Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 16, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Rejection of appeal - additional evidence at the appellate stage cane be entertained, at the discretion of the appellate authority, in cases where it can be proved that the party did not get the opportunity to file the documents at the lower stage or the original authority refused to admit the evidence or the appellant establishes that it had exercised due diligence, but was still unable to produce such evidence during the original proceedings. Therefore, the circumstances on which the discretion can be exercised for entertaining additional evidence at the belated stage squarely fits in the instant case, more so in view of the findings of the Appellate Authority. - The request of the Petitioner to accept the endorsement certificate, dated 11.01.2021, of the specified officer of Ramky Pharmacity India Limited, is allowed - HC
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Principles of natural justice - adjustment of IGST with CGST and SGST - adjustment of the amounts paid by the Petitioner under the Integrated Goods & Services Tax Act, 2017 towards the alleged dues determined under Central Goods & Services Tax Act, 2017 & Andhra Pradesh State Goods & Services Tax Act, 2017 - Department directed to adjust the amount and Refund to be allowed for excess payment - HC
Income Tax
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Reopening of assessment u/s 147 - the notice in question was issued on 31.3.2021 - Manner of issuance of notice by electronic mode and when it would be taken to have been issued, but then the judgment was rendered in reference to the date of receipt of the notice, without showing that after the notice was digitally signed on 31.3.2021, it was not sent being entered by the income tax authority in computer resource outside his control. Thus, with due respect to the Division Bench of the Allahabad High Court, the conclusions finally drawn on the facts of that case cannot be applied, rather we cannot change the language of the provision by changing the word "issuance" to that of "receipt" - WP dismissed - HC
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Interest u/s 234C - interest for deferment of advance tax - If on a particular due date for payment of advance tax, the facts show that there is no liability to pay advance tax, non-payment of advance tax on the due date may not be considered sufficient to attract interest u/s 234C. If the returned income is higher due to unexpected income received subsequent to earlier due dates, the shortfall in payment of advance tax instalment in earlier date may not attract interest. - AT
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Deduction u/s 80IA(4)(iv)(a) - deduction was inadvertently not claimed in the return of income filed - In our considered view, if the language of the Statute is plain and unambiguous and is not open to interpretation so that two views may be possible, then the same represents the legislative intent. Here, section 80A(5) of the Act states that for an assessee to be able to make a claim under Chapter -VI of the Act, such a claim has to be made in the return of income. - Fresh claim was rightly denied - AT
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Late fee levied u/s.234E - As far as other returns filed by the assessee for the FY 2013-14 relevant to the AY 2014- 15, all returns were filed and processed before 01.06.2015 and thus, the Assessing Officer cannot levy late fees u/s.234E of the Act and thus, late fees filed for the AY 2014-15 except Form 26Q for 3rd quarter, is deleted. - AT
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Revision u/s 263 - loss incurred by the Directors - trading activity in F & O undertaken on behalf of the company - The trading of sale and purchase of shares done by the directors of the company in their individual capacity cannot be said to be in pursuance to the Board's resolution passed by the assessee company. In the board resolution, there is no whisper of making any "investment" on behalf of the company by these directors as provided u/s. 179(3)(e) of the Companies Act, 2013. In view of the above, we do not find any justification for the Assessing Officer to allow the deduction of the losses suffered by these directors in the hands of the assessee company. - AT
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TP Adjustment - It is not the case that the assessee which is carrying on forwarding chain business has paid the management services for some other unrelated business activity. The nature of business of the assessee company is directly linked to the nature of services and business carried on by its AE-CPA. In simple way, we find that the AE-CPA is an associated enterprise and the headquarter of the group company is based in Austria and they have to maintain their brand and uniformity in services to be provided to its clients which are attached to its various subsidiaries and other enterprises located in various part of the world. - the alleged management charges paid towards management support services to the AE-CPA are allowable as business expenditure incurred for the purpose of business of carrying out freight and other cargo forwarding services - AT
Customs
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Classification of imported goods - Axe Brand Universal Oil - to be classified under CTH 30049011 or under CTH 33079090? - Similar goods in the nature of Amrutanjan, Vicks, Tiger Balm have been held to be classifiable under Chapter 30 as seen from the decisions relied by the learned counsel for the respondent - AT
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Absolute Confiscation - Superior Kerosene Oil or Low Aromatic White Spirit - restricted item or not - to arrive at the conclusion that the product is Superior Kerosene Oil there are 8 Parameters which needs to be tested but as per the test report only 3 Parameters were tested. For this reason the test report of chemical examiner reporting the product as Kerosene cannot be taken as conclusive. Moreover, the appellant have rightly pointed out that the Adjudicating Authority has based this finding only on 1 parameter i.e. “Distillation” out of 8 Parameters for holding that goods are SKO. - AT
Indian Laws
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Dishonor of Cheque - Though detailed investigation was conducted and the final report was filed, the order of the High Court will indicate that while exercising the power under Section 482 Cr.P.C., it is not only brief, but cryptic. The High Court, neither has adverted to the facts arising in the case in detail nor to the nature of the allegation which led to the investigation and the filing of the final report. The only observation which appears to have influenced the decision of the High Court is that the cheque leaf belongs to the appellant and it contains her signature and there is no allegation of threat. - Matter restored back to HC - SC
PMLA
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Seeking stay of orders of freezing of the accounts of the petitioner - Money laundering - The singular absence of statements of reasons or the basis of an apprehension, factual or otherwise, for freezing the properties of the petitioners is apparent from the impugned orders. The requirement of satisfaction of the conditions stated in Section 17(1) before proceeding to Section 17(1-A) do not contemplate parroting the words used in the sections but a precise statement, in writing, reflecting the factors which form the basis of the conclusion arrived at - the impugned orders fall short at all levels of the statutory requirements. - HC
Service Tax
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SVLDRS - amount paid as pre-deposit and/or deposit during enquiry, investigation or audit is required to be deducted after extending the relief available - the action of Designated Committee by first deducting the amount of deposit made by petitioners during enquiry, investigation or audit and, thereafter, extending relief to the petitioners by computing the amount of tax due on the outstanding amount, is not as per the mandate of the Scheme. - HC
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Refund of service tax paid - tax paid under the head Management Consultant’s Service on reverse charge mechanism - M/s Cotunace have not rendered any advice for running the organisation of the appellants in an effective manner. Their role was mediation /arbitration in resolving the dispute. They have only performed the work of mediator/arbitrator in resolving the dispute between the appellant and M/s GCT. Actual work performed cannot be equated with advice. Therefore, M/s Cotunace did not render any management consultancy service to the appellant. - RCM is not applicable - Refund allowed - AT
Central Excise
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Clandestine Removal - clandestine removal is a serious charge and requires to be substantiated by evidence encompassing various activities in the chain of events. - The department has not adduced any additional evidence, even on a sample basis to substantiate the allegation of clandestine removal as per above. In the absence of evidence, the allegations raised by the department are not substantiated - AT
Case Laws:
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GST
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2022 (8) TMI 593
Principles of natural justice - recovering tax without issuance of any order under Section 74(9) of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The respondent / department is directed to issue show cause notice to the appellant within 15 days from the date of receipt of the server copy of this order granting not less than 10 days from the date of receipt of the show cause notice to submit a reply by the appellant. It is thereafter the show cause notice shall be adjudicated and a speaking order be passed on merits and in accordance with law. Appeal disposed off.
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2022 (8) TMI 592
Maintainability of petition - availability of alternative remedy - validity of penultimate portion of the order whereunder and by which the learned Writ Court was prima facie satisfied that the appellants / writ petitioners have been able to make out a case for an interim order - HELD THAT:- The learned Writ Court was right in protecting the interest of the appellants till the disposal of the writ petitions as the appellants were able to make out a prima facie case to the satisfaction of the learned Single Bench pursuant to which the writ petitions have been entertained and affidavits-in-opposition have been directed to be filed by the respondents. The direction issued by the learned Writ Court by directing the deposit of 10% of the demand in question should be construed to be in compliance of Rule 51 of the aforementioned Rules.However, we have a small reservation as regards whether deposit of 10% of the entire demand has to be directed or only deposit of 10% of the tax in dispute has to be directed to be made. Rule 51 of the Rules gives power to the Court to grant stay of realisation of any amount assessed as tax subject to the condition that the aggrieved party gives security and such security must be in satisfaction of the Court that it will be adequate and protecting the interest of the revenue. Therefore, the learned Single Bench rightly exercised its discretion and bearing in mind the mandate in Rule 51 has issued a direction - the direction to deposit 10% of the entire demand would be onerous as had the appellants file appeals before the Joint Commissioner under Section 107 of the Act, the appellants were required to deposit only 10% of the tax in dispute. The appeals are partly allowed and the directions issued by the learned Single Bench directing deposit of 10% of the demand in question stands modified as deposit of 10% of the tax in dispute. The appellants are granted 30 days time from the date of receipt of the server copy of this order to make the deposit before the appropriate authority and if the same is complied with, no coercive action shall be taken against the appellants for recovery of the balance amount as demanded.
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2022 (8) TMI 591
Appeal filed by the Petitioner - Refusal to accept additional evidences produced - whether the request of the Petitioner seeking a direction to the Appellate Authority to accept the endorsement certificate filed pending appeal can be accepted? - HELD THAT:- The fact that, the Petitioner has not filed the endorsement certificate along with the refund application is not in dispute. It is also not in dispute that, against the Order of refusing to grant refund, the Petitioner has preferred an appeal before the Respondent No. 1. It is also not in dispute that the Petitioner has not filed endorsement certificate issued by the specified officer of the SEZ Unit along with the appeal also. Pending appeal, the Petitioner herein is said to have filed an application requesting the Appellate Authority to accept the endorsement certificate issued by the specified officer in respect of its recipient SEZ Units. Insofar as the plea of the Respondents that the Petitioner ought to have obtained endorsement certificate much prior to arrival of Covid in India, it is to be noted here that the Petitioner herein has two years time to claim refund and the Petitioner could not have anticipated that the pandemic will sweep the entire country during that period. Therefore, non obtaining endorsement certificate prior to Covid pandemic cannot be a ground to reject the claim. As stated earlier, the Petitioner could not have anticipated the situation and when it thought of making an application within the time prescribed, the entire country was engulfed with pandemic. Rule 112(4) of C.G.S.T. Rules postulate that, nothing contained in the said Rule shall affect the power of the Appellate Authority or the Appellate Tribunal to direct production of any document, or examination of any witness, to enable it to dispose of the appeal. In fact, Section 107(11) of C.G.S.T. Act contemplate that, before disposing of any appeal, the Appellate Authority may make any further inquiry as he thinks fit - However, additional evidence at the appellate stage cane be entertained, at the discretion of the appellate authority, in cases where it can be proved that the party did not get the opportunity to file the documents at the lower stage or the original authority refused to admit the evidence or the appellant establishes that it had exercised due diligence, but was still unable to produce such evidence during the original proceedings. Therefore, the circumstances on which the discretion can be exercised for entertaining additional evidence at the belated stage squarely fits in the instant case, more so in view of the findings of the Appellate Authority. The request of the Petitioner to accept the endorsement certificate, dated 11.01.2021, of the specified officer of Ramky Pharmacity India Limited, is allowed - Petition allowed.
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2022 (8) TMI 590
Direction to GST Network to open the common portal to file/rectify TRAN-1 and TRAN-2 for a period of two months - HELD THAT:- Since all the Petitioners can avail of this window, Petitions stand disposed.
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2022 (8) TMI 589
Principles of natural justice - adjustment of the amounts paid by the Petitioner under the Integrated Goods Services Tax Act, 2017 towards the alleged dues determined under Central Goods Services Tax Act, 2017 Andhra Pradesh State Goods Services Tax Act, 2017 - Works Contract - HELD THAT:- Though various grounds are raised, learned counsel for the petitioner mainly submits that when the nature of transaction is admitted, the authorities ought to have adjusted the amount paid by him towards I.G.S.T. In any event, he would contend that he will pay the C.G.S.T. and S.G.S.T. due to the authorities and thereafter, he may be permitted to claim refund of the amount paid towards I.G.S.T. - The same is not seriously opposed by the learned Government Pleader for Commercial Tax. Even in the assessment order, dated 05.10.2020, passed by respondent No.1/Assistant Commissioner (ST), Kurupam Market Circle, Visakhapatnam, it is held that the office cannot make adjustment of I.G.S.T. into C.G.S.T. and S.G.S.T. The taxable person may claim refund of I.G.S.T. after payment of C.G.S.T. S.G.S.T. and in view of the same, the objections filed by the taxable person were held not tenable. The present Writ Petition is disposed of directing the petitioner to pay C.G.S.T. and S.G.S.T. within a period of three (3) weeks from today and thereafter, make a claim for refund of the amount under I.G.S.T., which the petitioner is entitled to, before respondent No.1, in which event, respondent No.1 shall deal with the same as early as possible, preferably, within a period of four (4) weeks thereafter.
