Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 17, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Securities / SEBI
Insolvency & Bankruptcy
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
GST
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Seizure order & penalty quashed due to lack of intent for tax evasion; Refund ordered within 8 weeks.
The petitioner challenged the seizure order and show cause notice (SCN) on grounds that the address provided in the invoice was not the registered place of business at the time of detention. The court examined whether there existed mens rea (guilty mind) for tax evasion. It held that the revenue failed to establish mens rea, rendering the detention process, SCN, and penalty imposition without legal basis. Consequently, the seizure, SCN, and penalty were quashed. The revenue was directed to refund the penalty paid under protest by the petitioner within eight weeks. The petition was disposed of.
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Fake firms & tax credit fraud: Bail granted due to lack of evidence & co-accused's role. Conditions apply.
Bail granted in case involving creation of fake firms and passing of fake input tax credit. Considering nature of offense, punishment, available material, lack of evidence regarding device used for creating fake firms, and co-accused with more serious role already granted bail, applicant deemed eligible for bail upon furnishing personal bond and sureties to court's satisfaction, subject to imposed conditions. Application for bail allowed.
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Tax Liability: Denial of Input Tax Credit (ITC). Can Purchaser be Penalized for Seller's Default?
Sections 16(2)(c) and 16(2)(d) of the Assam and Central Goods and Services Tax Acts, 2017, were challenged regarding the validity of punishing a purchasing dealer for the selling dealer's failure to deposit collected tax. The High Court held that the controversy is covered by the Delhi High Court's decision in On Quest Merchandising India Pvt. Ltd. case, where it was ruled that default assessment orders against purchasing dealers invoking Section 9(2)(g) of the DVAT Act for the selling dealer's default were set aside. Consequently, the impugned show cause notices and consequential orders were set aside in the present case. However, the Department can act against non-bona fide purchase transactions in accordance with the law. The writ petition was disposed of.
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Unutilized Input Tax Credit Transfer Denied in AP GST Regime.
The petitioners sought transfer of unutilized input tax credit available in their ledgers as on 02.06.2014 to the AP GST regime. The court held that Section 56 of the Andhra Pradesh Reorganisation Act, 2014 deals with refund of excess tax collected, but is inapplicable to unutilized input tax credit, which is not excess tax paid. Consequently, the impugned demand orders in Form GST DRC-07 issued by the respondent were set aside, and the petition was allowed. The court clarified that the petitioners' only option was not to seek a refund, as Section 56 did not cover unutilized input tax credit.
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Tax Dispute Over Turnover Reporting Violation: Court Remands Case for Fresh Consideration.
Petition challenged impugned order passed by respondent for assessment year 2018-19, contending violation of principles of natural justice due to non-issuance of notices. Court held petitioner may have merits as dispute pertained to difference in turnover reported in GSTR-7 and GSTR-3B. Partial relief granted by setting aside impugned order and remitting case to respondent for fresh order on merits. Impugned order quashed, treated as addendum to show cause notices. Petitioner directed to file consolidated reply within 30 days and deposit 20% of disputed tax from electronic cash register. Petition disposed off by way of remand.
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Bail cancelled for concealing criminal history in economic offense case.
Bail was procured through misrepresentation and suppression of material facts by the applicant, who failed to disclose criminal history and prior conviction in a similar case. Despite objections raised in the first bail application, the applicant withdrew it and filed a second application without disclosing the material facts. The court held that economic offenses are serious, and the sessions judge rightly canceled the bail and examined the merits of the case due to the seriousness of allegations. The applicant's conduct of seeking regular bail without disclosing material facts justified cancellation of bail. The high court dismissed the application u/s 482 of CrPC, finding no merit in the arguments against cancellation of bail.
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Tax assessment remanded for fresh orders; 25% disputed tax to be paid from e-cash ledger.
Petitioner challenged assessment orders for Assessment Years 2017-2018 and 2020-2021. Court set aside impugned orders, remitting cases to respondent for fresh orders on merits. Petitioner directed to pay 25% of disputed tax from Electronic Cash Ledger and respond to Show Cause Notices within 30 days for respective Assessment Years. Impugned orders treated as addenda to Show Cause Notices. Petition disposed of.
Income Tax
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MSME reclassified as non-MSME eligible for tax relief scheme for 3 years under legal fiction clause.
The High Court held that even though the petitioner, initially registered as a "Medium" enterprise under the MSME Act, was reclassified as "not an MSME" with effect from 9th May 2023, it was entitled to avail the benefit of the "Vivad Se Vishwas I-Relief for MSMEs Scheme" (VSV Scheme), a non-tax benefit. Clause 8(5), as substituted, creates a legal fiction treating an enterprise as Micro, Small or Medium for three years from an upward reclassification, for availing non-tax benefits. Therefore, the petitioner, though reclassified as "not an MSME," could claim the VSV Scheme benefit as a Medium enterprise for three years from 9th May 2023. The emails denying the petitioner's eligibility for the VSV Scheme were held incorrect, and the writ petition was allowed.
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Condonation of 480-day delay in tax case appeal due to bona fide belief, diligent pursuit prioritizing substantial justice.
Condonation of delay in filing an application for special leave to appeal before the High Court. The applicant, an Assistant Commissioner of Income Tax, sought condonation of a 480-day delay in challenging a Magistrate's order dismissing a complaint u/ss 277 and 277A of the Income Tax Act and acquitting the accused. The delay arose due to the applicant's bona fide belief that the remedy against the impugned order was through a revision before the Sessions Court. Once objections were raised, the applicant promptly filed an appeal before the High Court, even while the revision was pending. The court held that the applicant had disclosed sufficient cause for the delay, considering the bona fide belief, diligent prosecution, and the fact that the complaint was dismissed solely due to non-appearance, not on merits. The court took a pragmatic view, prioritizing substantial justice over technicalities, and condoned the delay.
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Pending tax demand can't solely reject lower TDS deduction application.
The High Court held that the Assessing Officer (AO) does not have the power to summarily reject an application u/s 197 for deduction of tax at lower or nil rates based solely on the existence of a pending tax demand against the assessee for a different assessment year. The satisfaction required u/s 197 relates specifically to the total income of the recipient for the subject assessment year where the deduction is claimed. The existence of a pending demand, even if stayed, is an extraneous consideration that cannot be the basis for rejecting the application. The impugned orders were set aside, and the application was restored before the AO for consideration in accordance with the law.
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Ex-Gratia Compensation: Employer's Voluntary Payment Exempt from Tax.
The assessee, an employee who resigned voluntarily from Pfizer Healthcare India Pvt. Ltd., Aurangabad, received compensation which was accepted as capital in nature by the Assessing Officers after reopening assessments. The Revenue did not challenge this treatment nor initiate any section 263 proceedings, allowing it to attain finality. Relying on the ITAT Delhi ruling in ITO vs. Avirook Sen, where ex-gratia compensation paid voluntarily without employer obligation under service rules was held not to constitute section 17(3) income, the ITAT allowed the assessee's appeal. It held that the ex-gratia compensation received by the assessee was voluntary without employer obligation under service rules, and thus not taxable u/s 17(3). Consequently, the CIT(A)/NFAC order was set aside, directing the Assessing Officer to delete the addition.
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NGO's coal plant activism jeopardizes energy needs, trust registration cancelled retrospectively.
The Income Tax Appellate Tribunal (ITAT) holds the power to grant stay of the operation of an order under challenge during its pendency, if non-granting of stay would render the appeal nugatory for the assessee upon success. Re-assessment proceedings are independent and cannot be considered a consequence of the impugned order cancelling registration. The PCIT (Central)-2, Delhi had jurisdiction to cancel the registration u/s 12AB with retrospective effect, as per precedents. The assessee's claim of carrying activities per trust objects is prima facie contradicted by materials gathered during a survey, indicating involvement in stopping coal-based power plants and mines, utilizing funds from foreign entities. The assessee failed to satisfy conditions of prima facie case, irreparable loss, and balance of convenience for granting stay, as its activities prima facie contradict trust objects and cause potential irreparable loss to the nation's energy requirements. Precedents cited by the assessee were distinguishable on facts. Consequently, the ITAT rejected the assessee's stay application.
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Assessee wins on adjustment of profit from tangible assets; CIT order quashed for ignoring audit report.
The case pertains to revision u/s 263 regarding adjustment made in profit on account of tangible fixed assets. The assessee's audited financial statements indicated an increase in profit as per ICDS-V (tangible fixed assets). However, the Assessing Officer (AO) failed to add back the impugned amount despite the auditors' recommendation. The Commissioner of Income Tax (CIT) provisionally computed excess depreciation granted at 15%. The Appellate Tribunal held that the accounts' working of depreciation chargeable under the profit and loss account was correctly worked out and disclosed in the audit report filed with the return of income. The AO considered the assessee's explanation and dropped any adverse treatment. The CIT erroneously failed to consider the details in the audit report, leading to an erroneous conclusion. The order was quashed, and the decision was in favor of the assessee.
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Income Tax Rectification Order Quashed for Lack of Natural Justice and Time Bar.
The Income Tax Appellate Tribunal held that the rectification order u/s 154 was invalid due to violation of principles of natural justice, contravention of Section 154(3) provisions, and being barred by limitation. Crucial findings: No evidence of serving notice u/s 154 dated 01.12.2015 to the assessee, violating natural justice by not providing opportunity of being heard. Unexplained inordinate delay of 3 months in serving the rectification order dated 19.03.2018, despite promptly serving the original order u/s 143(3). Absence of evidence establishing the actual passing of order on 19.03.2018, with the ITD database indicating the date as 01.06.2018, rendering it time-barred. Consequently, the Assessing Officer's rectification order u/s 154 was cancelled, and the assessee's appeal was allowed.
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Futures and Options Losses: Tribunal Overrules Disallowance Based on Broker Manipulation Allegations.
Appellate Tribunal examined disallowance of claim for futures and options (F&O) loss by Assessing Officer (AO) based on report alleging stock brokers manipulated transactions to generate bogus losses/gains. Relying on Bombay High Court's decision in Coronation Agro Industries Ltd, Tribunal held client code modification by broker cannot justify disallowance. Transactions were supported by proper documents, thus disallowance based solely on generalized investigation report was unjustified. Tribunal set aside disallowance order, directing AO to allow F&O loss claim. Assessee's appeal allowed.
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Medical condition prevented taxpayer from meeting tax compliance; Appellate Tribunal directs case review on merits.
The Appellate Tribunal set aside the order passed by the Commissioner of Income Tax (Appeals) [CIT(A)] dismissing the assessee's appeal without admitting it for adjudication on merits. The CIT(A) had rejected the appeal on the ground that the assessee had not satisfied the condition of payment of advance tax as specified u/s 249(4)(b) of the Income Tax Act. The assessee contended that due to a heart problem and hospitalization for angioplasty, they could not appear on the dates provided by the Assessing Officer. Considering the decisions in similar cases and the totality of facts, the Tribunal directed the CIT(A) to admit the assessee's appeal for adjudication on merits after providing a reasonable opportunity of hearing. The appeal was partly allowed for statistical purposes.
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US firm's consulting services not taxable as FIS under India-US tax treaty.
The Income Tax Appellate Tribunal (ITAT) held that the consultancy services rendered by the assessee, such as organizational strategy, talent acquisition, rewards and benefits, and related leadership and development consulting, did not constitute Fees for Included Services (FIS) under Article 12 of the India-USA Double Taxation Avoidance Agreement (DTAA). The ITAT emphasized that for services to qualify as FIS, the recipient must acquire the ability to apply the technical knowledge, experience, or skill independently without recourse to the service provider in the future. The "make available" clause requires the transfer of technical knowledge, enabling the recipient to reproduce and utilize it on their own. Merely rendering consulting services that require expertise does not satisfy the "make available" requirement. The ITAT also allowed the appeal regarding reimbursements received from subsidiaries for general management charges, as no technical knowledge was made available, and the assessee merely passed on the costs incurred from third parties.
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Software company's transfer pricing dispute: Comparable selection, turnover filters, interest rates on delayed payments at issue.
Comparable selection - Tribunal remanded issue of inclusion of companies to TPO to examine functional comparability after applying applicable filters. If functionally comparable, TPO directed to include for computing ALP. Turnover filter - Tribunal directed TPO to apply turnover filter of ten times and 1/10th on both sides, excluding companies outside this range. Infobeans exclusion - Tribunal upheld exclusion as not a KPO. Delay in receipts - Tribunal directed applying SBI rate of 6% with 60-day credit period for interest on delayed trade receivables, following earlier decisions. ALP - Arm's Length Price, TPO - Transfer Pricing Officer, TNMM - Transactional Net Margin Method, KPO - Knowledge Process Outsourcing, AE - Associated Enterprise.
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Assessee trust formed in 1937 eligible for registration despite catering to particular community.
Section 13(1)(b) is inapplicable to trusts created before 1961. The assessee trust was established in 1937, prior to the Income Tax Act, 1961. Despite being created for a particular community, section 13(1)(b) cannot deny registration as it applies only to trusts formed after 1961's commencement. The CIT(E) erred in denying registration on this ground. Registration should be granted if other conditions u/s 12AB and Rule 17A are met. The appeal is treated as allowed for statistical purposes.
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Mandatory tax notice lapse voids assessment; mere affixture report inadequate. Cannot be cured u/s 292BB
Non-service of mandatory notice u/s 143(2) renders assessment proceedings void ab initio. Revenue failed to prove sending of notice by ordinary post/registered post or obtaining substituted service order for affixture. Mere affixture report without following due process is insufficient. Absence of notice cannot be cured u/s 292BB per Supreme Court ruling. Service of Section 143(2) notice is a condition precedent for valid assessment. Assessment order passed without serving requisite notice is liable to be quashed in favor of assessee.
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Indian citizen's appeal delay condoned due to overseas stay. CIT(A) directed to reconsider matter afresh.
CIT(A) erred in rejecting assessee's delay condonation request on technical grounds without considering assessee's absence from India until order receipt date. Assessee filed appeal within 30 days of returning to India, satisfying Section 249(2)(b) requirement. CIT(A) adopted pedantic approach, ignoring sufficient cause. Matter remanded to AO to decide afresh after issuing notice to assessee's updated address and email, allowing submissions. Assessee's lack of opportunity before AO also noted.
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Assessee's disallowance restricted; paintings expensed; currency fire loss remanded for fresh adjudication.
Disallowance u/s 14A read with Rule 8D - Suo moto disallowance by assessee upheld, disallowance restricted to Rs. 2,00,000 for the year, following HT Media Ltd. decision. Disallowance u/s 14A while computing book profits u/s 115JB - Actual expenditure of Rs. 2,00,000 disallowed, as per Vireet Investments P Ltd. decision. Expenditure on paintings allowed as revenue expenditure, following Wipro Ltd. decision, being for aesthetic purpose and better environment. Disallowance on account of currency burnt in fire - Issue restored to Assessing Officer for fresh adjudication considering additional evidence of advance received from scrap dealer, with direction to allow loss if advance burnt, and avoid double taxation in subsequent year if disallowed.
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Taxability of receipts, debentures, acquisitions, improvements & losses in business.
Non-compete fee received is a capital receipt not liable to tax. Surplus on cancellation of debentures issued for capital expenditure is not taxable. Premium paid on redemption of debentures is allowable expenditure. Payment for acquisition of a going concern is capital expenditure. Cost of improvement to be allowed indexation. Cost of acquisition of amalgamated business to be taken as cost to previous owner. Claim of capital loss on surrender of land to DDA not entertained as it requires verification of facts.
Customs
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Employees penalized for exporter's attempt to claim excess duty drawback through overvaluation lacked concrete evidence
The appellants, who were neither exporters nor Customs House Agents (CHAs), were wrongly penalized u/ss 114 and 114AA for overvaluation of goods for claiming excess duty drawback. The alleged kickback of 40-60% drawback to the appellants lacked documentary evidence. One appellant's contradictory statements could not be relied upon, and the adjudicating authority failed to cross-examine witnesses. As mere employees acting on instructions, the appellants did not benefit from the exporter's attempt to claim excess drawback. The penalties imposed on the appellants were set aside by the Appellate Tribunal.
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Customs issued notice without probe into alleged license forgery. DGFT letter inconclusive after 10 yrs. Forgery unproven. Order denying exemption, duty & penalty set aside.
Customs authorities issued show cause notice based solely on letter doubting authenticity of DEPB licenses, without conducting investigation to establish alleged forgery. Commissioner relied on letter from DGFT office after 10 years, which did not categorically state licenses were forged. Alleged forged nature of DEPB licenses not proved beyond doubt. Impugned order denying exemption, confirming duty and imposing penalty set aside as reliance on new material by Commissioner not permissible. Appeals allowed by CESTAT.
FEMA
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Adjudication u/s 16(1) FEMA can proceed during appeal against s37A(1) seizure order. Distinct functions of authorities. No writ against show cause notice after adjudication.
The adjudicating authority can proceed with adjudication u/s 16(1) of FEMA during the pendency of an appeal against an order passed u/s 37A(1). Section 37A deals with interim seizure of value equivalent situated within India of foreign exchange, foreign security, or immovable property during adjudication proceedings. The functions of the adjudicating authority, authorized officer, and competent authority are distinct. The writ against a show cause notice is not entertainable once adjudication proceedings are completed. The adjudicating authority must pass appropriate directions in the adjudication order regarding further actions concerning seizure u/s 37A(1). The interim seizure order u/s 37A(1) does not have implications for the final order passed by the adjudicating authority u/s 16.
Indian Laws
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Bail granted; no prima facie case under UAPA. Letting out premises insufficient. No antecedents, no organizing training.
Bail application rejected under IPC and UAPA lacks reasonable grounds for believing accusations against appellant prima facie true. No specific material shows appellant advocated, abetted, or incited unlawful activities defined under UAPA. Mere letting out premises insufficient to conclude facilitation of terrorist acts. No allegation of organizing training camps. Impossible to record prima facie finding of reasonable grounds for UAPA offences against appellant. No antecedents brought on record. Appellant directed to be released on bail by Special Court within 7 days. Appeal allowed.
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Dishonored cheque attracts liability; respondent failed to rebut presumption. Offense committed under NI Act. Interest rate discrepancy immaterial.
