Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 25, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Profiteering - infringement of legal rights - seeking direction to NAPA for deletion of proceedings against the petitioner - Since in the present case, the Petitioner has not been held guilty of violation of the Central Goods and Services Tax Act, 2017 and NAPA has no objection if the Petitioner is deleted from the array of parties, this Court is of the view that the Petitioner has no locus standi to maintain the present petition - Consequently, the present writ petition along with pending applications are disposed of by dropping the proceedings against the Petitioner as a Respondent - HC
Income Tax
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Penalty u/s 271(1)(c) - Assessee wrongly claimed the income as agricultural income - One of the strange features in the kind of arrangement or documentation of the assessee is that in case of no yield or damage of crop, the expenses on labour or service or fertilizer etc. has to be borne by the farmer because in absence of no crop, there would be no procurement price to the farmer and the farmer will get nothing. In such circumstances, how the assessee could explain that the cultivation has been done by the company. Another strange feature is that how the assessee can claim as cultivator as its name is not appearing in the revenue land records - penalty imposed by the AO upheld - AT
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Addition on account of long term capital gain - AO has not brought on record any material which establish non-genuineness of the members of the society - all the members of the society were assessed to tax, in the case of the four members assessments have been made u/s. 143(3) of the Act, the capital gain shown by them in their return of income was duly accepted by the AO - action of the AO for taxing the long term capital gain arising on sale of land in the hands of the assessee society is amount to double taxation since the same has been taxed in the hands of individual member. - AT
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Assessment u/s 153A - Undisclosed cash receipts - merely because some discrepancies were found in assessee’s books in the pre-search period of unaccounted sales, it could not be presumed that such a discrepancy continued even in the post-search period, when there is no evidence to support such a view, and, therefore, addition could not be made on the basis that the assessee had made unaccounted sales throughout the accounting year. Being so, there is no question of extrapolation of income in all these assessment years. - AT
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alidity of search u/s 132 - law was amended by insertion of aforesaid Explanation by the Parliament in section 132 by the Finance Act, 2017 w.r.e.f. 1.4.1962 and it was held that the Appellate Authorities could not go into the reasons recorded by the concerned Income Tax Authority for directing Search action. In view of this, we are of the opinion that the assessee is precluded in challenging the validity of search action before the Tribunal. - AT
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Addition u/s 36(1)(ii) - payment of incentive to the Chairman and Managing director - CMD having substantive share holding - If it was a dividend which was paid in the name of incentive, similar payments would have been made to the other shareholders of the company. However, this is not the case. The allegation of Ld. AO that there was violation of the provisions of The Companies Act, is not supported by any concrete material on record. - No additions can be made - AT
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Reopening of assessment u/s 147 - multiple entries in the information received from INV Wing - the balance sheet filed with the return of income clearly showed unsecured loans in liability side and therefore, it cannot be said that the assessee has not disclosed true and material facts in the original return of income. - the assumption of jurisdiction by issue of notice u/s 148 of the Act is bad in law which makes the assessment order framed u/s 147 r.w.s 143(3) of the Act void ab initio - AT
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TDS u/s 194I - hire charges paid for the equipment disallowed - addition u/s 40(a)(ia) - the amount of equipment hire charges in question having been already offered to tax by NCC Limited, the assessee-company cannot be treated as assessee in default for non-deduction of tax at source from the said payment and there is no question of making disallowance under section 40(a)(ia). - Matter remanded back to AO for the limited purpose of this verification - AT
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Estimating the income of the assessee @ 8% on the sub-contract turnover - On verifying the paper book of the assessee running to 32 pages, we do not find any concrete evidence to establish that the assessee is actually executing any civil contract works with respect to the contracts he has claimed to have undertaken - assessee could also not furnish proper evidence to establish that the parties from whom the assessee had received the amount of ₹ 18 lakhs is genuine. - Additions made by AO sustained - AT
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Assessment u/s 153A - Addition of bogus purchases on protective basis in the hands of the assessee - Unless, it is brought over knowledge the fate of substantive addition in the hands of another entity, the addition in the case of the assessee cannot be sustained. In view of this we set-aside this ground of appeal back to the file of the learned assessing officer to 1st ascertain the fate of addition made on substantive basis in the hands of another entity. If the addition is sustained there on substantive basis, the addition on protective basis in the hands of this assessee deserves to be deleted. If the addition is not sustained in the hands of that assessee on its own merits, even then the protective addition cannot be sustained in the hands of this assessee. - AT
Customs
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Classification of goods - components for the assembly of iPERL flowmeter - For classification of such parts and accessories relevant Chapter and Section notes are required to be referred. General Explanatory Note 1 (f) to Chapter 90 excludes parts of general use, as defined in Note 2 to Section XV, of base metal (Section XV) or similar goods of plastics (Chapter 39). - the “Senses iPERL smart meter” merit classification under heading 90.26 and more specifically, under subheading 90261010 - AAR