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Income Tax
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2022 (8) TMI 588
Assessment of trust - benefit of the deficit for earlier years against the income of subsequent year - whether Tribunal has erred in allowing deficit resulting out of Corpus Donations without appreciating that this income has been claimed as exempt by the assessee? - HELD THAT:- We are of the opinion that the CIT (Appeals) as well as the Tribunal have arrived at concurrent findings of fact by applying the decision of this Court in case of Sheth Manilal Ranchhoddas Vishram Bhavan Trust [ 1992 (2) TMI 51 - GUJARAT HIGH COURT] and in case of Shri Plot Swetambar Murti Pujak Jain Mandal [ 1993 (11) TMI 17 - GUJARAT HIGH COURT] wherein it is held that, there is nothing in language of Section 11(1)(a) of the Act, 1961 to indicate that the income from the trust property should have been applied for charitable or religious purposes only in the year in which such income is received and the deficit incurred by the Trust due to excess spending on the object of the trust during the particular year or excess expenditure incurred in earlier years or in the current year by the trust cannot be permitted to be set off against the income of subsequent years. It was held in case of Sheth Manilal Ranchhoddas Vishram Bhavan Trust (Supra) that, income referred to in Section 11(1)(a) of the Act, 1961 was to be computed in accordance with normal rules of the accounting. Hence, depreciation has rightly been allowed as expenditure in the facts of the case. The Tribunal, applying the aforesaid decisions of this Court, has held that the expenditure incurred in the earlier year can be set off from the income of the subsequent years and utilization of such income for meeting the expenditure of the earlier year would amount to such income being applied for charitable or religious purpose. This Court in case of Shri Plot Swetambar Murti Pujak Jain Mandal [ 1993 (11) TMI 17 - GUJARAT HIGH COURT] has held that the income derived from Trust property has to be computed on commercial principles and consequently deficit arising out of expenditure over income for the previous year can be set off against the surplus of income over expenditure of the subsequent year. Thus we are of the opinion that there is no error in the impugned orders passed by the Tribunal giving rise to any question of law, much less any substantial question of law, proposed or otherwise.
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2022 (8) TMI 587
Reopening of assessment u/s 147 - petitioner had received payments u/s 194 J also, but it had not shown the said receipts in his Profit and Loss account and had not given any explanation for the same - HELD THAT:- The petitioner had not disclosed the amount of reimbursement of expenses claimed by it and the actual amount received by it towards reimbursement. It had not submitted the details of expenses incurred by it for verification during the assessment proceedings. It did not produce any ledger, bills and vouchers of expenses incurred on behalf of the Principal Companies. Thus the petitioner did not make a full and true disclosure of all the material facts which resulted in an income having escaped assessment. In the instant case, the notice under Section 148 of the Act has been issued by the Assessing Officer after an investigation was carried out and after going through the income tax return and other related documents of the petitioner and after forming reason to believe that the petitioner did not truly and fully disclose all the material facts, because of which income amounting to Rs.1,07,24,386/- has escaped assessment. Thus the reassessment has been ordered upon discovery of apprehended untruthfulness of facts previously disclosed, which came to light after an investigation and, therefore, the judgment in Phool Chand Bajrang Lal [ 1993 (7) TMI 1 - SUPREME COURT] does not support the petitioner and as per the law laid down in Srikrishna[ 1996 (7) TMI 2 - SUPREME COURT] the reassessment proceedings have rightly been initiated. The judgment passed by this Court has also been sought to be reviewed on the ground that various case laws relied upon by the petitioner in support of its claim have not been considered by this Court. This Court is not obliged to refer to each and every judgment forming part of a compilation of judgments submitted after conclusion of oral submissions, which judgments were not placed before the Court during oral submissions. Moreover, while deciding the writ petition, we have referred to and relied upon the relevant case laws and it is not been submitted by the petitioner that in the judgment sought to be reviewed, the law applicable to the facts of the case has not been taken into consideration. Therefore, this submission also stands rejected. We do not find any error apparent on the face of the record in the judgment and the order sought to be reviewed. The application for review of the judgment and order dated 18-04-2022 lacks merit and, is accordingly dismissed.
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2022 (8) TMI 586
Reopening of assessment u/s 147 - time limit for issuance of the notice under Section 148 - manner of issuance of notice by electronic mode - manner of service of notice and Section 282 - issuance v/s receipt of notice - HELD THAT:- As in Daujee Abhushan Bhandar Pvt Ltd case [ 2022 (3) TMI 784 - ALLAHABAD HIGH COURT] referred to Rule 127A of the Rules of 1962 which deals with communication in the electronic form and after referring to Section 13 of the Information Technology Act, 2000, it was held that despatch of an electronic record occurs when it enters a computer resource outside the control of the originator. Therefore, if a notice is digitally signed by the income tax authority and it is entered by the income tax authority in computer resource outside the control, then that point of time would be the time of issuance of the notice. After recording the aforesaid finding, the Division Bench of the Allahabad High Court further examined the definition of the words issue and issuance of notice which have not been defined under the Act of 1961. The dictionary meaning of both the words were thereafter taken and after considering different judgments, the Division Bench finally came to the conclusion that mere digitally signing the notice is not issuance of notice. The impugned notice under Section 148 of the Act of 1961 in that case was received on 6.4.2021 and, therefore, it was treated to be time barred. As the notice under Section 148 of the Act of 1961 was digitally signed by the authority on 31.3.2021 and was sent to the assessee through email, but email was received by the assessee on 6.4.2021 and thereby taking the date of receipt to be relevant, the judgment was rendered favourable to the assessee. With due respect to the Division bench of the Allahabad High Court, the issue threadbare discussed by it refers to the date of issuance and not of receipt, but after making discussion in reference to all the provisions, conclusions have been drawn referring to the date of receipt, without discussion as to when it enters a computer resource outside the control of the originator Manner of issuance of notice by electronic mode and when it would be taken to have been issued, but then the judgment was rendered in reference to the date of receipt of the notice, without showing that after the notice was digitally signed on 31.3.2021, it was not sent being entered by the income tax authority in computer resource outside his control. Thus, with due respect to the Division Bench of the Allahabad High Court, the conclusions finally drawn on the facts of that case cannot be applied, rather we cannot change the language of the provision by changing the word issuance to that of receipt . Finding that the notice in question was issued on 31.3.2021, we do not find a case in favour of the petitioners and, accordingly, WP are dismissed. However, it is with liberty to the petitioners to challenge the assessment orders, if they so choose, by availing the remedy as provided under law. The dismissal of these writ petitions would not come in the way of the petitioners availing the remedy in accordance with law. Notices were issued before 1.4.2021, W.P. challenging the validity of Explanation to Clause A(a) modified by notifications issued from time to time are not pressed and, accordingly, the said writ petitions are dismissed.
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2022 (8) TMI 585
Exemption u/s 11 - violation of Section 13(1)(d) r.w.s. 11(5)(1) - AO held that although the assessee is registered u/s 12AA the trust is not doing any charitable activity - amount given us loan would be treated as taxable - AO held that the society has diverted its fund and invested in violation of 11(5) - HELD THAT:- In the instant case, the assessee has neither deposited nor made investments by extending loan to the parties mentioned above. Hence, the provisions of Section 13(1)(d) and 11(5) are not applicable. To decide the issue, we have gone through the provisions of Section 11(1)(d) existing as on the Assessment Year applicable to the assessee which were brought by the amendment w.e.f. 01.04.1989 and also the further amendments brought out w.e.f. 01.04.2021. From the concurrent reading of the provisions as on 01.04.1989 and as on 01.04.2021, we find that there was no mandate that the corpus donations have to be necessarily invested or deposited one or more of the forms or modes specified in sub-section (5) maintained specifically for such corpus. Hence, the appeal of the assessee for the instant year is allowable. Decided in favour of assessee.
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2022 (8) TMI 584
Disallowance u/s 14A r.w.r. 8D - Mandation of recording satisfaction - HELD THAT:- Section 14A of the Act provides that no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does in form part of the total income under this Act., if the Assessing Officer is not satisfied with the correctness of the claim of the assessee in respect of expenditure incurred in relation to income which does in form part of the total income, the Assessing Officer can determine the amount of such expenditure after having regard to the accounts of the assessee. The satisfaction as required to be recorded under the provisions of section 14A is not limited to merely disagreeing with the submission of the assessee and requires that the AO should also provide the basis for reaching such conclusion, after having regard to the accounts of the assessee. In the present case, assessee is an investor in shares as well as also does trading in shares under proprietary firm i.e. M/s Gaurav Trading Company. Assessee claimed to have maintained separate books of account for the aforesaid two activities. Dividend income was earned by the assessee in his personal account. The assessee has also claimed to have incurred expenditure in his personal account. The expenditure incurred on personal account by the assessee was not claimed as deduction and thus, no question arises of disallowing any part of such expenditure. As during assessment 2011-12, AO only took into account the exempt income forming part of the personal account, for the purpose of invoking the provisions of section 14A - Assessing Officer as well as learned CIT(A) though alleged that common pool of human and financial resources have been utilised to earn the income, however, failed to appreciate that the assessee has already recorded expenditure incurred in personal account, which has also not been claimed as deduction by the assessee. Therefore, no basis for upholding the disallowance made by the Assessing Officer under section 14A read with Rule 8D - Decided in favour of assessee.
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2022 (8) TMI 583
Rectification u/s 154 - Entitlement to exemption u/s 11 - expenses so claimed fully entitled to get which made for public charitable purpose according to the provisions of the Act - trust has filed an application for registration u/s 12AA of Income Tax Act, 1961 and ld. Commissioner of Income Tax (Exemption), Jaipur granted registration certificate under section 12AA - HELD THAT:- As looking into the entirety of facts and circumstances that the assessee trust is registered under section 12AA w.e.f. 11.07.1966 and continuously getting benefit of section 11 of the IT Act, however, because of change in the system of the Department all the cases were transferred to New Ward (Exemption), therefore, technically the assessee trust again applied registration which was granted vide order dated 06.05.2016. Even the department while considering the entire facts of the case had already allowed expenses under section 11 of the Act for the assessment years 2012-13, 13-14 and 14-15. Therefore, keeping in view the principles of natural justice and consistency, we direct the AO to give benefit of section 11 to the assessee for the year under consideration. The order of ld. CIT (A) is set aside - Appeal of the assessee is allowed.
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2022 (8) TMI 582
Interest u/s 234C - interest for deferment of advance tax - assessee argued book profit includes capital gain income which arose in 4h quarter therefore the liability to pay advance tax arise only on 15.03.2018 30.03.2018 - HELD THAT:- As provisions of S. 234C (1) regarding payment of interest shall not apply to any shortfall in the payment of the advance tax due on the returned income - this is subject to condition that the assessee has paid the whole of the amount of tax payable in respect of his total income (including windfall gains, if any), as part of the remaining instalments of advance tax which are due (after accrual of windfall gain) or where no such instalments are due, i.e., in cases of windfall gain accruing after 15th of March of financial year, by the 31st day of March of the financial year. Therefore, when it is not possible for the assessee to estimate accrual or receipt of such income at any time when the payment of first, second, third or fourth instalment of advance tax, as the case may be, is due, the assessee is not liable to pay advance tax on the respective due dates in respect of such windfall gain. If on a particular due date for payment of advance tax, the facts show that there is no liability to pay advance tax, non-payment of advance tax on the due date may not be considered sufficient to attract interest u/s 234C. If the returned income is higher due to unexpected income received subsequent to earlier due dates, the shortfall in payment of advance tax instalment in earlier date may not attract interest. As far as income under the head business/profession is concerned, interest under section 234C of the Act shall not be chargeable on default in payment of advance tax in respect of such income only in the first year of business/profession. For income in the nature of windfall gain/unexpected income under other heads of income, provisions of S. 234C (1) shall not apply to any shortfall in the payment of the advance tax due on such income if the same is of the nature which can't be foreseen by the assessee so as to enable him to estimate such income for the purpose of payment of advance tax. However, the above relaxation in payment of advance tax instalments is subject to condition that the assessee has paid the whole of the amount of tax payable in respect of his total income (including windfall gains, if any), as part of the remaining instalments of advance tax which are due (after accrual of windfall gain) or where no such instalments are due, i.e., in cases of windfall gain accruing after 15th of March of financial year, by the 31st day of March of the financial year. Considering the facts of the case and pronouncements of various authorities, we delete the interest charged u/s. 234C and allowed the ground of appeal raised by the appellant.
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2022 (8) TMI 581
Long term capital gain - Transfer u/s 2(47) - possession of land has been handed over by the assessee to the developer on execution of the agreement - whether the incident of tax [i.e, transfer of immovable property] for charging capital gain has arisen in this year (AY. 2011-12) against the assessee or not? - assessee contended that on perusal of the agreement executed by the assessee with the developer would reveal that there was no transfer of a capital assets in view of the provisions of Section 2(47) (v) of the Act r.w. Section 53A of the TOPA - HELD THAT:- As per the agreement, the assessee only has to hand over possession of the immovable property in the event the transferee obtains the IOD from the MCGM. So it is noted that the possession of property to transferee will be only after he obtains the IOD from MCGM and in this case, the IOD (the intimation of disapproval) was undisputedly issued by the MCGM only on 15.04.2013 (i.e. in AY. 2014-15). Thereafter only assessee need to hand over the vacant and peaceful possession of the property to the transferee/developer i.e, only on or after 15.04.2013. AO/Ld. CIT(A) erred in assuming that assessee by virtue of the sale-cum-development agreement dated 20.10.2010 has handed over/allowed the transferee to take possession of the immovable property and thus erroneously held that section 53A of TOPA read with section 2(47)(v) of the Act stood attracted. AO/Ld. CIT(A) mis-interpreted the agreement dated 20.10.2010 and applied the law erroneously, so their impugned action cannot be sustained. Having held so, we further note that there was no evidence/material before AO/LD CIT(A) to suggest that the assessee has given possession of the property to the developer before the IOD was issued by the MCGM and any way that is not the case of AO/Ld. CIT(A). Assessee has produced evidence to substantiate that he had not vacated the house in the immovable property till IOD was issued by MCGM. For that he has has filed the Electricity Bill in the name of assessee (Mahesh Saini) for the month of April 2011- June 2011, April-2012 June 2012 found placed at page no. 1 to 4 of the P.B-III and Property Tax Bill issued by BMC in the name of Mother of assessee Smt. Parvati Devi of Property No. 1481 1482 upto 28.12.2012 (Receipt dated 04.05.2012) found placed at page no. 5 to 7 of the P.B-III. In the light of the facts discussed supra, we find that there was no transfer of immovable property, so no capital gain could have been taxed in the hands of the assessee in this assessment year, therefore, the assessee succeeds.