Dishonor of cheque creates legally enforceable liability with a rebuttable presumption, requiring the respondent to introduce evidence to rebut it. The respondent failed to justify the reason for not adducing evidence initially. The presumption remains undislodged, yet the accused was acquitted. An offense u/s 138 of the Negotiable Instruments Act is committed when a cheque is dishonored for insufficient funds. The discrepancy over the interest rate, whether 1.8%, 2.4%, or 3% per month, was insufficient to disbelieve the appellant's claim. Even at 1.8% per month, the interest exceeded the prescribed cap of 12% per annum under the Tamil Nadu Act. The respondent, being a subscriber to a chit fund company, should have challenged the interest rate. The Appellate Court's order and the impugned judgment are set aside, restoring the Trial Court's order with a modification directing the respondent to pay a fine amounting to one and a half times the cheque amount.
IBC
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Applicant can't withdraw insolvency petition u/s 9 at any stage & file afresh as a matter of right. Adjudicating authority rightly denied liberty.
Permission to withdraw application filed u/s 9 of the Insolvency and Bankruptcy Code, 2016 was denied, and the Appellant challenged the order contending error in not granting liberty to file a fresh application. It was held that in IBC proceedings, the Applicant is not entitled to withdraw the application filed u/s 9 at any stage and pray for liberty to file afresh as a matter of right. The Adjudicating Authority had permitted withdrawal but denied liberty to file fresh application, as an objection was raised by the Corporate Debtor alleging false evidence pertaining to Demand Notice. The Appellate Tribunal found no error committed by the Adjudicating Authority in denying liberty to file fresh application, although imposition of cost was unnecessary. The appeal was dismissed.
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Corporate Debtor's assets freed post RP approval. Clean slate for new mgmt. NCLT erred not lifting ED's attachment.
Section 32A of the IBC provides immunity to the Corporate Debtor and its assets after approval of the Resolution Plan, overriding powers under PMLA. The legislature intended to grant a clean slate to the new management. The Adjudicating Authority erred in not extending Section 32A(2) benefit to the Resolution Applicant, lifting the attachment by the Enforcement Directorate over the Corporate Debtor's assets. The NCLAT relied on Supreme Court and High Court judgments upholding Section 32A's legislative scheme and the NCLT's jurisdiction to adjudicate on release of attachments. The appeal was allowed, granting relief to the Resolution Applicant.
SEBI
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Petitioners resigned as directors before alleged offence per Form-32, a public document. Respondent's letter can't override it.
The petitioners had resigned as directors on 23.02.1998, prior to the alleged cause of action, as evidenced by the certified copy of Form-32 filed by SEBI itself before the Trial Court. Form-32 is a public document recognized as evidence regarding directorship. The respondent's subsequent letter dated 27.04.1998 mentioning the petitioners as directors cannot override Form-32. Consequently, the High Court allowed the petition and quashed the Criminal Complaint pending against the petitioners.
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Unregistered advisory services to 290 investors earned INR 12 cr. Show Cause Notice for disgorgement, prohibition, penalties.
The Noticee no. 1 provided unregistered investment advisory services to 290 investors from March 2020 to August 2023, earning over INR 12 crore. Noticees 4 and 5 are liable for the acts of Noticee 1. Show Cause Notice issued for potential directions: disgorgement of gains with interest, securities market prohibition, penalties for unregistered advisory and PFUTP violations, and non-compliance penalty. Noticees have 21 days to respond. The Order is immediately enforceable, without prejudice to further actions.
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Unregistered CIS mobilized over Rs. 132 crores; SEBI orders freeze on accounts & cessation of activities to safeguard investors.
The Collective Investment Scheme (CIS) operated through the Growpital platform prima facie violates provisions of the SEBI Act, CIS Regulations, and SEBI-PFUTP Regulations. The activities indicate an unregistered CIS mobilizing over Rs. 132 crore in ZF Project 1 LLP alone, amounting to a fraudulent practice under Regulation 4(2)(t) of PFUTP Regulations. To safeguard investors' interests, an ad-interim ex-parte order directs Growpital and its directors/partners to cease soliciting or undertaking CIS activities, not collect funds, not divert existing funds, not dispose assets without SEBI's permission, provide asset inventory, remove CIS-related materials, not access securities market, and submit investor details. Cashfree Payments, banks, depositories, and RTAs are directed to freeze accounts and disallow transfers. The order aims to prevent further fund mobilization through the unregistered platform.
Service Tax
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Notice Pay recovered from employees for quitting early is not liable to service tax.
Liability for service tax u/s 66E of the Finance Act for 'tolerating an act' - Notice Pay, i.e., amount recovered from an employee for quitting before the prescribed period, is not liable to service tax. This is based on the decision in C.S.T. -SERVICE TAX - AHMEDABAD VERSUS INTAS PHARMACEUTICALS [2021 (6) TMI 906 - CESTAT AHMEDABAD], where it was held that the amount recovered from an employee for quitting without serving the notice period is not subject to service tax. Consequently, the impugned order is unsustainable, and the appeal is allowed.
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Equipment rented on monthly basis=deemed sale under Sec 366(29A)(d). Excluded from 'service' as per Sec 65B(44). Tribunal upheld transaction as sale, not service.
The appellant had provided earth moving equipment on monthly rent basis, transferring the right of possession and use to the lessee. This transaction constituted a deemed sale under Article 366(29A)(d) of the Constitution of India, as evidenced by the appellant paying State VAT. As per Section 65B(44) of the post-2012 negative list regime, activities constituting deemed sale are excluded from the definition of 'service'. Consequently, the renting of earth moving equipment did not qualify as a taxable service. The Tribunal held that the transaction was a deemed sale, not a service, and set aside the impugned order, allowing the appeal.
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Penalty u/s 78 cannot be imposed with penalty u/s 76 for same offense. Nizam Sugar Factory case applies sans fraud, etc. Demand u/s 73(1) only when no fraud.
Penalty u/s 78 of the Finance Act, 1994, cannot be imposed simultaneously with penalty u/s 76 for the same offense. The decision in Nizam Sugar Factory case applies to recurring show cause notices, where ingredients like fraud, collusion, willful mis-statement, or intent to evade duty are not involved. Demand u/s 73(1) can be made only when these ingredients are absent; otherwise, the proviso to Section 73(1) should be invoked. Different yardsticks for imposing penalties u/ss 76 and 78 cannot be adopted. The Commissioner's order refraining from imposing penalty u/s 78 is correct and legal, and the Revenue's appeal is dismissed.
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Tax liability upheld due to misstatement of facts in ITR & ST-3 Returns. Failure to provide documents to dept. Interest & penalty imposed.
The Department initiated the case based on income tax documents, which were public documents, and the presumption is on their truthfulness. The difference in value based on ITR and ST-3 Returns was due to misstatement of facts. The Department proceeded based on information received from the Income Tax Department regarding income from service provision shown in ITR and income on which TDS was deducted, as well as the gross value of service shown in ST-3 Returns. While relying on TDS/26-AS statements, service tax demand cannot be made under the Service Tax Act, the appellant's conduct of failing to provide documents when asked for by the Department and lack of supporting evidence for the discrepancy cannot be ignored. The differential tax liability was upheld, and interest liability accrued u/s 75 of the Act due to suppression of correct taxable income. The penalty imposed on the appellant for suppressing taxable income was upheld. The appeal was dismissed as there were no reasons to interfere with the impugned order.
Central Excise
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Appellant's duty refund on revised invoice upheld. Dept can't retain duty not payable under law. Cancelled invoice can't demand duty sans evidence.
Duty refund claimed based on affidavit and certificate was inappropriate. Revenue did not dispute discharge of duty by appellant on revised invoice. Appellant inadvertently paid duty in April 2012 on entire consignment, later issuing fresh invoice for part quantity. Respondent's documentation established bonafides and upheld refund claim. Tribunal ruled department cannot retain duty not payable under law. Once invoice is cancelled, no duty can be demanded unless department proves goods moved under cancelled invoice causing duty loss. No such evidence found. Commissioner's order allowing refund upheld, department's appeal dismissed.
TMI Short Notes
Articles
Notifications
Companies Law-
S.O.. 3455 (E) - dated
13-8-2024
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Co. Law
Appointment of chairperson and members to the Investor Education and Protection Fund Authority - Amendment in Notification No. S.O. 1647 (E), dated the 5th May, 2016
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G.S.R. 492 (E) - dated
12-8-2024
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Co. Law
Companies (Indian Accounting Standards) Amendment Rules, 2024.
Customs-
54/2024 - dated
14-8-2024
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Cus (NT)
Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver
DGFT-
23/2024-25 - dated
16-8-2024
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FTP
Amendment in Export Policy of De-Oiled Rice Bran
GST - States-
38/1/2017-Fin (R&C) (275) - dated
6-8-2024
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Goa SGST
Amendment in Notification No. 38/1/2017-Fin(R&C)(74), dated the 24th September, 2018
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F.12 (4) FD/Tax/2018-Pt-I-90 - dated
13-8-2024
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Rajasthan SGST
Notification under Central Goods and Services Act, 2017 with respect to relaxation in eligibility criteria of Technical Member (State) of GST Appellate Tribunal
IBC-
IBBI/2024-25/GN/REG115 - dated
13-8-2024
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IBC
Insolvency and Bankruptcy Board of India (Inspection and Investigation) (Amendment) Regulations, 2024.
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IBBI/2024-25/GN/REG114 - dated
13-8-2024
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IBC
Insolvency and Bankruptcy Board of India (Information Utilities) (Amendment) Regulations, 2024.
Money Laundering-
S.O. 3454(E). - dated
13-8-2024
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PMLA
Reporting Entities notified for Aadhaar authentication service of the Unique Identification Authority of India u/s 11A of the Prevention of Money-laundering Act, 2002
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S.O. 3453(E) - dated
13-8-2024
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PMLA
Central Government appoints the 13th day of August, 2024 as the date on which the amendments to the Prevention of Money-laundering Act, 2002 as specified in column (5) against serial number 34 of the Schedule to the Jan Vishwas (Amendment Of Provisions) Act, 2023, shall come into force.
SEZ-
S.O. 3446(E) - dated
12-8-2024
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SEZ
De-notification of entire area of 1.72 hectares of proposed Special Economic Zone for Information Technology and Information Technology Enabled Services at Wagholi and Kharadi Villages, Pune District, in the State of Maharashtra - Central Government rescind the Notification Numbers S.O. 1401 (E) dated 18.03.2019 and S.O. 4068 (E) dated 24th September, 2021 -
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2024 (8) TMI 840
Challenge to seizure order and SCN - address given in the invoice was not the registered place of business of the petitioner at the time of detention - Refund of the penalty that has been paid by the petitioner under protest for release of the goods - existence of mens rea or not - HELD THAT:- In the present case, it is found that the revenue has not been able to indicate any mens rea for evasion of tax, and therefore, the very process of detention leading to the show cause notice and the imposition of penalty is without any basis in law and is liable to be quashed and set aside. In light of the same, the seizure and the show cause notice dated December 6, 2023 is quashed and set aside and the penalty imposed and collected by the revenue is directed to be refunded to the petitioner within a period of eight weeks from date. Petition disposed off.
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2024 (8) TMI 839
Challenge to impugned order - specific objection was raised before the authority and the ground was taken, but without considering the same, the impugned order has been passed - violation of principles of natural justice - HELD THAT:- It is not in dispute that the petitioner had closed his business with effect from 30.09.2017. Further, no material has been brought on record to suggest that the Pan of (HUF), which was used by the proprietor for registration, was also used for the partnership firm to which the Income Tax Department conducted a survey in which excess stock was found, this fact was brought to the notice of the authority concerned, but without any independent finding, only on the finding recorded by the Income Tax Department, the impugned order has been passed. In absence of any independent finding by the proper officer as well as confirmed by the appellate authority, the impugned orders have been passed, which cannot be sustained in the eyes of law and the same are hereby quashed. The matter is remanded to the proper officer for initiating de novo proceedings by reasoned and speaking order, after hearing all the stakeholders, within a period of three months from the date of production of certified copy of this order - Petition allowed by way of remand.
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2024 (8) TMI 838
Violation of principles of natural justice - non-service of notice - Calling for records of the respondents and quash the impugned order under Section 73 of the Tamil Nadu Goods and Service Tax Act, 2017 - availment of excess input tax credit - HELD THAT:- In the present case, it appears that the notices have been uploaded in the GST portal and the same were not at all physically served to the petitioner, due to which, the petitioner was unaware about the said notice. Hence, the reasons provided by the petitioner for being unaware of the notice, which was uploaded in the web portal, are appears to be genuine. Further, this Court is of the view that no order can be passed without providing sufficient opportunities to the petitioner. However, in the present case, no reply was filed by the petitioner and no opportunity of personal hearing was provided to the petitioner. Hence, the impugned order is liable to be set aside. The impugned order dated 12.12.2023 is set aside and matter remanded back to the respondent on condition that the petitioner shall deposit 10% of the disputed tax demand of the assessment year, within a period of four (4) weeks from the date of receipt of a copy of this order and thereafter, the petitioner is directed to file a reply within a period of two (2) weeks - petition disposed off by way of remand.
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2024 (8) TMI 837
Seeking grant of bail - creation of fake firms and passing of fake ITC - HELD THAT:- Considering the nature of the offence, the punishment and the material available on record and none availability of any device by using which fake firms are said to be created and the fact that co-accused Gaurav Singhal having more serious role has been released on bail by the coordinate Bench of this Court, and without expressing any opinion on the merits of the case, the Court is of the view that the applicant has made out a case for bail. Let the aforesaid applicant be released on bail on furnishing a personal bond and two heavy sureties each in the like amount to the satisfaction of the court concerned subject to fulfilment of conditions imposed - The bail application is allowed.
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2024 (8) TMI 836
Validity of Sections 16 (2) (c) and 16 (2) (d) of the Assam Goods and Services Tax Act, 2017 as well as the validity of Sections 16 (2) (c) and 16 (2) (d) of the Central Goods and Services Tax Act, 2017 - whether purchasing dealer cannot be punished for the act of the selling dealer in case the selling dealer had failed to deposit the tax collected by it? - HELD THAT:- The controversy raised in this batch of writ petitions is squarely covered by the decision of the Delhi High Court in the case of On ON QUEST MERCHANDISING INDIA PVT. LTD., SUVASINI CHARITABLE TRUST, ARISE INDIA LIMITED, VINAYAK TREXIM, K.R. ANAND, APARICI CERAMICA, ARUN JAIN (HUF) , DAMSON TECHNOLOGIES PVT. LTD., SOLVOCHEM, M/S. MEENU TRADING CO., MAHAN POLYMERS VERSUS GOVERNMENT OF NCT OF DELHI ORS. COMMISSIONER OF TRADE TAXES, DELHI AND ORS. [ 2017 (10) TMI 1020 - DELHI HIGH COURT] where it was held that 'the default assessment orders of tax, interest and penalty issued under Sections 32 and 33 of the DVAT Act, and the orders of the OHA and Appellate Tribunal insofar as they create and affirm demands created against the Petitioner purchasing dealers by invoking Section 9 (2) (g) of the DVAT Act for the default of the selling dealer, and which have been challenged in each of the petitions, are hereby set aside.' Hence, the show cause notices impugned in the present writ petitions and the consequential orders are set aside. However, the Department is free to act in those cases, where the purchase transactions are not bona fide, in accordance with law. The writ petition is disposed off.
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2024 (8) TMI 835
Violation of principles of natural justice - petitioner has not appeared, when was provided by opportunity of personal hearing - HELD THAT:- In the present case, Form DRC-01 was issued and the petitioner filed a detailed counter. When the personal hearing opportunity was provided, he has not appeared. In those cases, the respondent ought to have granted one more opportunity. However, the respondent has failed to do the same. In this circumstance, both learned counsel for the petitioner submitted that there is a scheme available under Rule 128 of the Act and the petitioner intended to avail the same in the event the impugned order is setting aside and remanding the matter to the appellate authority for consideration after providing opportunity of personal hearing to give quietus to the present dispute. Taking into consideration these aspects, this Court feels that it would be appropriate to give one more opportunity of personal hearing to the petitioner. Hence, the impugned order as well as the attachment order passed by the respondent dated 22.12.2023 are set aside. Petition allowed.
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2024 (8) TMI 834
Transfer of tax credit available in the ledgers of the petitioners, as on 02.06.2014, on account of unused input tax, to the AP GST regime - whether the only option available to the petitioners was to seek a refund of the same? - HELD THAT:- Section 56 of the Andhra Pradesh Reogranisation Act, 2014 deals with refund of tax or duty on property, including the land revenue which is collected in excess and refund of the same would be the liability of the Successor State in whose territory the property is situated and in the case of any other tax the liability would be on the Successor State within whose territory the place of assessment of such tax had been assessed. This provision relates to the liability of the Successor State, relating to refund of taxes which are been collected in excess of the liability of the tax payer. The tax credit available in the ledgers of the petitioners is input tax credit, which is not tax paid in excess. Consequently, the provision of the Section 56 of the Andhra Pradesh Reogranisation Act, 2014 would not be applicable in the present cases. The impugned demand orders in Form GST DRC-07 issued by the 1st respondent set aside - petition allowed.
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2024 (8) TMI 833
Challenge to impugned order passed by the 1st respondent for the assessment year 2018-19 - contention of the petitioner is that the impugned order has been passed without issuance of the notices - violation of principles of natural justice - HELD THAT:- The petitioner may have a case on merits as the dispute pertains to difference of turn over reported in GSTR-7 and GSTR-3B. Considering the same, partial relief granted to the petitioner by setting aside the impugned order and remitting the case to the 1st respondent to pass fresh order on merits. The impugned order, dated 12.02.2024 passed for the assessment year 2018-19 which stands quashed hereby, shall be treated as addendum to the show cause notices in DRC-01A, dated 26.10.2023 and DRC-01, dated 15.11.2023. The petitioner shall file a consolidated reply within a period of thirty (30) days from the date of receipt of copy of this order and also deposit 20% of the disputed tax from electronic cash registered. Petition dispsoed off by way of remand.
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2024 (8) TMI 832
Input Mismatch (GSTR 3B Vs. GSTR 2A) - RCM not paid for certain transactions - Tax on rebate received - ITC reversal on inward supplies for which payment was not made for a period more than 180 days - Liability for Advance for Land - petitioner was unable to reply to the notice in absence of the documents which were seized by the Central Tax Authorities - HELD THAT:- The impugned order in the manner in which it has been passed is liable to be interfered with. Accordingly, the impugned order is quashed and the case is remitted back to the respondent to pass fresh order on merits and in accordance with law, within a period of 9 months from today - Petition disposed off by way of remand.