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Refund of SAD - Appeal found to be filed beyond the period of one year from the relevant date - Substantial quantity of imported goods was sold by the appellant in the year 2016 itself - There is no sufficient reason quoted for waiting till March, 2018. In the absence of such explanation it is held that limitation mentioned in the amended N/N. 102/2007 is rightly invokable for the impugned refund claim. - AT
Indian Laws
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Grant of anticipatory Bail - Merely because an arrest can be made because it is lawful does not mandate that arrest must be made. A distinction must be made between the existence of the power to arrest and the justification for exercise of it. - In the present case when the appellant has joined the investigation, investigation has completed and he has been roped in after seven years of registration of the FIR we can think of no reason why at this stage he must be arrested before the chargesheet is taken on record - SC
Service Tax
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Rebate of service tax paid - There is no bar by a professional Chartered Accountant (CA) in giving business consultancy for the purpose of export. Further, the Commissioner (Appeals) has travelled beyond the scope of Show Cause Notice rejecting the appeal on a new ground i.e. Chartered Accountant in practice cannot give consultancy for export - the appellant is entitled to rebate on the Service Tax paid on the consultancy bill, for consulting the Chartered Accountant. - AT
Central Excise
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CENVAT Credit - meaning of input services pre and post 01.04.2011 - When CENVAT credit was sought to be justified by the appellant under the ‘means’ clause, for which reliance was placed on the earlier decisions of the Tribunal, there was no necessity to examine whether it can be justified under the ‘includes’ clause or ‘excludes’ clause of the definition. The decision rendered by the Tribunal on 24.11.2017 is, therefore, clearly per incuriam. - The appellant correctly availed CENVAT credit on the amount of service tax paid for the services provided by the dealers to the customers on behalf of the appellant for fulfilling the warranty obligations of the appellant - AT
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Reversal of CENVAT Credit - inputs written off - provision made in the books of accounts on account of Non-Moving Inventory, without reducing the value of inventory - Rule 3(5B) of Cenvat Credit Rules - in the facts of the present case, the appellant has made only a ‘general provision’, which is not attributable to any particular capital asset/input. Admittedly, Revenue has not been able to identify the details of inventory or any asset, for which the general provision has been made. - demand set aside - AT
Case Laws:
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GST
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2021 (8) TMI 973
Seeking stay on the direction given by the Respondent for recovery of amount from the bank account of the Petitioner - HELD THAT:- The assurance and undertaking given by learned counsel for the petitioner/applicant is accepted by this Court and the petitioner is held bound by the same. Accordingly, till further orders, there shall be stay of respondent and stay of the operation of the order passed by the Respondent No.2, subject to the condition as stipulated - Application disposed off.
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2021 (8) TMI 970
Profiteering - infringement of legal rights - seeking direction to NAPA for deletion of proceedings against the petitioner - HELD THAT:- This Court is of the view that it is a settled law that in order to have the locus standi to invoke the extraordinary jurisdiction under Article 226 of the Constitution of India, the applicant should ordinarily be one who has a personal or individual right in the subject matter of the application. In other words, as a general rule, infringement of some legal rights or prejudice to some legal interest inhering in the petitioner is necessary to give him a locus standi in the matter. Since in the present case, the Petitioner has not been held guilty of violation of the Central Goods and Services Tax Act, 2017 and NAPA has no objection if the Petitioner is deleted from the array of parties, this Court is of the view that the Petitioner has no locus standi to maintain the present petition - the notice dated 17th June, 2021 referred to by learned counsel for the Petitioner is deemed to have been withdrawn. Petition disposed off.
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2021 (8) TMI 966
Maintainability of petition - availability of alternative remedy of appeal - error apparent on the face of record or not - HELD THAT:- In Section 161 of the Act, it has been made clear that without prejudice to the provisions of Section 160 and notwithstanding anything contained in any other provisions of this Act, any authority, who has passed or issued any decision or order or notice or certificate or any other document, may rectify any error which is apparent on the face of record in such decision or order or notice or certificate or any other document, either on its own motion or where such error is brought to its notice by any officer appointed under this Act or an officer appointed under the State Goods and Services Tax Act, etc. In both way, the petitioner has got alternative appeal remedy or remedy of review to rectify the error under Section 161 of the Act as stated supra. While that being so, in view of the settled legal position, where except under two exceptions for want of jurisdiction and violation of principles of natural justice, writ petitions are not entertained without exhausting the appeal remedy, especially, in respect of revenue matters (tax matters), the hierarchy of forums by way of appeals as has been provided, the assessee / petitioner is expected to exhaust the said appeal remedy and without exhausting the same, no writ petition can be entertained, straightaway without the two circumstances available. This Court is inclined to dispose of this writ petition, by relegating the petitioner to approach the appellate authority or the adjudicating authority as the case may be, as indicated above, within a particular period and if such endeavour is made by the petitioner, within the time to be stipulated in this regard, the same may be entertained by the appellate authority and decided - Petition disposed off.