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2022 (8) TMI 580
Unexplained credit u/s 68 - CIT-A deleted part addition - HELD THAT- As considering the details in respect of agricultural income we note that the assessee has substantial land holding and claimed agricultural income. CIT(A) considering the relevant evidence on record and also with submissions of the assessee following earlier years assessments restricted the addition to the extent of Rs. 8,35,667/- i.e. Rs. 81,28,523/- (-) Rs. 72,92,856/-). Therefore, we find no infirmity in the reasons recorded by the CIT(A) from para 5.2 to 5.10 of the impugned order at page 17. Thus, the order of the CIT(A) is justified. Ground No. 1 raised by the Revenue is dismissed. Benefit u/s 43CA - difference between the value of stamp duty and the sale consideration as per agreement to sale u/s 43CA(1) of the Act on account of deemed income - HELD THAT:- CIT(A) held that the sub-section (3) of section 43CA does not provide the agreement fixing the value of consideration for transfer of assets should be registered. Therefore, we find that the view of the A.O in not giving benefit provided u/s 43CA(3) of the Act to the assessee is not justified. Further, the CIT(A) also discussed the relevant Explanatory note of Finance Act, 2013 for introduction of section 43CA of the Act which is reproduced by the CIT(A) in the impugned order - On perusal of the same, we note that the CIT(A) is correct in holding that the Explanatory Note also does not provide the agreement fixing the value of consideration entered into on earlier date should be registered. Thus, we find no infirmity in the order of the CIT(A) in holding that the assessee is entitled for benefit u/s 43CA of the Act. Thus, the order of the CIT(A) is justified on this issue and the ground No. 2 raised by the revenue is dismissed.
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2022 (8) TMI 579
Deduction u/s 80IA(4)(iv)(a) - deduction was inadvertently not claimed in the return of income filed - only contention of the assessee is that there are various decisions to the effect that the assessee is entitled to claim the deduction before appellate authorities if the same was not claimed in the original return or of income but was claimed during the assessment and the appellate proceedings - if the assessee has not claimed deduction under section 80-IA of the Act in the return of income, can it be permitted to claim the same during the course of assessment proceedings by way of filing a revised computation in response to notice issued by the assessing officer HELD THAT:- It is well-settled law and when the language of the Statute is plain and unambiguous, the same represents the legislative intent. In the instant case, the language of section 80A(5) of the Act is plain and unambiguous in its wordings and the same is not open to interpretation. It is an undisputed fact, that the assessee did not make a claim for deduction under section 80-IA of the Act in its return of income. The said claim was made by way of filing revised computation during the course of assessment proceedings. While we are aware of the fact that in various cases it has been held that beneficial provisions should be construed liberally and legitimate claim of the assessee should be allowed, even if the assessee has failed to claim the same in its return of income. In our considered view, if the language of the Statute is plain and unambiguous and is not open to interpretation so that two views may be possible, then the same represents the legislative intent. Here, section 80A(5) of the Act states that for an assessee to be able to make a claim under Chapter -VI of the Act, such a claim has to be made in the return of income. In view of the plain language of the Statute, and respectfully following the decision in the case of Rachna Infrastructure (P.) Ltd. [ 2022 (3) TMI 256 - GUJARAT HIGH COURT] we are of the view that Ld. CIT(Appeals) has not erred in facts and in law in confirming the order of the assessing officer. In the result, appeal of the assessee is dismissed
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2022 (8) TMI 578
Revision u/s 263 by CIT - Disallowance u/s 14A r.w.r.8D not made by AO - whether the assessment order has been passed by Ld. AO without making inquiries or verification with respect to the disallowance u/s 14A read with Rule 8D hence the assessment is erroneous insofar prejudicial to the interest of the Revenue? - HELD THAT:- It is not the case that the AO has not made any enquiry. Indeed the Pr. CIT initiated proceedings under section 263 of the Act on the ground that the AO has not made enquiries or verification which should have been made in respect of disallowance u/s 14A read with rule 8D of the Act. It is not the case of the Pr. CIT that the AO did not apply his mind to the issue on hand or he had omitted to make enquiries altogether. In the instant set of facts, the AO had made enquiries and after consideration of material placed on record accepted the genuineness of the claim of the assessee. We make our observation that the learned PCIT has not invoked the explanation 2 of section 263 of the Act in the show cause notice dated 17 January 2022 about the same. Therefore, the opportunity with respect to the explanation 2 of section 263 of the Act was not afforded to the assessee. Thus, on this count the learned PCIT erred in taking the course of such provisions while deciding the issue against the assessee. Secondly, the learned PCIT has also not specified the nature and the manner in which the enquiries which should have been conducted by the AO in the assessment proceedings. Thus, in the absence of any specific finding of the learned PCIT with respect to the enquiries which should have been made, we are not convinced by his order passed under section 263 of the Act. We hold that there is no error in the assessment framed by the AO under section 143(3) causing prejudice to the interest of revenue. Thus, the revisional order passed by the learned PCIT is not sustainable and therefore we quash the same. Hence the ground of appeal of the assessee is allowed.
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2022 (8) TMI 577
Unexplained money u/s 69A - assessee offered no explanation about the nature and sources of the acquisition of money deposited into bank accounts - AO held that the tax liability of the assessee has to be computed as per the provisions of section 115BBE of the Act as the addition is made under section 69A - HELD THAT:- Sec.69A of the Act can be invoked only when the assessee is found to be owner of money, bullion, jewellery or other valuable article or thing is not recorded in the books of accounts maintained by him for any source of income and the assessee offers no explanation or the explanation offered is not satisfactory. When the entries are found recorded in the books of accounts, the aforesaid provisions cannot be invoked at all. The source of income of the assessee is salary from the partnership firm Siddivinayak Ventures and income from other sources . A credit entry in the bank pass book regarding receipt of money into that account cannot be the basis to hold that the assessee is found to be owner of any money, bullion, jewellery or other valuable article or thing and therefore the first condition for invoking the provisions of Sec.69A of the Act, does not stand satisfied. Conditions for invoking the provisions of Sec.69A of the Act, are not satisfied in the present case - all the cerdits have been staisfactorily expalined by assessee - affidavits has been filed giving all details like address and PAN confirming that parties had paid through banking channels.
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2022 (8) TMI 576
Reopening of assessment u/s 147 - investment in trade market through broker and manipulated his income by shifting in losses / shifting in profit - HELD THAT:- As the reopening was done on the basis of information received from the Investigation Wing as has been accepted by the AO and the CIT(A) in their respective orders, therefore, in the absence of independent application of mind by the AO, the reopening in the instant case under section 147 r.w.s 148 of the Act was not justified. Investigation Wing supplied the information to the AO that there was a client code modification to manipulate the profit as was the case in the aforesaid referred to case of Shri Tulsi Dass, Laxmi Nagar, Delhi [ 2019 (1) TMI 1985 - ITAT DELHI] - Therefore for the same reasoning the reassessment order in the case of the assessee also deserves to be quashed. AO acted only on the basis of suspicion and acted on the basis of information received from the Investigation Wing therefore the reassessment proceedings was not valid. Moreover in the reasons recorded, copy of which is placed of the assessee s paper book. AO categorically stated that the AO had reason to believe on the basis of observation of the Directorate of Investigation that the assessee had probably shows bogus profit to adjust unaccounted money generated from business or elsewhere and he had reason to believe on that basis that the amount had escaped assessment within the meaning of Section 147. From the aforesaid notings of the AO in the reasons recorded it is clear that the AO was not sure as to whether income escaped the assessment. Since the word probably has been used, and there was no application of his own mind by the AO who depended only on the information received from the Investigation Wing. We therefore by considering the totality of the facts as discussed herein above are of the view that the reopening in the instant case on the basis of borrowed information by the AO from the Investigation Wing without applying his independent mind was not justified. Accordingly the subsequent reassessment proceedings framed by the AO is quashed. - Assessee appeal allowed.
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2022 (8) TMI 575
Reopening of assessment u/s 147 - reasons to believe on the basis of which his case was reopened - sustainability of the assessment framed by the A.O without making available a copy of the reasons to believe to the assessee who after duly complying with the notice u/s 148 of the Act is stated to have specifically requested for the same - HELD THAT:- As in the case before us there has been a complete violation of the applicable principle of law by the A.O, who had despite specific request by the assessee failed to communicate the reasons to believe that had formed the very basis for reopening of his assessment u/s.147 of the Act, therefore, the very assumption of jurisdiction by him and framing of the impugned assessment cannot be sustained and is liable to be struck down on the said count itself. Our aforesaid view is supported by the judgment of the Hon ble High Court of Bombay in the case of Agarwal Metals and Alloys [ 2012 (8) TMI 612 - BOMBAY HIGH COURT] As view had been taken by the Hon ble High Court of Delhi in the case of Pr. CIT Vs.Jagat Talkies Distributors [ 2017 (9) TMI 192 - DELHI HIGH COURT] . In its aforesaid order, the Hon ble High Court relying on the judgment of the Hon ble High Court of Bombay in the case of CIT Vs. Trend Electronics, [ 2015 (9) TMI 1119 - BOMBAY HIGH COURT] had held, that on account of the failure of the A.O to make available to the assessee a copy of the reasons for reopening of the assessment u/s.147 of the Act, the re-assessment proceedings would stand vitiated in law. Accordingly, as in the case before us, the A.O despite specific request of the assessee had failed to provide to him the copy of the reasons to believe on the basis of which his case was reopened u/s.147 therefore, as per the aforesaid settled position of law the assessment framed by the him being devoid and bereft of valid assumption of jurisdiction cannot be sustained and is herein quashed. - Decided in favour of assessee.
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2022 (8) TMI 574
Disallowance of guarantee fee claimed - CIT-A deleted the addition as based on fresh evidence without affording an opportunity to the Assessing Officer under Rule 46A of the Income Tax Rules - HELD THAT:- Admittedly, in this case, CIT(A) has not entertained any fresh material for adjudication of the issue. The TDS on guarantee fee paid by the assessee was very much produced before the Assessing Officer and the Assessing Officer, without considering its entirety, extracted half portion in one page and half portion in another page and made the addition. Moreover, under section 251(1)(a) of the Act, the powers of the first appellate authority are coterminous with those of Assessing Officer, considering the facts and circumstances of the case, we are of the considered opinion that the ld. CIT(A) has rightly assumed the jurisdiction to conclude the issue based on the materials already available with the Assessing Officer. Thus, the ground raised by the Revenue is dismissed. Disallowance of delayed payment of EPF and ESI dues - HELD THAT:- We find that the ld. CIT(A) has rightly followed the decision in the case of CIT v. Industrial Security Intelligence India Pvt. Ltd. [ 2015 (7) TMI 1063 - MADRAS HIGH COURT] as well as decision of CIT v. Alom Extrusions Ltd. [ 2009 (11) TMI 27 - SUPREME COURT] in directing the Assessing Officer to allow the deduction to the extent payments are made within due date of filing of return of income. Thus, the ground raised by the Revenue is dismissed.
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2022 (8) TMI 573
Validity of Reopening of assessment u/s 147 - issuance of reassessment notice by the Assessing Officer, who has no jurisdiction to assess the assessee - HELD THAT:- If the AO, who had jurisdiction over the assessee completes assessment u/s.143(3) of the Act, on the basis of notice issued by the non-jurisdictional Assessing Officer is bad in law and void ab initio. Although, DR justified assessment order passed by the AO having jurisdiction over the assessee on the basis of 148 notice issued by non-jurisdictional AO in light of provisions of section 124(3) and 124(5) of the Act, we do not find any substance in the arguments advanced by the learned DR for simple reason that section 124(5) deals with powers of the AO in respect of income accruing or arising or received within the area, if any, such powers can be derived with by virtue of direction or order issued under sub-section (1) or (2) of section 120 of the Income Tax Act, 1961. If we go by said provisions of the Act, then, case of the assessee clearly lies with the jurisdiction of the ITO, Ward 4, Puducherry, but not with the ITO., Ward-1(1), Puducherry. Therefore, when the ITO, Ward-1(1), Puducherry does not have jurisdiction over the assessee, he ought not to have issued notice u/s.148 of the Income Tax Act, 1961. Having issued notice u/s.148 and transferred case to jurisdiction officer, the ITO, Ward-4(1), the incumbent Assessing Officer should have started case by issue of fresh notice u/s.148 or section 143(2) of the Act or notice u/s.129 of the Act to assume jurisdiction on change of incumbent of office. In this case, the Assessing Officer, who completed assessment u/s.144 r.w.s 147 of the Act has not issued any notice and thus, assessment framed on the basis of 148 notice issued by non-jurisdiction officer is invalid and liable to be quashed. Hence, we quash reassessment order passed by the Assessing Officer u/s.144 r.w.s147 of the Income Tax Act, 1961, dated 10.03.2016. Assessee appeal allowed.
