Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 20, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Seeking release of detained vehicle alongwith goods - expired E-way bill - Apparently, the proceedings have been initiated on the same date and concluded also on the same date. Though, learned counsel for the respondent has stated that the proceedings were expedited at the instance of the tax payer on the same date, but there is nothing to substantiate such contention. - Order set aside - the respondents are at liberty to take a fresh decision after due opportunity to the petitioner as provided under the Act. - HC
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Validity of Demand-cum- Show Cause Notice under Section 63 of the CGST/OGST Act - Clear proposition with reasons are found mentioned in the impugned SCN as to why the Proper Officer has sought to invoke the provisions of Section 63 of the CGST/OGST Act which essentially relates to the facts and circumstances of the case. Of course, the petitioner has the fullest opportunity to refute and rebut the same during the course of proceeding. - Having not found illegality, irrationality, procedural impropriety and proportionality in issue of Demand-cum-Show Cause Notice by the Proper Officer, this Court does not, therefore, deem it expedient to exercise its extraordinary jurisdiction under Article 226 of the Constitution of India - HC
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Search and seizure - Seeking mandamus for a direction to the respondents to refund of amount collected from his residence - the references to the amount in the course of the show cause notice would, in my considered view, justify the retention of the amount till proceedings for adjudication are complete. - HC
Income Tax
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Bogus donations - addition made as donation in question to the trust was not “genuine” - registration granted to those organisations / trusts u/s 35C were cancelled with retrospective effect - tribunal noted that there is nothing on record to show that the respondent/assessee connived with the scheme of arrangement between the concerns in bogus billing etc. and deleted the additions - We find the reasoning given by the tribunal to be just and proper and cannot be held to be perverse. - HC
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Black money - Undisclosed Foreign Assets - Beneficial Owner of the specified Undisclosed Assets - The Impugned Notice is very detailed and there are multiple references to different transactions between and amongst M/s. RAL and other entities. The Impugned Notice also refers to certain Minutes of Meetings and instances of payments with necessary documents illustrated. The transactions are multi-fold and make a complex web, and this Court, when the petitioner is yet to file response and produce documents/accounts/evidence, and the Assessing Officer is yet to consider those materials, cannot opine that the Impugned Notice lacks in material details or has not considered material circumstances - HC
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Addition u/s 40A(2) - Allegation of Excessive price paid to related parties - The provisions of section 40A(2) of the Act applies for making disallowance of expenses for payments, which have been claimed as deduction in computation of profit & loss account of business and it shall not apply for income or gains under any circumstances. - the addition made on account of shifting of profit of the assessee company to its sister concern, a partnership firm is without any basis - Additions deleted - AT
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Addition u/s 68 - gift received from mother-in-law - Once the gift is treated as genuine, it is immaterial what the assessee does with that money thereafter. - Since the assessee in the instant case has provided the identify and creditworthiness of the donor and the genuineness of the transaction, therefore, the addition made by the Assessing Officer and sustained by the learned CIT (A) received as gift from her mother-in-law, in our opinion, cannot be sustained. - AT
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Condonation of delay in filing the appeal - Denial of natural justice - CIT(A) was of the opinion that the reason for delay in filing the Appeal claimed by the Assessee cannot be accepted to be a sufficient cause meeting the tests of Section 249 sub Section 3 of the Act. In our opinion, CIT(A) should have taken liberal view by considering the reasons assigned by the assessee for condoning the delay. - AT
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Exemption u/s 11 - Cancelling Registration 12AA(3) and section 80G - contentions of the assessee that the registration granted u/s 12A cannot be cancelled with retrospective effect - as per the majority view, the impugned order of the Pr. CIT(Exemption) cancelling the registration granted under section 12A as well as withdrawing approval under section 80G(5) is upheld but the cancellation would be with effect from the previous year in which the assessee sold the educational institutions i.e. the previous year 2017-18. - Not with retrospective effect - AT
Customs
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Validity of SCN - corrigendum issued six years later from original SCN - Having perused both the original SCN and the ‘corrigendum’ issued six years later on 19th January 2000, this Court has no hesitation in concluding that the so-called corrigendum is in fact a fresh SCN since it materially alters the original SCN both in terms of the demand raised as well as the grounds on which the demand was raised. - HC
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Valuation of imported goods - Used tyres - rejection of declared value - It is settled position in law that it is the discretion of the authority deciding to determine the quantum and fine and penalty as per the gravity of the offence involved. - There are no merits in the appeal filed by Revenue challenging the order of Commissioner (Appeals) whereby he has reduced the redemption fine equivalent to 10% of undervaluation and which is in accordance with the order of Bangalore CESTAT - AT
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Valuation of imported goods - Integrated Circuits - The ultimate use of the imported goods cannot be criteria for deciding the valuation. Every business man is free to adopt his own way of conducting business. In any case, this cannot be reason for rejecting the value of the impugned goods. In the absence of any technical opinion obtained, comparing the impugned goods with other goods, simply on the basis of description, is not acceptable. Moreover, as per Rule 4 of CVR, 2007 the transaction value of identical goods in a sale at the same commercial level and in substantially the same quantity as the goods being valued shall be used to determine the value of imported goods - AT
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Exemption from Customs Duty - Import of an aircraft that had been granted permit by the Director General of Civil Aviation, DGCA for operating non-scheduled (passenger) services - Applicability of CAR 1999 or CAR 2000 - The show cause notice was, however, adjudicated upon by order dated 27.07.2010. Thus, it would be the CAR 1999 that would be applicable and not CAR 2010. The two decisions in Sameer Gehlot and King Rotors could not, therefore, have been distinguished for the reason that CAR 2010 would apply and not CAR 1999. - The conclusion, therefore, that emerges is that King Rotors does not lay down the correct position of law. - AT
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Classification of import goods - differential pressure sensors and tyre pressure monitoring sensors - The impugned devices are used for measuring the pressure of gases. They are fitted with sensors sensitive to the variations in pressure. - Heading 9026 and more specifically sub-heading 9026 20 00 is the appropriate classification for the devices under consideration. - AAR
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Classification of devices - wireless speaker device - Speakers classified under Heading 8518 include both passive speakers and active speakers. Active speakers, like many sub-woofers, contain a built-in audio amplifier. The sub-heading under which speakers are classified depends on the number of ‘drive units’ - the actual loudspeaker cones or ribbons - in each cabinet or enclosure. Speakers with a single drive unit in each cabinet are classified under sub-heading 8518 21 00. The impugned device has a single driver. - AAR
Indian Laws
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- Dishonor of Cheque - vicarious liability of Director - The Petitioner resigned from the Company on 05.02.2016. Therefore, as per the details regarding the Directors of the first Accused Company available with the Registrar of Companies, on the date of filing of the criminal complaint, the Petitioner cannot be arrayed as Accused by the Respondent/Complainant. The uploaded details regarding the status of the Directors of the Company available on the web portal of the Registrar of Companies cannot be disputed by any one as it is an authenticated web portal under the Ministry of Company Affairs, Government of India. - HC
IBC
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Power of RP or CoC to call for final compliant Resolution Plan once the CoC concluded the negotiations on Resolution Plans - only resolution plan submitted by the applicant was deemed to be approved - this Tribunal is of the view that the amendment is only to consider the feasibility, viability of each plan and not to call fresh resolution plans (decided by RP) under the guise of final compliant resolution plan. - AT
Service Tax
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Whether the petitioner (university) is liable to pay the service tax on the rent received by it from the buildings let out by it? - Normally, a person is bound to reply to the show cause notice issued by the Authority and it is not appropriate for him to approach the Court without doing the same. However, in the instant case, the dispute does not pertain to quantification of service tax, but whether the respondents – Authorities have jurisdiction to demand service tax for the activity of petitioner-University in providing education. - It is not appropriate to relegate the petitioner before the adjudicating Authority - SCN set aside - HC
Central Excise
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Levy of penalty - delay in filing ER-1 returns - There is a substantial compliance on part of appellant to all the legal provisions which were in effect during the impugned period. Interest of justice requires that Rule 12 (6) of Central Excise Rules 2002 would not have been invoked. The imposition of late fee is nothing less than imposition of penalty. - Penalty is a grave word which should be imposed only in case of apparent mala fide fraud, suppression of facts, misrepresentation etc. There is nothing apparent in this case on the part of the appellant. - AT
VAT
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Classification of manufactured goods - Robinson Barley - Purity Barley - There can be no doubt that in trade parlance ‘Robinson Barley and Purity Barley’ would not be simply understood as ‘barley’ - In other words, they are identifiable, distinct, commercial products different from ordinary ‘barley’. If a customer went to a shop and asked for barley, such customer would not be supplied Robinson Barley or Purity Barley. Conversely, if the customer was to ask for Robinson Barley or Purity Barley, then he would not be supplied with plain barley. - The distinct commercial product ‘Robinson Barley’ cannot be classified as ‘cereal’ which is taxable @4% and has to be brought under the residual entry taxable @ 12%. - HC
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Time limitation for completion of assessments - Unless there be an assessment made soon after the period to which such assessment relates, the question of consideration of escapement would indeed become difficult to consider and examine. The Hon’ble Apex Court having regard to the return filed by the assessee along with the payment of admitted tax held that no prejudice to the assessee will be caused if the assessing authority is permitted to complete the assessment even at that stage. If no assessment is made, the assessee may claim refund of taxes in the absence of an assessment. - The orders passed by the assessing officer relating to interest and penalty are set aside. However, having regard to the peculiar facts and circumstances of the case, the assessee shall not be entitled for refund of the taxes paid - HC
Case Laws:
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GST
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2022 (8) TMI 757
Revocation of cancelled registration of petitioner - sufficient opportunity to furnish reply, not afforded to petitioner - time limit to approach proper officer in terms of Section 30 read with 23 of the Odisha Good and Services Tax Rules, 2017 - HELD THAT:- It is required under Section 30(1) read with Rule 23(1) that an application for revocation of cancellation of registration in Form GST REG-21 is required to be submitted to the proper officer who has cancelled the same invoking Section 29. The application for revocation is required to be made within 30 days from the date of service of the order of cancellation of registration. Having conceded by both the parties, if the Petitioner files application for revocation of cancellation of registration within a period of 30 days from today, the proper officer shall consider the same in its proper perspective by condoning the delay and such consideration shall be subject to the Petitioner depositing the tax, interest, penalty and late fee from the date of default. In order to enable the Petitioner to deposit tax, interest and penalty along with late fee, the proper officer shall take steps to open the portal and also allow the Petitioner to file all its returns - the proper officer shall consider the application for revocation of cancellation of registration in accordance with law. Petition disposed off.
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2022 (8) TMI 756
Seeking release of detained vehicle alongwith goods - expired E-way bill - Section 129 of CGST Act and Rule 68 of CGST Rules - HELD THAT:- A bare perusal of the provisions of Section 129 shows that no goods or conveyance shall be detained or seized without serving an order of detention or seizure on the person transporting the goods on the allegation of making transit in contravention of the provisions of the Act or Rule made thereunder. Apparently, the proceedings have been initiated on the same date and concluded also on the same date. Though, learned counsel for the respondent has stated that the proceedings were expedited at the instance of the tax payer on the same date, but there is nothing to substantiate such contention. The impugned adjudication order and the appellate order therefore both suffer from procedural infirmities and lack of proper opportunity to the petitioner or the person transporting to defend himself. The impugned order is set aside - petition allowed.
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2022 (8) TMI 755
Non-filing of Form GST-TRAN-1 to avail of the transitional credit in terms of Section 140 of CGST and JGST Act, 2017 within the stipulated time - HELD THAT:- Reasons for non-filing of Form GST TRAN-1 and TRAN-2 within the stipulated period may be slightly different in individual cases, but irrespective of the reasons, since any of the aggrieved registered assesses have been directed to file relevant form and revise the already filed form under the window period of 01.09.2022 till 31.10.2022 irrespective of the fact that whether he had approached the High Court or their cases were decided by ITGRC, the issue need not detain us. As in M/S SHRI ENTERPRISES, A PROPRIETARY CONCERN, DHANBAD [ 2022 (7) TMI 1232 - SC ORDER ], it was held that, any aggrieved registered assesse shall file relevant Form TRAN-1 and TRAN-2 or revise the already filed Form irrespective of whether the taxpayer has filed writ petition before the High Court or whether the case of the taxpayer has been decided by Information Technology Grievance Redressal Committee (ITGRC) within this window period of 01.09.2022 till 31.10.2022. As such, case of the petitioners would also abide by the said direction. Writ petition disposed off.
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2022 (8) TMI 754
Inability in filing of form TRAN-I and uploading of the same - transition and utilization/availment of credit - HELD THAT:- In the case of UNION OF INDIA ANR. VERSUS FILCO TRADE CENTRE PVT. LTD. ANR. [ 2022 (7) TMI 1232 - SC ORDER ], the Court has, considering the hardship felt by several assessees leading to a slew of litigation on this aspect, granted those, and all other similarly placed assessees, the benefit stating that Goods and Service Tax Network (GSTN) is directed to open common portal for filing concerned forms for availing Transitional Credit through TRAN-1 and TRAN-2 for two months i.e. w.e.f. 01.09.2022 to 31.10.2022. Mr.Raghavan Ramabadran, learned counsel for the petitioner has made an endorsement along the aforesaid lines and acceding to the request made, this Writ Petition thus stands disposed as withdrawn, with liberty as aforesaid.
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2022 (8) TMI 753
Validity of Demand-cum- Show Cause Notice under Section 63 of the CGST/OGST Act - scope of alternative remedy - participation of assessee in the proceeding by furnishing appropriate explanation in order to determine the correct tax liability - demand of tax with interest and penalty - HELD THAT:- Clear proposition with reasons are found mentioned in the impugned Demand-cum-Show Cause Notice as to why the Proper Officer has sought to invoke the provisions of Section 63 of the CGST/OGST Act which essentially relates to the facts and circumstances of the case. Of course, the petitioner has the fullest opportunity to refute and rebut the same during the course of proceeding. It is possible for the petitioner to seek for further time, if according to him the time given by the authority for filing the reply was required to be extended in order to enable her to collect further material. It cannot, therefore, be said that the Demand// cum-Show Cause Notice would be rendered invalid. The present case seems neither to be a case of lack of jurisdiction nor is there any allegation of violation of principles of natural justice. The petitioner has ample opportunity to agitate issue before the Proper Officer. Therefore, this Court feels entertainment of the writ petition at the stage of Demand-cum- Show Cause Notice would be premature. Doing so would frustrate the tax administration and adjudication process. This Court is alive to the fact that the statute under consideration, viz., the CGST/OGST Act(s) and rules framed thereunder provide sufficient safeguard for the assessee-petitioner, more so, when against the final orders of adjudication, appeal lies. It is, therefore, necessary for the Proper Officer to examine on the basis of materials available on record and that are furnished by the petitioner-assessee whether he is required to proceed to assess the tax liability of the taxable person on account of failure to obtain registration - the enquiry/process of assessment requires factual determination with reference to liability and requirement of obtaining registration. Having not found illegality, irrationality, procedural impropriety and proportionality in issue of Demand-cum-Show Cause Notice by the Proper Officer, this Court does not, therefore, deem it expedient to exercise its extraordinary jurisdiction under Article 226 of the Constitution of India, and the petitioner is, therefore, relegated to place appropriate material before the Proper Officer for arriving at just determination of liability. This Court does not wish to entertain the writ petition challenging Demand-cum-Show Cause Notice issued under Section 63 of the OGST Act/the CGST Act and, therefore, the writ petition stands dismissed.