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2021 (8) TMI 931
Refund of ITC - Zero Rated Supply - export of goods and services at zero rated without payment of Tax under Bond/LUT out of India - HELD THAT:- The appellant filed an application for refund of ITC on export of goods and services at zero rated supply made without payment of tax however, the proper officer issued show cause notice (RFD-08) vide reference No.ZO0801200126834 dated 13.01.2020 wherein it has been mentioned that the entire refund claim amount i.e. ₹ 23,12,195/- is inadmissible under other category. In the remark it was directed to submit ITC accumulation documents,invoices etc., and also it was directed to furnish reply within 15 days from the date of service of this notice and appeared before proper officer on 21.01.2020 thereafter, the proper officer/adjudicating authority issued the rejection order in Form GST RFD-06 dated 31.01.2020. The rejection of refund due to non submission of documents and by assuming that claimant has nothing to submit is not proper and justify. There is a provision available under Rule 90(2) to (4) of CGST Rules, 2017 that the refund application shall be scrutinize within a period of fifteen days of filing of the said application by the proper officer, for its completeness and where the application is found to be complete in terms of sub-rule (2) (3) and (4) of Rule 89, an acknowledgement in Form GST RFD-02 shall be made available to the applicant on common portal. Where any deficiencies are noticed, the proper officer shall communicate the deficiencies to the applicant in Form GST RFD-03 through common portal. The proper officer has not followed the proper procedure before rejecting the refund application of the appellant and appellant was also debar from being heard because of non receiving of the said SCN properly hence, it is demand of justice to examine the refund application on merits - the appellant was eligible for refund of ITC in respect of zero rated supply. Appeal allowed - decided in favor of appellant.
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Income Tax
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2021 (8) TMI 976
Exemption u/s 10(46) - application in the appropriate format or not? - HELD THAT:- As the petitioner had apparently made an application in the appropriate format on 14.05.2020 to the Principal Commissioner of Income Tax, NER at Guwahati, it prima-facie does not appear to us that the petitioner had not made the application in the required procedure as provided in the letter dated 24.06.2013 of the CBDT. But, however, Mr. S Sarma, learned counsel points out that a copy of such application is also required to be forwarded to the Under Secretary (ITA-1) of the CBDT. Without going into any such question, we require the petitioner to file a fresh application claiming exemption u/s 10(46) of the Income Tax Act, 1961 in the given format provided in clause 3 of the letter dated 24.06.2013 of the CBDT and the said application be sent to the Principal Commissioner of Income Tax, NER, Guwahati. A copy thereof be also given to the Under Secretary (ITA- 1), CBDT. The application be made within a period of 15(fifteen) days from today.
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2021 (8) TMI 975
Revision u/s 263 - HELD THAT:- Two conditions of the order being erroneous and prejudicial to the interest of revenue have to be present at the stage when the Principal Commissioner or the Commissioner initiates the exercise of the jurisdiction u/s 263. The very reading of the clause 4.0 of the order would go to show that the Principal Commissioner, Income Tax is yet to arrive at his prima facie conclusion that the order of the AO was erroneous and in order to arrive at a satisfaction whether it was erroneous, the Principal Commissioner requires the matter to be examined further in depth. From such point of view, it is submitted by Dr. Saraf that the pre-condition to be present for invoking the Section 263 is absent in this case inasmuch as there is no prima facie satisfaction by the Principal Commissioner on the basis of the materials available as to whether the order of the Assessing Officer which is sought to be reviewed under Section 263 of the IT Act was an erroneous order. Income Tax Department prays for an adjournment to examine the matter.Prayer is allowed. List again on 26.08.2021
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2021 (8) TMI 974
Revision u/s 263 - assessee had omitted to disclose the long term capital gain - AO had failed to examine and consider the fact that the assessee had omitted to disclose the long term capital gains while computing his income - HELD THAT:- By referring to the returns submitted by the assessee available a submission is made that the aforesaid conclusion is arrived at by the Principal Commissioner that there is merit in the claim that the Assessing Officer failed to examine and consider that the assessee had omitted to disclose the long term capital gains amounting to ₹ 5,30,257/- . Accordingly a submission is made that the conclusion of there being an erroneous assessment is absent. Counsel also raises the submission that the aforesaid items are covered under the provisions of Section 10(38) of the IT Act wherein itself there is a provision that the aforesaid items are exempted from payment of income tax and even if there is any discrepancy in the return submitted by the assessee, the same would not be prejudicial to the interest of revenue. We find that a prima facie case has been made out by the petitioner. Considering the balance of convenience and irreparable loss that the petitioner may suffer, further process pursuant to the order dated 24.03.2021 under Section 263 of the IT Act shall remain stayed until further order(s).