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2022 (8) TMI 572
Income from house property - ALV determination - property was let out, but was vacant for the impugned assessment year alone - HELD THAT:- There is no dispute with regard to fact that property owned by the assessee was let right from assessment year 2008-09 to 2011- 12, however, same was vacant due to non-availability of tenants for the assessment year 2012-13 to assessment year 2013-14. But, same property was again let out from the assessment year 2015-16 onwards. The assessee has computed Nil annual letting value of the property in terms of provisions of section 23(1)(c) of the Act, whereas the AO has determined annual value in terms of provisions of section 23(1)(a) of the Act. The Assessing Officer has relied upon decision Mr. Vivek Jain [ 2011 (1) TMI 897 - ANDHRA PRADESH HIGH COURT] to support his findings. According to Assessing Officer, in order to apply provisions of section 23(1)(c) of the Act, property must be let out during the previous year and it should be vacant for any part of the previous year. it is very clear that provisions of section 23(1)(c) of the Income Tax Act, 1961 does not apply, in case where property is not let out at all. However, if the property is let out for two or more years and was vacant for whole or any part of the previous year, then said property would come within ambit of provisions of section 23(1)(c). In this case, property was let out earlier, however, it was vacant during the impugned assessment year owing to non-availability of tenants. It is not the case of the Assessing Officer that property was not at all let out. In fact, the Assessing Officer has admitted fact that property was let out, but was vacant for the impugned assessment year alone. Further, the assessee has made his best efforts to let out the property which is evident from e-mail correspondence between the assessee and agents however, could not get tenants for relevant period. Therefore, we are of the considered view that the assessee has rightly computed annual letting value of the property as per provisions of section 23(1)(c) and this principle is supported by the decision of M/s. Sonu Realtors Pvt.Ltd [ 2018 (9) TMI 1687 - ITAT MUMBAI] where an identical issue has been considered by the Tribunal and held that term property is let used in section 23(1)(c) is solely used with intent to avoid misuse of determination of annual value of self-occupied property by taking recourse to section 23(1)(c), however, same cannot be stretched beyond that and thus, annual value of property which was let, but thereafter remains vacant for whole year under consideration, subject to condition that same is not put under self-occupation of the assessee and is held for the purpose of letting out of the same would continue to be determined u/s.23(1)(c). Thus we are of the considered view that the Assessing Officer has erred in computing annual letting value of the property in terms of section 23(1)(a) of the Act. Hence, we direct the Assessing Officer to delete addition made towards income from house property. Assessee appeal allowed.
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2022 (8) TMI 571
Late fee levied u/s.234E - assessee has filed TDS Quarterly returns in Form 24Q beyond due date specified under the Act - HELD THAT:- In this case, for the AY 2013-14, the quarterly return filed by the assessee and order passed by the Assessing Officer are on or before 01.06.2015 and thus, there cannot be any late fees for filing return u/s.234E of the Act, and hence, addition made for the AY 2013-14 is deleted. For the AY 2014-15, the assessee has filed Form 26Q for 3rd quarter of FY 2013-14 after 01.06.2015 and the CPC (TDS) has processed the return filed by the assessee after 01.06.2015 and thus, late fees provided u/s.234E can be levied and thus, late fees levied for delay in filing Form 26Q for the 3rd quarter alone is sustained. As far as other returns filed by the assessee for the FY 2013-14 relevant to the AY 2014- 15, all returns were filed and processed before 01.06.2015 and thus, the Assessing Officer cannot levy late fees u/s.234E of the Act and thus, late fees filed for the AY 2014-15 except Form 26Q for 3rd quarter, is deleted. As regards, quarterly return filed for the AY 2015-16, the assessee has filed all returns on or after 01.06.2015 and the CPC(TDS) had also processed the returns filed by the assessee on or after 01.06.2015 and thus, the Assessing Officer can levy late fees u/s.234E of the Act and thus, late fees levied by the Assessing Officer u/s.234E of the Act, for the AY 2015-16, is confirmed.
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2022 (8) TMI 570
Revision u/s 263 by CIT - profit derived from purchase and sale of shares - profit derived from share transactions to be assessed under the head income from business or profession OR 'capital gain' - AO noticed that the assessee has derived short term capital gain from investment activity and accordingly, assessed short term capital gain u/s.111A and levied tax @ 15% - HELD THAT:- If we examine reasons given by the PCIT, we find there is no merit in reasons given by the PCIT to term the assessment order as erroneous, insofar as it is pre-judicial to the interests of the Revenue, because very same issue of profits derived from share transactions was subject matter of 143(3) assessment proceedings before the Assessing Officer, where the AO has discussed the issue in the assessment order dated 15.12.2017 and after considering relevant details filed by the assessee, assessed profits under the head short term capital gain and further determined profit derived for the year at Rs.10 lakhs and levied 15% tax in terms of section 111A of the Income Tax Act, 1961. When the AO has taken one possible view, after considering relevant materials, then there is no scope for the PCIT to assume jurisdiction u/s.263 of the Act and set aside the assessment order, because the PCIT can assume jurisdiction in a case, where there is lack of inquiry, however, the PCIT cannot set aside the assessment order for inadequate inquiry. In this case, it is abundantly clear that the Assessing Officer has verified the issue and taken one possible view. There is no scope for the PCIT to revise assessment order u/s.263 because the PCIT has failed to make out a case of erroneous order passed by the AO, which caused prejudice to the interest of the Revenue, which is precondition for invoking jurisdiction u/s.263 of the Income Tax Act, 1961 as held in the case of Malabar Industrial Co. [ 2000 (2) TMI 10 - SUPREME COURT] . Hence, we quash order passed by the learned PCIT u/s.263 - Decided in favour of assessee.
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2022 (8) TMI 569
Reopening of assessment u/s 147 - validity of reassessment proceedings twice passed in this case - Reopening beyond period of four years - first reopening of assessment was initiated for the reason that the assessee has not deducted tax on the expenses such as, professional charges, interest others, interest on machinery finance charges, advertisement charges paid and remuneration to name lenders debited in the profit and loss account, which are required to be disallowed under section 40(a)(ia) - Case [second time] reopened the assessment on the ground that the profit admitted by the assessee on the sale of agricultural lands was not an agricultural land and the profit on sale of land earned by the assessee for the assessment year 2008-09 is to be brought to tax - as per CIT-A AO has not established what was the default on the part of the assessee to face the reassessment proceedings - HELD THAT:- On perusal of the first reassessment order under section 143(3) r.w.s. 147 of the Act dated 30.03.2013, as reproduced hereinabove, the assessee has furnished detailed submissions towards realizing net profit on sale of lands. In the assessment order, the AO has elaborately discussed on the sale of the impugned agricultural lands, scrutinized the documents and evidences submitted by the assessee and arrived at the findings that the profits from the sale of land being agricultural in nature are exempt from tax. Thereafter, having different opinion on the sale of land is not an agricultural land, AO again reopened the assessment, which is mere change of opinion and not permissible as per the law laid down in the case of CIT v. Kelvinator of India Ltd. [ 2010 (1) TMI 11 - SUPREME COURT] wherein, it was held that an assessment cannot be reopened on a mere change of opinion; reason to believe that the income chargeable to tax has escaped assessment is one of the conditions precedent for invoking the jurisdiction of the Assessing Officer to reopen the assessment under section 147 - The Hon'ble Supreme Court further observed that the Assessing Officer had power to re-assess but no power to review. If the concept of change of opinion is removed, review would take place in the garb of reopening of assessment. Thus, applying the ratio of the above judgment of the Hon'ble Supreme Court to the instant case, since no new material was brought on record after completion of assessment under section 143(3) r.w.s.147 of the Act dated 30.03.2013, the second reopening of assessment was not on account of any fresh material and it is only on a mere change of opinion, we are of the considered view that the reopening of assessment is liable to be quashed. Once the assessment was reopened beyond four years from the end of the relevant assessment year under consideration, the provisions of section 147 of the Act applies. Once the proviso to section 147 applies, it is the duty of the Assessing Officer to prove that the assessee has failed to furnish fully and truly all material facts to complete the assessment. In this case the Assessing Officer was not able to establish that there is failure on the part of the assessee to disclose fully and truly all materials. We, therefore, considering the entire facts and circumstances of the case, hold that the reopening is invalid beyond four years from the end of the relevant assessment year. As decided in the case of Fenner (India) Ltd. [ 1998 (11) TMI 66 - MADRAS HIGH COURT] , the Hon'ble Jurisdictional High Court has held that the reasons recorded by the Assessing Officer did not establish even prima facie, a failure on the part of the assessee to fully and truly disclose the material fact for the assessment and accordingly quashed the notice. Thus, the service of notice under section 148 of the Act 11.03.2015 is liable to be held as bad in law. - Decided in favour of assessee.
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2022 (8) TMI 568
Deduction claimed u/s 80P(2)(d) - interest income earned from deposits kept with a co-operative bank - A.R submitted that the co-operative banks also co-operative societies carrying on banking business and hence the interest earned on deposits kept with co-operative banks is to be treated as interest income earned from co-operative societies - HELD THAT:- As identical issue has been adjudicated in the case of Kaliandas Udyog Bhavan Premises Co-op Society Ltd [ 2018 (4) TMI 1678 - ITAT MUMBAI] and it has been decided in favour of the assessee as observed that the interest income earned by a co-operative society on its investments held with a co-operative bank would be eligible for claim of deduction under Sec.80P(2)(d). Thus interest income on deposits kept with co-operative banks is eligible for deduction u/s 80P(2)(d) - we set aside the order passed by Ld CIT(A) and direct the AO to allow deduction u/s 80P(2)(d) in respect of interest income earned from deposits kept with cooperative banks. Assessee appeal allowed.
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2022 (8) TMI 567
Assessment of trust - addition u/s 68 - unexplained donations - revenue submitted that even during the course of the set aside proceedings, the assessee could neither furnish the correct addresses of the donors, nor produce them before the AO for cross-examination - AO did not issue any fresh summons to the thirteen alleged donors in the remand proceedings, despite the assessee having provided their addresses before the Ld. CIT(A) - HELD THAT:- CIT(A), it is seen, has nowhere considered the assessee's contentions. No findings have been recorded on these submissions. Assessing Officer having not summoned the thirteen donors of the assessee during the Remand proceedings, from the addresses provided by the assessee before the CIT(A), AO's Remand Report ought not to have affected the Ld. CIT(A)'s decision adversely to the assessee, particularly when the Ld. CIT(A) too did not deem it proper, for the reasons not evincible from the order under appeal, to so much so as to have taken note of the contentions raised by the assessee in his Rebuttal to the Remand Report, much less deal with them in the impugned order. Rather, the Ld. CIT(A) ought to have directed the Assessing Officer to summon the persons, or to have himself summoned them. Au contraire, the Ld. CIT(A) wrongly endorsed the Assessing Officer's unsustainable finding that the assessee had not provided fresh addresses. Even otherwise, the assessee cannot be said to have gained anything by not providing the addresses of his donors. Rather, in the process, the claim of the assessee remained hanging fire for long years, before the ultimate passing of the order under appeal. We find this to be a fit case where despite the Authorities below erred in not summoning the assessee's donors, the matter requires to be once again remitted to the Assessing Officer to be decided afresh on merit, in accordance with law, after summoning the thirteen donors of the assessee, on affording due and adequate opportunity of hearing to the assessee. The assessee, no doubt, shall cooperate in the fresh proceedings before Assessing Officer. All pleas available under the law shall remain so available to the assessee. Appeal of the assessee is treated as allowed for statistical purposes.
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2022 (8) TMI 566
Applicability of provisions of section 40A(3) - cash payments made for any expenses in excess of prescribed limit - HELD THAT:- As in each and every case provisions of section 40A(3) cannot be applied, because, real nature of transactions need to be ascertained. In case, the assessee acts as commission agent and earns commission on total sales, then even if, for practical purposes, transactions are treated as purchase sales, then for the purpose of provisions of section 40A(3) real nature of transaction needs to be ascertained. In this case, the assessee claims that though he has reported purchases as his own purchases, but said purchases is made on behalf of principal, and his income is only commission on net sales. In this regard, the assessee has placed agreement between the M/s. B M Hot Breads Pvt.Ltd. and the assessee. These fact needs to be verified by the AO to decide applicability of provisions of section 40A(3) of the Act. Hence, we set aside the issue to the file of the AO and direct the AO to reconsider the issue in light of averments of the assessee and also agreement between the parties and decide applicability of provisions of section 40A(3) - Appeal filed by the assessee is treated as allowed for statistical purposes.
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2022 (8) TMI 565
Penalty u/s 271(1)(c) - assessment proceedings were initiated by issue of notice u/s 148 r.w.s. 147 - HELD THAT:- There was certain mistakes so committed by the previous counsel while filing the return of income of the assessee and when it came to the knowledge of the assessee through another counsel at the time of furnishing return/ reply for notice u/s 148, at the very first opportunity, the assessee furnished the return declaring correct income. Moreover, AO accepted the return income so now filed and no additions were made while computing the income in the assessment order passed u/s 143(3) r.w.s. 147. Considering that assessee is salaried person, the argument of ld. AR that assessee is not well versed in taxation laws, cannot be brushed aside. Considering the judgment of Hon'ble Apex Court in the case of M/s Price Water House Coopers Pvt. Ltd.,[ 2012 (9) TMI 775 - SUPREME COURT] so cited by the ld. AR as above, and judgment of Hon'ble Rajasthan High Court in the case of J.P. Sharma Sons [ 1984 (1) TMI 25 - RAJASTHAN HIGH COURT] we are of the opinion that it is a case where benefit of doubt is to be given to the assessee that it was an inadvertent and bonafide error on the part of assessee without knowing the nittygritty of the taxation laws and it was not a case of assessee trying to conceal its income. Considering the facts and in the circumstances of the case and the case laws so cited penalty order passed by AO is cancelled and appeal of the assessee is allowed for AY 2016-17. It is reiterated that facts and the grounds so taken in AY 2017-18 are also same as that of in AY 2016 17 and accordingly the appeal for AY 2017-18 is also allowed.