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2022 (8) TMI 752
Levy of Interest for delayed payment of CGST OGST - Section 50 of the Odisha Goods and Service Tax Act - tax periods 1st July, 2017 to 31st March, 2018 - 1st April, 2018 to 31st March, 2019 - HELD THAT:- It is seen that the adjudication Order being passed on 28th February, 2022 in respect of both the Financial Years in questions, the writ petitions have been filed on 25th March, 2022 and 28th March, 2022 respectively; as such, said writ petitions have been filed within the period prescribed under Section 107 of the CGST/OGST Act. In consideration of above submission at the Bar, this Court is inclined to dispose of both the writ petitions with the observation that in the event appeal(s) is filed within a period of two weeks hence, subject to compliance of statutory requirements, the Appellate Authority shall do well to admit the appeal(s) and decide the same on merits in accordance with law. The petitioner is required to file petition(s) for condonation of delay along with appeal(s) which shall be considered favourably keeping in view the fact of pendency of writ petition(s) before this Court in terms of Section 14 of the Limitation Act, 1963 read with Section 107 of the CGST/OGST Act. Petition disposed off.
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2022 (8) TMI 751
Search and seizure - Seeking mandamus for a direction to the respondents to refund of amount collected from his residence - direction to the respondents to initiate proceedings for assessment under Section 73/74 of the Central Goods and Services Tax Act, 2017 - section 67 of CGST Act. It is the petitioner s case that, on a combined reading of Section 67(2), second proviso and Section 67(3), the amount of Rs.9.39 lakhs collected from the petitioner s residence on 14.03.2019 would have to be returned, since it has not been appropriated towards the demand quantified under show cause notice dated 31.07.2021. HELD THAT:- The provisions of Section 67(2) authorise search and seizure of premises by the authorised officials, who upon conduct of such search, may seize such documents, books or things as may be, in their opinion, necessary to determine the duty in a particular case. The second proviso protects the interest of the assessee by stating that such documents/books/things referred to in sub-section (2) or any other document/books/things relied upon by a taxable person or any other person that have not been relied upon for the issue of notice under this Act shall be returned within a period of 30 days from date of issue of notice. The use of the phrase relied upon is wide and in this context, my attention has been drawn to the show cause notice itself, which at paragraphs 2.2.1.2(vii) and 4.3.6(i) thereof, makes specific reference to the amount of Rs.9.30 lakhs that has been seized. It is correct that the aforesaid amount has not been appropriated towards the liability - however, such appropriation is not a condition under Section 67(2) or (3) and the condition is only that the asset seized must be relied upon by the authorities for issue of show cause notice. Thus, in the present case, the references to the amount in the course of the show cause notice would, in my considered view, justify the retention of the amount till proceedings for adjudication are complete. The direction of the Division Bench is to complete the proceedings within a time frame of four months. The petitioner appears to have made a request for cross examination of certain parties which request shall be considered by the respondent in accordance with law. The proceedings, including consideration of request of cross examination and grant of request if the respondent believe that such request is to be granted, shall be completed within a period of 6 weeks from date of issuance of this order. Petition dismissed.
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Income Tax
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2022 (8) TMI 750
Bogus donations - addition made as donation in question to the trust was not genuine - registration granted to those organisations / trusts u/s 35C were cancelled with retrospective effect - tribunal noted that there is nothing on record to show that the respondent/assessee connived with the scheme of arrangement between the concerns in bogus billing etc. and deleted the additions - HELD THAT:- We need not travel thus far to decide the substantial question of law in the case on hand as we are considering the case falling under Section 35 of the Act. In terms of Explanation to Section 35(1)(iii) of the Act, deductions to which the assessee is entitled to in respect of any sum paid to a research organisation, university etc. shall not be denied merely on the ground that subsequent to the payment of such sum by the assessee, the approval granted to the research organisation or university etc. has been withdrawn. This issue was considered by the Hon ble Supreme Court in the case of Commissioner of Income Tax vs. Chotatingrai Tea Ors. [ 2002 (10) TMI 3 - SUPREME COURT ] We find the reasoning given by the tribunal to be just and proper and cannot be held to be perverse. In the result, the appeal filed by the revenue is dismissed.
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2022 (8) TMI 749
Black money - Undisclosed Foreign Assets - Beneficial Owner of the specified Undisclosed Assets - proceedings under the provisions of Section 10[1] of the Black Money [Undisclosed Foreign Income and Assets] and Imposition of Tax Act, 2015 - whether the petitioner is a beneficial owner of the Undisclosed Assets ? - HELD THAT:- AO can proceed to assess the undisclosed foreign income and asset to determine the liability only on considering the accounts/documents, and evidence, and every further relevant material gathered. Further, the Assessing Officer, for the purposes of such enquiry u/s 10[2] of the BM Act, is vested with the necessary powers to direct discovery and production of evidence. The provisions of Section 8[2] of the BM Act specify that the authority, for the purposes of making an enquiry or investigation, shall be vested with specific powers as regards discovery and inspection, enforcing attendance and compelling production of documents and issuing commissions. These purposes are mentioned in Section 8[1] of the BM Act. The scheme of notice, further notices, enquiry and assessment under Section 10 of the BM Act is comprehensive and the AO must examine the entire gamut of circumstances and decide on the jurisdictional fact as a condition precedent for assessment. In this Court s considered opinion this scheme does not admit of any ambiguity to employ an interpretative tool, especially the reading of a definition clause which would not be a positive enactment, to construe a segregated enquiry. It is also argued that the provisions of Section 8 of the BM Act would indicate a distinct and separate enquiry on the jurisdictional fact from an enquiry that is contemplated under Section 10 of the BM Act. But in the light of the scheme under Section 10 and the express provisions of Section 8[2], such reading would be a contrived reading. As observed by the Hon'ble Supreme Court in Commissioner of Central Excise, Haldia v. M/s Krishna Wax [P] Ltd., [ 2019 (11) TMI 673 - SUPREME COURT] the significance of the date of issuance of notices will also have to be borne in mind when admittedly, the date of issuance of show-cause notice becomes vital for the purpose of limitation under the BM Act. If as contended on behalf of the petitioner, enquiry on the jurisdictional fact and assessment are segregated, despite the scheme under section 10, there would be serious ramifications but without the necessary redressal. The settled proposition is that in construing fiscal statutes and in determining the tax liability, the strict rules of interpretation will have to be followed without adding or importing significance beyond the language used in such statutes. In the light of the above, and the respondents' admitted position that the Assessing Officer must necessarily decide on the jurisdictional fact viz., whether the petitioner could be called a Beneficial Owner of the specified Undisclosed Asset considering the material that the petitioner produces, and there will be sufficient opportunity to the petitioner to produce further documents, this Court must answer the first question in the negative and in favour of the respondents Validity of issuance of notice under Section 10 of BM Act - statutory time limit is prescribed for issuance of notice under Section 10[1] of the BM Act - The contention that the Assessing Officer should be presumed to have had Information of the alleged transaction is very presumptuous, and no such presumption can be drawn at this stage to truncate the enquiry. Therefore, this Court cannot opine that the Impugned Notice is issued beyond thirty days from the date of Information and therefore prior approval had to be obtained. The Impugned Notice is very detailed and there are multiple references to different transactions between and amongst M/s. RAL and other entities. The Impugned Notice also refers to certain Minutes of Meetings and instances of payments with necessary documents illustrated. The transactions are multi-fold and make a complex web, and this Court, when the petitioner is yet to file response and produce documents/accounts/evidence, and the Assessing Officer is yet to consider those materials, cannot opine that the Impugned Notice lacks in material details or has not considered material circumstances - The question Nos.2 and 3 must therefore be answered in the negative and in favour of the respondents
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2022 (8) TMI 748
Validity of reopening of assessment - non - considering and disposing objection of the petitioner by passing a speaking order - HELD THAT:- The impugned assessment order dated 31st March, 2022 being Annexure P-11 to the writ petition passed is in clear violation of the law laid down in the case of GKN Driveshafts (India) Ltd. [ 2002 (11) TMI 7 - SUPREME COURT] and the same is not sustainable in law since it was passed without considering and disposing objection of the petitioner by passing a speaking order which he was obliged to do in view of the decision of the Apex Court in the case of GKN Driveshafts (supra) before proceeding any further in the impugned reassessment proceeding. In view of the discussion made above impugned assessment order is quashed and the matter is remanded back to the assessing officer concerned to first dispose of the aforesaid objection of the petitioner against impugned notice under Section 148 by passing a reasoned and speaking order and after giving an opportunity of hearing to the petitioner or its authorised representatives and any further proceeding with the impugned assessment proceeding will depend upon the final outcome of the aforesaid objection of the petitioner.
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2022 (8) TMI 747
Penalty u/s 271(1)(c) - penalty imposed on the amount offered by the assessee in the return of income pursuant to survey - HELD THAT:- As the reported income and the assessed income of the assessee remain the same. The AO has imposed penalty only with reference to the amount which was suo motu declared by the assessee in the return. In that view of the matter, the ratio laid down in MAK data Pvt. Ltd . [ 2013 (11) TMI 14 - SUPREME COURT ] has no application to the facts of the extant case as the income under consideration, forming the foundation for the penalty, is not the one which was added by the AO beyond the income returned. In view of the fact that the assessee voluntarily offered the income, declared in the survey, in the return of income and the assessment was made without making any addition on that score, we hold that such an income cannot constitute the bedrock for the imposition of penalty u/s.271(1)(c) of the Act. We, therefore, affirm the impugned order. Revenue Appeal is dismissed.
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2022 (8) TMI 746
Demand u/s 201(1)/ 201(1A) - period of limitation - non deduction of TDS u/s 192 on re-imbursement made under Leave Fare Concession ( LTD ) scheme of the State Bank of India to employees who have carried out circuitous tour, covering foreign destination was considered as part of taxable income of those employees - contention of Ld. Counsel for the assessee is that the order of assessment passed is beyond jurisdiction of the AO on account of being passed after prescribed period of limitation - HELD THAT:- It can be appreciated that Ld CIT(A) has fallen in factual error in mentioning wrong dates of filing statement and thereby holding applicability of amended provisions. He considered the date of filing correctional statement to invoke the amended provisions which had come in to effect from 1/10/14. It can be observed that there is no dispute to the fact that in regard to present appellants, for assessment year 2010-11 summons were issued in January 2018 and the assessment orders u/s 201(1)/ 201(1A) of the Act have been passed on 30rd or 31st March 2018. There is no doubt that Section 201(3) of the Act provides that the assessment orders under sub section 1 of Section 201 against assessee in default for failure to deduct the whole or any part of the tax from a person resident in India can be passed before expiry of two years from the end of financial year in which the payment is made. Judgment of Hon ble Gujarat High Court in Tata Teleservices vs. Union of India [ 2016 (2) TMI 414 - GUJARAT HIGH COURT] relied by Ld. Counsel for appellant has held that Section 201(3) as amended by Finance Act (no. 2) of 2014 shall not be applicable retrospectively. The distinction attempted to be brought by Ld. Sr. DR by submitting that under the un-amended sub section 3 of Section 201 there were two clauses and first clause provided two years limitation was in case where statement of TDS were filed and there was limitation of six years where no such statement is filed and has no foundation because in the present case admittedly the statement was filed by the assessee and the question was only with regard to the issue if TDS was required to be deducted in cases involving payment of LTC reimbursements to employees who had taken circuitous routes involving travel abroad to one or more domestic destinations. There is no doubt in the mind of Bench that the impugned order of assessment passed was without jurisdiction as the same was passed beyond the limitation period of two years and accordingly the ground no. 1 as raised stands allowed in favour of the assessee declaring assessment order to be void ab initio requiring no further determination of issues.
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2022 (8) TMI 745
Disallowance of depreciation on the brand value - brand value introduced in the balance sheet by the assessee s firm before conversion into a Public Limited Company w.e.f.30.04.2008 - assessee s contention was that before undertaking the conversion of the partnership firm into public limited company, the transferor partnership firm valued all its assets and liabilities at net realizable value i.e. Fair Market Value (FMV) - HELD THAT:- Before undertaking the transfer, the partnership firm valued all assets and liabilities at net realizable value as per valuation report submitted. The firm valued the registered brand name for its brand value of Rs.60,24,10,642/- independent and scientific method of valuation as per internationally expected standards using the double discount rate of the market, @ 28% + 10% margin of errors in the present case, and transferred the same to the assessee company i.e. the transferee by satisfying all the conditions prescribed under the Act i.e.47(xiii) - According to us, now this value is found to be reasonable in regard to brand value and assessee is eligible for claim of depreciation acquired from the partnership firm in lieu of allotment of fully paid equity shares to the partners of the partnership firm. We noted that the authorities below have wrongly applied the provisions of section 55(2)(a) for determining the NIL value of the brand, which cannot be a case where all the materials was produced by the assessee before the authorities below and even now before us. According to us, the assessee has rightly computed depreciation on actual cost basis u/s.43(1) of the Act and not applied the provisions of Sec.55(2)(a) of the Act. Hence, we accept the value determined by the valuer at Rs.60,24,10,642/- and direct the AO to allow depreciation on the same as per law. Consequent to the above findings as regards the brand value accepted at Rs.60,24,10,642/-, insofar as claim of depreciation although conversion of partnership firm into private limited company took place in financial year 2009-10, the assessee has claimed depreciation only from AY 2013-14 onwards. The assessee claimed that as per fifth proviso to section 32(1) of the Act, in the year of succession he cannot claim depreciation because of overlapping of period of depreciation to be claimed by predecessor and successor. However, for remaining two assessment years the assessee by oversight has not claimed depreciation on brand value. But contended that even assessee has not claimed depreciation as per provisions of section 32, the AO should allow depreciation as per law. We find that even if the assessee does not claim depreciation on assets, the AO should allow depreciation in accordance with provisions of section 32 and thus, we direct the AO to allow depreciation on brand value from the year in which the assessee is entitled for such depreciation. Addition of construction expenses in regard to Anbu Illam Thulir School and RJ Mantra Thulir School and consequent interest disallowance on the same - HELD THAT:- No doubt the assessee is not in the business of running an educational institute but the assessee s employees numbering more than 850 are residing in remote area where their children cannot go to school as there is no nearby school in the rural area. According to us, in such situation running a school is for the welfare of employees and providing education to children of the employees is an allowable expenditure in the hands of the assessee company. This issue has been dealt with by the Hon ble Karnataka High Court almost on the same facts in the case of CIT vs. Pandavapura Sahakara Sakkare Karkhane Ltd., [ 1988 (6) TMI 39 - KARNATAKA HIGH COURT] wherein it is held that contribution by the co-operative society for the education fund under the provisions of Karnataka Cooperative Societies Act is held deductible as expenditure. Even Hon ble Bombay High Court in the case of Krishna Sahakari Sakhar Karkhana Ltd. [ 1997 (7) TMI 97 - BOMBAY HIGH COURT] held that contribution made by the assessee under section 68 of the Maharashtra Cooperative Societies Act, 1960 for the education fund created for the purpose of the education of the children of the employees is held to be deductible. Since the issue is exactly identical here also, the assessee company has constructed the building for running a school in the vicinity of the factory building for the children of the employees of the assessee company. This according to us, is allowable expenditure and we direct the AO accordingly. This issue is arising in all the 7 assessment years in regard to construction expenses of Anbu Illam , construction of R.J. Mantra Tulir School and interest on loan taken for construction purposes for the building of R.J.Mantra English School, is allowable in all these assessment years. We direct the AO accordingly. Disallowance of expenses relatable to exempt income by invoking the provisions of section 14A r.w.r. 8D - HELD THAT:- Assessee before us contended that he is not aggrieved by the order of CIT(A) and he is ready to accept the disallowance to the extent of exempt income in view of various decisions of Hon ble High Courts and particularly the Hon ble High Court of Madras in the case of CIT v. Chettinad Logistics (P) Ltd. [ 2017 (4) TMI 298 - MADRAS HIGH COURT] and the Hon ble Supreme Court in the case of Maxopp Investment Ltd.,[ 2018 (3) TMI 805 - SUPREME COURT] To this, the ld. CIT-DR has not objected. Hence, we find no infirmity in the order of CIT(A) and accordingly this common issue in all these 7 assessment years of assessee s appeals is dismissed. Addition u/s 40A(2) - Allegation of Excessive price paid to related parties - HELD THAT:- Price of the transaction entered into between these two parties is excessive and unreasonable and particularly in the hands of the firm in term of the provisions of section 40A(2)(a) of the Act. The provisions of section 40A(2) of the Act applies for making disallowance of expenses for payments, which have been claimed as deduction in computation of profit loss account of business and it shall not apply for income or gains under any circumstances. Further, we are of the view that as per income-tax law, the disallowance if the expenditure is excessive or unreasonable, can be made only in the hands of the receiver of the goods and not in the hands of the seller of the goods. In view of the above facts and circumstances, we cannot accept the argument of Revenue that the transaction is colourable device coming within the ambit of case law of Mcdowell supra. Further, we also point out that this transaction of sale and purchase although gives profit but it is taxed neutral from the point of view of the Revenue for the reason that the firms profit is taxable from Re.1 as the maximum marginal rate and even the profits of the assessee company is also taxable at the maximum margin rate. Once this is the situation, there is no impact on taxability of the profit and hence, we are of the view that the addition made by AO and confirmed by CIT(A) on account of shifting of profit of the assessee company to its sister concern M/s. Rasathe Garment, a partnership firm is without any basis and hence, deleted. For all these 5 assessment years, the additions made are deleted and the issue of assessee appeals is allowed. Disallowance of foreign tour expenses - HELD THAT:- AO noted that the expenditure debited in the books of accounts of the assessee company on account of foreign tour expenses on 27.04.2011 was for some of the employees along with their spouse travelling to Thailand and Bangkok on a tour package. According to AO, the assessee is unable to correlate these expenses with the purpose of business. Hence, he disallowed the same. Aggrieved assessee preferred appeal before CIT(A). CIT(A) considering the submissions of the assessee and noted that in the absence of any documentation of the relation of the activities on this trip with the business of the appellant the assessing officer has disallowed the expenditure and according to him there is no reason to interfere with the order of the assessing officer for disallowing the expenditure. Hence the disallowance made is confirmed.