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2024 (8) TMI 831
Grant of bail - whether the bail has been procured by the present applicant by way of misrepresentation and suppression of material facts? - While cancelling the bail of the present applicant, whether the same Court can touch the merit of the case? Grant of bail - whether the bail has been procured by the present applicant by way of misrepresentation and suppression of material facts? - HELD THAT:- One fact is undisputed that earlier the applicant filed a First Bail Application and admittedly, there was no disclosure about the criminal history as well as the fact that he was already convicted in another case of similar nature. About the criminal history and the fact that the applicant was convicted, the detailed objections were filed in the First Bail Application by disclosing the criminal history as well as the fact about the conviction of the present applicant in another case of similar nature. What the applicant has done, instead of filing the response to the objection, the First Bail Application was withdrawn. The most surprising part is that after withdrawal of the First Bail Application, Second Bail Application was preferred just after 5 days; but again he has not disclosed about the criminal history as well as the fact about his conviction in another case of similar nature. This Court is not convinced with the argument as advanced by the learned counsel for the applicant, particularly, when the applicant has not approached with clean hands to the trial Court while seeking bail. The question is if he has moved the First Bail Application, wherein the objections were called and the objections were filed by disclosing the criminal history of the applicant, then why he has not pressed the First Bail Application - the present applicant made all possible efforts to procure the bail by misrepresenting as well as by suppressing material facts. Such a conduct of the applicant, seeking regular bail without disclosing the material facts, about the criminal history and the facts about his conviction clearly reveals that he procured the bail by way misrepresentation and in such an eventuality, the same Court was right in cancelling the bail. While cancelling the bail of the present applicant, whether the same Court can touch the merit of the case? - HELD THT:- Now-a-days, the economic offences are serious in nature. Since there are serious allegations against the applicant/accused, therefore, in the opinion of this Court, the Court of District and Sessions Judge, Udham Singh Nagar, rightly touched also the merit of the case to examine the seriousness of the allegation. Therefore, this Court is of the view that there is no any illegality in the order under challenge, particularly when the applicant suppressed the material facts - the argument as advanced by the learned counsel for the applicant that the learned Sessions Judge was wrong in cancelling the bail and the same is barred by Section 362 of CrPC, is not acceptable, keeping in view of the seriousness of the allegation. This Court is of the firmed opinion that the learned Sessions Judge rightly cancelled the bail of the applicant. There are no merit in the present Application preferred under Section 482 of CrPC, and the same is, dismissed being devoid of merit.
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2024 (8) TMI 830
Challenge to assessment order - case of the petitioner is that the petitioner failed to respond to the Show Cause Notice dated 22.09.2023 for the Assessment Year 2017-2018 which culminated in the impugned Assessment Order dated 22.12.2023 - HELD THAT:- The petitioner may have a case to explain as far as the confirmation of demand vide Assessment Order dated 22.12.2023 for the Assessment Year 2017-2018 impugned in W.P.(MD) No.14443 of 2024 is concerned. Therefore, the impugned Assessment Order dated 22.12.2023 is set aside and the case is remitted back to the respondent subject to the petitioner paying 25% of the dispute tax from the Electronic Cash Ledger for the Assessment Year 2017-2018 and subject to the petitioner replying to the Show Cause Notice dated 22.09.2023 that preceded with the impugned Assessment Order dated 22.12.2023, within a period of 30 days from the date of receipt of a copy of this order. The impugned Assessment Order dated 07.09.2023 is also set aside and the case is remitted back to the respondent subject to the petitioner paying 25% of the dispute tax from the Electronic Cash Ledger for the Assessment Year 2020-2021, within a period of 30 days from the date of receipt of a copy of this order. Both the impugned Assessment Orders are quashed. Both the cases are remitted back to the respondent to pass fresh orders on merits. The impugned Assessment Orders shall be treated as Addendum to the Show Cause Notices issued to the petitioner for the respective Assessment Years. Petition disposed off.
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Income Tax
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2024 (8) TMI 829
Reopening of assessment - funds which were essentially meant to carry out activities in relation to a trust Legal Initiative for Forest and Environment were diverted to the account of the petitioner and that no professional services were either rendered or details thereof furnished - as decided by HC [ 2024 (5) TMI 1460 - DELHI HIGH COURT] find no justification to entertain the challenge at this stage bearing in mind the conclusions which stand incorporated in the order passed u/s 148A(d) and which have been extracted hereinabove. With the allegation of diversion of income, as evident on a consideration of the conclusions tentatively arrived at by that authority and which constitutes its prima facie opinion, it cannot be said that the authority has failed to bear in consideration the principles that govern the commencement of action under Section 148 or that the opinion formed is wholly untenable or perverse. WP dismissed. HELD THAT:- We are not inclined to entertain the Special Leave Petitions under Article 136 of the Constitution of India. Special Leave Petitions are accordingly dismissed. Pending applications, if any, stand disposed of.
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2024 (8) TMI 828
Eligibility of advantage of the Vivad Se Vishwas I-Relief for MSMEs Scheme [ VSV Scheme ] - Petitioner was registered as a Medium Enterprise under the MSME Act and obtained an Udyam Registration Certificate - Eligibility conditions for applying under the VSV Scheme were modified - Petitioner was upgraded/re-classified as not an MSME -scope of Clause 8 (5) [as substituted by Notification dated 18th October 2022] Whether the Petitioner is entitled to take the benefit of the VSV Scheme in February 2024 when it was re-classified as not an MSME w.e.f. 9th May 2023 ? - HELD THAT:- Clause 8 (5), as substituted by Notification dated 18th October 2022, creates a legal fiction of treating a Micro or Small or a Medium Enterprise as such, for a period of three years, from an upward change/reclassification in its status, notwithstanding the fact that its status may have changed due to its upward change/re-classification. This, of course, is for the limited purpose of availing of all non-tax benefits - For example, if a Small Enterprise becomes a Medium Enterprise [by virtue of its upward re-classification], for availing of all non-tax benefits, it will continue to be treated as a Small Enterprise for a period of three years from such upward change/re-classification. Similarly, if a Medium Enterprise is classified as not an MSME by virtue of its upward re-classification, for availing of all non-tax benefits, it will continue to be treated as a Medium Enterprise for a period of three years from such upward change/re-classification Even though the Petitioner was re-classified as not an MSME [by virtue of upward reclassification] w.e.f. 9th May 2023, for a period of three years from 9th May 2023, it was entitled to avail of all non-tax benefits available to a Medium Enterprise. Since the VSV Scheme is a non-tax benefit applicable even to a Medium Enterprise, in our view, the Petitioner was entitled to make a claim under the VSV Scheme. We are of the view that the emails dated 12th March 2024 and 13th March 2024 have wrongly held that the Petitioner was not entitled to make a claim under the VSV Scheme. WP allowed.
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2024 (8) TMI 827
Condonation of delay before High Court - delay in filing an application for special leave to appeal - Applicant is the Assistant Commissioner of Income Tax, preferred present application for condonation of delay of 480 days in filing leave to appeal thereby challenging the order passed by the learned Magistrate at Vasco in dismissing the complaint in default and acquitting the Applicant/Accused. Complaint was lodged before the learned Magistrate for the offence punishable u/s 277 and 277A of the Income Tax Act against the Respondent/Accused - matter was posted for hearing arguments and order was passed by Magistrate dismissing the said complaint and acquitting the Accused since neither the Complainant nor Advocate for the Complainant appeared before the said Court. As submitted Applicant was under the bona fide belief that the remedy against impugned order was before the Sessions Court by filing a revision - Effect of filing the proceedings before the wrong Forum - HELD THAT:- The explanation given in the application would clearly go to show that the revision was filed with a bona fide belief that the same is maintainable. Secondly, when the objections were raised, the Special Public Prosecutor intimated the Department and thereafter the documents were collected and the draft of the appeal along with delay application were prepared. Thus there is sufficient cause disclosed by the Applicant in approaching this Court beyond the period of limitation. Department would not be benefited by filing the proceedings before the wrong Forum deliberately. It is admitted fact that the complaint filed by the complainant was rejected only on the ground that the Applicant along with Counsel unable to remain present. The complaint was not decided on merits. Thirdly, action was taken when the Respondent raised objections to the tenability of the revision and by corrective measure, an appeal was filed before this Court even when the revision was pending before the Sessions Court. Such revision was later on withdrawn, which again show bona fides on the part of the Applicant to prosecute the matter before the correct Forum. The contention of the Respondents that from January till March, there is no explanation as to why the documents were not furnished or collected, will have to be answered on the ground that every day's delay cannot be explained. The Department functions on the basis of its officials and some time is expected to be consumed regarding communication as well as handing over all documents. First set of documents were furnished by the Special Public Prosecutor which were available with him. The second set was required about the documents which were presented before the learned Magistrate along with the complaint. Thus a contention of every day's delay, every hour delay, is not required to be explained, however, the sufficient cause must be satisfactorily explained. The Court has to take a pragmatic view in order to do substantial justice. Technicalities and other considerations can not pitted against substantial justice. Second set of decisions referred to by Mr Nankani are basically with regard to powers under Section 14 of the Limited Act. It is not the case of the Applicant that the entire delay was occasioned because the Applicant was bona fidely litigating before the wrong Forum. Admittedly, revision was filed within time and when it is pointed out to the Applicant that the revision is not tenable, suitable action was taken and appeal was filed with the application for condonation of delay. The party is entitled to seek exclusion of time of the proceeding bona fidely filed in a Court having no jurisdiction. It is not the case of the Applicant that they were aware that the revision is not maintainable and that the appeal is required to be filed. The impugned order passed by the Magistrate would clearly go to show that the complaint was dismissed for non-appearance of the complainant and the Standing Counsel for the Department. Such a decision was not on merit but on the default of appearance. Thus, the contention of Applicant that they were under bona fide belief and accordingly advised to file revision cannot be doubted with. The appeal was filed along with the delay application even when the revision was pending and only after filing of the appeal the said revision was withdrawn. The revision was filed within time. Thus, the contention of the Applicant that he is entitled for the exclusion of such time litigating before the wrong Forum needs to be considered. In the present matter, the record shows that the Applicant has diligently prosecuted the matter by filing revision and that too within a period of limitation. Once an objection was taken, the matter was re-examined and accordingly a decision was taken to file an appeal even during the pendency of the revision proceedings. The learned Sessions Court was not called upon by the Respondents to decide on its own jurisdiction or the maintainability of revision. The documents and opinions were furnished and accordingly the appeal was drafted within 2 weeks from the date of receipt of all the records. Immediately on the next date of receipt of the draft of an appeal, it was filed before this Court. This clearly shows the bona fide attempt and the due diligence adopted by the Applicant in prosecuting the matter. Thus, the reasons disclosed in the application and that too on affidavit must be construed as sufficient cause to condone the delay. Application stands allowed. The delay in filing an application for leave to appeal along with a memo of appeal stands condoned.
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2024 (8) TMI 826
Rejection of applications filed u/s 197 - orders impugned only found that there was a tax demand with respect to the AY 2018-19, which is pending and hence the deduction at the lower rate/NIL rate is not possible - petitioner would contend that the tax demand for the year 2018-19 has been stayed by the Principal Commissioner of Income Tax till the First Appeal is disposed of - HELD THAT:- De hors the stay ordered; pending First Appeal, we see that the provision under Section 197 only clothes the AO with the power to satisfy himself that the total income of the recipient justifies the deduction of Income Tax at any lower rates or at a NIL rate. Hence, a demand pending against the assessee would not clothe the AO with the power to summarily reject an application u/s 197. The satisfaction to be recorded under Section 197 is clearly with respect to the total income of the recipient for the subject assessment year, where the deduction is claimed at a NIL rate for the interest income earned from the fixed deposits in banks. We set aside orders for having decided the issue on extraneous considerations. The application will stand restored before the AO and the same will be considered in accordance with law.
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2024 (8) TMI 825
Validity of Faceless Assessment order - shorter period provided to respond - violation of principles of natural justice - Mandation to provide minimum of seven days time to respond - HELD THAT:- As in terms of Clause N.1.3 the assessing unit is bound to follow the principles of natural justice and the assessing unit is required to offer a response time of minimum 7 days from the date of issuance of show cause unless the issue of limitation intervenes. In the present case time provided to respond was less than three days. Nothing has been placed before this Court to demonstrate that the portal remained activated even after the expiry of the period mentioned in the show-cause, there is no email communication disclosed by the respondents to demonstrate that the petitioner was notified with regard to the portal being kept activated or with regard to the submit response button on the portal being kept activated, for the petitioner to submit its response beyond the period for submission of response in terms of the show cause notice. Since the petitioner was not afforded adequate opportunity, the petitioner could not respond to the show cause and the assessing unit had passed the assessment order without the petitioner s response.The aforesaid order should be set aside and the matter should be remanded to the Faceless Assessment Unit with further opportunity to the petitioner to file its response to the show-cause. The petitioner shall be at liberty to file its response with the Faceless Assessment Unit within a period of 10 days from date.Faceless Assessment Unit shall open a micro portal for the petitioner to submit its response
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2024 (8) TMI 824
Reopening of assessment - validity of notice u/s 148 - unexplained sources of SBN currency deposited during the demonetization period - HELD THAT:- As in the scrutiny assessment u/s 143 (3), the issue of deposit of SBNs by the assessee during the demonetization period has been examined in detail by the Assessment Officer and the same objection is now raised by the audit party which, in our considered view, would amount to an attempt to review the same issue and consequently come within the fold of change of opinion which is not permissible in accordance with the settled position of law. As indicated earlier, we have relied upon Mangalam Publications [ 2024 (1) TMI 1042 - SUPREME COURT] in support of the view that we take. In our opinion, it is not necessary to go into the scope and import of explanation 1 (ii) to Section 148 in the present facts and the same is left open to be examined in an appropriate case. Consequently, the petition is allowed. The impugned notice under Clause (b) of Section 148-A is quashed. Decided in favour of assessee.
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2024 (8) TMI 823
LTCG - Deduction u/s 54F - investment in two flats - Assessee combining two flats into one unit - AR first argued that the assessee has made the agreement with the builders for purchasing Joint flats and converting them into one unit - assessee had invested in two fiats which were separate, registered separately and as per plan approved by RERA/NMMC both the flats could not have been made into one due to space between the two flats being open to sky and hence assessee was not entitled to claim deduction u/s 54F(1) . - HELD THAT:- AO relies on the core plan of the One Akshar and has noted that the OTS (open to sky) space is structured between flat Nos. 601 602 and there is no common wall between the two flats. Hence both flats cannot be combined as claimed by the assessee. Whereas the plan of the flat and affidavit of the developers mentioned that the assessee has taken both the above said flats and both are adjacent flats. The Bench has asked both parties whether any physical verification was conducted to verify the claim of assessee. But reply was negative. Although the assessee is allowed to combine two flats as a single unit, this issue has not been physically verified by any revenue authorities. AO has expressed the view that both flats cannot be combined. Thus, there is contradiction between parties on facts. Consequently, we are remitting the matter to the file of the learned AO with a specific directive. We instruct the ld. AO to carry out a physical verification of the flats. If both flats are combined, then the assessee should be given deduction u/s 54F of the Act. Appeal of the assessee bearing ITA No.659/Mum/2024 is allowed for statistical purposes.
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2024 (8) TMI 822
Reopening of assessment - sudden dip in the profits as compared to the earlier year - AO observed that the net profit range is between 8.44% to 11.65% and computed average net profit percentage of three years which works out to @9.39% - AR argued CIT(A) has erred in sustaining the addition made by the AO overlooking the submissions made by the assessee in lieu of the notice issued on 06.04.2024 to file the reply on or before 12.04.2024. HELD THAT:- AR has demonstrated the information and details filed before the CIT(A) on 12.04.2024, which is not disputed and was not considered by the CIT(A). AR submitted that the assessee in the F.Y. 2015-16 was engaged in the business of wholesale food items and therefore the profit margin based on the Turnover/volume will be lower and the AO comparing with the net profit rate of earlier years, where the assessee was engaged in the retail trade and the profit margin differs. AR submitted that the assessee has a good case on merits and shall substantiate with material evidences that the assessee s wholesale business profit margin is between 2% to 3%. Therefore, we considering the facts, circumstances and the principles of natural justice, shall provide with one more opportunity of hearing to the assessee to substantiate the case with evidences and information - Matter remitted to the file of the AO to adjudicate afresh - Appeal filed by the assessee is allowed for statistical purposes.
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2024 (8) TMI 821
Denial of relief u/s 89 - compensation received on termination of service - Profits in Lieu of Salary or capital receipt - as submitted to be treated as capital in nature and not falling u/s 17(3) - assessee/ employee resigned voluntarily from service of Pfizer Healthcare India Pvt. Ltd., Aurangabad has accepted the compensation received as capital in nature - HELD THAT:- We find merit in the arguments of assessee that when the concerned AOs after reopening of the assessment have treated such compensation as capital in nature and the Revenue has not challenged the same and which has attained finality since no 263 proceedings have been initiated, therefore, the assessee s case being identical to the facts of the other employees of Pfizer Healthcare India Pvt. Ltd., the CIT(A) / NFAC is not justified in sustaining the addition made by the Assessing Officer. See ITO vs. Avirook Sen [ 2024 (4) TMI 548 - ITAT DELHI] wherein held as the payment of ex-gratia compensation was voluntary in nature without there being any obligation on the part of employer to pay further amount to assessee in terms of any service rule. it would not amount to compensation in terms of section 17(3)(i) of the Act. The impugned addition was rightly deleted by the Ld. CIT(A). Thus the payment of ex-gratia compensation received by the assessee was voluntary in nature without there being any obligation on the part of the employer to pay further amounts to the assessee in terms of any service rule and therefore, would not amount to compensation in terms of section 17(3) of the Act. We, therefore, set aside the order of the CIT(A) / NFAC and direct the Assessing Officer to delete the addition. The grounds raised by the assessee are accordingly allowed.