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2021 (8) TMI 971
Adjustment of tax due under Direct Tax Vivad Se Vishwas Act, 2020 [DTVSV Act] with the amount as already been deposited by the Petitioner on account of the Penalty Order and to refund the excess amount in a time bound manner - HELD THAT:- In the opinion of this Court, if the petitioner is entitled to refund of ₹ 11,36,800/- after making payment of ₹ 4,21,000/-, it is not understood as to why the respondents cannot itself adjust the amount of ₹ 4,21,000/- against the amount of ₹ 11,36,800/- already deposited by the petitioner on account of the Penalty Order dated 04 th January, 2018. The present writ petition is disposed of with a direction to the respondents to adjust the tax demand amounting to ₹ 4,21,000/- under DTVSV Act with the amount of ₹ 11,36,800/- already deposited by the petitioner on account of the Penalty Order dated 04 th January, 2018 on or before 31 st August, 2021 and refund the balance amount within a further period of four weeks.
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2021 (8) TMI 964
Penalty u/s 271(1)(c) - defective notice u/s 274 - Assessment framed u/s 92CA(3) - HELD THAT:- Following the decisions rendered in the cases of CIT vs. Manjunatha Factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] , CIT vs. SSA s Emerald Meadows [ 2016 (8) TMI 1145 - SC ORDER] and Pr. CIT Vs Sahara India Life Insurance Company Ltd [ 2019 (8) TMI 409 - DELHI HIGH COURT] we are of the considered view that when the notice issued by the AO is bad in law being vague and ambiguous having not specified under which limb of section 271(1)(c) of the Act, the penalty proceedings initiated u/s 271(1)(c) are not sustainable. Thus when the very initiation of the penalty by way of issuance of vague and ambiguous notice u/s 271(1)(c) read with section 274 of the Act without specifically charging the assessee if he has concealed the particulars of income or has furnished inaccurate particulars of such income, subsequent penalty proceedings are not sustainable, hence penalty levied by the AO and confirmed by the Id. CIT (A) is not sustainable. Assessment framed u/s 92CA(3) - TPO simply did not accept the bench marking of the assessee and has directed the Assessing Officer to consider the levy of penalty u/s 271(1)(c) of the Act in accordance with Explanation 7. As decided in VERIZON INDIA PVT. LTD. [ 2016 (8) TMI 1287 - DELHI HIGH COURT] in the absence of any overt act, which disclosed conscious and material suppression, invocation of Explanation 7 in a blanket manner could not only be injurious to the assessee but ultimately would be contrary to the purpose for which it was engrafted in the statute. It might lead to a rather peculiar situation where the assessee who might otherwise accept such determination may be forced to litigate further to escape the clutches of Explanation 7 - we do not find any merit in levy of penalty u/s 271(1)(c) of the Act.- Decided in favour of assessee.
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2021 (8) TMI 962
Addition u/s 68 - Addition based on evidences collected and statements of various person in search - assessee was one of the entry provider of accommodation entry and provided entries in the nature of bogus transaction in the form of sales/purchases and unsecured loans - HELD THAT:- It is pertinent to note that all the documents were before the Assessing Officer and the Assessing Officer has merely relied upon the statement of Sh. Rajendra Jain which was later on retracted. The assessee has given the details of purchase bills, sales bills, stock register and bank statements and after going through the evidences which was before the Assessing Officer and before us , it is found that the same is tallying with, with the transaction which was allegedly held as bogus transaction by the Assessing Officer . Thus, as per the documents provided by the assessee transaction is genuine, parties were before the search/investigation wherein and there statements on record which does not reflect that the assessee is actual for the of the accommodation entry. The statements were also retracted later on. Thus, the sanctity of the statement cannot be the sole basis for making an addition. The transaction in the present Assessment Year i.e. Assessment Year 2008- 09 is genuine, identity and the credibility has also been established by the assessee. Therefore, Section 68 will not attract and the additions made by the Assessing Officer which was confirmed by the CIT(A) is not just and proper. - Decided in favour of assessee.
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2021 (8) TMI 961
Penalty u/s 271(1)(c) - Assessee wrongly claimed the income as agricultural income - Entitled for exemption u/s 10(1) denied - HELD THAT:- The present assessment years also are not the simple case of disallowance of expenditure as in the case of Reliance Petro Products Private Limited [ 2010 (3) TMI 80 - SUPREME COURT] . The facts remains unchanged that the real activity of purchase of the seeds has been planned and arranged in such a way as it look like the agricultural activity but the assessee has not succeeded in camouflaging its real activity. One of the strange features in the kind of arrangement or documentation of the assessee is that in case of no yield or damage of crop, the expenses on labour or service or fertilizer etc. has to be borne by the farmer because in absence of no crop, there would be no procurement price to the farmer and the farmer will get nothing. In such circumstances, how the assessee could explain that the cultivation has been done by the company. Another strange feature is that how the assessee can claim as cultivator as its name is not appearing in the revenue land records maintained either as lessee of the land or the cultivator. Since the Tribunal in preceding Assessment Years have already given a finding that the assessee made claim of agricultural income in mala fide manner in gross abuse of the provisions of the Income Tax Act and since the facts of the impugned year are identical, therefore, respectfully following the order of the Tribunal in assessee s own case in preceding year,[ 2017 (12) TMI 1058 - ITAT DELHI] we uphold the penalty imposed by the AO. Thus, the order of the CIT(A) is reversed and we uphold the findings of the Assessing Officer. - Decided in favour of revenue.