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2022 (8) TMI 744
Assessment u/s 153A - no justification of issuing share of Rs.10 as such huge share premium - Assessee objection was that out of share capital and share premium has been shown without any incriminating material - absence of incriminating material, on the basis of which the additions have been made - HELD THAT:- We find that no such ground was taken before the Assessing Officer. It is clearly emanating from the orders of the authorities below that plethora of documents which were incriminating in nature were found during the search including that of the bogus entry operator. Hence, the claim that no incriminating material was found devoid of any merit when the AO was confronting the assessee, he never pointed any such aspect and only after considerable lapse of time, he had an afterthought and made plea before the Ld. CIT(A). The Ld. CIT(A) rightly and cogently rebutted the assessee s plea. Hence, in our considered opinion, the plea that the addition was made dehors incriminating material is devoid of merit. Addition u/s 68 - Undoubtedly money routed through bogus companies operated by entry operators. No discussion about the details of the financial aspects is available on record nor the financials of the assessee company command share premium. As usually bogus entry operator use circuitatious route of laundering unaccounted money in the garb of share capital and share premium. This is one of the classic such case, the complete absence or non-existence of the parties at the address given is a clinching testimony that these were bogus transactions. In this view of the matter, in our considered opinion, there is no infirmity in the orders of the authorities below and hence we uphold the same. Decided against assessee.
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2022 (8) TMI 743
Disallowance of commission payments u/s 37 - HELD THAT:- The ITAT in assessee s own case for assessment year 2006-2007 had restored the matter to the A.O. for de novo consideration. The ITAT while disposing of the matter, held that the agents were third parties unrelated to the assessee and all commission payments were made by account payee cheques. It was further held that the TDS deduction has been made wherever the said provisions were applicable. The assessee has furnished the party-wise break-up of the commission payments and since most of the commission payments are to the same parties year after year, in the interest of justice and equity, the matter needs to be examined afresh by the A.O. Accordingly, the issue of commission payments made to the local agents as well as foreign agents, is restored to the files of the A.O. The assessee shall cooperate with the Revenue and shall furnish the necessary details in support of its case. The A.O. shall afford a reasonable opportunity of hearing to the assessee before a decision is taken in the matter. It is ordered accordingly. Appeal allowed for statistical purposes.
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2022 (8) TMI 742
Addition u/s 68 - gift received from mother-in-law - HELD THAT:- Once the identity and creditworthiness of the donor is established and the gift deed was duly furnished and nothing wrong has been found except the variance in the dates mentioned in the gift deed and the amount reflected in the Bank statement which is due to delay in presentation for clearance etc., the assessee, in our opinion, has established all the 3 ingredients of provisions of section 68 i.e. identity and capacity of the creditor/donor and the genuineness of the transaction. Once the gift is treated as genuine, it is immaterial what the assessee does with that money thereafter. So far as the allegation of the learned CIT (A) that the assessee did not furnish the details of the person to whom the transfer is made is concerned, we find she is a Partner in Shree Packaging Corporation which fact has been admitted by the learned CIT (A) in her order. Since the assessee in the instant case has provided the identify and creditworthiness of the donor and the genuineness of the transaction, therefore, the addition made by the Assessing Officer and sustained by the learned CIT (A) received as gift from her mother-in-law, in our opinion, cannot be sustained. Accordingly, the order of the learned CIT (A) on this issue is set aside and the grounds raised by the assessee are allowed. Addition being the share of profit earned by the assessee from the partnership firm - Share of profit is exempt u/s 10(2A) of the I.T. Act and it cannot be added to the total income of the assessee. Therefore, the order of the learned CIT (A) sustaining the addition being the share of profit from the partnership firm being not in accordance with law is set aside and the Assessing Officer is directed to delete the addition. Appeal of assessee allowed.
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2022 (8) TMI 741
Penalty proceedings u/s 271(1)(c) - assessment framed u/s 92CA(4)/143(3) - addition on account of provision for interest on excise duty - HELD THAT:- Revenue has not brought any material to rebut the finding of Ld.CIT(A) that claim of the assessee was allowed in quantum appeal in AY 2102-13. Therefore, on such disallowance in the year under appeal, no penalty would be attracted. Moreover, the Ld.CIT(A) has given a finding that the claim of the assessee was bonafide. Under these facts, we do not see any reason to interfere into the finding of Ld.CIT(A), the same is hereby upheld. Thus, grounds raised by the Revenue are dismissed.
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2022 (8) TMI 740
Addition under the head salaries as based on Form No. 26AS - declining the claim of deduction u/s 10 regarding house rent paid by him - HELD THAT:- As relying on JUSTICE SC. MITTAL [ 1979 (11) TMI 92 - PUNJAB AND HARYANA HIGH COURT] and MS GUJRAL, CHIEF JUSTICE, SIKKIM HIGH COURT [ 1979 (12) TMI 41 - PUNJAB AND HARYANA HIGH COURT ] case the assessee is entitled for deduction u/s 10(13A) in respect of expenditure made towards rent. The appeal of the assessee is partly allowed. Rest of the action of learned CIT(Appeals) is sustained. Hence the grounds raised in this appeal are partly allowed.
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2022 (8) TMI 739
Income from house property - ALV of the unsold Flats - property forming part of his stock-in-trade - whether or not ALV of the unsold flats held by the assessee as stock-in-trade of his business as that of a builder/developer is liable to be assessed u/s.22 of the Act? - HELD THAT:- As the facts and the issue involved in the aforesaid order of the Tribunal in the case of Osho Developers [ 2020 (11) TMI 218 - ITAT MUMBAI] remains the same as are there before us in the case of the present assessee, therefore, we respectfully follow the same. We, thus, herein conclude that the ALV of the unsold 7 flats held by the assessee as stock-in-trade of his business could not have been assessed u/s.22 of the Act. Accordingly, we herein vacate the addition of Rs.1,91,406/- made by the A.O. Thus, the Grounds of appeal No.(s) 1 to 3 raised by the assessee are allowed.
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2022 (8) TMI 738
Penalty levied u/s.271(1)(c) - exemption u/s. 11 - HELD THAT:- The quantum appeal itself is being allowed in favour of the assessee by granting exemption u/s. 11 of the Act, consequently penalty levied u/s. 271(1)(c) for concealment of income is liable to be deleted. Further more, the Ld. CIT(A) also as follows various case laws on the ground penalty cannot be levied on highly debatable issues of applicability of proviso to Section 271(1)(c). - Decided against revenue.
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2022 (8) TMI 737
Disallowance of Trademark License Utilisation Fees - HELD THAT:- In the present A.Y. the CIT(A) has observed that the assessee paid a sum as trade mark licence utilization fees and debited the said amount under the head selling and distribution expenses , the assessee company came into existence after conversion of erstwhile firm namely M/s Vishnu Packaging (firm) and the firm was also carrying out the same business of manufacturing the pan masala under the brand name Vimal which was taken over by the assessee company. The assessee company has been paying trade mark licence utilization fee to the licensor for utilization of the brand Vimal under agreement to this effect. The assessee company claimed the entire licence fees paid during the year as revenue expenses whereas the AO treated the same as payment made for acquisition of trademark and licence within the meaning of capital assets as defined in Section 32(1)(ii) of the Act. Respectfully following the decision of the Tribunal, the CIT(A) has rightly deleted the addition as in earlier years also it has been observed that there is no dispute that the trade mark Vimal is owned by Vishu Company Trademark Pvt. Ltd. It is also true that the assessee has paid royalty as part of terms and conditions of the registered agreement. These facts were not disputed before us by the ld. DR in this A.Y. as well. Therefore, appeal of the Revenue is dismissed. Delayed payment of Employees contribution to P.F. E.S.I.C. u/s.36(1)(va) r.w.s. 2(24)(x) - HELD THAT:- The issue is covered against the assessee by the decision of Jurisdictional High Court in case of CIT vs. Gujarat State Road Transport Corporation [ 2014 (1) TMI 502 - GUJARAT HIGH COURT] . Thus, the appeal filed by the assessee is dismissed.
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2022 (8) TMI 736
Penalty u/s 271(1)(c) - HELD THAT:- As in the assessee s own has allowed complete relief to the assessee in quantum proceedings, accordingly, we hereby direct that the order imposing penalty u/s 271(1)(c) of the Act be set aside. Appeal of the assessee is allowed.
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2022 (8) TMI 735
Addition u/s 68 - unexplained cash credit - HELD THAT:- The assessee has filed the details related to repayment of loans to the said parties which shows that the assessee has taken these loans from the parties and subsequently repaid the said loans. The Credit worthiness of M/s Sudarshan Enterprise was stated to be not doubted by the AO as per the observations of the CIT(A) but the findings of the AO clearly shows that the creditworthiness of the parties was in doubt. In respect of M/s Jupiter Business Limited also the creditworthiness was in doubt. The parameter of creditworthiness is determined from various documents including the return of income along with Profit Loss account of those parties taken by the assessee has to see whether those parties are having sufficient amount to lent the same to the other parties. From the perusal of records and the bank statement, it is seen that the assessee is showing only the bank statement related to the transfer of amount from these parties to the assessee and not that of the actual balance of M/s. Jupiter Business Limited and M/s. Sudarshan Enterprise - The first parameters of creditworthiness was never established by the assessee during the remand back proceedings before the AO and the CIT(A) has not properly appreciated the evidences and without verifying the creditworthiness granted relief to the assessee which is not just and proper. Hence, ground no.1 of the Revenue s appeal is allowed. Disallowance related to expenditure - AO disallowed the expenditure that business of the assessee was not commenced - CIT(A) deleted this addition - HELD THAT:- The assessee has demonstrated before the Assessing Officer as well as before the CIT(A) that the purchase of land is actually shown in the trading account and was never capitalised during the year and the same is evident from the Profit Loss account furnished before the AO during the assessment proceedings. In fact, from the perusal of the cases as well as from the observations of the Tribunal, it is seen that the assessee has actually commenced in F.Y. 2007-08 relevant to A..Y under appeal and, therefore, the CIT(A) has rightly deleted this addition. Ground no.2 is dismissed
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2022 (8) TMI 734
Disallowance u/s 14A - assessee claimed interest expenditure from interest free own funds in the form of share capital and reserves as well as surplus - HELD THAT:- Interest free funds were much higher than the investment in shares and partnership firms. There is no change in investment except increase investment to the extent of share of profit received from partnership firm. CIT(A) while restricting the disallowance under Section 14A of the Act directed the Assessing Officer to restrict the same on the basis of the Special Bench decision in case of ACIT vs. Vireet Investment Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] MAT Computation - The computation under Clause(f) Explanation-1 to Section 115JB(2) is to be made without restoring to the computation as contemplated under Section 14A read with Rule 8D of the Income Tax Rules, 1962. The CIT(A) also relied upon the decision of Jurisdictional High Court in case of PCIT vs. Alembic Limited [ 2017 (9) TMI 189 - GUJARAT HIGH COURT] and, therefore, deleted the book profit and restricted the disallowance under Section 14A to the extent of Rs.9,06,254/-. The issue is covered and identical in the present case. The CIT(A) has rightly made the said observations and there is no need to interfere with the same. Hence, appeal of the Revenue is dismissed.
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2022 (8) TMI 733
Exemption u/s. 11 - assessee has violated the provisions of section 13(l)(c), 13(2)(b), 13(2)(d) and 13(2)(g) - assessment made on the income of the assessee as AOP - HELD THAT:-CIT(A) following the order passed by the Co-ordinate Bench of this Tribunal in assessee s own case for the Assessment Year 2009-10 in [ 2019 (9) TMI 909 - ITAT AHMEDABAD ] allowed the appeal filed by the assessee in cancelling the assessment made on the income of the assessee as AOP and directed to grant exemption u/s. 11 12 of the Act. CIT(A) has correctly held that the activity of the trust to carried on in accordance with its objects and in the best interest of charity, therefore, the exemption u/s. 11(1)(a) has rightly allowed by the Ld. CIT(A). Similarly, the CIT(A) has clearly held that the Sec. 13((1)(c)(ii) can apply only if any part of the charitable income of the trust has been used or applied for the benefits of the said persons during the previous year - since no portion of the income of the assessee has been applied for said person, therefore, the case of the assessee falls outside the scope of this section - trust is in receipt of income by way of management charges from SCPL and also all of its liabilities have been taken over by the same therefore there is a fact that there is no undue benefits of the use of trust property have been taken by any other persons. Similarly, there is no diversion of income of the trust as per Explanation of Sec. 13(2)(d) and 13(2)(g) of the Act as the trust has been benefitted greatly and its deficit of trust duly reduced to a great extent. Some erroneous presentation of Form No. 10B report does not disentitle the trust for claiming exemption u/s. 11 of the Act. Similarly, the amount of advance in favour of SCPL appearing in the balance sheet was not advance but the reimbursement of the expenses. In the light of the aforesaid facts and circumstances, we are of the considered opinion that the CIT(A) has analyzed the facts correctly and given a judicious finding which does not call for any interference from outside. - Decided against revenue.