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2024 (8) TMI 820
LTCG - denial of exemption u/s. 54F - as no new residential house was purchased/constructed and it was only an extension of the old house, the AO disallowed the claim of the assessee - HELD THAT:-We are of the opinion that the assessee had discharged the burden to prove construction of a residential house/dwelling unit (first floor with separate stair-case, kitchen, new electrical connection, water connection, etc.) and it is not disputed that construction of the new dwelling/residential unit was within the time stipulated u/s. 54F of the Act. Therefore, assessee is eligible for claiming deduction u/s. 54F of the Act and therefore, we set aside the impugned order of the Ld.CIT(A) and direct the AO to grant deduction claimed u/s. 54F of the Act. Addition u/s. 68 - unexplained cash credit - HELD THAT:- We are of the opinion that assessee had discharged the burden to prove that an amount of Rs. 57 lakhs was in his hands, which was received from his family members in the relevant year under consideration, apart from the amount received on 21.10.2011; and further, we note that assessee had withdrawn an amount of Rs. 13.90 lakhs between 01.08.2009 to 16.07.2010. Therefore, the assessee succeeds in proving the nature and source of Rs 59.90 lakhs, and therefore, addition made of Rs. 59.90 lakhs was not warranted. In such an event, no addition u/s. 68 of the Act is sustainable and directed to be deleted. Appeal filed by the assessee is allowed.
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2024 (8) TMI 819
Stay of demand - ITAT power to grant stay - Cancellation of registration u/s 12A/12AA/12AB - Cancelling the registration of the assessee trust with retrospective effect - Jurisdiction of PCIT (Central)-2, Delhi to Cancel the Registration - HELD THAT:- ITAT has the power to grant stay of the operation of the order, which is subject matter of challenge before the Tribunal during its pendency before it, if the Tribunal came to a finding that by not staying the operation of the material order will make the appeal filed by the assessee a nugatory if the assessee succeeds in the appeal at a later stage - we do not agree with the plea of the department that the Tribunal does not have power to grant stay as contended by it and it is held that the Tribunal has powers under section 254(1) of the Act to grant stay in the appropriate cases. Re-assessment proceedings initiated against the assessee, are an independent set of proceedings governed by different set of provisions and cannot be said to be a consequence of the impugned order cancelling registration granted to the assessee - It is a fact that the notice u/s 148 of the Act for AY 2016-17 was issued on 04.05.2023 prior to the date on which the cancellation order was passed on 30.09.2023, but it cannot be denied that such cancellation order dated 30.09.2023, which has been appealed by the assessee will not have an adverse impact on the ongoing assessment proceedings of the assessee for Assessment Year 2016-17. Similarly, as stated by the Revenue that even though for other assessment years, in the reasons recorded for reopening the assessment, the fact of cancellation of registration vide order dated 30.09.2023 of the PCIT(Central)-2, Delhi has been noted for completeness but again it cannot be denied that the cancellation order will not have an adverse impact on the ongoing re-assessment proceedings in the case of the assessee. Maintainability of the stay application - For grant of stay, the assessee has to satisfy all the three conditions i.e. prima facie case in favour of the assessee, balance of convenience and irreparable loss/injury to become eligible for stay and if the assessee fails to pass any of these tests, the assessee will not be entitled for stay. Jurisdiction to the respective PCIT to exercise all the powers under the Act where the assessment of the case has been transferred u/s 127 to the AO for completing the assessment falling under the administrative jurisdiction of the said PCIT - Delhi Tribunal in the case of Aggarwal Vidya Pracharni Sabha [ 2024 (1) TMI 491 - ITAT DELHI] had specifically mentioned that when a query was made to the CIT-DR to produce any further notification by virtue of which the power exercised by the PCIT u/s 124B(4) of the ACT , which had come into effect from 01.04.2021 would also be exercised or that further jurisdiction u/s 12AB of the Act could be transferred to other authorities as per this notification was left unsatisfied and no other Notification or Circular was brought to the notice. We are of the view that in absence of consideration of the Board Notification No.70/2014 dated 13.11.2014, we cannot hold that the Pr. CIT(Central-2), Delhi lacked jurisdiction to pass the order dated 30.09.2023, cancelling the registration of the assessee trust. Jurisdiction of the Pr. CIT(Central-2), Delhi to cancel the registration with retrospective effect - As decided in Young Indian [ 2019 (11) TMI 996 - ITAT DELHI] proceeded to hold that the PCIT had the power to cancel the registration with retrospective effect - thus we are of the view that we cannot hold that the Pr. CIT(Central-2), Delhi had no jurisdiction to cancel the registration with retrospective effect vide his order dated 30.09.2023. Claim of the assessee that it had been carrying its activities as per the objects of the trust, it is seen that prima facie, the same is not in sync with the materials/ emails gathered during the course of survey conducted by the Investigation Wing, Delhi in the case of the assessee on 07.09.2022. Claim for exemption by the assessee on account of suffering irreparable loss and balance of convenience - India is a fast-growing nation and the development of its projects to meet its energy requirements is critical for its growth - PCIT, Central-2, Delhi, in his order has given a finding that the funds received by the assessee from M/s Earth Justice and by LIFE Properitorship Concern of Sh. Ritiwick Dutta, which was later converted in LIFE LLP was utilized to stop coal based Indian Thermal Power Plants and Coal Mine projects. Various emails reproduced prima facie indicates the involvement of the assessee trust in furnishing about the status of Thermal Power Projects and the Coal mining. The discussion by the PCIT, Central-2, in respect of email titled LIFE Coal Cases update 10.07.2016 shows that the assessee trust proposes to file and litigate matter in respect of Thermal Power Plants and Coal Mines. These facts prima facie show the contradiction in the claim of the assessee that it has no involvement with Earth Justice and is not engaged in the stopping the thermal power projects and coal mining with assistance from Earth Justice. Therefore, in view of the facts on record, the claim for exemption by the assessee on account of suffering irreparable loss and balance of convenience is also not satisfied because prima facie the facts on record suggest that the activities of the trust in stopping coal based Indian Thermal Power Plants and Coal Mine projects will cause irreparable loss to the nation rather than the assessee. Therefore, in this background, it is held that the assessee fails to satisfy the test of irreparable loss caused to it by the cancellation order dated 30.09.2023. Consequently, the balance of convenience is also not in favour of the assessee. Assessee has claimed that in similar cases i.e. in the case of Centre for Policy Research [ 2023 (10) TMI 39 - DELHI HIGH COURT] and Oxfam India [ 2024 (1) TMI 1311 - DELHI HIGH COURT] . the Hon ble Delhi High Court has granted stay of the operation of the order cancelling the registration of the said trust. The above decision of the Hon ble Delhi High Court has been carefully perused and it is seen that in the said cases unlike in the case of the assessee, wherein facts showing prima facie lack of transparency in its activities emerges had not emerged in the cited cases in which the Hon ble Delhi High Court has granted the stay. Therefore, we are not inclined to accept the plea of the assessee in this regard. Assessee has failed to satisfy the three conditions for grant of stay i.e. a prima facie case, an irreparable loss and balance of convenience. Activities of the assessee trust prima facie are not being carried out as per the objects of the trust. Therefore, we are of the considered view that the assessee trust is not entitled for stay in this case and we hereby reject the stay application of the assessee. Decided against assessee.
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2024 (8) TMI 818
Revision u/s 263 - adjustment made in the profit on account of tangible fixed assets - as per CIT AO had failed to add back the impugned amount in spite of the auditors clearly pointing it out for such treatment - CIT proceeded to provisionally compute the grant of excess depreciation at 15% - HELD THAT:- In the return of income itself the audited financial statements indicated that as per ICDS-V (tangible fixed assets) there would be an increase in profit . However, the ld. A/R explained that this figure is part of the working on account of depreciation on both tangible and intangible assets which would need to be worked out in a dual manner Accounts working of depreciation actually chargeable under the profit and loss account has been correctly worked out and more importantly disclosed in the audit report filed along with the return of income. On this fact alone, the impugned order deserves to be quashed since the issue has been considered by the AO and dropped for any adverse treatment on account of the response filed by the assessee. The two items pertaining to the ICDS were issues on which the case was picked up for scrutiny and whereas on the ground that we have discussed above, the matter was dropped for considering any addition by the AO, the second ground pertaining to the ICDS-V (change in foreign exchange rates) has been taken adverse note of and an addition has been made to that extent. This amply demonstrates the application of mind by the AO on the issues before him and reveals that he has duly considered the explanation offered by the assessee regarding the issue around ICDS-V. Considering all it is clear that the impugned order started off on an erroneous premise and did not duly take into consideration the details contained in the audit report filed along with the return of income and thereby ended up with an erroneous conclusion. Decided in favour of assessee.
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2024 (8) TMI 817
Disallowance of deductions claimed u/s 57 - addition of Interest expenditure, Legal expenses, Bank charges and Brokerage claimed by assessee against interest income - HELD THAT:- In present case, the assessee is not engaged in money lending business which is a fact. The assessee has shown interest income under other sources head and therefore the deduction claimed by assessee has to be allowed only if the mandate of section 57(iii) is satisfied. While we admit that the interest rate paid can be higher as compared to interest rate received but first of all the assessee has to prove that the funds on which he has paid interest and claimed deduction were actually utilized for giving loans so as to satisfy the requirement of wholly and exclusively for the purpose of making or earning income as per section 57(iii). In present case, there is no submission by assessee to prove this factum. Therefore, the assessee is required to submit clinching particulars to AO in this regard. AO has disallowed interest deduction claimed by assessee fully as if the assessee has not utilized a single pie of borrowed funds for giving loans. Apparently, this approach of AO is also not correct. So far as other expenses, namely Legal expenses, Bank charges and Brokerage are concerned, there is no submission from assessee s side before lower-authorities or even before us. Therefore, the case of assessee can be carried to a proper conclusion only if complete particulars of all deductions are available and the AO examines the same from the touchstone of section 57(iii). No option except to remand this matter back to the file of AO for a fresh adjudication. Addition on account of interest receipt/income - We find that the assessee has shown net loss under the head other source safter claiming deduction from gross interest receipt/income. Thus, the gross interest receipt/income stands already included in total income of assessee. Therefore, by making a further addition in assessment-order, the AO has doubly taxed the same item. Being so, we delete the addition made by AO. This ground is allowed.
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2024 (8) TMI 816
Correct head of income - characterization of receipts - interest income - income from other sources or business income - HELD THAT:- CIT(A) has rightly held that the interest income derived by the assessee company registered as Non-Banking Finance Company required to be treated as business income earned in the ordinary course its core business activity. The re-characterization of income from business income as declared by the assessee to income from other sources by the AO on the rationale that interest earned from investment in securities out of surplus fund falls under the head income from other sources is totally misplaced having regard to the fact that money lending and income from investment are the core business activities of the assessee company. It is thus far fetched to characterize the income derived from main business activity as Income From Other Sources . No error in the process of reasoning adopted by the CIT(A) and thus, decline to interfere therewith - Decided against revenue.
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2024 (8) TMI 815
Validity of rectification order u/s 154 as barred by limitation - violation of principle of natural justice and in contravention to the provisions of section 154(3) - HELD THAT:- No copy of the notice under Section 154 of the Act dated 01.12.2015 is available on record, neither there is any evidence for service of this notice on the assessee available in the file. The assessee had categorically denied the receipt of any notice under Section 154 dated 01.12.2015. Since, no such notice dated 01.12.2015 nor any acknowledgement for service of this notice is found available on the case records, the contention of the assessee is found to be correct. Since, we do not find any evidence of allowing any opportunity to the assessee before passing order under Section 154 of the Act, the order is found to be in contravention to the provisions of the Act and against the principle of natural justice. Period of limitation - The Revenue was required to explain this inordinate time gap in the service of order under Section 154 of the Act, but no convincing explanation has been brought on record. It is found from the case record that the order under Section 143(3) of the Act dated 05.06.2014 was served on the assessee on 06.03.2014, the evidence for which is available on record. When the earlier order was served so promptly on the assessee, the Revenue has failed to explain as to why the order under Section 154 of the Act dated 19.03.2018 was served on the assessee after such a long gap of 3 months. In view of these facts as well as the date of order as appearing in ITD data base, we are of the considered opinion that the order u/s 154 was not actually passed on 19.03.2018 as we do not find any evidence of passing of this order on the case records. Therefore, we find considerable force in the contention of the assessee that the order was barred by limitation as it was not passed within the permissible time limit of four years. we are of the considered opinion that the findings of the Ld. CIT(A) to uphold the order under Section 154 of the Act dated 19.03.2018 cannot be held as correct. The AO s order was passed in violation of principle of natural justice and in contravention to the provisions of section 154(3) of the Act and was also not passed on the date as appearing in the order. Date of order 01.06.2018 as appearing in ITD database unequivocally establishes that the order was barred by limitation. Therefore, the order u/s 154 passed by the AO, is cancelled. Assessee appeal allowed.
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2024 (8) TMI 814
Addition u/s 68 - unexplained money - initial discharge on onus - source of cash was justified by the assessee stating that it was received from the relatives - AO doubted the genuineness of loan and creditworthiness of the parties for reason that the parties were not filing the returns of income and there was meagre balance in their bank accounts - HELD THAT:- We note that the AO did conduct inquiries before rejecting the primary documentary evidence provided by the assessee. AO in the present case without making an inquiry or bringing any contrary material held that the assessee has deposited own unexplained cash in her bank account. The Hon ble Supreme Court in the case of CIT vs. P. Mohanakala [ 2007 (5) TMI 192 - SUPREME COURT] while dealing with scope of provision of the section 68 held that the opinion of the AO that the explanation furnished by the assessee as not satisfactory is required to be based on proper appreciation of material and other attending circumstances available on record. The opinion of the Assessing Officer is required to be formed objectively with reference to the material available on record. Application of mind is the sine qua non for forming the opinion . Once the assessee submits primary evidence regarding source of cash, the onus shifts on the AO to consider the material provided and make independent inquiry to find out genuineness of the evidence or bring material contrary to the facts explained by the assessee. AO cannot reject the primary evidence furnished by the assessee without appreciating the facts available on record or without bringing contrary material to from the belief that primary documents or explanation furnished by the assessee are not satisfactory. In the present case the assessee has provided all the necessary documentary evidence justifying the source of cash deposited in the bank. However, the AO merely based on surmises and conjecture held that the assessee has routed own unaccounted cash in the guise of unsecured loan which is not justified. Therefore, direct the AO to delete the addition made by him. Hence the ground of appeal filed by the assessee is hereby allowed.
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2024 (8) TMI 813
Reopening of assessment - Unexplained deposit of cash - HELD THAT:- As the part of the fact of the business is accepted by the Revenue, there is no reason that why the amount of cash deposited could not be accepted as business income of the assessee when ₹ 14 lacs is accepted as business income. It is not disputed that this is the first year of the business of the assessee. It is not the fact that assessee has deposited ₹ 27,75,833/- in his bank account and it remain as balance in the bank account. Therefore, no reason to not to accept that the amount of cash deposit is also not from the business of the assessee. This is also for the reason that there is no evidence of purchase and sales with respect to the turnover. Accordingly, we find that the learned lower authorities are not correct in not accepting that the amount of cash deposited is out of the retail trading of Jeans. Determination of profit to be taxed in the hands of the assessee - We find that assessee himself has offered to be taxed at the rate of 8.65%. Therefore, we direct AO to tax the income of the assessee at the rate of 8.65% of the amount of cash deposited which amounts to ₹ 2,40,110/-. The addition to that extent is confirmed and balance addition required to be deleted. Accordingly, the orders of the learned lower authorities are reversed to that extent. Assessee appeal partly allowed.
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2024 (8) TMI 812
Disallowance of claim of F O loss - AO received information that certain stock brokers were manipulating F O transactions in the stock market in order to generate bogus losses and gains - case of the Ld CIT(A) was that the loss of the assessee was generated through alleged client code modification - HELD THAT:- Hon ble Bombay High Court has held in the case of Coronation Agro Industries Ltd [ 2017 (1) TMI 904 - BOMBAY HIGH COURT] that the client code modification done by the assessee s broker cannot be a ground to believe that there had been any escapement of income. CIT(A) has also confirmed the disallowance primarily on the basis of report of the investigation wing. Since the transactions are supported by proper documents and since they cannot be disbelieved based on the generalized report of the investigation wing, we are of the view that the disallowance confirmed by the CIT(A) was not justified. Accordingly, we set aside the order passed by CIT(A) on this issue and direct the AO to delete the disallowance of F O loss made by the AO. Assessee appeal allowed.
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2024 (8) TMI 811
Exparte order passed by CIT(A) - CIT(A) non admitting the appeal on the ground that the assessee had not satisfied the condition of payment of advance tax as specified u/s 249(4)(b) - contention of the assessee that he was suffering from Heart problem got hospitalized due to heart attack was undergone angioplasty due to which could not appear on the dates of hearing provided by the AO - HELD THAT:- We find that the appeal of the assessee was dismissed in a summery manner without admitting the same for adjudication on merits of the case. It was the observation of LD CIT(A)/NFAC that the assessee was required to deposit advance tax in the light of section 249(4)(b) of the IT Act when the assessee was issued show cause to explain this point he did not chose to file any application to exempt him from payment of advance tax in the light of the fact that no advance tax is payable by him, instead a letter dated 18-08-2021 was filed mentioning that return of income is not filed as there was no taxable income. In the light of decisions passed by Co-ordinate Bench of the Tribunal in the case of Dilip Hiralal Chaudhari [ 2024 (6) TMI 273 - ITAT PUNE] and in the case of Vishnusharan Chandravanshi [ 2024 (6) TMI 238 - ITAT RAIPUR] and case of Govidappa Setty [ 1997 (6) TMI 8 - KARNATAKA HIG H COURT] as well as considering the totality of the facts of the case, we deem it appropriate to set-aside the order passed by LD CIT(A)/NFAC with a direction to admit the appeal of the assessee for adjudication of the appeal on merits of the case after providing reasonable opportunity of hearing to the assessee. Appeal filed by the assessee is partly allowed for statistical purposes.