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2021 (8) TMI 959
Addition on account of long term capital gain - Assessment in the hands of members of the assessee society or society itself - AO has taken a view that the long term capital gain on sale of plot of land to be taxed in the hands of the assessee society whereas the assessee pleaded that such long term capital gain will be taxable in the hands of the members of the assessee society who were the real owners of the land - HELD THAT:- Members of the society have contributed funds for the purchase of the land. The land was purchased by the society only after the introduction of the new members along with the old continuing members who were the real owners of the land. On sale of the land, the society has made distribution to the members in the proportion of the contribution made by the members at the time of the purchase of the land. The genuineness of the member was established from the filing of their income tax return and assessment made in some of the cases. AO has not brought on record any material which establish non-genuineness of the members of the society - all the members of the society were assessed to tax, in the case of the four members assessments have been made u/s. 143(3) of the Act, the capital gain shown by them in their return of income was duly accepted by the AO, in all these four cases assessment were made in the jurisdiction of the same range wherein the case of the society was assessed - action of the AO for taxing the long term capital gain arising on sale of land in the hands of the assessee society is amount to double taxation since the same has been taxed in the hands of individual member. After considering the above cited facts and circumstances, we consider that ld. CIT(A) has rightly deleted the impugned addition - Decided in favour of assessee.
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2021 (8) TMI 955
Validity of search u/s 132 - contention of the ld. AR is that search action was not valid and due procedure laid down u/s. 132 of the Act was not followed - HELD THAT:- In this case, search was conducted u/s. 132 on 15.10.2015 by issuing valid warrant in the name of assessee and also Panchanama was drawn with proper local witnesses. As on date there was Explanation inserted in section 132 by the Finance Act, 2017 with retrospective effect from 1.4.1962 prohibiting appellate authorities to go into the reasons recorded by the concerned appellate authorities for directing search against the assessee. This amendment will have effect in the present case. Therefore, the Tribunal cannot be expected to go into the said question. It is only for the Constitutional posts to examine the validity of search action. More so, this issue was also decided in the case of Prathibha Jewellery House [ 2017 (11) TMI 1744 - KARNATAKA HIGH COURT] where the writ petition was dismissed holding that law was amended by insertion of aforesaid Explanation by the Parliament in section 132 by the Finance Act, 2017 w.r.e.f. 1.4.1962 and it was held that the Appellate Authorities could not go into the reasons recorded by the concerned Income Tax Authority for directing Search action. In view of this, we are of the opinion that the assessee is precluded in challenging the validity of search action before the Tribunal. Validity of notice issued u/s. 153A - HELD THAT:- As per clause (a) of sub section (1) of section 153A, at the stage of issue of notice u/s 153A, the only requirement is to ask the assessee to file return of income for relevant six years covered by section 153A and whether after filing of return of income, the assessment to be made by the AO will be assessment or reassessment has to be determined afterwards and not at the time of issue of notice u/s 153A. Similar view was taken in the case of Rajesh Exports Ltd.[ 2018 (12) TMI 278 - ITAT BANGALORE] in para 17 of the Tribunal s order. In this view of the matter, this ground is dismissed. Status of the assessee - According to the ld. AR, trust is not a person referred to in section 2(31) of the Act and the CIT(Appeals) ought to have held that assessment made on a nonexistent status is bad in law - HELD THAT:- In this case, the assessee itself has filed return of income in the status of trust and the same was followed by the AO in framing assessment u/s. 153A of the Act. Being so, we do not find any infirmity in the order of AO. This ground is dismissed. Validity of assessment u/s 153A - HELD THAT:- There are various incriminating material found during the course of search and as rightly pointed out by the ld. DR, it cannot be accepted that no incriminating material was found during the search action. As in Canara Housing Development Co. case [ 2014 (8) TMI 642 - KARNATAKA HIGH COURT] held that once the assessment is validly reopened, the AO has to take into account all the three types of income to complete the assessment or reassessment, as the case may be. The three types of income are (i) income disclosed in the return of income, (ii) undisclosed income during the search, and (iii) any other income which is not disclosed in the earlier return and not unearthed during the search. In our considered opinion, if incriminating material is found during the search u/s. 153A, all three types of income has to be assessed by the AO and in view of the judgment of Canara Housing Development Co. (supra) this legal ground has no merit. Unaccounted capitation fees in cash - Reliance on seized material and post-search statements - HELD THAT:- Addition made by the AO is based on unsubstantiated loose sheets and jottings without proper cross-examination of the person who has admitted the contents therein. Being so, it cannot be stated as full-proof of material evidence to substantiate the addition. In our opinion seized documents do not support the AO s contention that assessee has received unaccounted capitation fees for admission of the students to the college. It also does not suggest