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2022 (8) TMI 732
Disallowance of deduction claimed u/s 80P - AR submitted that intimation issued under section 143(1) of the Act did not mention any reason for disallowing claim for deduction under section 80P - HELD THAT:- As per sec. 80A(5), if an assessee has not made a claim for deduction under any of the sections mentioned in sec. 80A(5) of the Act, then such deduction shall not be allowed to him. As rightly pointed out by learned AR, the provisions of section 80A(5) would be applicable only if an assessee fails to make a claim for deduction under the heading C Deductions in respect of certain incomes under Chapter VIA, which includes section 80P of the Act. In the instant cases, there is no dispute that the assessee has made a claim for deduction u/s 80P of the Act. Hence the provisions of sec. 80A(5) are not applicable to the assessee. The provisions of section 80AC which bars claiming of deduction if the return of income was not filed before the due date specified under section 139(1) of the Act, was made applicable to the deduction under the heading C Deductions in respect of certain incomes under Chapter VIA of the Act w.e.f. 1st day of April, 2018. Hence, for all the three years under consideration, provisions of section 80AC are also not applicable to the assessee, since all these three years prior to assessment year 2018-19. AR also brought to notice that the power to make disallowance of deduction under the heading C Deductions in respect of certain incomes under Chapter VIA, while processing return under section 143(1) of the Act has been given to the Assessing Officer only by the Finance Act 2021 w.e.f. 1.4.2021. Prior to that, there was no power available with the AO to disallow the claim made under the heading C Deductions in respect of certain incomes under Chapter VIA. Thus Assessing Officer could not have disallowed the deduction claimed by the assessee under section 80P of the Act in all the three years under consideration, while processing the returns of income u/s 143(1) - Appeal of assessee allowed.
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2022 (8) TMI 731
Condonation of delay in filing the appeal - Denial of natural justice - not providing sufficient opportunity of being heard - HELD THAT:- The assessment order came to be passed and served on the assessee on 21/03/2016 and the Appeal before CIT(A) has been filed on 10/09/2016. The assessee has assigned the reason for condoning the delay was that, his daughter was hospitalized in the month of April to September, 2016 and the circumstances was very serious and beyond control of the assessee, therefore, assessee could not file the appeal in time . CIT(A) was of the opinion that the reason for delay in filing the Appeal claimed by the Assessee cannot be accepted to be a sufficient cause meeting the tests of Section 249 sub Section 3 of the Act. In our opinion, CIT(A) should have taken liberal view by considering the reasons assigned by the assessee for condoning the delay. Therefore, in the interest of justice, we hereby condone the delay in filing the appeal before CIT(A) and set aside the matter to the file of CIT(A) to adjudicate the matter on merit in accordance with law. Appeal of assessee is allowed for statistical purpose.
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2022 (8) TMI 730
Revision u/s 263 by CIT - Introduction of cash as capital in the firm - HELD THAT:- There is no dispute on the fact that the assessee has introduced cash of Rs.7,00,000/- as capital in the firm. Prima facie, enough cash was not available with the assessee to introduce as capital. AO had not verified it. During the hearing before the ld.CIT, the assessee submitted that he had taken Loan from Life Insurance Corporation of India - CIT observed that the explanation submitted by the assessee was not acceptable. We agree with the ld.CIT, that the explanation of the assessee that he had obtained Loan from LIC and then Rs.7,00,000/- had been introduced in cash as Capital in the firm, is not acceptable. Because, the LIC disburses Loan through banking channel, then why a prudent man will withdraw the amount in cash and introduce it as Capital in the firm? If the assessee wanted to introduce the impugned amount then he could have directly issued a cheque. Therefore, we agree with the ld.CIT that the explanation is not acceptable. Hence, the ld.CIT was right in holding that the assessment was erroneous and prejudicial. Similarly, the Assessing Officer has not verified the cash deposits in the impugned bank account. Thus CIT(A) has rightly invoked the jurisdiction u/s.263 - Decided against assessee.
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2022 (8) TMI 729
Validity of assessment - notice u/s 143(2) issued to a non-existing company - Notice issued to amalgamating company - HELD THAT:- We find that the mandatory notice u/s 143(2) of the Act was issued by the AO on 07.08.2013 to a non-existing company i.e. M/s. MCCPL on the date of issue of notice. Therefore, all consequential action become null in the eyes of law. We note that on this legal issue, the Ld. CIT(A) has rightly taken note of the decision of the Hon ble Supreme Court in the case of PCIT Vs. M/s. Maruti Suzuki India Limited [ 2019 (7) TMI 1449 - SUPREME COURT] wherein their Lordship have observed regarding invalid notice u/s 143(2) that the assessing officer was informed of the amalgamating company having ceased to exist as a result of the approval scheme of amalgamation, the jurisdictional notice was issued only in its name. The basis on which jurisdiction was invoked was fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation - Decided against revenue.
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2022 (8) TMI 728
Addition in respect of loan repayments to two related persons - AO was not satisfied about the source and mode of aforesaid repayments against loans taken by the assessee in earlier year - HELD THAT:- Loan repayments have been duly recorded in the books of accounts of the assessee; and further that these amounts are also reflected in the respective ledger accounts of the two persons Mr. Sunit and Mr. Punit. It is also not in dispute that the assessee was in regular business of manufacturing polythene bags etc. It is not in dispute that there were regular receipts in the books of the assessee from the aforesaid business of manufacturing of polythene bags. In view of the foregoing, we are of the view, that the loan repayments are fully explained in the books of accounts of the assessee. Ld.CIT(A) and the AO to have not brought any material to show that these repayments have been made by the assessee from unexplained sources outside the books of accounts of the assessee. The addition made by the AO is without any basis and without sound reasoning; and the Ld.CIT(A) erred in confirming this addition. Addition of Sundry Creditors - persons from whom purchases were made in earlier years and the amounts were outstanding at the end of the year - HELD THAT:- We observe that between 28/11/2016 and 05/12/2016 there were only six intervening days. This period of merely six days, in our opinion, in the facts and circumstances of the present case before us, was inadequate for the concerned parties to sent their replies; and for the assessee to submit any explanation/reconciliation in case the inquiries did not result in satisfactory verification. Moreover, if we consider the normal time taken in delivery of mail by the Postal Department, then the aforesaid period of merely six days seems to be grossly insufficient. We are of the view, that the assessment order was passed in a hasty manner without providing reasonable opportunity to either the assessee or to the parties to whom notices u/s 133(6) of I.T Acts were issued. CIT(A) erred in confirming the addition without noticing that the assessee and the concerned parties to whom notices were issued u/s 133(6) did not have adequate opportunity - we restore the dispute regarding the aforesaid amount to the file of the AO for fresh order in accordance with law after providing reasonable opportunity to the assessee and to all concerned. Ground allowed for statistical purposes
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2022 (8) TMI 727
Exemption u/s 11 - Cancelling Registration 12AA(3) and section 80G - contentions of the assessee that the registration granted u/s 12A cannot be cancelled with retrospective effect - whether the registration already granted can be cancelled retrospectively? - order giving effect of third member - HELD THAT:- The Judicial Member took a view that registration under section 12A and approval under section 80G(5) was rightly cancelled by the Pr. CIT(E) however, the cancellation of registration / approval would be treated only prospectively i.e. from the previous year in which the assessee sold the educational institutions and the activity of the assessee ceased to exist. Learned Accountant Member, however, took a view that the order cancelling the registration under section 12A and withdrawing approval under section 80G(5) has to be set aside and the matter be remanded to the record of the Pr. CIT(Exemption) for consideration de novo. The learned Accountant Member also took a view that the Pr. CIT(Exemption) has powers to cancel registration with retrospective effect i.e. from the date when the assessee infringes conditions subject to which registration under section 12A was granted and misused the status of the registered trust. Third Member HELD THAT:- the main aspect which has to be taken note of is the principle that the grant of registration u/s12A of the Act, does not automatically enable an assessee to claim exemption u/s 11 12 of the Act. The AO even in a case, where a trust or charitable organization for which registration u/s 12A of the Act subsists has to go in to the question, as to whether the income has been applied for charitable purposes and to the extent contemplated by Sec.11 12 of the Act. Even in a case, where the trust or charitable organization applies its income for charitable purposes, but does not have registration u/s 12A of the Act, such trust or charitable organization cannot claim the benefit of Sec.11 12 of the Act. The apprehensions expressed by the learned AM have to be addressed or looked into in accordance with law and the parties should be left to explore remedies open to them in law. Therefore, I agree with the learned JM that the impugned order cancelling registration has to be upheld and there is no necessity to set aside the impugned order and remand the issue for de novo examination by the CIT(E). Now this appeal is listed before the Division Bench for passing the order in accordance with majority opinion. Hon'ble Third Member concurred with the view of the Judicial Member and thereby as per the majority view, the impugned order of the Pr. CIT(Exemption) cancelling the registration granted under section 12A as well as withdrawing approval under section 80G(5) is upheld but the cancellation would be with effect from the previous year in which the assessee sold the educational institutions i.e. the previous year 2017-18.
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2022 (8) TMI 692
Reopening of assessment - Validity of order u/s 148 A(d) - gross violation of the principles of natural justice - HELD THAT:- From the facts as admitted in the short counter affidavit it is undisputed that the impugned order has been passed by the respondents arbitrarily and in gross violation of the principles of natural justice. Therefore, the impugned order dated 30.03.2022 u/s 148 A(d) and the impugned order u/s 154 both passed by the respondent no.2 and the impugned notice u/s 148 can not be sustained and are hereby quashed. We are frequently coming across cases where Income Tax Authorities are giving complete go by to the principles of natural justice. The excuse orally being set up usually by the departmental counsels is that there is some problem in the computerisation system which is solely controlled by the respondent no.1 i.e. the Central Board of Direct Taxes, New Delhi, and they can not, at their own, correct the system. The practice of frequently violating principles of natural justice, non consideration of replies of assessee under one pretext or the other or rejecting it with one or two lines orders without recording reasons for rejection, is gradually increasing which needs to be taken care of immediately by the respondents at the highest level, otherwise prevailing situation of arbitrary approach and breach of principles of natural justice may not only adversely affect the assessee who pay revenue to the Government, but also may develop a perception amongst people/assessee that it is difficult to get justice from the authorities in statutory proceedings. For all the reasons aforestated, the impugned order and the notice as aforesaid are quashed. Liberty is granted to the respondents to pass an order afresh under Section 148A(d) of the Act 1961 after affording reasonable opportunity of hearing to the petitioner. The respondent no.1 is directed to take forthwith all required steps to remove shortcomings in the system and to develop a system of accountability of erring officers/employees.
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2022 (8) TMI 691
Validity of notices issued u/s 148 and 143(2) - By this writ petition petitioner has challenged the impugned assessment order, inter alia, on the ground of non-compliance of the law/guidelines laid down by the Hon ble Supreme Court in the case of GKN Driveshaft [ 2002 (11) TMI 7 - SUPREME COURT] Mr. Bhattacharya prays for time to take instruction in the matter as to whether in this case objection to the recorded reason was disposed of or not before passing the impugned assessment order. List this matter on 19.07.2022 to enable Mr. Bhattacharya to produce the written instruction this matter.
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Customs
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2022 (8) TMI 726
Validity of SCN - corrigendum issued six years later from original SCN - Collection of short levy of Customs Duty - Determination of impugned short levy of duty is saved by limitation under the Act or not - HELD THAT:- Having perused both the original SCN and the corrigendum issued six years later on 19th January 2000, this Court has no hesitation in concluding that the so-called corrigendum is in fact a fresh SCN since it materially alters the original SCN both in terms of the demand raised as well as the grounds on which the demand was raised. The question framed for consideration by this Court is answered in the negative i.e. in favour of the Appellant-Assessee and against the Department. The impugned order dated 29th February, 2000 of the Commissioner of Customs and the order dated 9th January, 2002 of the CEGAT are hereby set aside - Petition disposed off.
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2022 (8) TMI 725
Violation of principles of natural justice - withdrawal of immunity, granted under Section 127H of the Customs Act, 1962, from petitioner without serving any prior notice - HELD THAT:- Evidently, no notice has been issued to the petitioner prior to withdrawal of the immunity and the order is unilateral, merely referring to the fresh evidences brought out by the investigating agency. What the evidences are, is also unknown and do not appear to have been put to the petitioner - There has been no representation on behalf of the respondent though a learned Standing Counsel had, at the time of admission, accepted notice on their behalf. Thereafter, on account of a change in panel, the present learned Senior Standing Counsel was requested to take instructions, but states that she has also been unable to obtain instructions. It was held in that matter that the forum/Court before which the order of the Settlement Commission must be challenged is that where the Assessing Officer concerned is located. However, in the present case, it is not the substantive order which is under challenge but a subsequent order, which is patently in violation of the principles of natural justice - the order is set aside, as being contrary to the principles of natural justice. Petition allowed.
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2022 (8) TMI 724
Seeking permission of presence of the advocate with the petitioner while interrogating/enquiry - seeking direction to conduct the interrogation promptly without undue delay and during the office hours - HELD THAT:- There are specific allegations made by the petitioners that their business associate, Mr. Rajesh Jain had been beaten and threatened by the respondent in the course of investigation for the purpose of recording the statement as per their wishes. In light of these serious allegations made by their business associate, the petitioners apprehend that they may, too, be physically assaulted or manhandled. Since, the allegations levelled by the business associate of the petitioners raise a reasonable apprehension on the part of the petitioners. The Hon ble Supreme Court in VIJAY SAJNANI ANR. VERSUS UNION OF INDIA ANR. [ 2012 (4) TMI 706 - SUPREME COURT] has held that it is directed that the petitioners' advocate should be allowed to be present during the interrogation of the petitioners. He/they should be made to sit at a distance beyond hearing range, but within visible distance and the lawyer must be prepared to be present whenever the petitioners are called upon to attend such interrogation. Accordingly, the present writ petitions are allowed with direction to the appropriate authority that the petitioners would be interrogated in presence of an Advocate at a visible, but not audible distance in relation to the interrogation by the Officers of DRI in accordance with the direction given by the Hon ble Supreme Court in Vijay Sajnani - It is also directed that the proceedings be video-graphed in terms of the orders passed by Hon ble Supreme Court in RAJINDER ARORA AND ORS. VERSUS UOI AND ORS. [ 2010 (12) TMI 1254 - SUPREME COURT ]. Petition disposed off.