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2022 (8) TMI 564
Revision u/s 263 - loss incurred by the Directors - trading activity in F O undertaken on behalf of the company is not assessable in the assessment of the appellant - allowability of loss claimed under F O - HELD THAT:- It is clear that none of the questions pertain to the claim of deduction by the assessee for the loss suffered by the directors in their individual accounts. Neither the Assessing Officer asked assessee pertaining to the above said questions nor it was replied by the assessee. Hence, the present case is a case of no enquiry by the AO. Whether inquiry was conducted by the AO during assessment proceeding on the issue of disallowability of loss caused to the directors in the hands of the assessee or not? - In the present case, despite the fact that the losses were caused to the directors in their accounts, the AO has allowed the said loss to be set off against the income of the assessee company without making any enquiry. The same is not permissible in law. No question was asked by the AO to the assessee and there was no basis for allowing the deduction of such trading loss to the assessee company. We cannot approve the same as in the present case, no transactions were carried out by the assessee company during the period from 01.04.2013 to 31.03.2014 resulting into loss - In fact, from the perusal of ledger account of M/s. Zen Securities Limited, in the books of the assessee company, only a loss was shown on account of trading in securities/derivatives. Therefore, in our view, the order passed by the AO is unsustainable and the action on the part of the Ld. PCIT was correct. Two directors namely Ms. P. Usha Rao and Karthik Velagapudi were having two different unique client codes and the amounts were transferred by the assessee company to these two directors. Thus, merely transferring the amounts by the company to the accounts of directors cannot ipso facto lead to the conclusion that they were authorized to transact for and on behalf of the assessee company. Once the transactions can be undertaken by the company on its own capacity, having separate unique client code, then it is possible that the activity would be carried out through the accounts of the directors. Therefore, in our view, the order passed by Ld. PCIT is in accordance with the law. Applicability of section 179 of the Companies Act, 2013 - From the perusal of the Board resolution, it is amply clear that the Board has given the power to the directors to transact for and on behalf of the company . Contrary to the power given by the resolution, the directors have started doing business of share trading in their individual capacity. The act of the director cannot be said to be the act of company under the provisions of the Companies Act, 2013. There is distinction between the company and its directors under the Act and the act done by the directors in their individual capacity cannot be said to be an act on behalf of the company. As per the Companies Act and as well as the Income Tax Act, the company and its directors are two distinct jurist entity. Hence, both are separately assessed under the provisions of the Income Tax Act. The trading of sale and purchase of shares done by the directors of the company in their individual capacity cannot be said to be in pursuance to the Board's resolution passed by the assessee company. In the board resolution, there is no whisper of making any investment on behalf of the company by these directors as provided u/s. 179(3)(e) of the Companies Act, 2013. In view of the above, we do not find any justification for the Assessing Officer to allow the deduction of the losses suffered by these directors in the hands of the assessee company. CIT-A allowing the loss claimed by the assessee company from trading in Futures Options pertaining to the director and carried out in the trading account of the director and not through such trading account maintained in the name of the company wherein no trading activity carried out - In the present case, it is clear from the facts on record that the activities of share trading were carried out by the directors in their individual capacity from their unique client codes. Therefore, in our view, the losses/income, if any, caused on account of such activities carried out by the directors from their own unique client codes cannot be allowed in the hands of the assessee. Further, an interesting aspect is also brought on record that as against Rs. 2,06,18,388/- allegedly given by the company to its directors, the directors had suffered loss of Rs. 1,67,31,578/- for A.Y. 2014-15 and similarly, as against Rs. 1,72,83,000/- allegedly given by the company to its directors on various occasions, the directors had suffered a loss of Rs. 2,18,87,793/-. Thus, the loss suffered by the assessee, was more than the amount lent by the assessee to its directors. The conduct of the company and its directors does not inspire confidence as it is highly improbable to believe that the assessee will continue to transact through its directors, despite persistent losses. We are of the opinion that the order passed by the Ld. CIT(A) is required to be set aside and the order of the Assessing Officer is required to be restored. Accordingly, the appeal of the Revenue is allowed.
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2022 (8) TMI 563
Nature of receipt - Receipt of interest income - revenue or capital receipt - As necessary on the part of the assessee to revise the audited financial statements before filing the revised return of income, as the assessee has failed to do so and the same is treated as revenue expenditure and assessable as income from other sources and determined the assessed income - HELD THAT:- It is undisputed fact that the assessee company incorporated for the purpose to carry on the business to set up, manage, operate and maintain a Rail Based Mass Rapid Transport System around and between Ahmedabad and Gandhinagar in the State of Gujarat. Both the Central and the State Governments are to provide requisite finaces for implementation of the said project and the funds from the Central and State Government flow directly to the assessee company. Thus the assessee company is a SPV formed by the Central Government and State Governmet of Gujarat and there is no profit motive as the entire fund entrusted and the interest accrued therefrom on deposits in bank has to be applied only for the purpose of welfare of the State as provided in the guidelines. We have no hesitation in holding the order passed by the Ld. CIT(A) that the interest income is to be treated as capital in nature and therefore the addition made by the Assessing Officer is hereby deleted. Thus the grounds of appeal raised by the Revenue are hereby rejected and Cross objection raised by the Assessee are hereby allowed.
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2022 (8) TMI 562
TP Adjustment - addition towards managerial and technical services - Proof of allowable as business expenditure incurred for the purpose of business of carrying out freight and other cargo forwarding services - whether management service charges paid by the assessee to its AE-CPA fails on the benefit test and since not incurred for business purposes, deserves to be disallowed? - as per AO Assessee failed to prove the benefit received by it by making payment to its AE-CPA for management support services - HELD THAT:- We find that the alleged management services are merely 2% of the total revenue of the company which is even less than 2% of the revenue of the company and the said sum paid by the assessee has also been offered to tax by AE-CPA. Also the nature of services rendered by AE-CPA to the assessee are not specific but provided on day to day basis whenever needed. The AE-CPA has expertise in the overseas freight and forwarding business and there are various types of issues and problems attached in such services and the AE being an expertise in the international business - the assessee company is taking regular service through the personnel of AE-CPA to get guidelines on various fronts including the marketing, commercial management, corporate sales, invoicing, finance, other connected issues on various courses. For day to day smooth and effective working of business and for trying to keep an error free working environment, such management support services have been taken. In the past also, during the assessment year 2010-11 and 2011-12 such services have been taken and have been consistently charged in the books of account. The observation of the Revenue authorities is not specific but general in nature that the assessee has failed on the benefit test but nowhere any specific instances have been given to show that the so-called services taken by the assessee company from its AE under various agreements are not related to the nature of business carried on by the assessee. It is not the case that the assessee which is carrying on forwarding chain business has paid the management services for some other unrelated business activity. The nature of business of the assessee company is directly linked to the nature of services and business carried on by its AE-CPA. In simple way, we find that the AE-CPA is an associated enterprise and the headquarter of the group company is based in Austria and they have to maintain their brand and uniformity in services to be provided to its clients which are attached to its various subsidiaries and other enterprises located in various part of the world. Thus we are of the considered view that the alleged management charges paid towards management support services to the AE-CPA are allowable as business expenditure incurred for the purpose of business of carrying out freight and other cargo forwarding services and by paying the alleged charges the assessee has been able to run the business smoothly and effectively. We, therefore, delete the transfer pricing adjustment made and allow ground raised by the assessee. Non grant of credit for tax deducted at source - HELD THAT:- As we find that during the course of hearing, no submissions were made by learned Counsel for the assessee on this issue. It seems that the assessee is not interested to press this ground. Even otherwise, this issue is of mere reconciliation of tax deducted at source and such exercise can be carried out at the level of Assessing Officer if not made earlier. Hence, ground No. 7 is allowed for statistical purposes.
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2022 (8) TMI 561
Depreciation on Right to Collect Toll - true nature of the rights acquired in terms of the contract awarded by the NHAI - whether or not the cost of Right to Collect Toll qualifies as intangible asset as defined under clause (ii) of sub-section (1) of section 32? - whether the Right to Collect Toll falls within the definition of commercial right or intangible asset ? - HELD THAT:- There can be no doubt that as result of developing this project, the respondent-assessee had acquired a commercial right to collect the toll in terms of the contract awarded by NHAI. This right definitely falls within the meaning of commercial right or intangible asset . This definitely would qualify for depreciation @ 25%. To the same effect is the decisions of the Hon ble Rajasthan High Court in the case of GVK Jaipur Expressway Ltd.[ 2017 (10) TMI 1380 - RAJASTHAN HIGH COURT] the High Court has taken into consideration all the decisions and more particularly the decisions of (i) Hon ble Delhi High Court in the case of Moradabad Toll Road Co. Ltd.[ 2014 (11) TMI 354 - DELHI HIGH COURT] (ii) Hon ble Allahabad High Court in the case of CIT v. Noida Toll Bridge Co. Ltd.[ 2012 (11) TMI 556 - ALLAHABAD HIGH COURT] ; (iii) Hon ble Madras High Court in the case of CIT v. VGP Housing (P.) Ltd.[ 2014 (8) TMI 423 - MADRAS HIGH COURT] ; (iv) Hon ble Rajasthan High Court in the case of CIT v. Jawahar Kala Kendra [ 2014 (6) TMI 292 - RAJASTHAN HIGH COURT] (v) Hon ble Rajasthan High Court in the case of CIT v. Mohd. Bux Shokat Ali [ 2001 (2) TMI 26 - RAJASTHAN HIGH COURT] . Decisions of the Hon ble Jurisdictional High Court in the case of North Karnataka Expressway Ltd. [ 2014 (11) TMI 351 - BOMBAY HIGH COURT] AND CIT vs. West Gujarat Expressway Ltd. (No.1) [ 2016 (4) TMI 1184 - BOMBAY HIGH COURT] and CIT vs. West Gujarat Expressway Ltd [. 2016 (4) TMI 1220 - BOMBAY HIGH COURT] have no application to the facts of the present case, inasmuch as, the decision in the said two cases relates to the allowability of depreciation on roads treating as building . In the circumstances, we do not find any illegality in the order of the ld. CIT(A). Accordingly, we do not find any merit in the appeal filed by the Revenue. Hence, the grounds of appeal raised by the Revenue are dismissed.
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2022 (8) TMI 560
Disallowance of different amount u/s. 2(24) (x) r.w.s 36 (1) (va) towards employees contribution to PF/ ESIC - assessee s captioned above have deposited the employees contribution to PF/ ESIC well before the prescribed date for filing the return of income u/s.139(1) although there may be some delinquency in abiding by the due date prescribed under the prescribed Act - HELD THAT:- The issue is no more res-integra . The issue has already been settled in favour of the assessee by various judicial pronouncements by the Tribunal. The Hon ble Jurisdictional High Court of Delhi in the case of PCIT vs Pro Interactive Service (India) Pvt.Ltd. [ 2018 (9) TMI 2009 - DELHI HIGH COURT] held that legislative intent was/is to ensure that the amount paid is allowed as an expenditure only when payment is actually made. We do not think that the legislative intent and objective is to treat belated payment of Employee s Provident Fund (EPD) and Employee s State Insurance Scheme (ESI) as deemed income of the employer under section 2(23)(x). 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 all the above-stated matters, the Revenue had not contended that the assessee has deposited the contribution after the filing of the return of income. - Decided in favour of assessee.
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2022 (8) TMI 559
Condonation of delay by the CIT(A) - non-service of the assessment order, the assessee was prevented by a reasonable cause in filing the appeal before the Ld. CIT(A) - HELD THAT:- When the Bench inquired from the Sr. DR if the Department was willing to challenge findings of CIT(A) vis- -vis the non-service of assessment order by filing an Affidavit on behalf of the Department in this regard, DR replied in the negative. In such a situation, we are of the considered view that the Department is merely trying to grab at straws to somehow make a case that the condonation of delay being bad in law would nullify the First Appellate Order on the merits of the case. Therefore, we out- rightly reject this contention of the Department that the CIT(A) had wrongly condoned the delay as the same is not established by any documentary evidence. We are of the considered view that the condonation of delay lies within the discretionary powers of the First Appellate Authority and he has exercised the same in favour of the assessee after duly considering the facts and record. Accordingly, ground No.2 of the Department s appeal stands dismissed. Unsecured loans - Addition u/s 41(1) - AO acknowledges that the impugned amount were never debited to the profit and loss account as an expenditure in the year they were received - HELD THAT:- In the present case, the assessee had not debited the aforesaid liability to its Profit and Loss account in any of the earlier years (admitted by the AO at Pg-7 and by Ld. CIT(A)) and thus, the question of receiving any benefit, allowance or deduction by the assessee in earlier years, as specified in (i) above, has not been fulfilled in the instant case and, therefore, there lies no application of section 41 (1) in the instant case. Further, the assessee had also not received any benefit either in cash or otherwise during the relevant year. In fact the said sum will decrease the cash inflows of the assessee in the subsequent years. The assessee has not written back the liability during the relevant year and the said liability continued to appear as the closing liability and has been carried forward to next year. Thus, condition (ii) above has also not been fulfilled. Therefore, it can be said that both the conditions needed for the application of section 41(1) of the Act have not been fulfilled in the instant case and, therefore, the addition made u/s 41(1) of the Act would have no legs to stand and has been rightly deleted by the Ld. CIT(A). Hon'ble Punjab Haryana High Court in the case of CIT Vs. G.P International Ltd [ 2009 (12) TMI 33 - PUNJAB AND HARYANA HIGH COURT] has held that since the assessee was showing the aforesaid liabilities in his books and has not written off the same, the provisions of section 41(1) are not applicable. Appeal of department dismissed.