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2024 (8) TMI 810
Accrual of income in India - Training and Consultancy Fees FIS - Make available Clause - assessee claimed to have offer consultancy services pertaining to organizational strategy, assessment cessation, talent acquisition, leadership professional development, evaluation of Rewards benefits like ESOPs and compensation, payment structure - AO held that the amount under the purview of FIS under Article 12 of India-USA DTAA - HELD THAT:- Mere rendering of services is not roped into FIS unless the person utilizing the services is able to make use of the technical knowledge, etc., by himself in his business or for his own benefit and without recourse to the performer of the services in future. The technical knowledge, experience, skill, etc. must remain with the person utilizing the services even after the rendering of the services has come to an end. Thus, the consideration for technical services can be taxed as FIS under the India- USA DTAA) only when the person acquiring the service is able to apply the technology on its own i.e. the recipient acquires a means to an end. This means that the recipient in this situation is able to reproduce and make use of the technical knowledge, etc. by itself in the business or for their own benefit and without recourse to the performer of the services, in future. Make available is akin to the concept of transfer and involves the transfer of technical knowledge, experience, skill, knowhow, or processes to the recipient by the service provider so that the recipient can apply the same on his own. Merely because the rendering of consulting service requires any expertise by the person providing the service would not per se mean that technology has been made available to the service recipient. In the instant case, the assessee has received payment for rendition of consultancy service in the field of organizational strategy, talent, reward and benefits etc. While rendering of such services, the assessee does not transmit any knowledge, skill or technical know-how in a manner that clients/customers are able to perform the aforesaid functions in future on its own without recourse to the service providers and hence, the element of make available in absent in such services. The same is clearly evident from the fact that such services are rendered on continuous basis from preceding years. In the present case, assessee is merely providing consulting services such as organizational strategy, talent strategy, consulting in relation to rewards and benefits and related leadership and development consulting services for which clients / service recipients need to come back to assessee, as and when they have such requirement and service recipients do not get equipped in providing such services. We find that the assessee has provided services to Deloitte, Flipkart and gone through the work order and the scope of service, details of project team and cost of services. On going through the entire details, we find no technical knowledge has been made available to the client. Similarly, the review of ESOPs is a continuous process taking into consideration various parameters. Even in that, it cannot be said that the assessee Korn Ferry has made the clients enriched by imparting or passing permanently any technical inputs. From the terms of agreements and also from the conduct of the party, it cannot be said that the make available requirement has been satisfied. Hence, we hold that the services rendered were not in nature of FIS under Article 12(4)(b) of the India-USA DTAA. Reimbursements on account of General Management Charges - As submitted that the assessee received from Future step Recruitment Services Pvt. Ltd. and from Hay Consultant India Pvt. Ltd. which are the only one subsidiary of the assessee - HELD THAT:- We find that the assessee procures services from third parties and relevant costs was passed on to by the assessee to the affiliates benefiting from such services. The assessee paid to the sellers and in turn got the money reimbursed from their associates. Hence, the same cannot be taxed. Even otherwise also, it would not partake the character of fee for inclusive services (FIS) as no knowledge or know-how was made available to the associates. The appeal of the assessee on this ground is allowed.
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2024 (8) TMI 809
TP Adjustment - Comparable selection - HELD THAT:-Unfortunately, the assessee has sought inclusion of few companies in the TP Study Report, however, for the reasons best known to the TPO, it was stated that these companies were not meeting the search matrix and accordingly, they were rejected by the TPO. Since the assessee has shown us that these companies are appearing in search matrix, therefore, it would be in the interests of justice the issue of inclusion of these companies are remanded back to the file of TPO with a direction to examine whether these companies are functionally comparable with the assessee company or not after applying the applicable filters. If these companies were functionally comparable, then the TPO is directed to include these companies for the purpose of computing the ALP. Thus, these grounds are allowed for statistical purposes. Erroneous comparison made by the TPO and DRP, who compared the Appellant companies with companies having high turnover - Tribunal has continuously been following the turnover of the filter of ten times x and 1/10th of the turnover of the assessee on both the sides. We deem it appropriate to remand back this issue to the file of AO / TPO with a direction to apply ten times filter lower and upper on both the sides. The companies which are having turnover of more than 10 times are required to be excluded from the list of comparable and similarly, the companies whose turnover are less than 1/10th of the turnover of the assessee are also required to be excluded from the list of comparable. TPO is directed to exclude the comparable in the light of the above said directions. Thus, this ground is allowed for statistical purposes. Exclusion of Infobeans Technologies Limited - It is clear that this company was into software development services and cannot be said to be a KPO for any purposes. When the TNMM method is applied to benchmark the transaction, then the slight / little variation in the profile of the comparable company are required to be permitted for applying TNMM method, otherwise, the other methods as available are required to apply if the transaction entered by the assessee with its AE matches with the profile of the comparable company. Therefore, we do not find any error in the order passed by the lower authorities. Accordingly, the ground raised by the assessee is rejected. With respect to the other companies, the assessee has not raised any objection and it was submitted that these companies would be taken care being the subject matter of turnover filter. Hence, the ground no.4 of the assessee is dismissed subject to our finding with respect to turnover filter. Adjustments made in the case of delay in receipts of sale proceeds from AE - HELD THAT:- Admittedly, this Tribunal in the case of Satyam Ventures Engineering Services Vs. ACIT [ 2022 (6) TMI 1386 - ITAT HYDERABAD] , Zeta Interactive Systems India Private Limited [ 2022 (6) TMI 1383 - ITAT HYDERABAD] M/s. Apache Footware India Private Limited etc [ 2023 (4) TMI 521 - ITAT HYDERABAD] has decided the issue in favour of the Revenue by holding that the SBI bank rate of 6% with a credit period of 60 days is to be applied for determining the interest on delayed trade receivables. In the present case, says the assessee has agreed for application of has very deposited of 6% for benchmarking the interest on trade receivable, therefore we don t want to decide the issue and accordingly direct the AO /TPO to apply the SB rate of 6% to the transaction in dispute for with a credit of 60 days. In the light of the above the issue is decided in favour of the assessee and against the revenue.
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2024 (8) TMI 808
Exemption u/s 11 - assessee trust has created for a particular community, that is, Soni Nyat - Charitable activity u/s 2(15) - assessee has failed to file documentary evidences to satisfy about the genuineness of its activities to verify these activities that the same are in consonance with its objects - HELD THAT:- As provisions of section 13(1)(b) is applicable to the trusts created or established after the commencement of Income Tax Act, 1961. We note that assessee-trust, under consideration was in existence prior to commencement of the Income Tax Act, 1961. As per the plain language of section 13(1)(b) of the Income Tax Act 1961, which, states that in the case of a trust for charitable purpose or a charitable institution created or established after the commencement of this Act, any income thereof if the trust or institution is created or established for the benefit of any particular religious community or caste therefore, it is vivid that trust created prior to commencement of the Income Tax Act, 1961, the provisions of section 13(1)(b) would not be applicable to such trust, even if, such trust was established or created for the benefit of any particular religious community or caste. We find that assessee-trust, under consideration, was in existence since in 1937, that is, prior to the Income-Tax Act, 1961, came into being. That is, the trust under consideration was created in 1937, however, the Indian Income Tax Act 1961, was come into force in the year 1961. Therefore, the assessee-trust was in existence prior to the Indian Income Tax Act 1961, hence the provisions of section 13(1)(b) of the Income Tax Act, 1961, would not be applicable to the assessee-trust under consideration. Therefore, CIT (E) should not have denied the registration on this issue. Registration of the trust should not be denied on account of provisions of section 13(1) (b) as these provisions are not applicable to the assessee-trust, under consideration, as explained above. Therefore, we direct the CIT(E ) to grant the registration to the assessee-trust provided, the assessee-trust fulfilled other conditions, as mentioned in section 12AB and Rule 17A of the Income Tax Rules, 1962. For statistical purposes, the appeal of the assessee is treated to be allowed.
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2024 (8) TMI 807
Deduction u/s 80P(2)(a)(i) - interest earned from investment with cooperative societies from other banks - business income which is increased due to disallowance made u/s 40(a)(ia) - HELD THAT:- We find that the definition of member as per Maharashtra State Cooperative Societies Act includes nominal members also therefore the interest earned from nominal members also covered under business income which qualifies for deduction under section 80P(2)(a)(i). It is also observed that during the course of its business the assessee society has made deposits with other banks therefore the interest earned from such deposit also qualifies for deduction u/s 80P(2)(a)(i) being business income. Disallowance u/s 40A(ia) - Even if the disallowance u/s 40(a)(ia) is maintained it will simply increase the business income of the cooperative society which is already deductible u/s 80P(2)(a)(i) - As relying on case of Nashik Road Nagri Sahkari Patsanstha Limited .[ 2021 (12) TMI 1259 - ITAT PUNE] we are of the considered opinion that the appellant assessee is entitled for deduction u/s 80P(2)(a)(i) of the IT Act. Direct the assessing authority to allow deduction u/s 80P(2)(a)(i) of the IT Act in respect of interest income earned from members nominal members further directs to allow deduction u/s 80P(2)(a)(i) of the IT Act in respect of interest earned from investments/deposit made during the course of business in other cooperative society/banks. Disallowances, if any, made, shall increase the business profits of the assessee cooperative society. And the business profits so increased shall equally qualify for deduction u/s 80P(2)(a)(i) - we hold that the enhanced income on account of disallowances made u/s 40(a)(ia) by the AO should qualify for deduction u/s 80P(2)(a)(i) of the IT Act. We therefore also directs the AO to allow deduction u/s 80P(2)(a)(i) on the business income which is increased due to disallowance made u/s 40(a)(ia) of the IT Act. Thus, the grounds raised in the appeal filed by the assessee are allowed.
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2024 (8) TMI 806
Validity of assessment - Non service of the prescribed notice u/s 143(2) - Revenue department is claiming that notice has been served through affixture - whether a curable defect u/s 292BB - HELD THAT:- The notice u/s 143(2) is mandatory. Admittedly, the Revenue department failed to produce / prove the sending of the notice through ordinary post or through RPAD, etc. and also failed to bring on record any order passed for substituted service by affixing the notice and even otherwise the report of the Inspector on the basis of which the Revenue department is claiming that notice has been served through affixture. Service through affixture remained un-proved/un- substantiated, as no efforts were made to serve the notice u/s 143(2) of the Act through ordinary process and there is no specific order for substituted service by the AO and even otherwise the affixture as appears in report of Inspector (supra), is also not as per the procedure established by law. Hence we don t have hesitation to hold that in the instant case, in fact no service of notice 143(2) of the Act has been made and/or attributed. We also observe that Hon ble Apex Court in the case of CIT Vs Laxman Das Khandelwal [ 2019 (8) TMI 660 - SUPREME COURT] has clearly held that absence of service of notice, cannot be cured by invoking the provisions of section 292BB of the Act. We are also of the considered view, that the service of the prescribed notice such u/s 143(2) of the Act on the Assessee is a sine qua non or condition precedent for the validity of the assessment proceedings. If no notice is issued or if the notice issued is shown to be invalid, then proceedings initiated and carried out by the Assessing officer without a notice or in pursuance of invalid notice, would be void-ab-intio and shall vitiate the entire proceedings and invalidates the Assessment Order as well, hence the Assessment order being passed sans serving notice u/s 143(2) of the Act, is liable to be quashed - Decided in favour of assessee.
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2024 (8) TMI 805
Delay filling appeal before CIT(A) - Assessee has given the reason that the delay has been caused on account of he being outside India - assessment order was collected by his Brother in law on 3.1.2019 personally, thus caused delay -CIT(A) has rejected the request for condonation of delay mentioned in Form No.35 stating that the date of service of order is 3.1.2019 and the appeal was filed on 14.2.2019 in form No.35 - HELD THAT:- We find that the Ld. CIT(A) rejected it on technical grounds that the Assessee did not file any affidavit showing that assessment order was received by his Brother in law on 3.1.2019. Assessee was not in India till 5.2.2019. The appeal was filed on 14.2.2019. If we consider that Assessee was not in India till 5.2.2019 and appeal was filed on 14.2.2019, we find that the Assessee came to India only on 5.2.2019 that should be the date of receipt of order by the Assessee. Accordingly, as per Section 249(2)(b), the appeal is required to be filed within 30 days from the date of service of notice of demand relating to assessment. If the Assessee is not in India, we fail to understand that how he has received the order prior to that. CIT(A) has taken a pedantic approach in considering the fact and merely rejecting the cause shown by the Assessee as insufficient only for the reason that it is not supported by an affidavit. There is a sufficient cause in delay in filing of the appeal. In view of this we did not find that the Ld. CIT(A) is correct in not condoning the delay. Further, it could be seen that the notice to the Assessee by the assessing officer was also sent to the address that was not available with the Assessee during the course of assessment proceedings as the impugned property was already sold. Therefore, it is clear that the Assessee did not have any opportunity before the assessing officer. In view of the above fact, we restore the matter before the AO to decide the issue afresh by issuing notice at the address given in Form No.36. The notices may also be given to e-mail address mentioned in the form No.36. On receipt of such notices, the Assessee is directed to respond to the same by filing any submissions or contentions that he would like to raise. AO may decide the issue afresh.
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2024 (8) TMI 804
Addition u/s 68 - non considering submission made by the Assessee - Assessee as an individual has undoubtedly received Rs. 1.80 crores in HSBC account from one party in UAE - re-opening of the assessment was made and assessee has failed to produce documentary evidence with respect to the above loan to show identity and credit worthiness of the lender as well as genuineness of the loan to the satisfaction of the Ld. AO - AO also recorded statement of the Assessee u/s 131 in which Assessee admitted to have received the above sum but could not explain the ingredient under Section 68 HELD THAT:- Before us, the Assessee has submitted e-proceedings acknowledgement wherein the Assessee has submitted various submissions including written statement as well as several judicial pronouncements. CIT(A) passed the appellate order without considering any of the submissions made by the Assessee. As the appellate order was passed this written statement as well as the evidence and contentions raised by the Assessee submitted should have been considered by the Ld. CIT(A). Non consideration of submission made by the Assessee by the Ld. CIT(A) makes his order un-sustainable in law. Therefore we set aside the whole issue back to the Ld. CIT (A) to consider all the submissions made by the Assessee before him as well as granting further opportunities of hearing to the Assessee - direction to CIT(A) to consider the same and decide the issue on the legalities of re-opening of the assessment as well as the merits of the addition - Assessee appeal allowed as directed above for statistical purposes.
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2024 (8) TMI 803
Validity of order passed by the CIT(A) - denial of principles of natural justice in non- compliance of technical procedure and without affording an opportunity of being heard to the assessee - Addition u/s 56(2)(vii) - Submission of assessee is that the assessee is deprived off to advance the submissions before the ld. CIT(A) to contest the case and thus he may be provided one more opportunity to submit his arguments/ submissions to settle the issue in question before the CIT(A). HELD THAT:- The bench considered the submissions of assessee to submit his submissions / arguments as to the issue raised hereinabove but awards cost of Rs. 2,000/- and the same may be deposited in the Prime Minister Relief Fund and copy of the same shall be submitted to the CIT (A) for proof and thus the appeal of the assessee is restored to the file of the CIT(A) to decide it afresh by providing one more opportunity of hearing, however, the assessee will not seek any adjournment on frivolous ground and remain cooperative during the course of proceedings. Thus the appeal of the assessee is allowed for statistical purposes.
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2024 (8) TMI 802
Disallowance u/s 14A r.w.r. 8D - suo moto disallowance made by assessee - HELD THAT:- We hold that the AO had not recorded any objective satisfaction having regard to the accounts of the assessee as to why the suo moto disallowance made by the assessee is incorrect. Respectfully following the decision of HT Media Ltd. [ 2017 (8) TMI 962 - DELHI HIGH COURT ] we hold that the disallowance u/s 14A of the Act should be restricted only to Rs 2,00,000/- for the year under consideration. Disallowance made u/s 14A while computing the book profits u/s 115JB - The law is now very well settled by the decision of Vireet Investments P Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI ] wherein it was held that the computation mechanism provided in Rule 8D(2) of the Rules cannot be imputed in clause (f) of Explanation 1 to section 115JB(2) of the Act. However, the actual expenditure needs to be disallowed as per clause (f) of Explanation 1 to Section 115JB(2) - Hence we direct the ld. AO to disallow only a sum of Rs 2,00,000/-, being the actual expenditure suo moto disallowed by the assessee under normal provisions of the Act, to be considered for the purpose of computing book profits u/s 115JB. Nature of expenses - allowability of expenditure incurred on Paintings - Revenue or capital expenditure - HELD THAT:- We find that the assessee rents out office / commercial space and provides facility management services to its tenants. During the year under consideration, the assessee had earned service income. Owing to the nature of business, the assessee keeps on refurbishing the common areas frequently to attract the foreign visitors, employees of the multinational companies, which, in turn, attracts more clients and also gets higher return from the maintenance income as compared to the other buildings located in the same area. We are completely convinced with the aforesaid submissions of the assessee and hold that the cost of paintings are meant for aesthetic purpose and for having better environment and accordingly to be construed as expenditure wholly and exclusively incurred for the purpose of business of the assessee herein. Our view is further fortified by the decision of Wipro Ltd. [ 2013 (11) TMI 618 - KARNATAKA HIGH COURT ] which is directly on the impugned issue in favour of the assessee. Hence we have no hesitation in allowing the cost of paintings as a revenue expenditure. Disallowance on account of currency burnt in fire - contentions of the revenue that no income was offered in terms of section 36(2) of the Act with regard to currency burnt in fire - HELD THAT:- Before us, the assessee had filed additional evidences under Rule 29 of the Income Tax Appellate Tribunal Rules, 1963 in the form of record of cross-examinations during the civil suit proceedings initiated against the assessee by the scrap dealer and also evidencing the fact that the scrap dealer had given advance for removal of scrap. These additional evidences containing the records relating to civil suit filed by the scrap dealer seeking compensation for loss suffered by him due to fire at assessee s premises including record of cross examination held in the suit proceedings, were admittedly not placed before the lower authorities. As these evidences are very crucial for adjudication of the issue in dispute before us, we are inclined to admit those additional evidences and deem it fit and appropriate to restore this issue to the file of ld. AO for denovo adjudication in the light of these additional evidences. AR also submitted that the advance received from scrap dealer which was remaining on the liability side was written back to income by the assessee in Asst Year 2019-20 and offered to tax thereon. AO is also directed to verify this fact from the ITR of Asst Year 2019-20. If on verification of the evidences, the ld. AO is convinced that the said sum was indeed advance received from the scrap dealer and the same was burnt in fire, then the loss on account of currency burnt in fire which was written off would be allowable as a trading loss u/s 28 - AO need not disturb the income returned by the assessee for Asst Year 2019-20. If the ld. AO continues to disallow the loss on account of currency burnt in fire in the year under consideration, then correspondingly the amount written back to income in Asst Year 2019-20 should not be brought to tax and ld. AO would have to give effect in Asst Year 2019-20 accordingly, in order to avoid double taxation. Assessee ground allowed for statistical purposes.