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2022 (8) TMI 723
Requirement of license to import - hazardous goods - old and used printers - Revenue was of the view that the imported goods namely old and used printers were very old and the year of manufacture was 1999-2000, having very short shelf life and would be treated as hazardous wate as per Hazardous Waste (Management, Handling and Transboundary Movement) Rules, 2008 - absolute confiscation of goods or re-export - HELD THAT:- Once the goods have been released after inspection by authorized Chartered Engineer, as has been noted by the Hon ble High Court in M/S. PANKAJ ELECTRONICS VERSUS THE COMMISSIONER OF CUSTOMS, THE ADDITIONAL COMMISSIONER OF CUSTOMS (GR. 5) , THE ASSISTANT COMMISSIONER OF CUSTOMS (GR. 5) , CHENNAI [ 2012 (9) TMI 1225 - MADRAS HIGH COURT] , there cannot be any contrary view possible in the present appeal. Ten years down the time line after release of the goods per direction of the High Court in accordance with the order of Commissioner (Appeal) this appeal has become infructuous as the impugned printers if were to be considered as e-waste, and hazardous, then they were to be confiscated absolutely, or allowed re-export. However the goods as is evident have been allowed clearance in DTA on payment of appropriate Customs duty. Once the goods have been cleared for domestic consumption there could not be any question of absolute confiscation or re-export. Impugned order of Commissioner (Appeals) is upheld - the appeal filed by Revenue is dismissed.
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2022 (8) TMI 722
Power of Customs (appeals) in reducing the value - Valuation of imported goods - Used tyres - rejection of declared value - Confiscation - redemption fine - penalty - HELD THAT:- It is settled position in law that it is the discretion of the authority deciding to determine the quantum and fine and penalty as per the gravity of the offence involved. It is not even the case that Commissioner (Appeals) has exonerated completely the respondent. The total offence which is as per the order of the Assistant Commissioner, is about 10% of under valuation. Against the declared value of US$ 30429 (Rs 14,19,513/-), Revenue has determined the loaded value to U$ 33846.40 (Rs 15,78,935/- CIF). The total case which involves undervaluation is not more than 10% of the value of the goods under importation. Thus in the present case the redemption fine as determined by the Commissioner (Appeal) on the basis of the CESTAT Bangalore Bench order is above 10% in the case of HT. COMPANY VERSUS COMMISSIONER OF CUS., HYDERABAD [ 2006 (11) TMI 384 - CESTAT, BANGALORE ] for fixing the fine and redemption fine as per the percentage indicated in that order, which is higher than what has been upheld by the Hon ble High Court - there are no merits in the said submissions of the revenue. There are no merits in the appeal filed by Revenue challenging the order of Commissioner (Appeals) whereby he has reduced the redemption fine equivalent to 10% of undervaluation and which is in accordance with the order of Bangalore CESTAT - From the provisions of Section 128 and 128 A of the Customs Act, 1962, it is quite evident that there is sufficient power vested in the Commissioner (Appeal) to confirm, modify or annul any decision or order appealed against. Any order used in the section 128 and 128A, is wide enough to include the orders passed in respect of the imposition of penalty on the aggrieved person. Thus the order of reducing the penalty by Commissioner (Appeal) and aligning the same with the percentage of penalty as determined by the Bangalore Bench cannot be faulted with. The appeal filed by the Revenue is dismissed and the impugned order of Commissioner (Appeals) is upheld.
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2022 (8) TMI 721
Valuation of imported goods - Integrated Circuits - declared assessable value was rejected without giving any cogent reasons and the valuation was arrived at on the basis of the another bill of entry of the appellant holding that the goods are identical - assessment of Bills of Entry in question as per Section 17(5) of the Customs Act, 1962 - opportunity of personal hearing was accorded to the appellants or not - HELD THAT:- The department has not given any cogent reasons for rejection of the declared value, except stating that the appellants have imported identical goods in the past at a higher price. Nothing is forthcoming in the impugned orders as to how they constitute identical goods except for the description. We find force in the contention of the appellants that the description IC is a generic one. The department has not obtained any technical opinion on the impugned goods so as to examine the identical nature of the products. Department has not even alleged that there was flow of extra consideration, than the declared value, form the appellant to the overseas supplier, leave alone any evidence to that effect. Moreover, there are force in the argument of the appellants that the quantity imported is not comparable. Department is attempting to compare the value at which 23750 Nos of ICs were imported, with the value at which a meagre 13 Nos were imported vide another B/e. Department overlooked the very common principles of business that the price is dependent on volumes. Therefore, we find that the invocation of, Rule 4 of CVR, 2007, after rejecting the declared value under Rule 12 ibid, though for no cogent reasons, is not legally sustainable. The ultimate use of the imported goods cannot be criteria for deciding the valuation. Every business man is free to adopt his own way of conducting business. In any case, this cannot be reason for rejecting the value of the impugned goods. In the absence of any technical opinion obtained, comparing the impugned goods with other goods, simply on the basis of description, is not acceptable. Moreover, as per Rule 4 of CVR, 2007 the transaction value of identical goods in a sale at the same commercial level and in substantially the same quantity as the goods being valued shall be used to determine the value of imported goods - In the instant case, the comparison of the quantities, betrays a complete mismatch. Therefore, the valuation arrived on the basis of so called identical goods is not legally sustainable. The department has not made any case for rejection of the value declared by the appellants in the impugned Bill of Entry - Appeal allowed - decided in favor of appellant.
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2022 (8) TMI 720
Exemption from Customs Duty - Import of an aircraft that had been granted permit by the Director General of Civil Aviation, DGCA for operating non-scheduled (passenger) services - notification No. 61 of 2017 dated 03.05.2007 - Applicability of CAR 1999 or CAR 2000 - As there was difference of opinion in the two case, the division bench, accordingly referred the matter to a larger bench of the Tribunal to express its view as to which of the two views expressed by the division benches was the correct view. HELD THAT:- All the division benches of the Tribunal, except the division benches deciding King Rotors and East India Hotels [ 2011 (6) TMI 276 - CESTAT, MUMBAI ] , have followed the earlier decision of the Tribunal in Sameer Gehlot [ 2010 (11) TMI 85 - CESTAT, NEW DELHI ] that held that the aircraft operator was entitled to the benefit of the exemption notification. The decision of the Tribunal in Sameer Gehlot was placed before the division benches deciding King Rotors and East India Hotels. In King Rotors it was considered to be per incuriam and in East India Hotels it was found not to apply to the facts of the case. Reliance can be placed in the case of ivision bench of the Tribunal in COMMR. OF CUS. (IMPORT) , ACC, MUMBAI VERSUS AIRMID AVIATION PVT. LTD. [ 2020 (3) TMI 922 - CESTAT MUMBAI ] , that was decided on 11.09.2019, considered the entitlement of the aircraft operator for continuance of exemption from duties of customs that had been allowed on import of aircraft against the undertaking given by the operator for complying with the condition of operating non-scheduled (passenger) service, though the aircraft was deployed on charter hire and was considered to be a private aircraft by the department. The adjudicating authority concluded that non issue of tickets to employees of group companies, or even pre dominant use by group companies for their employees did not reduce the aircraft to a private aircraft and that offering of the imported aircraft on charter was not violative of the condition for exemption - The Tribunal, after noticing the earlier division bench decisions of the Tribunal in Sameer Gehlot and Reliance Transport on the one hand, and King Rotors on the other, dismissed the appeal filed by department and observed that The harmonious construct of the finding on obligation of performance, the lack of acceptability of the sole decision relied upon by Revenue, the consistent stand adopted by the Tribunal in all other decisions, the renewal of the permit to operate as non-scheduled passenger service by the competent statutory authority and the clarifications issued by that authority, in general as well as to the Commissioner of Customs, leaves us with no option but to dismiss the appeal of Revenue. In M/s. East India Hotels Ltd. vs. Commissioner of Customs Central Excise and Central GST, New Delhi, [ 2020 (1) TMI 766 - CESTAT NEW DELHI ] , which was decided on 14.01.2020, a division bench of the Tribunal examined whether the importer of aircraft who had been granted permit by DGCA for using the aircraft for non-scheduled (passenger) services had violated the conditions specified in the exemption notification while using the aircraft for private use and held that it had violated. The division bench denied the benefit of the exemption notification and it was held that The usage, of the impugned aircraft post import is not for non scheduled passenger/ charter air transport services but only for private use. Aircrafts and helicopters are classified under Customs Tariff Heading 88 of the First Schedule to the Customs Tariff Act, 1975. The tariff rate of duty till 28.02.2007 on the import of aircraft was 3% / 12.5%. Subsequently, pursuant to the proposal made in the Finance Bill 2007, exemption notification no. 20/2009 dated 01.03.2007 was issued inserting Entry 346B and Condition No. 101 in the earlier exemption notification dated 01.03.2002, whereby, the effective rate of duty on import of aircraft for scheduled air transport service was made nil . No exemption was, however, granted to non-scheduled air transport service and private category aircraft. However, with the issuance of the exemption notification dated 03.05.2007, the effective rate of duty on the import of aircraft for non-scheduled air transport service was made nil . This exemption notification was as a consequence of the statement made by the Hon ble Finance Minister in the Parliament - the aforesaid exemption notification dated 03.05.2007 inserted Condition No. 104 which requires at the stage of import, an approval from MCA to import the aircraft for non-scheduled (passenger) service and an undertaking by the importer to the customs authority that the aircraft would be used only for non-scheduled (passenger) services and that the operator would pay on demand, in the event of his failure to use the aircraft for the specified purpose, an amount equal to the duty payable on the said aircraft but for the exemption under the notification. Thus, if a service is covered by air transport service defined in rule 3(9) of the Aircraft Rules and is other than scheduled (passenger) air transport service defined in rule 3(49), it would be a non-scheduled (passenger) service within the meaning of clause (b) of the Explanation to Condition No. 104 of the exemption notification. Whether the aircraft was used by the appellants only for providing non-scheduled (passenger) services as defined in clause (b) of the Explanation to Condition No. 104 of the exemption notification? - HELD THAT:- Non-scheduled (charter) services have been defined in clause (c) to mean services provided by a non-scheduled (charter) air transport operator, for charter or hire of an aircraft to any person, with a published tariff, and who is registered with and approved by DGCA for such purposes and who confirms to the Civil Aviation Requirements. An aircraft operator can be said to provide non-scheduled (charter) service only if the service satisfies the requirements of clause (c). The appellants are not registered and approved with DGCA as non-scheduled (charter) air transport operator and in some cases there is no published tariff. The appellants, therefore, cannot be said to have provided non-scheduled (charter) services as defined in clause (c) - The appellants have, therefore, provided non-scheduled (passenger) services, as defined in clause (b) of the Explanation to the exemption notification. Whether, non publication of tariff is violative of Explanation (c) of Condition No. 104? - HELD THAT:- Merely because the appellants can also conduct charter operations would not mean that the appellant would becomes a non-scheduled (charter) permit holder and consequently required to have a published tariff. The definition of non-scheduled (passenger) service given in clause (b) of the Explanation, as analyzed above, does not require the publication of tariff. It is also seen that under rule 135 of the Aircraft Rules, 1937, it is only the air transport undertaking offering scheduled air transport services in accordance with rules 134(1) and 134(2) that are required to publish their tariff. Whether the aircraft can be used by members of public? - HELD THAT:- The personnel of companies which are group companies of the appellant are also members of public. The aircraft is, therefore, available for used by the public. Even otherwise, this cannot be a reason to hold that the air transport service provided by the appellants would fall outside the scope of non-scheduled (passenger) service. Whether the customs authorities have the jurisdiction to decide violation of the exemption notification? - HELD THAT:- It is the jurisdictional authorities under the Civil Aviation Ministry that alone can monitor the compliance of the conditions imposed and the Customs Authorities can take action on the basis of the undertaking submitted by the importer only when the authority under the Civil Aviation Ministry holds that the conditions have been violated. Doctrine of Per incuriam - HELD THAT:- There are no difficulty in holding that the division bench in King Rotors was not justified in holding that the decision of the earlier division bench in Sameer Gehlot had been rendered per incuriam as neither it was pointed out that provisions of a Statue or a judicial authority of binding nature had been ignored. Infact, as noticed above, all that the division bench in King Rotors observed was that the post importation nature of the subjects of undertakings was not appreciated by the bench . Analysis of the division bench decisions - HELD THAT:- A perusal of the order passed in East India Hotels would indicate that the aircraft had been purchased by East India Hotels on 21.05.2007 and the show cause notice alleging violation of the conditions of the exemption notification was issued on 27.06.2008. This show cause notice was, however, adjudicated upon by order dated 27.07.2010. Thus, it would be the CAR 1999 that would be applicable and not CAR 2010. The two decisions in Sameer Gehlot and King Rotors could not, therefore, have been distinguished for the reason that CAR 2010 would apply and not CAR 1999. The conclusion, therefore, that emerges is that King Rotors does not lay down the correct position of law. The appeals may now be listed before the regular division bench for hearing.
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2022 (8) TMI 719
Classification of import goods - differential pressure sensors and tyre pressure monitoring sensors - to be classified under heading 8708 or under heading 9026? - HELD THAT:- The impugned devices are used for measuring the pressure of gases. They are fitted with sensors sensitive to the variations in pressure. Heading 9026 covers instruments and apparatus like manometers for measuring or checking the pressure of liquids or gases. Pressure gauges indicate the pressure of a liquid or gas in a closed space - Further, Heading 9026 also includes differential pressure gauges, used to measure pressure differences. The devices under consideration use electrical phenomena to measure the pressure. Therefore, these instruments can be classified under Heading 9026. Sub-heading 9026 20 00 specifically includes instruments for measuring or checking the pressure. The Hon ble Tribunal in COMMISSIONER OF CUSTOMS, BANGALORE VERSUS SPM INDIA LTD. [ 2006 (12) TMI 368 - CESTAT, BANGALORE ], observed that as the device does not have controlling and operating functionalities, they are not classifiable under sub-heading 9032 as an automatic controlling instrument and is eligible for classification under Tariff Item 9026 80 90 of the Tariff Act, 1975 - Taking into account the preceding discussions, it is opined that Heading 9026 and more specifically sub-heading 9026 20 00 is the appropriate classification for the devices under consideration. The differential pressure sensor and tyre pressure monitoring system merit classification under subheading 9026 20 00 of the first schedule of the Customs Tariff Act, 1975.
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2022 (8) TMI 718
Classification of devices - wireless speaker device - classifiable under sub-heading 8518 21 00 or not - HELD THAT:- The device is a sub-woofer that has Wi-Fi and Bluetooth connectivity features. It is a single speaker with a single drive unit mounted in an enclosure. It converts electrical variations into mechanical variations which are then communicated to air to produce sound. It is designed to produce low frequencies, like those associated with bass or drum for music or thunder and explosions in a home theatre. The device does not have a microphone and is not capable of voice interaction. However, the product is compatible with the Echo device (via Wi-Fi or via Bluetooth). Though the device contains Bluetooth and Wi-Fi features for transmission or reception of data by electromagnetic waves in a wireless network, this functionality, however, is just an additional feature, which makes it compatible with separate Echo devices. This device is only a speaker and its principal function is to reproduce sound by converting electrical variations or oscillations from an amplifier into mechanical vibrations which are communicated to the air, which is correctly classifiable under Heading 8518. Speakers classified under Heading 8518 include both passive speakers and active speakers. Active speakers, like many sub-woofers, contain a built-in audio amplifier. The sub-heading under which speakers are classified depends on the number of drive units - the actual loudspeaker cones or ribbons - in each cabinet or enclosure. Speakers with a single drive unit in each cabinet are classified under sub-heading 8518 21 00. The impugned device has a single driver. Thus, wireless speaker device Model No. P5B83L merits classification under Heading 8518 and more specifically under sub-heading 8518 21 00 of the First Schedule to the Customs Tariff Act. Application disposed off.