that the assessee has paid commission to agents to bring the students for admission to college. Similarly it does not suggest payment of any amount to the trustees for their self-benefit. Going through the entire facts of the case it creates only a suspicion in the minds of the revenue authorities that the assessee has collected unaccounted capitation fee - the suspicion not enough to hold that the assessee has collected unaccounted capitation fees in absence of concrete evidence bought on record by the authorities concerned. The suspicion cannot replace the material evidence brought on record by the authorities Statement of 2 cannot be basis for making such huge additions on collection of capitation fees. It cannot be considered as appropriate sample to frame the assessment on the basis of their statement - assessee requested for cross examination of all the parties whoever have given the statements against the assessee, if any, which was not provided at all - such statements cannot be relied upon.The revenue authorities bound to follow the principle of natural justice and ought to have given proper opportunity of examination and cross examination of the parties concerned whose statements are relied upon to frame the assessment. In our opinion the discovery of documents not only sufficient to conclude the collection of unaccounted capitation fees, cross examination of concerned parties is also important. The revenue authorities recorded statement of only 5 students out of more than 800 students and out of 5 only 2 are confirmed. The two statements recorded cannot be relied upon without confronting the same to the assessee. The statement of these two persons confirming payment of capitation fees is fully uncorroborated and non-production of them for cross-examination cannot be considered as incriminating material so as to sustain the addition. The rough notings in the loose papers are not full-proof evidence without proving the correctness of the same. Nothing was recorded in the orders of lower authorities that assessee has deviated from its objects for which approval u/s. 12A was granted and not applied its funds towards its objects. No evidence was brought out to show that the amount of capitation fees alleged to have been collected resulted in creation of any unaccounted assets by the trust or trustees or by any interested person. On this count also the addition cannot be sustained. Evidence collected by the authority is not sufficient to establish that the stand that the assessee has collected unaccounted capitation fees for admission of students to various courses in the assessee s college. We are aware that entire evidence has to be appreciated in a wholesome manner and even where there is documentary evidence, the same can be overlooked if there are surrounding circumstances to show that the claim of assessee is opposed to normal course of human thinking, conduct and human probability. Even applying this principle to the present case, we have difficulty in rejecting the assessee s plea as opposed to normal course of human conduct. The circumstances surrounding the case are also not enough to reject the assessee s explanation. We have considered all the material on record and also the statement of the parties as discussed in the earlier paragraphs. No evidence was brought on record to show that amount of alleged capitation fees which have been collected was misused by the assessee or by any interested persons.There is no allegation that the assessee is not imparting education and it is an admitted fact that thousands of students are studying in the college and assessee has been carrying on educational activities imparting medical education. It fulfilled the requirement of imparting education which are not doubted or challenged by the authorities. Being so, exemption u/s. 11 of the Act cannot be denied. The unsubstantiated and uncorroborated seized material alone cannot be considered as conclusive evidence to frame these assessments. The words may be presumed in section 132(4) of the Act given an option to the AO concerned to presume these things, but it is rebuttable and it does not give a definite authority and conclusive evidence. The assessee is having every right to rebut the same. No addition can be made in the absence of any corroborative material. Since there was no examination or cross-examination of persons concerned, the entire addition in the hands of the assessee on the basis of uncorroborated writings in the loose papers found during the course of search cannot be sustained. The evidence on record is not sufficient to uphold the stand of revenue that assessee is collecting huge unaccounted capitation fees in the guise of carrying on educational activities. As already held that there are various loose sheets, scribblings, jottings and Excel sheets taken from the computer having no signature or authorization from the assessee s side. These are unsubstantiated documents and there is nothing to suggest any undisclosed assets of assessee found during the course of search. More so, it does not show any recovery of the undisclosed assets in the form of landed property, building, investments, money, bullion, jewellery or any kind of movable or immovable assets - Decided in favour of assesee. Denial of exemption u/s. 11 - AO denied the exemption under sec 11 of the Act for the major reason that the trust has received capitation fee in cash and has been carrying on the activities which are not in accordance with the objects of the trust - HELD THAT:- Unless the department shows that there was breach of conditions laid down for grant of exemption u/s. 11 of the Act, the benefit of exemption u/s. 11 cannot be denied. The assessee enjoyed registration granted during this period and the assessee also demonstrated that the assessee s predominant objects remain the same i.e., carrying out the charitable activities for the purpose of advancement of education and not to earn profit. Earning surplus