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2024 (8) TMI 801
Nature of receipt - Non-compete fee received as revenue receipt liable to tax or not? - HELD THAT:- When compensation received for loss of agency is taxable as revenue receipt, however, receipts attributable to the negative covenants for not to carry on a business are capital receipts not liable to tax. There is no dispute that there is no allegation levelled by the AO/ CIT(A) that the receipts for non compete are attributable to any other source. On the contrary, the AO says that it is for future profit. It would be pertinent to mention here that transfer of compressor business was done pursuant to scheme of arrangement sanctioned by the Hon'ble Delhi High Court. The Hon'ble Delhi High Court had an occasion to consider a case of similar agreements, namely, Smt. Tara Sinha [ 2017 (8) TMI 731 - DELHI HIGH COURT] wherein the Hon'ble High Court followed the decision of the Hon'ble Supreme Court in the case of Guffic Chem Pvt Ltd [ 2011 (3) TMI 6 - SUPREME COURT] and also the decision in the case of Rohitasava Chand [ 2008 (3) TMI 16 - HIGH COURT OF DELHI] The amount received as non-compete fee is not taxable and the AO is directed to delete the same. Ground No. 1 is allowed. Addition on cancellation of own debentures - AO dismissed the contention of the assessee on the ground that it is not supported by any principle of accounting - HELD THAT:- We find that these debentures were issued for obtaining funds for capital outflow involving capital expenditure. A perusal of the offer letter for issue of debentures show the object of issue, project and repurchase of debentures. The Hon'ble High Court of Bombay in the case of Scindia Steam Navigation [ 1977 (11) TMI 6 - BOMBAY HIGH COURT] had an occasion to consider a similar issue and held that surplus on cancellation of debentures is not equivalent to profits earned out of the business. On a reverse transaction, the Hon'ble Delhi High Court in the case of Dalmia Dadri Cement [ 1980 (2) TMI 45 - DELHI HIGH COURT] has held that loss on cancellation of debentures is a capital loss. Disallowance being provision for premium on redemption of debenture - AO found that the assessee has not debited in its profit and loss account but claimed the same in the computation of income - HELD THAT:- We find that the decision in the case of Madras Industrial Investment Corporation [ 1997 (4) TMI 5 - SUPREME COURT] apply on the facts of the case in as much as in that case, it was held that the discount was expenditure allowable u/s 37 of the Act and it should be allowed as deduction proportionately for each year. The only difference is that, in the case in hand debentures having been issued at discount at the time of redemption, premium @ 5% of the face value has been paid. Respectfully following the decision of the Hon'ble Supreme Court [ 1997 (4) TMI 5 - SUPREME COURT] we direct the Assessing Officer to delete the impugned addition. Ground No. 3 is allowed. Disallowance of claim of deduction being payment made to another bidder for loss of business/investment opportunity - HELD THAT:- As is apparent from the contention of the assessee, payment of Rs. 1.95 crores is a consideration for acquisition of Kanpur Sugar Works. This is cost of acquisition towards capital assets of a going concern and cannot be taken to be on revenue account as it is not the business of the assessee to take over and sell an undertaking as a going concern. Since the assessee itself is in the sugar business, cost of acquisition of a going concern for acquiring extra capacity is a capital expenditure and cannot be allowed as revenue expenditure. We do not find any error in the findings of the ld. CIT(A). Ground No. 4 is dismissed. Capital gain/loss on transfer of compressor business and hard metal business - benefit of indexation on the cost of improvement - HELD THAT:- In the notes, the valuer have mentioned that since the accounts of the assessee close on 30th September, therefore, the audited figures are not available as on 31st March till the accounting year is changed. The cost of improvement means the actual capital expenditure incurred by the assessee on the assets. We do not find basis in the aforementioned valuation being actual capital expenditure incurred by the assessee on improvement of the capital asset. Since the assessee has not been able to give any specific additions carried out to this unit of compressor division, we do not find much merit on cost of improvement adopted by the assessee. Considering the net asset value as on 31.03.1996, we are of the considered view that the cost of improvement at Rs. 185.37 lakhs taken by the AO is correct - AO ought to have given benefit of indexation on this cost of improvement. Therefore, to this extent, we direct the AO to recompute the capital gain after giving benefit of indexation on cost of improvement of Rs. 185.37 lakhs. Coming to the hard metal business, we find that the hard metal business was acquired by the assessee in pursuance to a scheme of amalgamation approved by BIFR. Therefore, cost to the previous owner shall become cost of the assessee on acquisition as per relevant provisions of the Act being section 49 r.w.s 47 of the Act as the transfer was under a scheme of amalgamation. Therefore, cost of acquisition to the assessee shall be cost to the previous owner. Since no opportunity was given to the assessee to furnish the cost of acquisition to the previous owner, therefore, we direct the AO to give reasonable opportunity to the assessee to furnish details of cost to the previous owner. The assessee is also directed to furnish the said cost for determination of capital gain/loss afresh. In light of the above, Ground No. 5 is allowed for statistical purposes. Additional ground of appeal - disallowance of capital loss on account of surrender of land to Delhi Development Authority [DDA] - HELD THAT:- The petition was heard by the Hon'ble Supreme Court who ordered that after leaving the part of the land with the owner for developing the same in accordance with the permissible land use under the Master Plan, the remaining land should be surrendered to the DDA for developing the same to meet the community needs. Accordingly, as per the order, 68% of the land was surrendered to the DDA and 32% was left with the owner. The assessee has claimed capital loss on such surrender in A.Y 1997-98 and also claimed in A.Ys 2001-02 and 2004-05. Since no such claim was made either in the return of income or during the assessment proceedings, this claim by way of additional ground cannot be entertained as it requires verification of factual matrix and no question of law is involved. Therefore, we decline to entertain this ground in light of the ratio laid in the case of NTPC[ 1996 (12) TMI 7 - SUPREME COURT]
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Customs
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2024 (8) TMI 800
Levy of penalties u/s 114 and u/s 114AA of CA - overvaluation of goods for duty drawback scheme - HELD THAT:- It is found that all the present three appellants are neither the exporter of the goods not the CHA. The entire case of over valuation stands attributed to exporter and CHA. As far as the allegation of fraudulent claim of duty drawback by over valuing the goods, the beneficiaries are the exporter i.e. M/s. Haresh Fashion. All the three appellants have no locus- standi to either claim the drawback or receive the drawback. As regard the allegation that Shri Pratik Bhansali and Zayd Chakiwala admitted that they were supposed to get 40% and 60% of drawback does not appeared to be correct for the reason that the drawback if at all is received, it is by the exporter of the goods i.e. M/s. Haresh Fashion in the present case. Moreover, except statements which too not relatable, there is no documentary evidence to show said kickback of 40% to 60% drawback. It is found that Shri Pratik Bhansali has clearly denied the allegation in his first statement, thereafter, there was no need to again call him but he was repeatedly summoned and in the subsequent statement he stated that he was supposed to get 40% of the duty draw back. When there are two contradictory statements by one person, those statements cannot be relied upon. Moreover, when the appellant right from their reply to show cause notice denied the allegation, the adjudicating authority was supposed to cross-examine the witnesses, however, no cross-examination has been conducted. As regard the allegation of sharing 40% or 60% drawback by Shri Pratik Bhansali and Shri Zayd Chakkiwala , no documentary evidence was brought on record for any past incident that they have received any such sharing of the drawback, therefore, the penalties under Section 114(iii) and 114 AA was wrongly imposed. As regard Kaustubh Parikh, he is mere an employee of CHA, therefore, he has performed his duty on the instructions of his senior and it is also a proven fact that he has not been benefited by attempt to claim excess drawback by the exporter. The CHA has already been penalized. In such case, the penalty on the employee cannot be imposed on the charge of wrong availment of drawback by the exporter. Therefore, all the three appellants in the present case are not liable for any penalty. The penalties set aside - appeal allowed.
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2024 (8) TMI 799
Forged DEPB licenses and Release Advises - whether DEPB licenses based on which TRAs issued by Bombay Customs House, against which appellant imported goods at Kandla port availing duty exemption under Notification No. 34/97-Cus. dated 07.04.1997 as amended, are forged and hence void-ab-initio as held by the Commissioner? HELD THAT:- It is noticed that based on letter dated 25.08.2001 of Commissioner of Customs, Jawahar Custom House, Sheva, a show cause notice was issued by the Deputy Commissioner, Kandla which was then by corrigendum dated 30.09.2002 was made answerable to Commissioner of Customs, Custom House, Kandla. Upon perusal of the said letter dated 25.08.2001 of the Commissioner of Customs, Sheva it is noticed that the same doubts the authenticity of the licenses shown in the register of the custom house. It states that the investigation with reference to the above mentioned DEPBs and TRAs have been taken up by Air Cargo Complex, Mumbai and Bombay Custom House and in the meanwhile to safeguard revenue interest immediate action to identify clearance and to demand duty may be taken. It follows from the record that absolutely no investigation was carried out thereafter to establish the alleged forged nature of the said DEPB licenses. Clearly, show cause notice issued solely based on said letter dated 25.08.2001 lacks its very foundation. It is observed that learned Commissioner acting as adjudicating authority, carried out inquiry with the DGFT office after more than 10 years of the issuance of show cause notice and relied upon the said letter to conclude that the DEPB licenses are forged. Upon perusal of the said letter dated 6.11.2012, it does not categorically state the Licenses in question are forged, further it does not rule out possibility of issuance of same series of numbers to licenses of DEPB category by the issuing authority - Reliance is placed upon the case of COMMISSIONER OF CENTRAL EXCISE, DELHI-III VERSUS CARRIER AIRCON LTD. [ 2005 (5) TMI 69 - SUPREME COURT] in which it has been held that it is not permissible for the Commissioner in review to introduce new material and travel beyond record of original proceedings. Since the alleged forged nature of DEPB licenses is not proved beyond doubt, impugned order denying exemption granted to the appellants is liable to be set aside. Consequently, duty confirmed, and penalty imposed by the impugned order are also liable to be set aside. The impugned orders are set aside - Appeals are allowed.
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Securities / SEBI
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2024 (8) TMI 798
Offences by companies - liability of directors/person responsible - resignation of the present petitioners - Criminal Complaint pending qua the petitioners - HELD THAT:- As petitioners has placed on record the certified copy of Form-32, which had been placed before the learned Trial Court by SEBI itself. The Form-32, as placed on record, clearly reflects that the petitioners had resigned on 23.02.1998, which was much before the cause of action alleged to have arisen in the present complaint. There is no other record. Respondent no. 2 does not dispute the authenticity of the said document as the same has been filed by them. The contention of the learned counsel for respondent no. 2 is that the letter dated 27.04.1998 reflecting the names of the petitioners as directors was issued much after the alleged date of resignation, again, is not tenable as the document-Form 32, has been recognised in law to be a public document to be regarded as evidence regarding whether a person is a director of a company or not. The said letter dated 27.04.1998 cannot override Form-32. In the present case, Form-32, has been placed by respondent no. 2 itself before the learned Trial Court. In view of the above, the present petition is allowed. The Criminal Complaint pending qua the petitioners is hereby quashed.
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2024 (8) TMI 797
Violation of securities laws - unregistered investment advisory - activities of rendering investment advisory services or any other services had been carried out without obtaining the mandatory registration from the SEBI, as statutorily required - HELD THAT:- Noticee no. 1 has admitted providing investment advisory services to at least 290 unique investors during the period March 11, 2020 to August 29, 2023 and through these activities of providing investor advisory for which no registration was obtained from SEBI, the Noticee no. 1 has earned more than INR 12 Crore as fee from the clients. As the prima facie violation on the part of the Noticee no. 1 has been established, it is to be seen as to who all are the natural persons, who are to be held liable in terms of section 27 of the SEBI Act. The activities of providing investors advisory or other activities for which registration is essential, have not stopped and are on-going. It has also noticed that the Noticee no. 4, Mr. Rahul Ananta Gosavi, who was employed with the Noticee no. 1 as Executive Assistant to CMD (since October, 2015) has become its Director w.e.f September 22, 2023. Therefore, the above two persons i.e. Noticees nos. 4 and 5 are also alleged to be liable for the acts and omissions on part of the Noticee no. 1, and further making them liable for the directions to be issued which need to be complied with by the Noticee no.1. There is nothing on record to indicate that subsequent to the resignation of Noticees nos. 2 and 3, the alleged activities of providing investment advisory has stopped, as agreements entered into by the Noticee no. 1 are long duration agreements. The prima facie observations/findings contained in this Order are made on the basis of the material available on record. In light of the alleged violations of the provisions of the SEBI Act, 1992, IA Regulations and PFUTP Regulations by the Noticees, this Order shall be treated as a Show Cause Notice under sub-section (1) of section 11, clause (d) of sub-section (4) of section 11, sub-section (4A) of section 11, sub-section (1) of section 11B, and sub-section (2) of section 11B, section 11D of SEBI Act 1992, read with clause (d) of sub-regulation (1) of regulation 11 of PFUTP Regulations, read with SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 2005, calling upon Noticees to show cause as to why following directions shall not be passed against them: a) Direction to disgorge an amount equivalent to the total gains made on account of alleged unregistered investment advisory along with interest; b) Direction to restrain them from accessing the securities market and prohibiting them from buying, selling or otherwise dealing in securities for an appropriate period; c) Directions for imposition of penalty under sub-section (4A) of section 11 and sub-section (2) of section 11B read with section 15EB and section 15HB of the SEBI Act, 1992 for carrying out unregistered investment advisory activities; d) Directions for imposition of penalty under sub-section (4A) of section 11 and sub-section (2) of section 11B with section 15HA of the SEBI Act, 1992 for violation of provisions of PFUTP Regulations; and e) Directions for imposition of penalty under sub-section (4A) of section 11 and sub-section (2) of section 11B read with clause (a) of section 15A of the SEBI Act, 1992 for not providing email dump The Noticees may file their replies to SEBI within 21 days from the date of receipt of this Order and avail an opportunity of personal hearing in the matter, if they so desire. This Order is without prejudice to any other action that SEBI may initiate under the securities laws, as deemed appropriate, against the above mentioned persons/entities. This Order shall come into force with immediate effect and shall be in force till further Orders.
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2024 (8) TMI 796
Collective Investment Scheme ( CIS ) - Scheme / arrangement operated through the Growpital platform - whether the Entities have prima facie violated any provisions of SEBI Act , CIS Regulations and SEBI -PFUTP Regulations - HELD THAT:- Prima facie the instant scheme / arrangement offered / operated through the Growpital platform falls within the definition of CIS. The activities of Growpital, as brought out from the various materials described above, show that prima facie a CIS is being operated. However, no material is available on record to indicate that any of the Entities involved in the instant arrangement has formed a Collective Investment Management Company that has obtained a certificate under CIS Regulations. This prima facie leads to a conclusion that there is violation of Section 12(1B) of SEBI Act read with Regulation 3 of the CIS Regulations. Additionally, as brought out in the preceding paragraphs, over ₹132 crore has been mobilized through the Growpital platform in ZF Project 1 LLP alone. In fact, the website of Growpital had advertised that an amount in excess of ₹160 crore has been mobilized. The activity of illegal mobilization of funds by sponsoring or causing to be sponsored or carrying on any collective investment scheme by any person also amounts to a fraudulent practice in terms of Regulation 4(2)(t) of PFUTP Regulations. Considering that no prior registration was obtained in the instant matter, the Growpital platform is being used to illegally mobilize funds from the public, which amounts to a fraudulent practice in terms of Regulation 4 (2) (t) of PFUTP Regulations. The amount of money, prima facie, observed to have been mobilized in the Growpital escrow account of over ₹ 184 crore, indicates the magnitude of the prospective threat of investors getting lured to the unregistered activities being carried out by the Entities. In light of the same, in order to ensure that additional funds are not mobilized through the Growpital platform under its scheme / arrangement / plans and to safeguard the assets acquired from the funds of the investing public until full facts and materials are brought out and final decision is taken in the matter, pending completion of the detailed examination initiated by SEBI, there is a need to pass an ad-interim ex-parte order to protect the interests of investors at large. Order by way of this ad interim ex-parte order, the following directions - Growpital and the directors / designated partners are directed: i. To cease and desist from floating any CIS, directly or indirectly, and cease to solicit or undertake such activity determined as CIS, in any manner whatsoever, until further orders. ii. Not to collect any money from new partners / investors or any additional sum of money from existing partners / investors in existing schemes / plans, until further orders. iii. Not to divert any funds collected from partners / investors, kept in bank account(s), payment wallets and/or in their custody, until further orders. iv. Not to dispose of or alienate any assets, whether movable or immovable, or any interest or investment or charge on any of such assets including moneys lying in bank accounts belonging to the Entities, except with the prior permission of SEBI, until further orders. v. To provide a full inventory of all the assets held by them, whether movable or immovable, or any interest or investment or charge on any of such assets, including details of all bank accounts, demat accounts and mutual fund investments, immediately, but not later than 15 working days from the date of receipt of this order. vi. To immediately withdraw and remove all websites, advertisements, representations, literatures, brochures, materials, publications, documents, communications, etc. in relation to the unregistered CIS activities or any other unregistered activity in the securities market, until further orders. vii. Not to access the securities market and buy, sell or otherwise deal in securities in any manner whatsoever, directly or indirectly, until further orders. viii. To submit the details of partners / investors (contact number, address, date of enrolment) who have contributed to the ZF Project LLPs (now or in the past) through Growpital or any other platform and to submit details of contributions received from each such partner / investor immediately, but not later than 15 working days from the date of receipt of this order. If the aforementioned entities have any open positions in any exchange traded derivative contracts, as on the date of the order, they can close out / square off such open positions within 3 months from the date of order or at the expiry of such contracts, whichever is earlier. Further, the aforesaid entities are permitted to settle the pay-in and pay-out obligations in respect of transactions, if any, which have taken place before the close of trading on the date of this order. Cashfree Payments India Private Limited is directed not to accept any payments made through Growpital or on behalf of Growpital. Further, no funds shall be transferred to the escrow account of Farm Silo Tech LLP / Growpital until further orders. Banks, depositories and Registrar and Transfer Agents are directed to freeze the bank accounts, demat accounts belonging to the Entities and not to allow transfer or redemption of securities of the Entities named in paragraph 27.1. The Order shall be sent to all the Entities, Market Infrastructure Institutions, Banks and Registrar and Transfer Agents to ensure compliance with the directions.