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Insolvency & Bankruptcy
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2022 (8) TMI 717
Refusal of connection for new electricity connection - demand of past outstanding dues against respondent no.3 - Section 53(1)(f) of the IBC - HELD THAT:- Regulation 32-A of the Liquidation Process Regulations of 2016 clearly specifies that liabilities for the purpose of going concern sales in liquidation are only those liabilities which have been identified and earmarked for the going concern sale by the committee of creditors, if not, by the liquidator - The said provision, read with Regulation 39-C of the Corporate Persons Regulations, 2016, is unambiguous and leaves no scope of construing that all the liabilities, including pre-CIRP liabilities, are transferred to the successful Resolution Applicant in a going concern sale. It is well-settled that the debts of the power distribution licensee do not operate as charge on the assets of the corporate debtor. The Regulations framed under the authority conferred by the IBC cannot be construed to override the provisions of the Code itself. Hence, no interpretation contrary to Section 53 of the IBC which, again, is preceded by a non obstante clause, can be attributed to the expression going concern sale , as contemplated in Rule 32 of the Liquidation Process Regulations, 2016 - In the present case, the distribution licensee had made its claim during the resolution process as well as before the liquidator. Thus, whatever claim was allowed by the liquidator and sanctioned by the NCLT as Adjudicating Authority would be payable to the WBSEDCL from the sale proceeds in the ratio and order of priority as stipulated in Section 53. The WBSEDCL cannot, thus, have a double claim on the sale proceeds on the one hand and again from the auction purchaser merely on the strength of the expression going concern sale as used in the EOI. The claim of the WBSEDCL against the petitioners for the electricity dues left by the erstwhile owners/management of the petitioner no.1-company prior to commencement of the CIRP, is turned down - The WBSEDCL is directed to process the application of the writ petitioners for new electricity connection at the earliest and to give such electricity connection to the petitioners, without insisting upon payment of such dues within a month from compliance of all other formalities by the petitioners in that regard. Application allowed.
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2022 (8) TMI 716
Refusal to grant new electricity connection to the petitioners in respect of the factory of the petitioner no.1- Company, unless the alleged outstanding dues left by the erstwhile owner, to the tune of above Rs.3.5 crore, was deposited by the petitioner - HELD THAT:- Regulation 32-A of the Liquidation Process Regulations of 2016 clearly specifies that liabilities for the purpose of going concern sales in liquidation are only those liabilities which have been identified and earmarked for the going concern sale by the committee of creditors, if not, by the liquidator - The said provision, read with Regulation 39-C of the Corporate Persons Regulations, 2016, is unambiguous and leaves no scope of construing that all the liabilities, including pre-CIRP liabilities, are transferred to the successful Resolution Applicant in a going concern sale. It is well-settled that the debts of the power distribution licensee do not operate as charge on the assets of the corporate debtor. Both sale of the corporate debtor and the business(es) of the corporate debtor as a going concern, as envisaged in Regulation 32, Clauses (e) and (f) respectively, do not contemplate automatic transfer of all pre-CIRP liabilities of the corporate debtor to the auction purchaser - the Regulations framed under the authority conferred by the IBC cannot be construed to override the provisions of the Code itself. Hence, no interpretation contrary to Section 53 of the IBC which, again, is preceded by a non obstante clause, can be attributed to the expression going concern sale , as contemplated in Rule 32 of the Liquidation Process Regulations, 2016. In the present case, the claim of the WBSEDCL of outstanding dues from the petitioners as a pre-condition for grant of electricity cannot be sustained. The WBSEDCL shall give new electricity connection without insisting upon payment of such dues by the petitioners, subject to compliance of all other formalities by the petitioners in connection with their application for new electricity connection at the earliest, latest within a month from compliance of such formalities by the petitioners. Later Judgement: At this juncture after delivery of judgment learned counsel for the respondent-Distribution licensee makes a prayer for stay of operation of the above judgment and order - However, since a month has been given for the WBSEDCL to reconnect electricity, such further stay is deemed unnecessary and hence refused.
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2022 (8) TMI 715
Power of RP or CoC to call for final compliant Resolution Plan once the CoC concluded the negotiations on Resolution Plans - only resolution plan submitted by the applicant was deemed to be approved - it is alleged that the RP misconstrued amended Regulation 39(3) issued by IBBI dated 07.08.2020 showing the same as pretext and throwing the blame on CoC - retrospective or prospective effect of amendment - HELD THAT:- it is clear case that the RP intend to invite fresh resolution plans under the guise of final compliant resolution plan is in our view highly misinterpreting the amendment to the regulations and it is act of contemptuous. - Hence, this Tribunal also draws adverse inference against the RP. The amendment does not give the powers to call for fresh resolution plans as intended by the 1st Respondent/RP under the guise of final compliant resolution plan as stated by the Respondent/RP in his e-mail dated 13.08.2020. This Tribunal makes it clear that the amendment to the Regulation 39(3) of the IBBI Regulations, 2016 as referred above is gave the powers to the committee to evaluate resolution plans received as per evaluation matrix i.e. RFRP and deliberate on the feasibility and viability and vote on all such resolution plans simultaneously, does not mean for calling fresh plans. The evaluation matrix has been provided under Regulation 36-B of IBBI Regulations, 2016 and the Regulations in this regard along with the substantial provision of law have to be read harmoniously. The Learned Adjudicating Authority misinterpreted the Regulations 39(3) of the I B Code, 2016 and not properly understood the judgment of the Hon ble Supreme Court in JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE ASSOCIATION ORS. VERSUS NBCC (INDIA) LTD. ORS. [ 2021 (3) TMI 1143 - SUPREME COURT ]. The Hon ble Supreme Court in the aforesaid judgment held that the said amendment of sub-regulation (3) of Regulation 39 of CIRP Regulations insertion of sub-regulation (3A) and (3B) thereto, could only be visualised as clarificatory in nature and in any case even before amendment there had not been any prohibition in putting two or more confirming Resolution Plans to vote simultaneously - The Hon ble Supreme Court also clarified the intent of the amendment to the Regulations and the Hon ble Supreme Court also did not hold that as per the amended regulation a fresh/final compliant resolution plans shall be called beyond the time stipulated under the Code. Further, this Tribunal is of the view that the amendment is only to consider the feasibility, viability of each plan and not to call fresh resolution plans (decided by RP) under the guise of final compliant resolution plan. This Tribunal hold that the order passed by the Adjudicating Authority dated 07.05.2021 is per se illegal and without application of mind and also not in conformity with the provisions of law - this Tribunal comes to a resultant conclusion that the Appellant has made out a prima facie case to be interfered with the order passed by the Adjudicating Authority. Appeal allowed.
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2022 (8) TMI 714
Seeking directions to Respondents No.1 and 2 to provide the accounting data record of the Corporate Debtor in soft data and physical record from 01.04.2014 till 31.03.2017 - Section 19(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Even if the contention of the respondents that the accounting data has been corrupted is accepted, the hard copies of the same must be with the suspended management of the Corporate Debtor as it is required to be maintained for audit purposed. As per Section 19(1) of the Code, the suspended management is under obligation to extend all assistance and cooperation to the RP as required in managing the affairs of the company. Mr. Rajnishpal Singh Dhaliwal - respondent No.1 and Mr. Shivrajpal Singh Dhaliwal - respondent No.2, Suspended Directors of erstwhile Management of Corporate Debtor are directed to handover accounting data record of the Corporate Debtor in soft data and physical record from 01.04.2014 till 31.03.2017 to the RP and provide assistance as required by the RP within fifteen days from the date of this order, failing which the RP is at liberty to approach local police on the basis of this order and local police to render all necessary assistance to RP. Application allowed.
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2022 (8) TMI 713
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - service of demand notice - whether the demand notice in Form 3 dated 20.07.2020 was properly served? - HELD THAT:- The petitioner has placed a copy of e-mail which was delivered to the corporate debtor and reply to that has been duly received. Whether the operational debt was disputed by the corporate debtor? - HELD THAT:- It is to be noted that none appeared on behalf of the corporate debtor despite repeated service and has been set ex parte vide order dated 27.05.2022. Moreover, the petitioner has appended affidavit u/s 9(3)(b) stating that even after reply to the demand notice, the corporate debtor has not cleared the outstanding dues and instead stated that payments will be made after the receipt of payment by the corporate debtor from M/s Hyosung India Pvt. Ltd., for which the present petition has been filed by the operational creditor. Whether this application is filed within limitation? - HELD THAT:- This application was filed on 17.09.2020 vide Diary No.01038. Whereas the date of default is 17.10.2019, therefore, this Adjudicating Authority finds that this application has been filed within limitation. Thus, there is a total unpaid operational debt (in default) of ₹1,27,40,356/-. The operational creditor has provided construction services to the corporate debtor and raised invoices attached as Annexure A-4. Accordingly, the petitioner proved the debt and the default, which is more than Rupees one lakh (prior to the amendment in threshold limit of one crore vide notification No. S.O.1205(E) dated 24.03.2020) by the respondent-corporate debtor - It is seen that the petition preferred by the petitioner is complete in all respects. The material on record clearly goes to show that the respondent committed default in payment of the claimed operational debt even after demand made by the petitioner. Petition admitted - moratorium declared.
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2022 (8) TMI 712
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- This Bench feels that the Petitioner has successfully demonstrated the existence of debt and default committed by the Corporate Debtor in this case - Since the Corporate Debtor did not file any reply, the claim of Operational Creditor remained unchallenged. Since the date of default is on 14.06.2021, the Company Petition being filed on 22.02.2022 is well within limitation. Thus, Company Petition satisfies all legal requirements for admission - Petition admitted - moratorium declared.
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2022 (8) TMI 711
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - Existence of debt and dispute or not - HELD THAT:- On perusal of the records it is found that the corporate debtor has neither replied nor contested the debt as per legal notice dated 25.01.2020 by the applicant. In the balance sheet as at 31.03.2019, under the head Notes forming the part of the balance sheet , the corporate debtor has shown Rs. 9,03,61,824/- as unsecured loan from the applicant thereby acknowledging the debt. Similarly, under the head Notes forming part of accounts , the corporate debtor has acknowledged that during the year company has received ECB loan amount Rs. 4.75 crore (ROI at LIBOR + 3%) from the applicant for the purpose of expansion of existing facilities and acquiring capital goods as per the agreement between both the companies. Though the Joint Venture Agreement (JV) may be still in existence, but, if the default of debt by one JV partner to another is proved, there is no ban in admitting the application. The clause of Arbitration in JV Agreement also cannot be taken on defence to oppose the application under Section 7 since the default of financial debt is established by the admission of corporate debtor in its own records and documents. The present application is complete in terms of Section 7 (5) of the Code. The applicant is entitled to claim its dues, establishing the default in payment of the financial debt beyond doubt - the present application is admitted and CIRP is ordered to be initiated against corporate debtor - Moratorium declared.
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2022 (8) TMI 710
Seeking enforcement of the Resolution Plan as approved by this Adjudicating Authority - Respondent Damodar Valley Corporation (DVC) is not complying with the Resolution Plan and this is causing prejudice to the applicant - Section 60(5) Insolvency and Bankruptcy Code, 2016, read with Rule 11 of the NCLT Rules, 2016 - HELD THAT:- Once the Resolution Plan has been accepted and the claim of the DVC was pegged and allowed at Rs. 24.67 Crores, thereby excluding the total pre CIRP claim to the extent of Rs. 64.44 Crores, the claim became final for all practical purposes. The Corporate Debtor cannot have benefit on both counts. On the one hand, the Corporate Debtor has saved itself by waiver of all pre CIRP dues and on the other hand, if there is any adjustment of accounts in the applicant office, the Corporate Debtor cannot claim the same as its own receivables, and claim the said amount from the applicant. The applicant has borne all the pre CIRP dues as its bad debts and if it has fortunately adjusted some amounts that came to it through some decision of the Hon'ble Supreme Court. It should have the benefit of setting off that amount against its bad debts. There is no purpose to unjustly enrich the new investors who have entered the shoes of the Corporate Debtor by further exploiting and squeezing the DVC - there are no merit in the demand of the Corporate Debtor/applicant, the relief sought by the applicant staying the demand of the DVC beyond Rs. 24.67 Crores is thus rejected. Application dismissed.
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2022 (8) TMI 709
Maintainability of application - initiation of CIRP - debt due from proprietorship firm - Corporate Debtor is the proprietor company of the proprietorship firm - Financial Creditors - privity of contract between the applicant and the corporate debtor - existence of debt and dispute or not - time limitation. Whether the Corporate Debtor herein, being the proprietor company of the proprietorship firm being The Mining Engineering Corporation can be proceeded against for the liabilities incurred by the said proprietorship firm? HELD THAT:- Hon'ble Supreme Court's decision in Amway India Enterprises Pvt. Ltd. vs. Ravindranath Rao Sindhia and Ors. [ 2021 (3) TMI 245 - SUPREME COURT ], wherein, while making it clear that that the consortium could not be allowed to rely upon their status as independent entities while dealing with MMRDA, the Apex Court held that The provisions of Rule 4 of Order XXX have no application to such a suit as by virtue of Order XXX Rule 10 the other provisions of Order XXX are applicable to a suit against the proprietor of proprietary business insofar as the nature of such case permits . This means that only those provisions of Order XXX can be made applicable to proprietary concern which can be so made applicable keeping in view the nature of the case. Thus, the proprietor and the proprietorship firm herein cannot be deemed to be separate entities and the Corporate Debtor, being the proprietor will be liable to clear the dues of the proprietorship concern. Whether a petition under section 7 of the Code can be filed against the Corporate Debtor herein, for the debt due from a proprietorship concern? - HELD THAT:- Sections 2(f) of the code which makes it clear that the Code, including Part II of the Code shall apply to proprietorship firms. Further, under section 3(8) of the Code, the Corporate Debtor means a corporate person who owes a debt to any person - In the instant case, the Corporate Debtor, in its role as a proprietor, owes the debt incurred by The Mining Engineering Corporation, towards the Financial Creditor. Further, while the definition of corporate person under section 3(7) of the Code does not include proprietorship firms, in the instant case, the Corporate Debtor is a company as defined under section 2(20) of the Companies Act, 2013. Therefore the instant petition against the Corporate Debtor is maintainable in this regard. Time Limitation - HELD THAT:- The date of default mentioned in the petition is 30.09.2016. The instant petition has been filed on 27/09/2019. The Corporate Debtor has acknowledged the debt by means of confirmation of accounts till 1.04.2019. period. Further, the Corporate Debtor herein has deducted Tax deducted at Source (TDS) on the amounts payable to the Financial Creditor. As such, the instant petition is within limitation. Further, such acknowledgments on part of the Corporate Debtor will also be deemed to be admission of debt due on its part. Keeping in view that a default in the payment of a financial debt has occurred by the Corporate debtor, and there is an acknowledgment of Financial Debt and also that the said application is not barred by limitation, it is concluded that the instant application under section 7 of the Code is complete in all respects - application admitted - moratorium declared.