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Customs
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2022 (8) TMI 558
Classification of imported goods - Axe Brand Universal Oil - to be classified under CTH 30049011 or under CTH 33079090? - HELD THAT:- The ingredients of Axe oil are printed each side of the box of Axe oil. The active compositions of the oil are Pudhina ka Phool, Niligiri ka Tel, Gandhara tel, Karpoor. The relevant extract of the page from the Ayurvedic Pharmocopia has been produced by the respondent. It shows that pudhina has therapeutic use and is used in the treatment of JIRNA JVARA (fever), Sula, Agnimandhya etc. Similarly, Niligiri tel or eucalyptus has therapeutic properties and is used in treatment of sula, agnimandhya (digestive impairment), swasa (dyspnoea, astma) etc. Similar goods in the nature of Amrutanjan, Vicks, Tiger Balm have been held to be classifiable under Chapter 30 as seen from the decisions relied by the learned counsel for the respondent - The Hon'ble Supreme Court in the case of AMRUTANJAN LTD. VERSUS COLLECTOR OF CENTRAL EXCISE [ 1995 (3) TMI 97 - SUPREME COURT ] has held that Having regard to the evidence, we are inclined to hold that the articles afore-mentioned were articles known both to ayurvedic and western sciences and were refined for use in medicaments. Since they were known to ayurveda, their use in the making of the balm did not, by itself, make the balm a non-ayurvedic product. Appeal dismissed.
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2022 (8) TMI 557
Absolute Confiscation - Superior Kerosene Oil or Low Aromatic White Spirit - restricted item or not - to be classified under Custom Tariff Heading No. 27101990 or under Custom Tariff Heading No. 27101910 of the first schedule of Custom Tariff Act, 1975? - penalty - HELD THAT:- The goods imported by the appellant have been absolutely confiscated on the ground that the same is Superior Kerosene Oil and not Low Aromatic White Spirit as declared by the appellant. The Superior Kerosene Oil is a restricted item therefore the same was absolute confiscated. In this regard the department has conducted the chemical test of the product for which the representative sample was drawn and sent to the chemical examiner, Custom House Laboratory, Kandla. The chemical examiner instead of answering the query that whether sample confirmed the description of goods as Low Aromatic White Spirit. The chemical examiner reported that parameter meets the requirement of Kerosene as per IS- 1459:2016. There may be a possibility that on the basis of the parameters tested by the chemical examiner the same also match with the parameter of the product imported by the appellant. Therefore, it was important on the part of the chemical examiner to first check as per the query raised by the custom that whether the sample conformed to the description of the goods as Low Aromatic White Spirit or not - to arrive at the conclusion that the product is Superior Kerosene Oil there are 8 Parameters which needs to be tested but as per the test report only 3 Parameters were tested. For this reason the test report of chemical examiner reporting the product as Kerosene cannot be taken as conclusive. Moreover, the appellant have rightly pointed out that the Adjudicating Authority has based this finding only on 1 parameter i.e. Distillation out of 8 Parameters for holding that goods are SKO. Wavier of detention and demurrage charges - HELD THAT:- The department must give effect of the above order for wavier of detention and demurrage charges. The department could not establish that the goods in question is SKO therefore, the classification claimed by the appellant needs to be maintained. The impugned order is set aside and giving effect of this order the department shall vacate the absolute confiscation and penalty imposed is set aside - appeal allowed - decided in favor of appellant.
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2022 (8) TMI 556
Confiscation - redemption fine - penalty - Indian Currency - Scope of goods as per Section 2 (22) of the Customs Act, 1962 - appellant s contention is that the money was legally procured from his savings - HELD THAT:- It is not the case of the appellant that he has declared upfront the currency in his position while he was travelling Abroad and the currency he carried was within limits prescribed under the notification. In terms of the Regulation as discussed above Indian Currency over and above Rs.25,000/- is not permissible to be taken outside India.As far as the Customs Act is concerned, knowledge or otherwise are not material for rendering the goods liable for confiscation. The activity of the appellant was an attempt to export currency over and above the limit. Therefore, the provisions of Section 113 of the Customs Act, 1962 and Section 114 of the Customs Act are attracted. Redemption of Confiscated goods - HELD THAT:- In the instant case, the issue involves an individual who is travelling Abroad for his personal work. No business dealing are alleged or indicated. It is not the case of the Department that the appellant was aware of the provisions of the Rules and Regulations - In the facts and circumstance of the case, it is found that absolute confiscation is not warranted. Any punishment needs to be commensurate with the offence. INR of 1,61,500 and Thai Baht of 8000/- are allowed to be redeemed on payment of a fine, of Rs. 10,000/-, in lieu of confiscation - Penalty imposed under Section 114 of the Customs Act, 1962 is reduced to Rs.5000/-. Appeal allowed in part.
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2022 (8) TMI 555
Valuation of imported goods - rejection of declared value - Confiscation - redemption fine - penalty - opportunity for hearing was not availed by appellant - violation of principles of natural justice - HELD THAT:- The appellant was given opportunity for hearing was extended by Commissioner to the appellant to appear before him. But the same could not be availed by him for the reasons as stated by Counsel that address has changed and CHA had never informed him about the fixation of date of hearing. Without going further into merits of the case, the ends of justice will be met if order in respect of the present appellant is set aside and matter remanded back to the Commissioner for decision on the notice issued to this appellant after allowing him opportunities of hearing him before passing the order - appeal allowed in part by way of remand.
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2022 (8) TMI 554
Seeking grant of anticipatory bail - deficit of gold in consignment is recovered - possibility of destroying evidence, tampering of witnesses and mislead investigation - evasion of customs duty - HELD THAT:- On perusal of documents on record, it is clear that there was deficit of gold in consignment. It is also admitted fact that father of applicant was arrested. There was search of premises and company of applicant. Deficit gold was found, which is also informed to the Customs Officer. As per the say of respondent, there is no case of evasion of Custom's Duty. As the record of the Consignment and other necessary facts are with Custom Officer, father of applicant being Director and responsible person for export of consignment is already arrested and investigated, documents are already seized and deficit gold is already informed. In such circumstances, arrest of applicant and his detention do not appear necessary. In the event of arrest, applicant is entitled to be released on bail, subject to conditions imposed - application allowed.
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Corporate Laws
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2022 (8) TMI 551
Constitutional Validity of N/N. S.O. 3412 (E) dated 20 September 2019 issued by the Ministry of Corporate Affairs - appointment of 28 candidates as Members of the National Company Law Tribunal for a tenure of three years - contrary to the provisions of Section 413 of the Companies Act 2013 or not - HELD THAT:- A Selection Committee was constituted for the selection of Members of the NCLT. The Selection Committee was chaired by the Chief Justice of India. On 29 March 2022, the President of the NCLT addressed a communication to the Union Government recording that the tenure of 23 Members would come to an end in June July 2022 and that the resultant vacancies would create difficulties in the pan-India functioning of the NCLT. The President of the NCLT requested that the probable vacancies may be factored in during the course of the deliberations in the selection process. The meeting of the Selection Committee was convened on 20 April 2022. Following the meeting of the Selection Committee on 20 April 2022, a report was obtained from the President of the NCLT about the work performance and suitability of 23 Members. The Selection Committee then opined that there was no specific provision which empowered it to consider the issue of revising the term of office of the Members of the NCLT. The Committee however observed that considering the sensitive nature of the functions and duties of the Members of the NCLT, and considering the verification reports bearing on the character, antecedents, performance and suitability of the Members, the Union government may take appropriate action in the matter - Appointment of persons as members of the NCLT for a period of three years is not contemplated by the provisions of Section 413(1). An administrative notification for appointment has to be consistent with the statute which governs appointments to the Tribunal. Whether this Court should in the exercise of its jurisdiction under Article 32 of the Constitution entertain a petition filed by the Bar Association and direct the extension of tenures, especially in view of the supervening developments which have taken place in the meantime? - HELD THAT:- In the present case, there is no challenge to the Rules or the provisions of the statute itself. The petitioners have instead sought an extension of the tenure of the retiring Members, who are not petitioning parties to the proceedings before this Court. The prayer for extension is also at a belated stage when the tenure of the Members is nearing its end. Not only had the Members consciously accepted the post for a duration of three years, the Selection Committee also already directed the government to take appropriate action basis the performance report. The Union Government has accordingly issued the notification dated 14 June 2020 extending the tenure of two judicial and six technical members. The appropriate course of action to be followed in the present case would be to allow the selection process which has been initiated to continue so that it can be concluded at an early date. The interest of the Bar Association which has moved these proceedings is that the vacancies in the Tribunal should be filled in on an expeditious basis so that work does not suffer and the functioning of the Tribunal is not hampered. The Bar Association cannot have a choice in regard to who should be a Member of the Tribunal. Petition disposed off.
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2022 (8) TMI 550
Sanction of Scheme of Amalgamation - Seeking dispensation of the meetings of shareholders and creditors - Section 230-232 of the Companies Act, 2013 - HELD THAT:- Directions with regard to holding, convening and dispensation with various meetings issued - directions with regard to issuance of various meetings also issued. The scheme is approved - application allowed.
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Insolvency & Bankruptcy
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2022 (8) TMI 549
Providing Police protection to the Liquidator to take over the custody of the School and the Petrol Pump that was functioning so far, on the properties, leased out to Rajeswari Educational Society and the Indian Oil Corporation by the Corporate Debtor to run the School and the Petrol Pump - categorical stand of the Applicants is that the company belongs to them and the said value of the company, as on today, is not less than three times to that of the liability of the company - HELD THAT:- It must be borne in mind that there is no provision in the I B Code, 2016, that enables the Creditors other than those who triggered the Insolvency Resolution Process, to be impleaded as Parties. In law, the Impleadment of Parties, is ultimately, within the ambit of exercise of discretion by a Tribunal / Authority, as the case may be. More importantly, no person, can be added, unless he is a necessary party. A necessary party means that a person is very much necessary to the Constitution of Suit / an Appeal in a given Proceeding before a Court of Law / Tribunal / Authority. In fact, whether a person has an enforceable legal right is to be looked into by a Tribunal in regard to the impleadment of parties. To array a person as a prospective / proposed Respondent(s) is not a Substantive Right, but undoubtedly, it is one of the procedure and the Tribunal is to exercise its judicial discretion, of course, in a subjective manner, diligently. It cannot be gainsaid that, an Individual will not be added as a Party, just because he will be affected by the Tribunal incidentally, when it passes an Order in a given proceedings, before it. An Appellant / Plaintiff in a given legal proceeding is the dominus litis. He cannot be coerced to include a person as Party against whom, he does not want to contest, unless it is a compulsion of Law. It must be borne in mind that a necessary party is one without whom no Order can be passed effectively, in a given case. A proper party is one in whose absence an effective Order can be made, but whose presence is necessary, for a complete and final decision on the questions, involved in a given Proceeding. Further, a mere interest of a Party in the fruits of a litigation, cannot be a yardstick / test for his being impleaded as a Party. Keeping in mind the entire conspectus of the attendant facts and circumstances of the present case in a holistic fashion, comes to an inevitable and inescapable conclusion that the Applicants are not necessary/ proper parties, to be arrayed as Respondents and even without their presence, this Tribunal can dispose of the main Company Appeal, of course, on merits, based on the available material on record. Application dismissed.
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2022 (8) TMI 548
Seeking dissolution of Company - section 59 of the Insolvency and Bankruptcy Code, 2016 (Code) read with Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 - HELD THAT:- Despite service of the notice ROC has neither filed its report nor raised any objections to the present application u/s. 59 of Insolvency Bankruptcy Code, 2016. There is no legal impediment in allowing the prayer of the applicant. Accordingly, the Prayer of Liquidator to dissolve the Company U/S. 59 of IBC is allowed and the said company is hereby dissolved with effect from the date of the present order - Application disposed off.