income by carrying out educational activities is not a reason to deny exemption u/s. 11 of the Act. The assessee s predominant activity is carrying out educational activities which is charitable in nature. The trust cannot be deprived of the benefit of exemption u/s. 11. Further, as we have discussed in elsewhere in the order there is no concrete evidence for collection of unaccounted capitation fees and it is not possible to deny the exemption u/s 11 of the act. It is also noted that even if the assessee constructed the temple inside the campus of the education institution for the benefit of the students and employees and also for public, it cannot be construed as violation of section 12(1)(a) of IT Act. There was one more allegation that assesse has collected exorbitant fees but in our opinion the fees has been fixed by the state authority and there was no violation noted by the state authority or MCI. As discussed in earlier para of this order about the authenticity of the seized material, we have held that it is not foolproof. In such circumstances it cannot be relied upon - Decided in favour of assessee. Allowance of depreciation - HELD THAT:- The assessee is entitled for depreciation u/s. 32 on assets where it has been laid out as application of income for charitable purposes u/s. 11(1)(a) of the Act. The amendment brought to section 11(6) of the Act by the Finance (No.2) Act, 2014 which became effective from AY 2015-16 and depreciation in such case being precipitation in nature. Accordingly, by placing reliance on the decision of the Hon ble Supreme Court in the case of CIT v. Rajasthan Gujarati Charitable Foundation Poona , [ 2017 (12) TMI 1067 - SUPREME COURT] the AO is directed to grant depreciation for AY 2010-11. Undisclosed cash receipts - HELD THAT:- We have already held in earlier para of this order that unsubstantiated material cannot be full-proof material evidence to sustain the addition. We also hold that mere existence of concealment even in one year is not sufficient to estimate the income of other years on that basis. It is pertinent to place reliance on the order of this Tribunal in the case of Anjaneya Brick Works. [ 2002 (1) TMI 256 - ITAT BANGALORE] wherein it was held that estimation of income could not be made relying on the seized documents which related to another accounting period and not the accounting year under consideration and, therefore, addition could not be made on the basis of incriminating documents relating to subsequent year. So the rule of uniformity cannot be and should not be applied on the estimate basis. There can be time and times when the uniformity can be maintained but for that case there should be some direct evidence available in a given case - As decided ANAND KUMAR DEEPAK KUMAR. [ 2006 (8) TMI 166 - DELHI HIGH COURT] merely because some discrepancies were found in assessee s books in the pre-search period of unaccounted sales, it could not be presumed that such a discrepancy continued even in the post-search period, when there is no evidence to support such a view, and, therefore, addition could not be made on the basis that the assessee had made unaccounted sales throughout the accounting year. Being so, there is no question of extrapolation of income in all these assessment years. Disallowance of donation u/s 37 - HELD THAT:- The donations have been given to the registered and approved institution i.e., R.L. Jalappa Foundation which is duly registered u/s. 12A of the Act by way of account payee cheque and the same is to be allowed as an application of income. This ground of the appeal of the assessee is allowed. Rate of Tax - contention of the AR is that even if exemption u/s. 11 is denied, maximum margin rate of tax cannot be applied in view of the CBDT circular number 320 dated 11/01/1982 - HELD THAT:- We are agreeing with the contention of the AR. in our opinion this ground of appeals does not require any adjudication as we have already held that assessee is entitled for exemption 11 of the I.T. Act.
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2021 (8) TMI 954
Penalty u/s 271(1)(c) - claim of deduction u/s 10A denied - HELD THAT:- Levy of penalty in this case is unsustainable because mere preferring a claim which is unacceptable to the Revenue does not ipso facto lead to levy of penalty. Here in this case, Form No. 56F duly signed by the Chartered Accountant justifies the plea of bona fide belief on the part of the assessee. It is not the allegation against the assessee that any material fact relating to the income had to be unearthed with any efforts of the Revenue. It is only on the basis of the material furnished by the assessee, claim of the assessee for benefit u/s. 10A of the Act in respect of 31 units as independent, was rejected. Every disallowance does not lead to penalty, and more particularly such disallowances in relation to the issues which are debatable, in respect of which, the substantial questions of law are admitted by the Hon'ble High Court, are immune from penalty proceedings. With this view of the matter, we do not find any justification to sustain the penalty and consequently, we direct the Assessing Officer to delete the same. - Decided in favour of assessee.
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2021 (8) TMI 953
TP Adjustment - benchmarking of AMP services - HELD THAT:- Applying the principles laid down by the Hon'ble High Court in the assessee's own case [ 2016 (10) TMI 1073 - DELHI HIGH COURT] the benchmarking is undertaken by comparing the gross profit earned by the assessee net of AMP expense with similar adjusted gross profit margin earned in undertaking uncontrolled transactions. Since, the adjusted gross profit margin earned by the assessee from international transaction at 14.92% is higher than the adjusted gross profit margin earned on similar transactions with unrelated third party at 8.17%, the entire adjustment made by the TPO is liable to be deleted. - Decided in favour of assessee.