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2022 (8) TMI 708
Seeking extension of liquidation period by one year - HELD THAT:- Six months extension of the liquidation period is granted. The Liquidator shall complete the liquidation process within the extended period and file an application for dissolution of the Corporate Debtor. Seeking return of original Title Deeds of the property, more fully and particularly, described in the Application from the Debenture Trustees - seeking declaration that the Trust Deeds and the Deed of Mortgages, more fully and particularly, described in the Application and the prayers be declared null and void - HELD THAT:- In view of the facts that the original Title Deeds in respect of the several properties of the Company [in Liquidation] are not traceable or found, this Hon'ble Tribunal thinks it fit to pass the following orders:- The Liquidator shall make a paper publication informing the public that the original Title Deeds of the properties of the Company [in Liquidation] are untraceable and the certified copy obtained by the Liquidator of those properties shall be deemed to be the original Title Deeds - The Liquidator shall apply in the Office of the concerned Registrar of Assurances and obtain authenticated certified copy of each of Conveyance Deeds of the properties of the Company [in Liquidation]. Such Application for seeking copy of an authenticated certified copy of the Conveyance Deeds shall be made by the Liquidator by making specific reference to the order passed by this Tribunal. Application allowed.
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Service Tax
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2022 (8) TMI 707
Validity of show cause notice - University - Levy of service tax - affiliation fees, penalty / fine for delayed payment from Colleges affiliated to it - rents from certain buildings rented out - case of the petitioner is that, it is imparting education and the entire affiliation fee received by it is towards the same and as per the provisions of Section 66D of the Act and N/N. 25/2012-ST dated 20.06.2012. HELD THAT:- It is not the case of the respondents that the consideration received towards the educational activity is taxable for service tax. It is their case that affiliation fee collected by the petitioner University cannot be considered as a consideration for providing educational services - the act of University in granting affiliation to a private college has to be considered as a service in furtherance of providing education is erroneous. Whether the petitioner is liable to pay the service tax on the rent received by it from the buildings let out by it? - HELD THAT:- Normally, a person is bound to reply to the show cause notice issued by the Authority and it is not appropriate for him to approach the Court without doing the same. However, in the instant case, the dispute does not pertain to quantification of service tax, but whether the respondents Authorities have jurisdiction to demand service tax for the activity of petitioner University in providing education. Further, it is the clear stand of the respondents Authorities before this Court that the activity of the petitioner Institution in granting affiliation to Colleges and consideration received towards it is taxable under the Service Tax. It is not appropriate to relegate the petitioner before the adjudicating Authority - Petition disposed off.
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2022 (8) TMI 706
Maintainability of petition - compliance with the requirement of pre-deposit or not - Violation of principles of natural justice - Appellate Authority has ignored to afford opportunity of hearing before rejecting the appeal filed under Section 83 of the Chapter-V of the Finance Act, 1994 read with Section 35F of the Central Excise Act, 1944 - HELD THAT:- This Court, without entering into merits of the matter, feels it just and proper to relegate the Petitioner to approach the Appellate Authority namely Commissioner (Appeals), Central GST and Customs and submit before him the necessary documents showing compliance of statutory requirement including pre-deposit being made as required under Section 83 of the Chapter-V of the Finance Act, 1994 read with Section 35F of the Central Excise Act, 1944. Petition disposed off.
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2022 (8) TMI 705
CENVAT Credit - Insurance services - exempt service has been provided by applicant or not - applicability of Rule 6 of the CENVAT Credit Rules - HELD THAT:- It is not in dispute that services provided by the assessee is insurance auxiliary services concerning life insurance. Any service under this category is covered by Sub-rule (5) of Rule 6 of CENVAT Rules. CESTAT has rightly analysed the position and following the decision of CESTAT of Delhi in MAX NEW YORK LIFE INSURANCE CO. LTD. VERSUS CCE AND ST (LTU) , DELHI AND VICE-VERSA [ 2018 (2) TMI 1262 - CESTAT NEW DELHI] has held that since no exempt service has been provided by the assessee, it is entitled for the CENVAT credit. There are no error in the order passed by the CESTAT - appeal dismissed.
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2022 (8) TMI 704
Clearing and Forwarding Agent Services - demand of service tax on the basis of information obtained from the Income Tax Department and the figures appearing in TDS statements appearing in Form 26AS - Extended period of limitation - HELD THAT:- The very basis of the impugned demand is the figures appearing in the Income Tax Portal and the Profit and Loss account - It is also found that the Ld. Commissioner has duly noted the fact that the Appellant was duly audited by the Service Tax Department for the compliance up to the Financial Year 2013-14. Since the records have been duly audited, the demand cannot be raised for the same period on account of change in the opinion. Further, it is found that the Appellant had duly submitted the VAT Returns which have been recorded by the Ld. Commissioner in the impugned order. In the VAT Return for the Financial Year 2015-16, the Appellant has duly disclosed the sales turnover of Rs.8,13,46,124/- on which VAT has been duly paid, whereas the impugned demand has been raised considering the value of taxable services to be Rs.8,28,06,929/- by taking higher of the amount appearing in profit and loss account and the Income Tax Return. Similarly, for the Financial Year 2016-17, the value of taxable services have been considered to be Rs.8,96,52,728/- whereas the appellant has duly disclosed the sales turnover of Rs.8,79,88,828/- in its VAT Return on which VAT has been paid at applicable rate - it appears that the major demand has been computed on the sales turnover. Time Limitation - HELD THAT:- There are no ingredient of fraud or suppression with an intent to evade payment of tax - the demand raised for the period up to March 2015 is completely barred by limitation and accordingly the demand is set aside. Further, since there is no element of fraud or suppression, the entire penalty amount is liable to be set aside. Demand pertaining to the Financial Year 2015-16 and 2016-17 - HELD THAT:- By considering the reconciliation statements and the Chartered Accountant Certificate submitted by the Appellant before the Adjudicating Authority, as well as the VAT returns, there is no occasion to sustain the demand as raised in the impugned order. The instant appeal is allowed.
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2022 (8) TMI 703
Non-payment of service tax - demand of interest under Section 75 of FA - demand of service tax has been rightly raised on the basis of Form-26AS (under the Income Tax Provisions) or not - HELD THAT:- There is no delay in payment of service tax and the appellant have rightly paid service tax, upon completion of the work, coinciding with raising of the invoice within 30 days. Accordingly, the demand of interest is set aside. Demand of service tax on the amount of Rs.1,05,050/- due to mis-match in Form 26 AS and ST-3 Return - period April, 2017 to June, 2017 - HELD THAT:- Evidently, Form 26 AS reflects the amount on cash basis, and accordingly, the demand on this score has been wrongly raised. Thus, the demand has been wrongly raised on the amount of Rs.1,05,050/- and accordingly, this ground is also allowed in favour of the appellant and the demand is set aside - All penalties are also set aside - appeal allowed.
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Central Excise
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2022 (8) TMI 702
Time Limitation - Wrongful availment of CENVAT Credit - motor vehicles cleared without payment of excise duty claiming exemption under N/N. 06/2006-CE dated 01.03.2006 - Case of Department is that petitioner has wrongly availed of the exemption inasmuch as Cenvat Credit on the input consumed in the manufacture of bodies manufactured on duty paid chassis received from independent owners of the chassis had been taken and the vehicles so manufactured had been cleared for payment of applicable central excise duty - inordinate delay in adjudication of the show cause notices as per Section 11(A) of the Central Excise Act, 1944. HELD THAT:- The issue as regards inordinate delay in adjudication of the show cause notices as per Section 11(A) of the Central Excise Act, 1944 came to be dealt with exhaustively by a Division Bench of this Court in M/s Shree Baba Exports through proprietor Ms. Jyotsna Agarwal vs. Commissioner, GST Central Excise, Commissionerate, Chandigarh and another (CWP No. 11860 of 2021) decided on 15.03.2022 [ 2022 (3) TMI 749 - PUNJAB HARYANA HIGH COURT] , where it was held that it is clear that in Section 11-A(11), the legislature has prescribed a time limit. The Authority(s) are duty bound to abide the same. The expression where it is possible to do so does not mean that the time prescribed can be extended perpetually. The time limit cannot be taken to be directory except in a case where the Authority has a reason to offer as an explanation for extending the said time limit. In the present case, no explanation has been offered in the written statement which can be held to be a plausible explanation for not adjudicating upon the Show Cause Notice within the time prescribed. In the facts of the present case the impugned show cause notices were issued in the year 2008. The same have not been adjudicated upon and the only explanation coming forth in the written statement is that the matter had been transferred to the Call Book as per CVIC guidelines issued from time to time. There are no cogent basis or legal impediment has been offered which may be construed to be a plausible explanation for not adjudicating upon the show cause notices within the time prescribed. In view of the above and by following the dictum laid down in COMMISSIONER GST AND CENTRAL EXCISE ANR. VERSUS M/S SHREE BABA EXPORTS [ 2022 (8) TMI 634 - SC ORDER] the impugned show cause notices cannot sustain as there has been an inordinate delay in adjudication of the same. Petition allowed.
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2022 (8) TMI 701
CENVAT Credit - inputs - castings and cast articles of iron, pipe fittings etc. falling under Central Excise Tariff 7325 and 7307 - activity amounting to manufacture or not - denial of CENVAT Credit availed by the appellant on the strength of invoices issued by the supplier - HELD THAT:- The Ld. Commissioner in the impugned Order has observed that the goods removed by the consigner is not a manufactured product and therefore, the assessee appellant is not entitled to credit. He has also observed that the assessee availing the credit was under obligation to examine the fact as to whether the goods received by him are a manufacture product and whether duty was rightly charged by the supplier i.e., M/s. Indo Thai Flexible Tubes Ltd. In the present case, it is found that the jurisdictional Commissioner of the said vendor has dropped the entire proceedings which has been duly upheld by the Tribunal as well as the Hon ble High Court. There are no reason to deny the claim of CENVAT Credit in the hands of the Appellant who is the recipient of the impugned goods from the said manufacturer - also, the legal position already stands decided in favor of the Appellant that CENVAT Credit cannot be denied on input on the ground that the activity undertaken by the assessee does not amount to manufacture when the assessee has admittedly deposited output duty on final product. Appeal allowed - decided in favor of appellant.
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2022 (8) TMI 700
Levy of penalty - delay in filing ER-1 returns - violation of Rule12 (1) of Central Excise Rules, 2022 and of Rule 12 (6) of Central Excise Rules, 2022 of Central Excise Act - intent to evade present or not - HELD THAT:- No doubt Rule 12 is silent about the element of intent. But the above facts clarifies that present is not the case of evasion of duty nor even the case of non-filing the requisite returns for the period in question. The only issue is that despite that the appellant was filing GST Returns but has failed to file the ER Returns for the same period - There is a substantial compliance on part of appellant to all the legal provisions which were in effect during the impugned period. Interest of justice requires that Rule 12 (6) of Central Excise Rules 2002 would not have been invoked. The imposition of late fee is nothing less than imposition of penalty. Penalty is a grave word which should be imposed only in case of apparent mala fide fraud, suppression of facts, misrepresentation etc. There is nothing apparent in this case on the part of the appellant. Appeal allowed.
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2022 (8) TMI 699
Disallowance of MODVAT Credit - ingots/billets and rounds - Rail Anchor and Suspension Shackle - Fish Plate Bar and Loose Jaw Bar - credit denied on the ground that the inputs (ingots, billets and rounds) used in manufacturing Elastic Rail Clip (ERC), Modified Loose Jaw (MLJ), were not of the type specified by the buyer - HELD THAT:- There can be no dispute that according to Chapter Note 1(f), Chapter 72 of the Excise Tariff, steel containing by weight 0.6% or more of silicon was alloy steel. Even otherwise, there has been no attempt on part of the revenue to controvert Mak Engineering s averments and submissions regarding the chemical composition of EN-45 grade steel or the views given in the publication Tool and Alloy Steel of M/s Dhiraj Steel Company produced in support thereof - no substantive evidence has been brought on record to support the Commissioner s observations that during the period in question, Mak Engineering had mostly purchased non-alloy ingots for manufacture of ERC and MLJ. Mak Engineering s final products manufactured from EN-45 alloy steel had been accepted by the railways after due quality inspection. This, by itself, leaves little room to allege that the input materials were something other than alloy steel. The ingots/billets procured by Mak Engineering and directly sent to its job workers, who had undertaken re-rolling on job work basis, were of grade EN-45. Such grade had also been specifically mentioned in the job work challans issued by the job workers. The job workers challans, manufacturers challans and other relevant challans should have been given due recognition by the Commissioner. On a query from this Bench, Sri Khaitan satisfied us that all such challans had formed part of the Department s seized records - the Commissioner wrongly observed that the invoices and relevant documents relating to job work showed that the disputed inputs were non-alloy. The said observations are contrary to the records of the case. The case of alleged price differential between alloy and non-alloy steel products sought to be made against the appellant on the basis of two invoices, one dated 08.08.1996 and the other dated 22.09.1996, lacks merit - it is evident from the accompanying challan that the goods were actually of grade EN-45 i.e. alloy steel. The said accompanying challan has been wrongly ignored and it accordingly follows that the entire case of alleged price differential must fail. Even otherwise, the said two invoices under consideration were more than one and half months apart and ought not to have been compared in the manner as done while framing the allegations in the show cause notice. Nothing turns against Mak Engineering on the basis of such alleged price differential. Thus, there is no proper justification to deny the credit on inputs in relation to manufacture of ERC and MLJ. Rail Anchor - It is the revenue s case that according to Chapter Note 1(f), Chapter 72 of Excise Tariff, steel having silicon and manganese less than 0.60% and 1.65% respectively fell in the category of non-alloy steel - HELD THAT:- It seems wholly unreasonable on part of the Commissioner to have given a go-bye to the ingot manufacturers invoices for ingots used in the manufacture of Rail Anchor which described the products as alloy ingots. When admittedly the ingot manufacturers had supplied alloy ingots under proper central excise invoices, subsequently confirmed vide the statements given by the said ingot manufacturers, Mak Engineering had availed Modvat on alloy steel, the job worker namely, ASRM had also categorically stated to have rolled alloy steel anchor bars and the use of alloy steel having chromium in the range of 0.32% to 0.38% for manufacturing Rail Anchor was not prohibited as per the Railways Specification, there remains no scope to sustain the findings that Mak Engineering had irregularly availed credit on the inputs. Nothing turns on the fact that the railways inspection agency, M/s Rites had never checked the Rail Anchor for chromium content. The Commissioner has not been able to appreciate the statement dated 19.07.2000 of Sri Dilip Sen of Mak Engineering in its proper perspective. It must be noted that the said representative was never asked questions as to the chromium content of the material used for manufacturing Rail Anchor. Accordingly, the said statement cannot be of much relevance in the facts and circumstances of the case - the Commissioner had wrongly held that no documentary evidence had been produced to show that without changing the percentage of carbon, silicon, manganese and sulphur, only presence of chromium at 0.3% will change the character of non- alloy steel to alloy steel products. This observation is completely arbitrary and perverse inasmuch as it is based on a total ignorance of the provisions of Chapter Note 1(f) of Chapter 72 of the Excise Tariff. Thus, the denial of Modvat Credit in relation to Rail Anchor was not in accordance with law and we set aside the impugned findings in this regard. CENVAT Credit on Fish Plate Bar and Loose Jaw Bar - denial on the ground that duty had been paid by the manufacturer, M/s Bengal Hammer Industries (Unit II) whereas the commercial invoice for the same had been raised by Unit III or Unit IV of the said manufacturer - HELD THAT:- Having gone through the excise documents issued by the said M/s Bengal Hammer Industries Pvt. Ltd., it is clear that the bills contained reference to the said manufacturer s Works, Rolling Mills, Registered Office as well as City Office. The commercial invoices of the said manufacturer containing reference of its Units III and Unit IV could not have, by itself, negatively impacted the availment of credit at the end of the supply recipient. Mak Engineering had rightly submitted that there was nothing illegal or wrong about the aforesaid internal arrangement of issuance of commercial bills, central excise invoices etc. at the end of the input supplier, M/s Bengal Hammer Industries Pvt. Ltd. - It is also not that the revenue has controverted Mak Engineering s assertion that M/s Bengal Hammer Industries Pvt. Ltd. maintained the same bank account for all its units and Mak Engineering had duly made payment for the inputs to the said M/s Bengal Hammer Industries Pvt. Ltd., pursuant to raising of central excise invoices and commercial invoices. The revenue has not been able to establish that the inputs in question had not been received by Mak Engineering directly from the factory of M/s Bengal Hammer Industries Pvt. Ltd. aforesaid or that the covering central excise invoices had not declared the payment of appropriate central excise duty under Section 3A of the Excise Act - the revenue has not been able to establish that Mak Engineering had violated the conditions of the above Notification dated 30.08.1997. Consequently, the impugned findings denying credit of Rs. 2,89,742/- in respect of Fish Plate and Loose Jaw are set aside being incorrect and illegal. Suspension Shackle - Credit denied on the basis that the assessee- appellant had used rounds of a diameter other than 25 mm - HELD THAT:- The Commissioner had erred by relying on the statement of the third supplier viz. Shiva Steel Rolling Mills. When the assessee-appellant had specifically requested that the records of the said supplier should be called for and after affording opportunity to inspect the same, it should be allowed to cross-examine Sri Bimal Sureka, partner of Shiva Steel Rolling Mills aforesaid, then the assessee-appellant s request for cross-examination should have been granted. The Commissioner was unjustified in failing to grant such inspection and cross-examination but disallowing credit on the basis of the said alleged statement - apart from the statements, no evidence has been brought on record to prove that the appellant had used non-25 mm diameter rounds for manufacturing Suspension Shackle. Thus. Mak Engineering had lawfully and correctly availed the credit of Rs.2,47,580/-. Invocation of extended period of limitation - suppression of facts or not - HELD THAT:- From a careful perusal of the show cause notice it is apparent that the said show cause notice has merely set out the language of Section 11A of the Excise Act without specifying as to which particular fact was suppressed by Mak Engineering - the present case does not involve any suppression of facts on part of the assessee. The Commissioner too, had mechanically upheld the invocation of extended period of limitation - there is no hesitation in holding that Mak Engineering is entitled to succeed on the point of limitation. Appeal allowed.