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2022 (8) TMI 547
Seeking for direction to the Respondents to pay their dues to the Corporate Debtor, being the benefits received by them from the Corporate Debtor - related parties or not - transactions with related party is hit by Section 43 or not - Section 43 and 45 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The sale of flats at a lower price is explained stating that it is due to the disputes between the builder and the Corporate Debtor, the fact that there are disputes is not countered by the Applicant. Apart from there being no sufficient material to hold that the transactions alleged are preferential transactions. The ground raised by the Corporate Debtor with regard to the maintainability of this application needs to be considered. The contention is that the Resolution Plan is already approved and hence, the Tribunal does not have jurisdiction to entertain this Application. It is submitted that the Resolution Professional (RP) has vacated his office on 25.06.2021 and hence, he cannot pursue the present application. There is no dispute that the Resolution Plan was approved by the NCLT on 25.06.2021 and thereafter corrigendum was also approved on 10.07.2021. The contention with regard to this aspect by the Applicant is that this application as filed even before the Resolution Plan was approved by this Tribunal and hence, the said limitation does not apply to this Application. But the rationale underlying the ruling that an avoidance application cannot be entertained after the approval of the Resolution Plan by the NCLT holds good even if the avoidance application is pending prior to the approval of the Resolution Plan and is not decided till the approval of the Resolution Plan by the Tribunal. The contention that the avoidance applications would be pending at the stage when the RP files the plan was also appreciated and it was held that though at the first blush the said submission may appear attractive a closer analysis reveals that Form-H seeks to achieve what is mandated in Regulations and it is merely a format prescribed to provide the said details. Under the Scheme of IBC in so far as avoidance applications are concerned the RP has to collect the details, form an opinion, make a determination and submit the same to the NCLT within the prescribed timelines. This is independent of the various other steps which are part of the CIRP. The activities in respect of objectionable transactions which the RP has to conduct would run parallel with the other steps of the CIRP - Section 26 of IBC also cannot be read in a manner so as to mean that an Application for avoidance of transactions under Section 25(2)(j) can survive after the CIRP process. Once the CIRP process itself comes to an end an application for avoidance of transactions cannot be adjudicated. Application dismissed.
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2022 (8) TMI 546
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - service of demand notice - HELD THAT:- The Operational Creditor issued a demand notice in Form 3 under section 8 of the Code on 11 January 2020. Further, the Operational Creditor has submitted an affidavit under section 9(3)(b) of the Code, affirming that the Corporate Debtor has not raised any dispute regarding the unpaid operational debt. The Operational Creditor has further produced affidavit affirming that it has not received any payment from the Corporate Debtor after the issuance of the demand notice in Form 3. The purpose of the Code is to resolve the insolvency of the Corporate Debtor and not recovery of debt. On perusal of the said documents, it is opined that the Corporate Debtor in the instant case is not insolvent and very much capable of repaying the due amount to the Operational Creditor. The admission on the part of the Corporate Debtor further suggests to the possibility of collusion between the parties. As such, this Adjudicating Authority is not fully satisfied that the instant petition should be admitted and the Corporate Debtor should be brought under CIRP - petition dismissed.
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2022 (8) TMI 545
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- It is noted that the Operational Creditor has supplied the goods to the Corporate Debtor and raised an invoice of Rs. 5,51,933/-. The copy of invoices along with delivery challan is annexed at page no. 12 to 123. The demand notice was issued by the Operational Creditor on 11.12.2019 and same was delivered to the Corporate Debtor on 17.12.2019. This Adjudicating Authority vide order dated 25.02.2020 again directed to the Operational Creditor to supply the copy of the application and inform the Corporate Debtor to appear and contest this present application but no one appeared on behalf of the Corporate Debtor. Hence, this Adjudication Authority vide order dated 08.03.2021 decided to proceed Ex-parte against the Corporate Debtor. Even after giving sufficient opportunities to the Corporate Debtor, none appeared on behalf of the Corporate Debtor. The present application is complete in view of Section 9(5) of the IB Code, 2016. The present application has been filed on 01.01.2020 and the claim amount of Rs. 8,58,956/- meets the threshold limit as prescribed under Section 4 of the IB Code, 2016. It is also well within the limitations. Thus, it is found that the present IB Petition is complete and fit for triggering the Insolvency Resolution Process in respect of Corporate Debtor. Therefore, the present IB Petition, filed under Section 9 of the Code, deserves admission - petition admitted - moratorium declared.
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2022 (8) TMI 544
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- Mere plain reading of the provision under section 7 of IBC shows that in order to initiate CIRP under Section 7 the Applicant is required to establish that there is a financial debt and that a default has been committed in respect of that financial debt. The documents submitted by the Financial Creditor and the Corporate Debtor clearly substantiate the Financial Creditor's claim that the Corporate Debtor has indebted and defaulted in the repayment of loan amount - upon appreciation of the documents placed on record to substantiate the claim, this Tribunal admits this petition and initiates CIRP on the Corporate Debtor with immediate effect. It is pertinent to mention here that the Code requires the adjudicating authority to only ascertain and record satisfaction in a summary adjudication as to the occurrence of default before admitting the application. The material on record clearly goes to show that respondent had availed the credit facilities and has committed default in repayment of the outstanding loan amount. The present application is complete in all respects and the applicant financial creditor is entitled to claim its outstanding financial debt from the corporate debtor and that there has been default in payment of the financial debt - Application admitted - moratorium declared.
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PMLA
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2022 (8) TMI 543
Seeking stay of orders of freezing of the accounts of the petitioner - Money laundering - location of proceeds of crime - Section 17(1) of PMLA - HELD THAT:- Section 17(1-A) is an alternative to Section 17(1) for facilitating the measures which are required to be taken in the event search and seizure is not practicable. Section 17(1-A) starts with the opening of an alternative avenue to an authorised officer under Section 17(1) to make an order of freezing a property where it is not practicable to seize the property. The word (used four times) in Section 17(1-A), is the word such . The word such precedes record/property and order whereever used in Section 17(1-A). The qualification of property and records by use of such fixes the sequence of steps which may be initiated by the authorised officer under Section 17(1) followed by Section 17(1-A). Before reaching the power conferred under Section 17(1-A), the authorised officer must also come to an informed finding that the exact location of proceeds of crime or the documents relating to money-laundering cannot be ascertained and hence the requirement to enter and search the premises on a reason to believe (based on material in his possession) that the proceeds of crime/documents may be located in the place of search. Second, the finding must also include the apprehension of resistance on the part of the person whose place is proposed to be entered into and searched. This would be evident from Section 17(1)(b) which includes forcible entry into the premises and breaking open of the receptacle for exercising the power conferred by Section 17(1-A). The singular absence of statements of reasons or the basis of an apprehension, factual or otherwise, for freezing the properties of the petitioners is apparent from the impugned orders. The requirement of satisfaction of the conditions stated in Section 17(1) before proceeding to Section 17(1-A) do not contemplate parroting the words used in the sections but a precise statement, in writing, reflecting the factors which form the basis of the conclusion arrived at - the impugned orders fall short at all levels of the statutory requirements. The defence that the freezing orders were passed only upon incriminating material being found in the three premises of the first petitioner cannot redeem the situation since the impugned orders do not contain any reason to believe which is a mandate for search and seizure under Section 17(1) and for freezing orders under Section 17(1-A). The PMLA cannot resort to action against any person for money-laundering on an assumption that the property recovered by them must be proceeds of crime unless the same is registered with the jurisdictional police or pending enquiry in a competent forum. More important, Vijay Madanlal Choudhary carved out a further area of exception for a person named in the criminal activity relating to a scheduled offence is finally absolved by a Court of competent jurisdiction owing to an order of discharge, acquittal or quashing of the criminal case against the person. An analogy can be drawn to the present facts where the stay of proceedings ordered by the Supreme Court on 14th December, 2015 is continuing till date. The impugned orders cannot be sustained either in law or in fact - Application disposed off.
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Service Tax
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2022 (8) TMI 542
Maintainability of petition - amount paid as pre-deposit and/or deposit during enquiry, investigation or audit is required to be deducted after extending the relief available to a declarant u/s 124 of SABKA VISHWAS (LEGACY DISPUTE RESOLUTION) SCHEME, 2019 - amount of pre-deposit/deposit is first required to be adjusted while determining the amount of tax dues u/s 123 of the Scheme and, thereafter, relief u/s 124 of the Scheme is to be extended to a declarant or not - clause 2(iv) of Circular No. 1072/05/2019/CX dated 25.09.2019. HELD THAT:- It is an admitted fact that declarations of the petitioners have been accepted by the Designated Committee and Form SVLDRS-3 has been issued to them and the only dispute pertains to the amount payable by the declarants. Petitioner-Aloke Dutta contends that the Designated Authority has determined a sum of Rs. 1,34,32,364.40/- as payable by the petitioner, whereas, as per the Scheme, it is only liable to pay an amount of Rs. 36,22,401/-. Similarly, in the case of M/s. Vassu Enterprises, the amount payable has been determined as Rs. 1,05,59,869.80/-, whereas, as per the petitioner, the amount payable is only Rs. 80,64,412.20/-. Admittedly, there is no dispute with respect to the amount determined in the Order-in-Original and/or the amount of deposit/pre-deposit made by petitioners, but the only dispute in the instant cases, is with respect to computation of the amount payable by the declarants. As per petitioners, amount of arrears means the amount of duty which is reflected as recoverable in the Orders-in-Original, being the tax dues amount, and, accordingly, relief under Section 124(1)(c)(ii) is to be granted on the said amount; whereas, as per the Revenue, the amount recoverable under the Orders-in-Original is the amount of duty demanded less the amount already paid by petitioners , and, accordingly, benefit of tax relief has to be granted on the net outstanding amount. If the interpretation given by the Revenue of the word recoverable u/s 121(c) is accepted, the same would lead to an incongruous interpretation leading to absurdity which is to be avoided. Admittedly, in both the cases, show cause notice has been issued to petitioners under section 73(1) of the Finance Act, 1994, wherein the total amount of duty recoverable from petitioners has been reflected, and, further, in the show cause notice, petitioners have been directed to show cause as to why the amount of pre-deposit/deposit made by petitioners be not adjusted from the amount of duty recoverable from the petitioners - Orders-in-Original have been passed and even in the Orders-in-Original, the amount of duty shown as recoverable is the amount of duty evaded by the petitioners and, further, in the Orders-in-Original, it has been stated that the amount of deposit made by the petitioners would be adjusted/appropriated from the amount of duty. The impugned Circular No.1072/05/2019/CX dated 25.09.2019 has an effect of altering the definition of amount in arrears as defined under section 121(c) of the Scheme. Admittedly, section 121(c) of the Scheme uses the term recoverable as opposed to the term outstanding and to this extent, impugned Circular is contrary to the Scheme itself - Admittedly, in the show cause notices issued to petitioners, the amount reflected as payable was the amount of service tax not paid by them. If petitioners would have filed appeal against the Orders-in-original disputing the amount payable as determined in the said Orders-in-original being the amount of service tax not paid by petitioners, the petitioners would have been extended relief u/s 124(1)(a) being equivalent to the amount of duty disputed by petitioners in the said appeal, i.e. the amount of service tax determined. Merely because petitioners, instead of filing appeal, have claimed benefit under the Scheme, the amount of service tax payable and/or recoverable from the petitioners cannot be reduced with the amount of deposit/pre-deposit by treating the said amount as the amount only outstanding against the petitioners. Even from a plain reading of Section 124(2), it would be evident that the amount of deposit made during enquiry, investigation or audit is required to be deducted after extending relief under section 124(1) of the Scheme and at the time of issuing statement indicating the amount payable by a declarant - the action of Designated Committee by first deducting the amount of deposit made by petitioners during enquiry, investigation or audit and, thereafter, extending relief to the petitioners by computing the amount of tax due on the outstanding amount, is not as per the mandate of the Scheme. Further, clause 2 (iv) of Circular No.1072/05/2019/CX dated 25.09.2019, to the extent it provides that tax relief is to be granted on the outstanding duty amount, as against the amount of duty recoverable, has an effect of altering the effect of the Scheme itself and cannot be given effect to. The Designated Committee is directed to re-compute the amount payable by petitioners under the scheme in view of the observations made, and to issue revised SVLDRS-3 Form to the petitioners within a period of four weeks from the date of this order - application allowed.
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2022 (8) TMI 541
Refund of service tax paid - tax paid under the head Management Consultant s Service on reverse charge mechanism - applicability of Board s Circular No. 1/1/2001-S.T., dated June 27, 2001 - HELD THAT:- In the present case, the contract between the Appellant and M/s. Cotunace for mediation services to settle outstanding dues payable by the Appellant to its supplier, GCT, was in pursuance to the Order of the BIFR. In terms of such Order, M/s Cotunace was to arrive at a settlement such that the pending disputes between the Appellant and GCT are resolved and arbitration between the parties is precluded. The work of the consultant is to advise the top management in order to help them in running the organisation in more efficient and effective manner after studying the peculiar features of the existing organisation. Thus, the work of the consultant falls in the realm of thinking and giving ideas and not executing the work or performing the task himself. In the instant case M/s Cotunace have only mediated between the organisations in settling the financial dispute. As submitted by the learned Chartered Accountant for the appellant the role of M/s Cotunace was to arrive at a settlement of the pending dispute between the appellant and GCT. M/s Cotunace have not rendered any advice for running the organisation of the appellants in an effective manner. Their role was mediation /arbitration in resolving the dispute. They have only performed the work of mediator/arbitrator in resolving the dispute between the appellant and M/s GCT. Actual work performed cannot be equated with advice. Therefore, M/s Cotunace did not render any management consultancy service to the appellant. The services rendered by M/s Cotunace do not fall under management consultancy service in terms of Section 65 (65) of Finance Act, 1994 - the appellants are not liable to pay any service tax on reverse mechanism on the services rendered by M/s Contunace to the appellants. Any tax paid this regards is liable to be refunded, if otherwise in order. Appeal allowed - decided in favor of appellant.
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2022 (8) TMI 540
Valuation - recovery of certain amounts under the head of liquidated damages for delays in supply contracts or service contracts as per various agreements entered into between them and their vendors - HELD THAT:- Prime facie Para 5(e) of Schedule-II of CGST Act, is identically worded as Section 66E(e) of the Finance Act, 1994. The circular expresses the stand of CBIC in case of GST on an interpretation of an identical expression. The circular was not available to the adjudicating authority when the matter was decided and he could not examine the issue in the light of the aforesaid circular. The issue in dispute can be decided in the light of the aforesaid circular. The matter is remanded to the original adjudicating authority to decide the issue afresh in the light of the arguments given in the aforesaid circular - Appeal allowed by way of remand.