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Insolvency & Bankruptcy
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2024 (8) TMI 795
Permission to withdraw application filed u/s 9 of the Insolvency and Bankruptcy Code, 2016 - Appellant challenging the order contends that the Adjudicating Authority committed error in not granting liberty to the Appellant to file a fresh Application - HELD THAT:- The present is a case where the Adjudicating Authority due to reasons recorded in the judgment has refused permission to grant leave to file a fresh Application under Section 9. More so, while in the IBC proceedings, it cannot be held as a matter of right that the Applicant is entitled to withdraw the Application filed under Section 9 at any stage and pray for liberty to file afresh. IBC is a process in which timeline has importance and from the facts of the present case, it is clear that an objection was raised by the Corporate Debtor and an IA was filed, making allegations against the Appellant, that the Appellant placed on record false evidence pertaining to Demand Notice - the Adjudicating Authority permitted the Appellant to file pursish for withdrawal. Thus, no error has been committed by the Adjudicating Authority in permitting withdrawal of the Application, while denying liberty to file fresh Application, once again - the imposition of cost of Rs.50,000/- was not necessary - appeal dismissed.
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2024 (8) TMI 794
Approval of Resolution Plan - lifting of attachment by Enforcement Directorate over the assets of the Corporate Debtor - Section 32A of the IBC - HELD THAT:- Through, Section 32-A, the legislature have authoritatively spoken of the terminal point whereafter the powers under the PMLA would not be exercisable. The events which trigger its application when reached would lead to erection of an impregnable wall, which cannot be breached by invocation of the provisions of the PMLA. The Adjudicating Authority has missed the clear pronouncement by the Delhi High Court in Rajiv Chakraborty [ 2022 (11) TMI 600 - DELHI HIGH COURT ] with regard to Section 32A. The Appellant has relied on judgment of the Bombay High Court in Shiv Charan [ 2024 (3) TMI 136 - BOMBAY HIGH COURT ], where the Bombay High Court has held that NCLT does not lack jurisdiction to use its judicial discretion to adjudicate upon the release of the attachment. The Hon ble Supreme Court had occasion to consider the challenge to Section 32-A in the Writ Petition filed in the Hon ble Supreme Court under Article 32 in the judgment of Manish Kumar vs. Union of India and Anr [ 2021 (1) TMI 802 - SUPREME COURT ]. In the above judgment challenge to Section 32-A was repelled and while repelling the challenge to Section 32-A, the Hon ble Supreme Court examined the legislative scheme of Section 32-A - Hon ble Supreme Court has clearly held that Section 32-A has been engrafted in the legislation, which is a legislative scheme and if legislature thought that immunity be granted to the Corporate Debtor or its property, it hardly furnishes a ground for this Court to interfere. In paragraph 326, it has been emphasized that the extinguishment of the criminal liability of the Corporate Debtor is apparently important to the new management to make a clean break with the past and start on a clean slate. Thus, the Adjudicating Authority erred in not extending the benefit of Section 32-A, subsection (2) to the Resolution Applicant, who was entitled to protection under Section 32A of the IBC. The SRA is entitled to relief of extension of benefit of protection of Section 32-A to lift the attachment by Enforcement Directorate over the assets of the Corporate Debtor - appeal allowed.
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FEMA
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2024 (8) TMI 793
Adjudicating Authority to proceed with the adjudication u/s 16(1) of FEMA during pendency of the appeal against an order passed u/s 37A(1) - Authorised Officer passed the seizer order and sent the same to the competent authority, who in turn rejected the order of the Authorised Officer and Appeal has been preferred by the respondents before the Tribunal, which is pending - HELD THAT:- Special provision under Section 37A is all about an interim seizer value equivalent situated within in India of such foreign exchange, foreign security or immovable property. In the event of seizer during the pendency of the adjudication proceedings, the procedures to be followed by the authority are enumerated under Sub Section (6) of Section 37A of FEMA. Therefore, the very purpose and object of inserting Section 37A is to seize value equivalent situated within India of such foreign exchange, foreign security or immovable property during pendency of the adjudication proceedings and such seizer proceedings initiated under Section 37A, undoubtedly cannot stand as a bar to proceed with the adjudication proceedings under Section 16 of the FEMA by the Adjudicating Authority. As noted under the definition, the functions of the Adjudication Authority, Authorised Officer and Competent Authority are distinguishable and each Authority is conferred with powers under the Act to carry out certain actions. Therefore, the contention on behalf of the appellants that the Authorised Officer is below the Competent Authority has no relevance as far as Section 37A of FEMA is concerned. In fine, we could arrive at an irresistible conclusion that a writ against a show cause notice is not entertainable. The adjudication proceedings have completed and the final order is about to be passed by the Adjudicating Authority. Regarding an interim seizer under Section 37A is concerned, it may not have any implication in respect of the final order to be passed by the Adjudicating Authority and it would be appropriate on his part to deal with the effect of seizer order passed by the Authorised Officer under Section 37A of FEMA, while passing final order under Section 16 of FEMA. The above position has been amply made clear in Sub Section (4) to Section 37A of the Act, wherein, it is contemplated that the Adjudicating Authority shall pass appropriate directions in the adjudication order with regard to further actions as regards to seizer made under Sub Section (1) to Section 37A and in this case, the Adjudicating Authority is directed to take note of said provision and take an appropriate decision with reference to the order passed by the Authorised Officer under Section 37A(1) of the FEMA.
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Service Tax
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2024 (8) TMI 792
Classification of service - Management, Maintenance, or Repair service - site formation and clearance service - supply of tangible goods services - Inclusion of free supply material in the gross value of construction service. Classification of service - HELD THAT:- It is found that as per chart given by the appellant it prima-facie appears that almost all the demands raised by the department are not sustainable. Even in the case of supply of tangible goods, though the invoices pertainto 16.05.2008, but ignoring the vital facts, the demand was confirmed. Inclusion of free supply material in the gross value of construction service - HELD THAT:- As regards the free supply of material supplied by the service recipient, the issue is covered by the Larger Bench of this Tribunal in the case of M/S BHAYANA BUILDERS (P) LTD. OTHERS VERSUS CST, DELHI OTHERS. [ 2013 (9) TMI 294 - CESTAT NEW DELHI-LB] which was upheld by the Hon ble Supreme Court in COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [ 2018 (2) TMI 1325 - SUPREME COURT] . All the other issues, such as repair of roads etc., are prima-facie covered by various notifications. There are no hesitation to state that entire order was passed is without application of mind and without appreciating all the facts and the legal authority for each and every service - the impugned order is set aside - Appeal is allowed by way of remand to the Adjudicating Authority.
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2024 (8) TMI 791
Non-payment of service tax - Business Support Service - Service tax liability on the appellant on endorsement services and participation in a reality show - principal and agent relationship. Non-payment of service tax - Business Support Service - remuneration received for a reality show - HELD THAT:- As far as the activity of the appellant in respect of playing in the IPL is concerned, the Tribunal has consistently held that the players showing Logos, Mascots, Insignia, Labels etc. of business houses as part of their attire are not promoting any business of the said companies. They are simply playing cricket and are wearing the attire as per the conditions described by the franchisers. Tribunal held the same in the case of SOURAV GANGULY VERSUS COMMISSIONER OF SERVICE TAX, KOLKATA (NOW COMMISSIONER OF CENTRAL GOODS SERVICE TAX CENTRAL EXCISE, KOLKATA SOUTH) [ 2020 (12) TMI 534 - CESTAT KOLKATA] and the same has been consistently followed by the Tribunal in PINAL ROHIT SHAH VERSUS C.C.E. S.T. -VADODARA-II [ 2023 (6) TMI 956 - CESTAT AHMEDABAD] and RAHUL DRAVID VERSUS COMMISSIONER OF SERVICE TAX [ 2012 (12) TMI 114 - CESTAT, BANGALORE] where it was held that 'In the identical agreements, in respect of other players engaged by different teams, in all those cased, this Tribunal relying on the High Court in the case of SOURAV GANGULY VERSUS UNION OF INDIA OTHERS [ 2016 (7) TMI 237 - CALCUTTA HIGH COURT ] held that arrangement between the owner Company and the cricket player is of employment hence, players are not directly involved in brand promotion of a brand owner. Therefore, the activity of the cricket player does not fall under the category of Business Auxiliary Services.' Revenue argues that there is no principal and agent relationship between the appellant and M/s Rhiti as there is no agreement between them; therefore, the service tax paid by M/s Rhiti cannot obviate liability of the appellant. We find that the argument is not acceptable for two reasons. One being that there is no requirement of a formal agreement between the appellant and M/s Rhiti; the way things are arranged in course of the business indicate the nature of the principal and agent; it is not the Department s case that M/s Rhiti were the go between M/s INX and the appellant; therefore, it cannot be said that there is no principal and agent relationship. The second reason being, assuming that there is no such relation, the appellant did not receive any remuneration from M/s INX and therefore, they are not liable to pay any service tax; therefore, the only logical conclusion is that the appellant acted through his agent, who on receipt of consideration from M/s INX has paid the requisite service tax. Understandably, on the same transaction, the appellants are not liable to pay service tax again. The appeal is allowed.
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2024 (8) TMI 790
Liability of service tax under Section 66E of Finance Act for tolerating an act - Notice Pay i.e. the amount recovered from an employee for quitting a job before the time period prescribed under an agreement/ job letter - HELD THAT:- The issue involved in the present case is no longer res-integra in view of the decision in C.S.T. -SERVICE TAX AHMEDABAD VERSUS INTAS PHARMACEUTICALS [ 2021 (6) TMI 906 - CESTAT AHMEDABAD] where it was held that the amount recovered from the employee for quitting the employment without serving during notice period the said amount is not liable to service tax. In the present case the impugned order is not sustainable - Appeal allowed.
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2024 (8) TMI 789
Levy of service tax - rent charges collected towards hiring of Earth Moving Equipment - transferring of right of possession and use of earth moving machinery - deemed sale or service - HELD THAT:- The appellant have given earth moving equipment on monthly rent basis to their lessee and the right to possession and use of earth moving equipment has been transferred to the lessee. Accordingly, the same is the deemed sale under Article 366 (29A)(d) of Constitution of India. The transaction is whether deemed sale or service is established on the basis of invoice raised by the appellant whereby the appellant have paid State VAT therefore, the transaction is clearly a deemed sale. As per the above definition of service in the post 01.07.2012, in the negative list regime with effect from 01.07.2012 it is clear that activity which constitute transfer, delivery or supply of any goods which is deemed sale within the meaning of Article 366 (29A)(d) of the Constitution of India, is excluded from the definition of service. In the facts of the present case, since the transaction is deemed sale and appellant have paid VAT, the same is clearly covered under sub-clause (ii) of clause (a) of Section 65B(44) which is excluded from the definition of service itself. The activity of the appellant does not fall under any taxable service. Thus, it is clear that transaction of renting of Earth Moving Equipment to various clients firstly, does not fall under supply of tangible goods and secondly, the service prior to 01.07.2012 and subsequent thereto it does not fall under the definition of input service as mentioned above. Therefore, the activity of renting of Earth Moving Equipment to various clients is not a taxable service. The impugned order is not sustainable, the same is set-aside - Appeal allowed.
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2024 (8) TMI 788
Levy of penalty u/s 78 of the Finance Act, 1994 - simultaneous penalty u/s 76 and 78 were proposed to be imposed - applicability of decision of Hon ble Supreme Court in case of Nizam Sugar Factory [ 2006 (4) TMI 127 - SUPREME COURT] - recurring SCN - HELD THAT:- In view of the above judgment of jurisdictional High Court in Raval Trading Company [ 2016 (2) TMI 172 - GUJARAT HIGH COURT] and Sai Consulting Engineering Pvt Ltd [ 2018 (5) TMI 1425 - GUJARAT HIGH COURT] once the penalty was imposed under Section 76 no simultaneous penalty can be imposed under both section. For this reason, penalty under section 78 is not imposable. It is further found that this show cause notice in the present case was issued as recurring in nature, therefore, the judgment of Hon ble Supreme Court in case of Nizam Sugar Factory is clearly applicable. Consequently, the ingredient such as fraud, collusion, willful mis-statement, contravention of any provision or rules with intent to evade payment of duty does involve in the present case. The demand u/s 73 (1) can be made only when there is no fraud, collusion, willful mis-statement, contravention of any provision or rules with intent to evade payment of duty, if these ingredients exist then the demand should be raised under proviso to Section 73 (1). For this reason also for demanding the service tax, proviso was not invoked. Therefore, different yardstick for imposing penalty under Section 78 cannot be adopted by the Revenue. The Learned Commissioner has rightly refrained from imposing penalty under Section 78. The respondent is not liable for penalty under Section 78, therefore, the order of the Learned Commissioner so far he refrained from imposing penalty under Section 78 of Finance Act, 1994 is correct and legal - the revenue s appeal is not maintainable. The Revenue s appeal is dismissed.
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2024 (8) TMI 787
CENVAT Credit - GTA Services - Credit on invoices of Authorized Service Stations for the services provided during the Warranty Period - wrongful availment of benefit of Notification No 19/2003-ST in respect of installation services provided for imported AC. Service Tax on GTA Services payable under Reverse Charge Mechanism through CENVAT Account - HELD THAT:- This issue is no longer res-intregra and has been decided in series of decisions referred to by the Appellant during the arguments. In case of COMMISSIONER CENTRAL EXCISE AND CUSTOMS VERSUS PANCHMAHAL STEEL LTD. [ 2014 (12) TMI 876 - GUJARAT HIGH COURT] , Hon ble Gujarat High Court while upholding thje decision of larger bench of tribunal observed ' A combined reading of these statutory provisions would, therefore, establish that though the assessee was liable to pay service tax on G.T.A. Service, it could have utilized Cenvat credit for the purpose of paying such duty.' - thus, there are no merits in the demand made. However as the appellant has already paid the amount in cash no refund shall be admissible to the appellant because the liability to pay the service tax has not been set aside. However the demand for interest of Rs 7,97,345/- made in respect of these amounts is set aside. Availed CENVAT Credit on invoices of Authorized Service Stations for the services provided during the Warranty Period - HELD THAT:- This issue is also no longer res-integra. In case of M/S ESCORTS CONSTRUCTION EQUIPMENT LTD. VERSUS CCE, DELHI-IV [ 2023 (12) TMI 601 - CESTAT CHANDIGARH] after taking note of previous decisions on the issue Chandigarh Bench has observed ' this Tribunal in various decisions relied upon by the appellant on identical issues has consistently held that the assessee is entitled to cenvat credit of service tax paid on Repair and Maintenance during the warranty period as the same fall within the ambit of Input Service as provided in Rule 2(l) of CCR, 2004.' - thus, CESTAT has constantly been taking view in respect of admissibility of CENVAT credit in on warranty services provided through third party authorized service centres. Thus there are no merits in this demand and set aside the same. Wrongly Availed the benefit of Notification No 19/2003-ST in respect of installation services provided for imported AC - HELD THAT:- In the case of indivisible contracts were the supply or transfer of property in goods was also involved along with the provision of service of erection, installation and commissioning no service tax could have been levied prior to 01.06.2007. As the service tax itself was not leviable in respect of these services provided by the appellant, then question of admissibility of abatement/ exemption under N/N. 19/2003-ST becomes irrelevant. Hence there are no merits in the demand made by disallowing the benefit of said notification. As all the demands are set aside on merits, the demand of interest and also the penalties imposed on appellant are set aside. Appeal allowed.
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2024 (8) TMI 786
Invocation of Extended period of limitation - suppression of facts or not - income of service provider shown in the Income Tax Return - HELD THAT:- The present case was initiated on the basis of the income tax documents, which were neither produced nor seized from the custody of the appellant but were in the realm of public documents, and the presumption is on the truthfulness of the documents. The reliance placed by the appellant on the decision in Vatsal Resources Pvt. Ltd. (supra) is not applicable, as in the said case, the documents were recovered from the office premises of another company, which not accepted as an admissible piece of evidence. Difference in the value, on the basis of ITR and the ST-3 Returns - mis-statement of facts - HELD THAT:- The Department has proceeded in the present case on the basis of the information received from the Income Tax Department relating to the income from the provision of services shown in the ITR as well as income on which TDS has been deducted and the gross amount of value of service shown in the ST-3 Returns was provided. The Tribunal in the case of VATSAL RESOURCES PVT LTD VERSUS C.C.E. S.T. -SURAT-I [ 2022 (7) TMI 718 - CESTAT AHMEDABAD] , following the earlier decisions in line, observed that by relying on the TDS/26-AS statements, the demand of service tax under the Service Tax Act cannot be made. There is no quarrel to the settled principle that amounts shown in the ITRs or Balance Sheets are not liable for service tax, however, here the conduct of the appellant cannot be ignored as he failed to provide the documents when asked for by the Department - Moreover, the plea taken by him for this discrepancy was only a bald reasoning without any supporting evidence. In the facts and circumstances of the present case, the impugned demand is confirmed. Since the differential tax liability upheld, the interest liability automatically accrues under Section 75 of the Act. The appellant having suppressed the correct taxable income from the department which was ascertained on the basis of the data received from the Income Tax Department. Consequently, the penalty imposed on the appellant is upheld. There are no reason to interfere with the impugned order - appeal dismissed.
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2024 (8) TMI 785
CENVAT Credit - capital goods or inputs - tower materials and pre-fabricated shelters (tower materials) falling under Chapter 73 of the First Schedule of the Tariff Act which materials were used in setting up of the tower for transmission - HELD THAT:- The decision of the Tribunal in M/S VODAFONE MOBILE SERVICES LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, JODHPUR (RAJ.) [ 2022 (10) TMI 581 - CESTAT NEW DELHI] holds that tower materials would qualify as inputs under rule 2(k) of the CENVAT Rules and they would also be capital goods and, therefore, credit could be taken. In view of the aforesaid decision of the Tribunal in Vodafone Mobile Services, the impugned order passed by the Commissioner (Appeals) deserves to be set aside and is set aside. Appeal allowed.
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2024 (8) TMI 784
Levy of service tax - fee receipt and job training - HELD THAT:- The appellant placed reliance upon the decision of the Delhi High Court in M/S INDIAN INSTITUTE OF AIRCRAFT ENGINEERING VERSUS UNION OF INDIA ORS [ 2013 (5) TMI 592 - DELHI HIGH COURT ] and the decision of the Tribunal in HINDUSTAN INSTITUTE OF AERONAUTICS VERSUS COMMR. OF C. EX., BHOPAL [ 2015 (2) TMI 140 - CESTAT NEW DELHI ] in the own case of the appellant where it was held that 'An educational qualification recognized by law will not cease to be recognized by law merely because for practicing in the field to which the qualification relates, a further examination held by a body regulating that field of practice is to be taken.' The Assistant Commissioner and the Commissioner (Appeals) were therefore, not justified in ignoring the order passed by the Tribunal in the own case of the appellant as also the order of the Delhi High Court in the case of the appellant. In view of the decision of the Delhi High Court in Indian Institute of Aircraft Engineering and the Tribunal in Hindustan Institute of Aeronautics it is not possible to sustain the order dated 11.01.2017 passed by the Commissioner (Appeals) - It is, accordingly, set aside and the appeal is allowed.
