or suppression of facts with an intent to evade payment of duty. It is well settled law that onus is on the Department to prove that extended period of limitation is invokable by adducing evidence. In the present case, no such evidence has been adduced by the Department. As far as demand for the normal period is concerned, it is found that the Appellant has reversed the proportionate cenvat credit which has been availed in the manufacture of exempted goods - Hon ble Supreme Court in the case of CHANDRAPUR MAGNET WIRES (P) LTD. VERSUS COLLECTOR OF C. EXCISE, NAGPUR [ 1995 (12) TMI 72 - SUPREME COURT] has held that the claim for exemption of duty on the disputed goods cannot be denied on the plea that the assessee has taken credit of the duty paid on the inputs used in manufacture of these goods. The impugned Order is not sustainable and the same is set aside - Appeal allowed - decided in favor of appellant.
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2022 (8) TMI 491
Lesser sanction of refund claim and non-payment of interest - quantum of refund reduced - amendment to N/N. 20/2007 by N/N. 20/2008 and 38/2008 - HELD THAT:- The department was required to sanction the amount as claimed in the original refund application, which was rejected by the original authority, but the Appeal of the Appellant was ultimately allowed by the Tribunal. The department is directed to refund the amount, as claimed in the original refund application filed by the respective Appellants. As regards interest, It is found that it is not the case here that the Appellants sought refund and/or filed refund applications after passing of the Tribunal s order since originally the refund claim itself was under challenge before the refund sanctioning authority. The Appellants are entitled to interest after 3(three) months from the date of filing of the original refund claim till the sanction of the refund amount - Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2022 (8) TMI 490
Disallowance of Input tax credit - order has been passed without proper notice to petitioner - violation of principles of natural justice - HELD THAT:- In the case at hand, it is clear that respondent no.3 has not provided to petitioner what was received from the investigation branch or given an opportunity to explain or put forth petitioner s case. The petitioner has not been given a proper hearing and the order has been passed without proper notice to petitioner. It would also amount to breach of principles of natural justice. Therefore, the impugned order is hereby quashed and set aside and the matter is remanded for denovo consideration. The order shall be passed by an officer other than Mr. A.S. Kudale, who is the Deputy Commissioner of Sales Tax, who had passed the impugned order. Before passing any order, a personal hearing shall be given to petitioner with atleast seven working days advance notice. After the personal hearing, petitioner, should they wish to file written submissions recording what transpired during the hearing, those written submissions shall be submitted within three days after the personal hearing. The order to be passed shall be a well reasoned order discussing every submission made by petitioner and the order shall give a finding on every submission made by petitioner - the assessment order shall be passed within twelve weeks from today. Petition disposed off.
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2022 (8) TMI 489
Demand of Electricity Duty - consumption of electricity by sister concern Guljag Gases Pvt. Ltd. - consumption of captive power and not sale - HELD THAT:- Undeniably, the petitioner M/s Guljag Industries and the company Guljag Gases Pvt. Ltd., are involved in manufacturing different items and thus, one cannot be considered to be the subsidiary of another. The transfer of energy by the petitioner M/s Guljag Industries Ltd. to the Company Guljag Gases Pvt. Ltd., even if the latter is considered to be sister concern in the loose parlance cannot be treated to be generation of electricity for own use and hence, respondents were perfectly justified in levying electricity duty on the energy transferred by the petitioner Company to the Company Guljag Gases Pvt. Ltd. The impugned assessment orders passed by the Appellate Authority and the Revisional Authority dated 15.03.2010 and 17.10.2017 respectively, affirming the levy of electricity duty, do not suffer from any illegality or infirmity whatsoever, warranting interference therein. Petition dismissed.
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2022 (8) TMI 488
Disallowance of Input Tax Credit - petitioner has been given a proper hearing or not - order has been passed without proper notice to petitioner - principles of violation of natural justice - HELD THAT:- Since there is nothing to indicate that petitioner was given details about the findings received from the Investigation Branch and given an opportunity to explain or put forth petitioner s case, petitioner has not been given a proper hearing and the order has been passed without proper notice to petitioner. It would also amount to breach of principles of natural justice. Therefore, the impugned order is hereby quashed and set aside and the matter is remanded for denovo consideration. Before passing any order, a personal hearing shall be given to petitioner with atleast seven working days advance notice - After the personal hearing, petitioner, should they wish to file written submissions recording what transpired during the hearing, those written submissions shall be submitted within three days after the personal hearing. Petition disposed off.
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