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2022 (8) TMI 539
Nature of activity - service or manufacture - work of segregation of cylinders, sealing of filled cylinders, de-shaping of cylinders by hydraulic pressure, spray of pesticides, disposing of collected muck/sludge, dirt, and bottling of LPG into cylinders to be sold by IOCL for the purpose of domestic use - Packaging Service - Works Contract Services - penalty - HELD THAT:- On perusal of the definitions of packaging service as existed up to 30/06/2012 and the negative list entry post 30/06/2012, both the entries provide an exemption from service tax if the process amounts to manufacture. The revenue has not disputed the fact that excise duty is being paid by IOCL on clearances of gas cylinders and that the expenditure is also a part of the valuation adopted for such purposes. Since these facts are not being disputed by the Revenue, therefore it is held that the activities undertaken by the Appellant would squarely be covered under the definition of manufacture under Section 2(f) of the Central Excise Act, 1944 and thus the said demand under packaging service cannot sustain. Works Contract Services - HELD THAT:- The Appellant has not disputed the demand on merits but only on limitation. The demand was raised based on audit of IOCL records. It is found that service tax is a self assessment regime and one cannot take the plea of being not paid/received service tax by the recipient. However under the peculiar circumstances of the case, it would be in the interest of justice to waive penalty by invoking the provisions under Section 80 of the Finance Act, 1994. Appeal allowed in part.
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Central Excise
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2022 (8) TMI 538
Clandestine Removal - Iron Flats, spring Leaves and Agriculture implements - entire case of department is based on the entries in a Shristi Brand Notebook recovered during the search - shortage or excess in the raw material/final products to prove clandestine removal - admissible statements or not - HELD THAT:- The case of the Department is that the appellants have indulged in clandestine removal. The department came to this conclusion on the basis of entries made in a certain note book recovered from the appellant s premises. Learned Counsel for the appellants submits that the author of the notebook is not identified to verify the truthfulness of the entries made therein; his statement was also not recorded and that all the entries in the said notebook appeared to be made with the same ink at same time - it has been held in a catena of judgments that a serious charge like clandestine removal cannot be established without tangible evidence or procurement of raw material, deployment of labour, consumption of electricity, manufacture of excisable goods, sale of excisable goods, transportation of excisable goods and receipt of consideration etc. It is found that other than the entries in the notebook and the statement of the appellants no other evidence has been put forth by the Department. Under these circumstances, the statement of the appellant has no validity as evidence. It is also found that there are some entries related to transportation allegedly by Tractor. Learned authorized representative argues that only a tractor has registration and not the trolley and therefore, reference to tractor should be read as reference to tractor with trolley - clandestine removal is a serious charge and requires to be substantiated by evidence encompassing various activities in the chain of events. The department has not adduced any additional evidence, even on a sample basis to substantiate the allegation of clandestine removal as per above. In the absence of evidence, the allegations raised by the department are not substantiated - Appeal allowed - decided in favor of appellant.
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2022 (8) TMI 537
Process amounting to manufacture or not - conversion of jumbo paper rolls into smaller sheet by the activity of slitting, cutting - adjudicating authority has contended that the use of the paper sheet converted from jumbo rolls is different from the paper in the paper jumbo rolls - time limitation - HELD THAT:- From Chapter Notes 13 of Chapter 48, it is clear that the process of slitting and cutting of thermal paper is amount to manufacture. However, the similar chapter note is not provided in respect of paper, which is the product in question. Therefore, in absence of the similar chapter note the slitting, cutting and conversion from bulk jumbo roll to sheet form of paper cannot be termed as manufacturing activity in terms of section 2(f) of Central Excise Act, 1944. Slitting, cutting of a already manufactured goods does not amount to manufacture as held in catena of judgments. It is settled that slitting, cutting of jumbo paper rolls to smaller sheet of already manufactured goods does not amount to manufacture - reliance can be placed in the case of COMMISSIONER OF CENTRAL EXCISE, VAPI VERSUS KNOWELL CONVERTERS [ 2008 (8) TMI 725 - CESTAT, AHMEDABAD] - thus, the activity of slitting, cutting in conversion of jumbo paper roll into paper sheet does not amount to manufacture. Time Limitation - HELD THAT:- The appellant have been categorically declaring their activity in each and every invoices as Jumbo Rolls converted into small rolls and small Rolls to Sheet, does not amount to Manufacture as per Section 2(f) of Central Excise Act, 1944 hence, no duty is leviable . The appellant had a bonafide belief that the activity of conversion from jumbo paper rolls to paper sheet is not amount to manufacture, therefore, the appellant have not suppressed the fact or misdeclared with intend to evade payment of duty. Therefore, the entire demand which is raised beyond the normal period is also hit by limitation. The demand raised by the adjudicating authority is not sustainable on merit as well as on limitation - Appeal allowed.
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2022 (8) TMI 536
Pre-deposit for the purpose of refund - amount deposited during investigation - Refund claim - tiime limitation - HELD THAT:- The Board has issued Circular No. 984/8/2014-CX dated 16.09.2014 wherein it has been clarified in para 3, that payment made during investigation or audit, prior to the date on which appeal is filed, shall be considered as pre-deposit for the purpose of appeal to the extent of the percentage specified under Section 35F (required for the purpose of pre-deposit). It is further stipulated in para 3.2 that from the date of filing appeal, the amount deposited shall be deemed to be the date of pre-deposit under Section 35F - para 5 of the Circular mentions that when the appeal is decided in favour of the assessee, he shall be entitled to refund of the amount deposited alongwith the interest at the prescribed rate, as per Section 35FF of the Act. It is found from the plain reading of Section 35FF of the Act, that there is no application of Section 11B in respect of refund arising, on being successful in appeal. This has also been clarified in para 5 of the aforementioned Circular of the Board. Accordingly, the impugned order is erroneous and against the provisions of law - The Adjudicating Authority is directed to grant the refund of the said amount of Rs.6,51,300/- with interest from the date of reversal (dated 02.02.2011), till the date of grant of refund. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2022 (8) TMI 535
Liability of dues - time limitation - main thrust was that the impugned order has been passed after the expiry of 6 years from the end of the year containing the transaction and, therefore, the order has been issued without jurisdiction - HELD THAT:- As per the proviso, in case a notice is issued under Sub-Section (5) on or after 1st April 2015, no order of assessment under Sub-Section(5) of Section 23 shall be made after the expiry of six years from the end of the year containing the transaction. Admittedly, transaction related to the period 1st April 2014 to 31st March 2015. The six years period, therefore, will begin from 1st April 2015 and it will end on 31st March 2021. It is for this reason, respondent no.3 knowing very well that 31st March 2021 is a crucial date, has dated the impugned order as 30th March 2021. But the clear give away is the date on which the digital signature is put on the impugned order, and that is 19th April 2021 at 18:14:33 hrs. Therefore, the order of assessment under Sub- Section (5) of Section 23 has been made after the expiry of 6 years from the end of the year and, therefore, the order has been passed without jurisdiction. Petition disposed off
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Indian Laws
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2022 (8) TMI 553
Smuggling - Ganja (Cannabis) - framing of charges u/s 20(b)(ii)(C) of the NDPS Act - acquittal of the accused - HELD THAT:- Looking into the nature of offence which has been committed by the appellant, there should be no leniency in such matters, particularly, when the offence has been proved against her beyond doubt and conviction is upheld by the High Court under Section 20(b)(ii)(C) of the NDPS Act. The offences under the NDPS Act are very serious in nature and against the society at large and no discretion is to be exercised in favour of such accused who are indulged in such offences under the Act. It is a menace to the society, no leniency should be shown to the accused persons who are found guilty under the NDPS Act. But while upholding the same, this Court cannot be oblivious of the other facts and circumstances as projected in the present case that the old illiterate lady from rural background, who was senior citizen at the time of alleged incident, was residing in that house along with her husband and two grown up children who may be into illegal trade but that the prosecution failed to examine and taking note of the procedural compliance as contemplated under Sections 42, 50 and 55 of the NDPS Act, held the appellant guilty for the reason that she was residing in that house but at the same time, this fact was completely ignored that the other coaccused were also residing in the same house and what was their trade, and who were those persons who were involved into the illegal trade providing supplies of psychotropic substances, prosecution has never cared to examine. While upholding conviction of the appellant, and considering the old age of the accused appellant, who is a poor illiterate lady completely unaware of the consequences, we consider it appropriate that the sentence of the accused appellant be reduced to 12 years rigorous imprisonment and a fine of Rs. 1 lakh and in default, to further undergo rigorous imprisonment of six months which shall meet the ends of justice - Appeal disposed off.
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2022 (8) TMI 552
Dishonor of Cheque - legally enforceable debt or not - rebuttal of presumption - preponderance of probablities - cheque in question was handed over to the complainant as security for loan in relation to purchase of a vehicle - section 138 of NI Act - HELD THAT:- It is found from the materials on record that the petitioner has not produced any documents namely loan agreement or receipt of the opposite party-complainant during trial showing the cheque in question to have been delivered to the complainant as security. The petitioner in his letters dated 06.02.2011, 23.01.2011 marked Exhibit D, Exhibit D1 respectively and in reply to the demand notice (Exhibit 3/1) has stated that certain documents were handed over to the complainant and finance agreement was signed by him. In his cross-examination he admitted that he did not file any finance agreement in court. It is not the case of the petitioner that copy of the finance agreement was not delivered to him - During the course of trial the petitioner also failed to make any endeavour calling for records from the office of the complainant-company to probabilise that the cheque was issued as security against loan. In the absence of cogent documents it cannot be said that the cheque amounting to Rs. 3,50,000/- was given to the complainant as security. It is also highly improbable as to why a prudent man would hand over high value cheque without any purpose or reason and that too without any receipt or document. It is admitted position that the cheque in question was issued by the petitioner and once it is so, the statutory presumption under section 139 of the Act would arise. The accused can, in contrary, prove non-existence of enforceable debt by raising probable defence. The burden upon the accused of proving the non-existence of enforceable debt can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. Bare denial of the debt apparently does not appear to be any defence. Something which is probable has to be brought on record for getting benefit of shifting the onus of proving upon the complainant - The presumption mandated by Section 139 of the Act includes a presumption that there existed a legally enforceable debt or liability. It is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant. Therefore, as soon as the complainant discharges the burden to prove that the instrument was executed by the accused, rules of presumptions under Sections 118 and 139 of the Act helps him shift his burden on the accused. The presumption will live, exist and survive and shall end only if the contrary is proved by the accused that is the cheque was not issued for consideration in discharge of any debt or liability. As it is found that neither any such material, cogent evidence has been adduced on behalf of the petitioner nor he has brought on record the preponderance of probabilities by referring to the circumstances from the evidence raising a probable defence of non-existence of debt, to rebut the statutory presumption, hence the findings of the courts below cannot be held to be infirm in the eye of law - Application dismissed.
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2022 (8) TMI 534
Dishonor of Cheque - forging of appellant signature - complaint alleges that the cheque was allotted to the appellant by the Canara Bank, 30 years back and was not in use for want of new MCRI number - section of 138 of NI Act - HELD THAT:- Though detailed investigation was conducted and the final report was filed, the order of the High Court will indicate that while exercising the power under Section 482 Cr.P.C., it is not only brief, but cryptic. The High Court, neither has adverted to the facts arising in the case in detail nor to the nature of the allegation which led to the investigation and the filing of the final report. The only observation which appears to have influenced the decision of the High Court is that the cheque leaf belongs to the appellant and it contains her signature and there is no allegation of threat. The non-examination of the case is incorrect perspective, keeping in view the guideline laid down by this Court to be borne in mind while exercising the power under Section 482 of Cr.P.C., in various decisions, more particularly in the case of STATE OF HARYANA VERSUS BHAJAN LAL [ 1990 (11) TMI 386 - SUPREME COURT] has led to an order which on the face of it is not sustainable. Having noted that the High Court has quashed the final report without adverting to either the facts or law by a cryptic order, it would be appropriate for us to set aside the order and restore the petition to the file to the High Court so as to enable the parties to put forth their contentions and allow the High Court to comprehensively advert to the matter on facts and law. Appeal allowed.
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2022 (8) TMI 533
Dishonor of Cheque - whether petitioner no. 3 has got any responsibility for the conduct of business of the company in connection with the issuance of impugned cheque by the company in respect of which proceeding under Section 138 of the Negotiable Instruments Act has been initiated by the complainant/opposite party? - HELD THAT:- At the time when the offence under section 138 of N.I. Act was committed, all the three petitioners are in charge of and was responsible to the company for the conduct of the business of the company as alleged in paragraph 4 of the complaint. When the specific allegation in complaint supported by documents like DIR-12 and notice of resignation, it is made clear that petitioners were responsible for the day to day affairs of the company and it s decisions, the defence that petitioner no. 3 was no longer the directors of the company at the time when the cheque was presented and dishonoured, had to be substantiated by the accused/petitioner and this could be done only at the stage of trial. Since this is a proceeding, under Section 138/141 of the Negotiable Instruments Act, 1881 and pending for last six years, learned Metropolitan Magistrate, 20th Court at Calcutta is hereby requested to make expeditious disposal of the case and to dispose of the entire proceeding preferably within a period of six months from the date of the order, without granting any unnecessary adjournment to either of the parties. Application disposed off.
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