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CST, VAT & Sales Tax
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2022 (8) TMI 698
Classification of manufactured goods - Robinson Barley - Purity Barley - taxable under the entry meant for cereals covered under Entry 16 List C @ 4% or under the residual entry at 12%? - HELD THAT:- In the present case, as correctly noted in the judgment in SATYANARAYAN BHANDAR VERSUS STATE OF ORISSA AND OTHERS [ 2006 (8) TMI 552 - ORISSA HIGH COURT] , the words used by the legislature in the delineation of articles are to be understood in the trade sense i.e. the commercial understanding of the terms used and not in their scientific and technical sense. In other words, the Court is required to apply the common parlance test . In the present case, there can be no doubt that in trade parlance Robinson Barley and Purity Barley would not be simply understood as barley - In other words, they are identifiable, distinct, commercial products different from ordinary barley . If a customer went to a shop and asked for barley, such customer would not be supplied Robinson Barley or Purity Barley. Conversely, if the customer was to ask for Robinson Barley or Purity Barley, then he would not be supplied with plain barley. The distinct commercial product Robinson Barley cannot, as pointed out in Satyanarayan Bhandar be classified as cereal which is taxable @4% and has to be brought under the residual entry taxable @ 12%. The question framed is answered in favour of the Department and against the Assessee by holding that Robinson Barley and Purity Barley manufactured by the Petitioner should be taxed under the residual Entry 189 of List C of the Rate Chart appended to the OST Act and not Entry 25 relating to cereals - revision petition dismissed.
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2022 (8) TMI 697
Levy of Entry Tax - initiation of proceeding by issue of notice for reassessment for the tax periods from 01.04.2013 to 31.03.2014 - HELD THAT:- Conjoint reading of Section 10(1), Section 2(p) and Section 2(oo) of the Act read with Rule 10 of the said Rules makes it clear that for the tax periods commencing from 01.04.2013 to 31.03.2014, the end of the year to which they relate would be 31.03.2014. Thus, the notice for reassessment under Section 10 being issued on 13.01.2022, it is manifest that the proceeding in respect of the year 2013-14 was not initiated within the time-frame envisaged under sub-section (1) of Section 10. It is clearly stipulated in said sub-section that the notice in Form E32 prescribed under Rule 15D(1) was required to be served on the petitioner within a period of seven years from the end of the year to which the tax periods from 01.04.2013 to 31.03.2014 relate. Entry tax - contention of the petitioner is that the subject-goods, i.e., plant and machinery, which were brought from outside into the local area during the period from 2009-10 till 2014-15 and subsequently capitalized in the year 2014-15, had already suffered entry tax - HELD THAT:- It is glaring on face of record that the instruction provided to the Additional Standing Counsel by the Assessing Authority pursuant to direction of this Court vide Order dated 11.07.2022 is incorrect - the onus lies on the assessee to satisfy the Assessing Authority by adducing evidence to the effect that subject-goods have already been subjected to entry tax or that the entry tax has been paid by any other person or dealer under the OET Act. This Court is of the considered opinion that as the explanation of the petitioner-company has not been given due consideration by the Assessing Authority. As has already been held that the assessment in respect of the tax periods from 01.04.2013 to 31.03.2014 out of the impugned tax periods from 01.04.2013 to 30.09.2015 undertaken for assessment under Section 10 is time-barred, and the assessment is required to be set aside for fresh consideration pertaining to rest of the periods, i.e., from 01.04.2014 to 30.09.2015, the Assessing Authority is also required to consider the submissions furnished to him by the petitioner on different dates with reference to evidence available on record and/or to be produced by the petitioner-company. Thus, the impugned reassessment order dated 31.03.2022 passed under Section 10 of the OET Act is unsustainable being barred by limitation so far as it relates to the tax periods from 01.04.2013 to 31.03.2014. However, so far as assessment for the tax periods from 01.04.2014 to 30.09.2015 is concerned, the same is liable to be set aside and remanded to the Assessing Authority-Sales Tax Officer, Angul Circle, Angul - assessment order dated 31.03.2022 is hereby set aside and the matter relating to the tax periods 01.04.2014 to 30.09.2015 is remanded to the Sales Tax Officer for proceeding with the matter afresh. Petition disposed off.
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2022 (8) TMI 696
Time limitation for completion of assessments - applicability of limitation prescribed in Section 7-A of the Act to an assessment passed under Section 6(3) of the Act - whether the appellate tribunal was justified in holding that the provisions pertaining to re-assessment cannot be applied to an assessment when computing the period of limitation especially when the word assessment would take into its connotation a re-assessment in the comprehensive sense? HELD THAT:- A bare reading of Section 6(3) of the Act makes it clear that no period of limitation is prescribed for assessment in cases of the assessee failing to furnish a return in respect of any period within the period specified in sub-section (1) of Section 5. The explanation offered by the revenue for invoking Section 6(3) of the Act by issuing the proposition notice on 12.2.2014 is, that the intelligence report dated 24.4.2008 was received in the office of the assessing officer on 29.12.2012. This inter se delay in the office of the Commercial Taxes would not be a ground to consider the assessments concluded on 28.2.2014 as reasonable. As per the law enunciated by the Hon ble Apex Court in the case of Bharat Steel Tubes Ltd. [ 1988 (5) TMI 335 - SUPREME COURT] , even in the absence of any prescribed period of limitation, the assessment has to be completed within a reasonable period. What such reasonable period would be, would depend upon facts of each case. One view can be that it should be a period not exceeding five years as the legislature has fixed the limitation of five years for completing assessments in case of escaped turnover. Unless there be an assessment made soon after the period to which such assessment relates, the question of consideration of escapement would indeed become difficult to consider and examine. The Hon ble Apex Court having regard to the return filed by the assessee along with the payment of admitted tax held that no prejudice to the assessee will be caused if the assessing authority is permitted to complete the assessment even at that stage. If no assessment is made, the assessee may claim refund of taxes in the absence of an assessment. It would be appropriate to confirm the assessment orders only as far as levy of taxes are concerned. Any reference made to the matters pending before this Court challenging the vires of Section 3-D of the Act would not come to the assistance of both the parties since the assessee was not a party to the proceedings before this Court and taxes were collected in the year 2007-2008. There being lapse on the part of the assessing officer in invoking Section 6(3) of the Act well within a reasonable period, atleast, within a period of five years from the expiry of the year to which the tax relates as per Section 7-A of the Act dealing with the assessment of escaped tax, conclusion of the original assessment beyond the period specified for assessment of escaped tax under Section 7-A of the Act would ex-facie prove that the said assessment was not further amenable to re-assessment, which appears to be not the intention of the legislature. The orders passed by the assessing officer relating to interest and penalty are set aside. However, having regard to the peculiar facts and circumstances of the case, the assessee shall not be entitled for refund of the taxes paid in pursuance to the inspection conducted on 17.5.2007 - revision petition is allowed in part.
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Indian Laws
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2022 (8) TMI 695
Dishonor of Cheque - insufficient funds - double jeopardy or bar of Section 300(1) of Cr.P.C. - fraudulent and dishonest intention - Section 138 of the NI Act - conflicting situations - HELD THAT:- It is deemed appropriate to refer this issue for decision by the larger bench to answer the following questions: (1) Whether the ratio of the judgment, in the case of G. Sagar Suri [ 2000 (1) TMI 934 - SUPREME COURT ] and Kolla Veera Raghav Rao [ 2011 (2) TMI 1257 - SUPREME COURT ] lay down the correct law? or The view taken in the case of Sangeetaben Mahendrabhai Patel [ 2012 (4) TMI 728 - SUPREME COURT ] as followed in M/S. V.S. REDDY AND SONS VERSUS MUTHYALA RAMALINGA REDDY AND ANOTHER [ 2015 (9) TMI 1730 - SUPREME COURT] which is subsequent and conflicting, lay down the correct proposition of law? (2) Whether on similar set of allegations of fact the accused can be tried for an offence under NI Act which is special enactment and also for offences under IPC unaffected by the prior conviction or acquittal and, the bar of Section 300(1) Cr.P.C. would attract for such trial? The questions of law have been formulated for answer by a larger bench for decision - the Registry is requested to place the file before Hon ble the Chief Justice of India for orders.
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2022 (8) TMI 694
Dishonor of Cheque - petitioner is Director of the first Accused Company - vicarious liability of Director - deemed liability against the Petitioner as per Section 141(1) of the Negotiable Instruments Act, 1881 - HELD THAT:- The specific averments in the complaint regarding the role of each of the Directors is found vague. As rightly pointed by the learned Counsel for the Petitioner that the averments in the complaint does not state clearly the role of the Director Tajinder Singh Kataria. The averments in the complaint that each of the Directors of the Company are responsible for the day-to-day affairs of the Company will not specify the claim under Section 141(1) of the Negotiable Instrument Act, 1881. The fact that the Petitioner resigned from the Company as Director of the Company, the same was accepted by the Registrar of the Companies is available on the web portal of the Registrar of the Companies which is uploaded on daily basis. This fact is available and had to be considered before the Complainant proceeds to file a criminal complaint as the complaint contains allegations of the role played by each of the Director in committing the offence under Section 138 of Negotiable Instruments Act. Therefore, this particular contention that the Petitioner was not at all responsible for the first Accused Company on a day-to-day basis on the date of issuance of the cheque i.e., on 27.02.2019. The Petitioner resigned from the Company on 05.02.2016. Therefore, as per the details regarding the Directors of the first Accused Company available with the Registrar of Companies, on the date of filing of the criminal complaint, the Petitioner cannot be arrayed as Accused by the Respondent/Complainant. The uploaded details regarding the status of the Directors of the Company available on the web portal of the Registrar of Companies cannot be disputed by any one as it is an authenticated web portal under the Ministry of Company Affairs, Government of India. This Court exercising discretion under Section 482 of Cr.P.C., as per the guidelines issued by the Hon'ble Supreme Court in the case STATE OF HARYANA VERSUS BHAJAN LAL [ 1990 (11) TMI 386 - SUPREME COURT ] can consider this aspect. The Petitioner need not be forced to face trial. The ruling relied by the learned Counsel for the Petitioner in MRS. ANITA MALHOTRA VERSUS APPAREL EXPORT PROMOTION COUNCIL (APPAREL EXPORT PROMOTION COUNCIL) [ 2011 (11) TMI 532 - SUPREME COURT ] is regarding the role of each of the Directors of the Company while prosecuting the Company and its Directors for the alleged offences under Section 138 of Negotiable Instruments Act. When the Director of Company resigns and the resignation had been accepted by the Registrar of Companies, the said Director cannot be prosecuted. Therefore, as per Section 141 of the Negotiable Instruments Act, while prosecuting the Directors of the Company, it has to be clearly stated by the Complainant regarding the role of each of the Director in the alleged offence committed by the Company. In the light of the ruling cited by the learned Counsel for the Petitioner in Anita Malhotra, the averments in the complaint regarding the role of each of the Director cannot be accepted, particularly, when the Petitioner herein had already resigned from the Board of Directors of the first Accused Company on 05.02.2016. There shall be a specific averment regarding the role of the Director who was a signatory on the Cheque for the day-to-day affairs of the Company. Under those circumstances, it is found from the Company that the Petitioner Tajinder Singh Kataria was not the Director of the Company as on the date of alleged offence in complaint. That is, when the Cheque was issued by the Company/Accused No.1 - Petition allowed.
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2022 (8) TMI 693
Dishonor of Cheque - time limitation - the petitioner accused firm has sought for quashing of the impugned entire proceeding primarily on the ground of limitation - HELD THAT:- The disputed question of fact and law pertaining to limitation is still subjudiced in the trial court, which is the primary ground in the instant petition for the prayer for quashing and setting aside the impugned proceeding under Section 138 of the NI Act and on the other hand, it is noticed that the petitioner accused has newly impleaded one Gopal Prasad Joshi, the partner of the complainant firm as respondent No. 4 who, as stated above, is not a party in the complaint case. In such backdrop of facts, this Court is not inclined to render any effective judicial decision on the prayer of the petitioner. The learned trial court is directed to take a decision on the point of Limitation, after affording opportunity of being heard to both the parties afresh, in accordance with law - Petition dismissed.
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