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Central Excise
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2024 (8) TMI 783
Recovery of Central Excise Duty - Job Work - re-packing activity - recovery sought on the grounds that the activity undertaken by the appellants amounted to manufacture and exemption under N/N. 50/2003 was not applicable to them as they did not fulfill the conditions therein - HELD THAT:- In the instant case, the appellants have filed a declaration on 20.02.2009 as required by the Department. It is found that thus the appellants have fulfilled the conditions of the notification making themselves eligible for availing the benefit thereof. Support found from the observation of Allahabad Bench of the Tribunal in the case of M/S. KRSNA URJA PROJECTS LTD., SHRI SHANTANU SANGHI, DIRECTOR VERSUS COMMISSIONER OF CENTRAL EXCISE, MEERUT-I [ 2017 (12) TMI 1076 - CESTAT ALLAHABAD] wherein it is held ' A liberal attitude, therefore, has to be taken in this regard, when the assessees otherwise are entitled to the benefit of exemption notification. It was also observed that exemption provisions have to be complied with strictly, but some latitude may be shown in case of some requirements which are directory in nature, the non-compliance of such requirements would not affect the substantive benefit of notification, granting exemption.' CESTAT, New Delhi in the case of M/S. GILLETE INDIA LTD. VERSUS CCE, CHANDIGARH [ 2011 (1) TMI 859 - CESTAT, DELHI] held that the declaration filed by the principal manufacturer should be treated as the declaration filed by the job-worker. Thus, as long as the appellants are eligible to avail the benefit of a notification, the same cannot be denied for procedural violations - as the appellants have given a declaration though belatedly, the same must be treated as a valid declaration in view of the Tribunal s order in the case of M/S VASANTHAM ENTERPRISES VERSUS COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH [ 2014 (12) TMI 953 - CESTAT NEW DELHI] . The impugned order is liable to be set aside - Appeal allowed.
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2024 (8) TMI 782
Invocation of extended period of limitation - Recovery of CENVAT Credit - recovery sought on the ground that the supplies were from manufacturers availing the benefit of N/N. 01/2010, which was not availed provided any exclusion under Rule 12 of Central Excise Rules, 2002 - HELD THAT:- It is found that the impugned Show Cause Notice has been issued invoking extended period; at the same time, the existence of the ingredients like mis-declaration, suppression, fraud etc. with intent to evade payment of duty is not established - the appellants had successfully placed on record the fact that the records of the appellant were being audited from time to time and that an endorsement to that effect has been made in the RG-1 Register. As submitted by the learned Consultant for the appellants, the Show Cause Notice refers to the audit of other units while being silent on the audit of the appellants themselves. Hon ble Supreme Court held in the case of COMMISSIONER OF CENTRAL EXCISE BANGALORE VERSUS M/S. PRAGATHI CONCRETE PRODUCTS (P) LTD. [ 2015 (8) TMI 1053 - SC ORDER] that: it is also found as a matter of fact, that the unit of the respondent was audited during this period several times and there were physical inspections by the Department as well. Therefore, there could not be any case of suppression. It is found that in the instant case, the appellant has been submitting the invoices along with the refund claims from time to time; it is not the case of the Department that there is endorsement on any of the invoices issued by the eight suppliers to the effect that they are availing exemption under Notification No.01/2010. Moreover, it is on record that for some period, the said Notification remains to be listed under the exclusions under Rule 12; the same was restored by issue of Notification No.02/2014 dated 20.01.2014. Therefore, there are reasons for the appellants to entertain a bona fide belief that they are entitled for CENVAT credit. Under the circumstances, no case has been made for invocation of extended period - the impugned Show Cause Notice is barred by limitation and as such the impugned order is liable to be set aside. Appeal allowed.
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2024 (8) TMI 781
Wrongful availment of Cenvat Credit of 4% Special Additional Duty of Excise (SAD) on the basis of supplementary invoice issued by the appellant s sister - Rule 9(b) of Cenvat Credit Rules, 2004 - reveue neutrality - HELD THAT:- As of now, it is a settled law that in respect of the stock transfer from one unit to the other unit of the same entity, since, the same is not considered as sale of goods but only a stock transfer, no SAD is payable by the transferor unit to the transferee unit. In the present case, same facts is involved that the appellant s sister unit has supplied the goods to the appellant without payment of SAD, but subsequently, the SAD was paid and supplementary invoice was issued. From the various judgments in M/S STI INDUSTRIES VERSUS CCE DAMAN VICE VERSA [ 2014 (12) TMI 1130 - CESTAT AHMEDABAD] and M/S MICRO INKS VERSUS CCE. ST. DAMAN [ 2014 (2) TMI 207 - CESTAT AHMEDABAD] , on the identical issue, it has been settled that in respect of transfer of goods from EOU to other unit of appellant no SAD payment is required. Since, the payment of SAD itself was not required to be made, there is no question of any suppression or willful misstatement, etc. involved in the transaction. Moreover, the transaction is of transfer from one unit to another unit of the same entity, therefore, this is a clear case of Revenue neutrality, for this reason also suppression of fact or willful misstatement, etc. cannot be alleged. Since, no suppression of fact, willful misstatement, etc. elements are involved in the present case, Rule 9 1(b) cannot be invoked. Accordingly, the appellant s availment of Cenvat Credit on supplementary invoice is absolutely legal and correct. The impugned order is set aside. Appeals are allowed.
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2024 (8) TMI 780
Extended period of limitation - CENVAT Credit - Penalties under Rule 26 of Central Excise Rules - Classification of goods - crystalis glass - polished marble slabs - to be classified under CETSH70169000 and CETSH 68022110 or under CETSH 25151220 and 25151290 respectively?. Extended period of limitation - HELD THAT:- It is apparent from the facts of preceding paras that the appellant has paid duty at his own volition and same has been declared in ER-1 return in the month of January 2008. The visiting officers were also informed about this very fact. In view of this fact, it is found that department was fully aware about the payment of differential amount of duty and therefore there are no reason for invoking extended time proviso for demanding duty under Section 11A of the Central Excise Act, 1944. In view of this the demand Central Excise duty is barred by period of limitation and therefore, the demand on this ground not sustainable. CENVAT Credit - HELD THAT:- It is matter of record that the Cenvat credit on CVD was availed by the appellant on the basis of valid import documents namely bills of entry. The availment of Cenvat credit on a later date then receipt of duty paid inputs in the factory premises is not a bar under the provisions of Cenvat Credit Rules, 2004. In this regard, reliance placed upon this Tribunal decision in the case of STEEL AUTHORITY OF INDIA LTD. VERSUS COMMISSIONER OF C. EX., RAIPUR [ 2001 (1) TMI 144 - CEGAT, NEW DELHI] where it was held that ' credit taken beyond six months period prior to 29-6-1995 was not to be reversed.' Penalties imposed on the partners and employees of the appellant under Rule 26 of Central Excise Rules, 2002 - HELD THAT:- It is matter of record that goods which have been manufactured and cleared by the appellant were duty paid though they have been classified wrongly under different Chapter heading however this being a matter of interpretation and further since the mistake has been corrected by them at the later stage by paying differential amount of duty, the very fact that the goods were cleared on payment of duty and on valid invoices therefore invoking penal provision under Rule 26 of Central Excise Rules, 2002 is legally not justifiable - the imposition of penalty on the partners and employees of the appellant is legally not sustainable and the same is set aside. The impugned order-in-original is legally not sustainable and is set aside - appeal allowed.
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2024 (8) TMI 779
Refund of erroneously paid duty - refund claimed on the basis of affidavit and certificate as allowed by Ld.Commissioner(Appeals) was inappropriate and not in accordance with law - HELD THAT:- It is noted from records that Revenue has nowhere disputed the fact of discharge of duty by the appellant on the strength of the revised invoice under which the goods were cleared. It is also borne out from records that the respondents had inadvertently discharged excise duty in the month of April 2012 having mistakenly issued invoice No.200000000000097 dated 12.04.2012 for clearance of the entire consignment pertaining to purchase order No.2900001399/109. As it has not been disputed that the respondent was not in a position to supply the entire consignment vide invoice dated 12.04.2012, a fresh invoice for part quantity was issued on 13.04.2012 and goods supplied with respect to the said purchase order. In the absence of any contrary claim/evidence to the effect of the respondent‟s version, the documentation were sufficient enough to establish the bonafides and uphold the refund claim filed by the respondent, duly establishing the claims of the respondent. This Tribunal in the case of M/S. PRICOL UNIT - I VERSUS COMMISSIONER OF GST CE, COIMBATORE [ 2021 (6) TMI 979 - CESTAT CHENNAI] had held the said procedure to be procedural and while allowing refund of duty in the said case, it had categorically asserted that the department was not empowered to retain duty which is not payable under the provisions of law. Once an invoice is cancelled, no duty can be demanded thereon and the onus thereafter, lies on the department to establish that goods were actually moved under the cover of the said invoice and invoice subsequently cancelled leading to loss of duty. There is not a shred of evidence to establish such a case in the present matter. There are no infirmity in the order of the Ld.Commissioner(Appeals) - appeal filed by the department is dismissed.
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2024 (8) TMI 773
Entitlement for exemption of sugar cess under N/N. 42/2001-CE (NT) dated 26.06.2001 for export of sugar - case of the department is that the goods under N/N. 42/2001 CE (NT) can be cleared for export under bond without payment of excise duty - HELD THAT:- The very same issue in the appellant s own case has been decided by this Tribunal in SHREE MAHUVA PRADESH SAHAKARI KHAND UDYOG MANDLI LTD VERSUS COMMISSIONER OF C.E. S.T. -SURAT [ 2024 (5) TMI 785 - CESTAT AHMEDABAD] , wherein it was held that ' Applying the ratio of these judgments in the present case also, the Sugar Cess Act, 1982 is nothing but the duty of excise. Accordingly, the same treatment to the sugar cess as to the excise duty should be given. Hence, under the facts of the present case in view of the judgment in the case of export of goods by virtue of Notification No. 42/2001- CE (NT) the appellant is not liable to pay sugar cess. Moreover, as per Notification issued vide Circular No. 10/93 CX.08 dated 01.09.1993 in case of export of sugar, the sugar cess is exempted.' Thus, the demand of sugar cess raised as per the impugned order is not sustainable. Hence, the impugned orders are set-aside and the appeals are allowed.
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CST, VAT & Sales Tax
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2024 (8) TMI 778
Challenge to impugned notice and Assessment Orders - input tax credit availed by the petitioner under Section 19 of the TNVAT Act - HELD THAT:- This Court is inclined set aside the impugned orders and remit the cases back to the respondent to pass separate common orders for each of the Assessment Years along with the Applications filed by the petitioner on 07.01.2023 under Section 84 of the TNVAT Act, 2006. To the extent the orders of the Appellate Commissioner for the Assessment Years 2006-2007, 2007-2008, 2008-2009 and 2014-2015 have been accepted and the demand may be dropped and to the extent the demands have been confirmed by the respondent, the demand may be confirmed for the petitioner to pursue the remedy before the Appellate Authority. Petition disposed off.
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2024 (8) TMI 777
Challenge to assessment order - wrongful availment of input tax credit - misuse of TIN number - HELD THAT:- Although the impugned order is a detailed order, it is noticed that the impugned order merely sets out the order passed by this Court on 13.12.2023, reply of the petitioner and has thereafter referred to transactions for the previous assessment years, namely 2011-12, 2012-13 and has referred to few dealers, who have allegedly availed input tax credit on the strength of the invoices generated from the petitioner's TIN number. As far as the subject assessment year 2014-15 is concerned, the details have not been furnished, although the impugned order states that the petitioner has not produced any documentary evidence for the orders already passed for assessment year 2014-15 with respect to the audit points. Hence, the order, dated 20.08.2019 which stood quashed by order in W.P(MD)No.29434 of 2023, dated 13.12.2023 was correct and in accordance with law. For the first time a reference is made to the sale made by the petitioner to one Tv.Malarvizhi Constructions. This ought to have been informed to the petitioner before confirming the demand vide impugned order, dated 14.05.2024. Thus, there is a violation of principles of natural justice. Hence, the impugned order, dated 14.05.2024 is quashed and the case is remitted back to the respondents to pass a fresh order on merits and in accordance with law. Petition disposed off by way of remand.
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2024 (8) TMI 776
Validity of assessment order - impugned order is passed without giving opportunity of hearing to the petitioner - violation of principles of natural justice - HELD THAT:- It is not in dispute that the impugned order is passed without giving opportunity of hearing to the petitioner and without considering the directions issued by the coordinate Bench of this Court in MALANI CONSTRUCTION COMPANY VERSUS STATE OF GUJARAT [ 2019 (9) TMI 171 - GUJARAT HIGH COURT] in case of the petitioner where it was held that ' The respondent No. 2 shall once again hear the writ applicant and take into consideration all the relevant materials earlier adduced by the writ applicant and also the materials that may be once again adduced at the time of rehearing of the matter.' On perusal of the impugned order also, it appears that no findings are recorded by the respondent No. 2 in the impugned order for applying the provision of Section 2 (30) (c) of the Act though learned Assistant Government Pleader has tried to explain the same during the course of hearing as well as relying upon the averments made in the affidavit-in-reply. The show-cause notice for penalty also appears to be a cyclostyled show-cause notice. Therefore, without entering into the merits of the matter, the impugned order dated 14th November, 2019 and the notice for penalty dated 14th November, 2019 are hereby quashed and set aside and the matter is remanded back to respondent No. 2, with a direction to give opportunity of hearing to the petitioner and pass fresh de novo order in accordance with law after complying with the directions issued by this Court in MALANI CONSTRUCTION COMPANY VERSUS STATE OF GUJARAT by applying mind to the method of accounting and also to take into consideration the decision of the Apex Court in the case of GANNON DUNKERLEY CO. VERSUS STATE OF RAJASTHAN LARSEN TOUBRO LTD. UNION OF INDIA [ 1992 (11) TMI 254 - SUPREME COURT] by giving detail reasons for coming to the conclusion if the respondent No. 2 is of the view that the method adopted was in accordance with Section 2 (30) (c) of the VAT Act. Petition disposed off by way of remand.
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Indian Laws
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2024 (8) TMI 775
Rejection of bail under IPC and UAPA - allegation is that, the first floor premises are being used for objectional activities of an organisation called Popular Front of India (PFI) - reasonable grounds for believing that the accusations against the appellant are prima facie true, or not - Section 43D (5) of the UAPA - HELD THAT:- There is nothing in the charge sheet which shows that the appellant has taken part in or has committed unlawful activities as defined in the UAPA. There is no specific material to show that the appellant advocated, abetted, or incited commission of any unlawful activities. A terrorist act is defined in Section 15(1). Assuming that the co-accused were indulging in terrorist acts or were making any act preparatory to the commission of terrorist acts, there is absolutely no material on record to show that there was any conspiracy to commit any terrorist act to which the appellant was a party. There is no material produced on record to show that the appellant advocated, abetted, advised, or incited the commission of terrorist acts or any preparatory activity. Taking the charge sheet as correct, it is not possible to record a prima facie finding that the appellant knowingly facilitated the commission or preparation of terrorist acts by letting out the first floor premises. Again, there is no allegation in the charge sheet against the appellant that he organised any camps to impart training in terrorism. On plain reading of the charge sheet, it is not possible to record a conclusion that there are reasonable grounds for believing that the accusation against the appellant of commission of offences punishable under the UAPA is prima facie true - it is impossible to record a prima facie finding that there were reasonable grounds for believing that the accusation against the appellant of commission of offences under the UAPA was prima facie true. No antecedents of the appellant have been brought on record. There was no reason to reject the bail application filed by the appellant - appellant is directed to be enlarged on bail on the terms and conditions as may be fixed by the Special Court. For that purpose, the appellant shall be produced before the Special Court within a maximum of 7 days from today - Appeal allowed.
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2024 (8) TMI 774
Dishonour of cheque - legally enforceable liability - rebuttable presumption - burden on the respondent to rebut the presumption by introducing evidence was initially not done for no justifiable/valid reason - plea for adducing additional evidence under Section 391 of the Code, the presumption has not been dislodged as required under law, and still the accused has been acquitted. HELD THAT:- This Court in DASHRATH RUPSINGH RATHOD VERSUS STATE OF MAHARASHTRA ANOTHER [ 2014 (8) TMI 417 - SUPREME COURT ] held that An offence under Section 138 of the Negotiable Instruments Act, 1881 is committed no sooner a cheque drawn by the accused on an account being maintained by him in a bank for discharge of debt/liability is returned unpaid for insufficiency of funds or for the reason that the amount exceeds the arrangement made with the bank. The fact that the cheque was issued as a consequence of failure to repay the loan taken by the respondent from the appellant to which the interest was added would more or less settle the issue. However, in the present case, a discrepancy apropos the rate of interest, whether it be 1.8%, 2.4% or 3% per month was not sufficient to disbelieve the claim of the appellant. The reasoning given by the Appellate Court, having taken note of the Tamil Nadu Act, fails to appreciate that even going by what has been written on the pronote i.e., 1.8% per month would lead to the interest being 21.6% per annum, which also is above the cap of 12% per annum prescribed in the Tamil Nadu Act. Thus, if the parties amongst themselves, agreed to a rate which is not in conformity with the Tamil Nadu Act, it was for the respondent to raise an objection or move the appropriate forum for getting the same corrected/taken care of, so that the interest rate did not exceed 1% per month but having agreed to a rate of 1.8% per month, the subsequent amount of interest calculated @ 3% per month does not have much force for it was upon the respondent to challenge the rate of interest. The respondent also cannot be said to be a layman, and being a subscriber to a chitfund company, he is expected to be aware of the laws and also of what is beneficial for him. The Appellate Court s order as also the impugned judgment are set aside. The order of the learned Trial Court stands restored albeit with certain modifications. It is considered appropriate to direct the respondent to pay fine amounting to one and a half (1 ) times the amount mentioned in the cheque - Appeal allowed.
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