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2021 (8) TMI 952
Addition under suspense account - assessee contended before the Ld. CIT(A) that first of all he did not get proper opportunity before the AO to explain about the suspense account - HELD THAT:- HELD THAT:- We are of the opinion that in the peculiar facts of the case and taking into consideration the consistent practice adopted by the assessee and accepted by the department in earlier and subsequent years, the assessee's claim that it has offered for taxation in the subsequent assessment years the very same receipts it has shown in the suspense account to the tune of ₹ 16,50,203/- out of ₹ 19,04,784/- then the addition to that extent (₹ 16,50,203/-) would amount to double taxation of the same income, therefore, we set aside the impugned order and remand this issue back to the AO and direct that if the assessee has already offered for taxation in the subsequent assessment years out of this amount added by the AO in this relevant assessment year to the tune of ₹ 19,04,784/-, then addition of ₹ 16,50,203/- need to be deleted. Coming to the balance amountthe details of which are given in page 29 of the paper book, we note that these are receipts from FYs 2005-06 to 2010-11. This amount if the assessee has offered to tax in the subsequent assessment years then it should not be taxed and this also the AO need to consider afresh after verification and pass order in accordance to law. Disallowance u/s 14A r.w.r. 8D - HELD THAT:- We note that the assessee has prepared separate income and expenditure account (personal) where dividend income which assessee claimed as exempt. According to Ld. AR, even though the portfolio management expenses of ₹ 39,18,761/- has been debited as expenses relating to portfolio management expenses, this expenses has not been claimed as deduction in the computation of total income which fact has not been verified by the AO or the Ld. CIT(A). According to Ld. AR, the assessee has incurred expenses of only ₹ 39,18,761/- for earning exempt income and the assessee has not claimed any deduction of the same in its revised computation of total income which is placed from pages 2 to 7 of the paper book. Therefore this issue need to be examined by AO afresh, for that we set aside the impugned order of Ld. CIT(A) and remand this issue back to AO with a direction to verify this fact and the AO to examine the claim of the assessee.AO has to examine the account of the assessee and if he is not satisfied with the correctness of the claim of the assessee, then he has to record the same and thereafter, only he can invoke rule 8D of the Rules. Appeal of the assessee is partly allowed for statistical purposes.
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2021 (8) TMI 951
Revision u/s 263 - AO has stated that he had examined the cash flow statement for the relevant assessment year, income expenditure statement, balance sheet, source of cash receipts, bank statements, particulars of agricultural income, agreement in respect to sale of agricultural produce, Dharma Kanta Bills, documents regarding purchase of immovable property during the relevant assessment year, cash book, bank book etc., and thereafter passed the assessment order - HELD THAT:- The assessee has also stated before the ld. PCIT that he had produced the Pattadar Pass Book and other relevant documentary evidence for earning agricultural income before the ld. AO - it is evident from the Order of the Ld. PCIT that he has produced the same before him also. Similarly, as regards the Chit Bid amounts received by the assessee, the assessee has produced the bank statements and other relevant documents before the Ld. PCIT and also claimed to have produced before the Ld. AO. With respect to loan received from HDFC bank also the assessee had produced the bank statement before the Ld. PCIT and also claimed to have produced the same before the Ld. AO. In this situation, the ld. PCIT without examining the documents furnished by the assessee setting aside the order of the Ld. AO and directing the Ld. AO to re-do the assessment de novo is not appreciable. It is apparent from the order of the Ld. PCIT itself that the assessee had produced all the requisite documents before him. From the order of the Ld. PCIT and Ld. AO it is apparent that the Ld. AO has not only examined the documents produced by the assessee but also made enquiries through his inspectors and thereafter came to the conclusion that the income declared by the assessee in his return of income is in order. We are of the view that the order of the Ld. PCIT is devoid of merits. Therefore, we hereby set aside the order of the Ld. PCIT and reinstate the order of the Ld. AO. Appeal of the assessee is allowed
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2021 (8) TMI 942
Addition u/s 36(1)(ii) - payment of incentive to the Chairman and Managing director - CMD having substantive share holding - AO proceeded to disallow the same u/s. 36(1)(ii) on the premises that the same is distribution of dividend in the guise of incentive - HELD THAT:- As observed that other shareholders-cum-directors have not been paid any dividend/incentive during the year. Dividend is usually a return on the investment made by a person. However, in the present case, the incentive has been paid to Shri Rustom Joshi only for the services rendered by him and not a return on the investment made by him. If it was a dividend which was paid in the name of incentive, similar payments would have been made to the other shareholders of the company. However, this is not the case. The allegation of Ld. AO that there was violation of the provisions of The Companies Act, is not supported by any concrete material on record. The allegation of Ld. AO that dividend was being paid in the guise of incentive, has no legs to stand since the assessee has substantiate the fact that incentive was paid only against services rendered by Shri Rustom Joshi. Therefore, the additions have rightly been deleted. - Decided in favour of assessee.
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2021 (8) TMI 941
Reopening of assessment u/s 147 - multiple entries in the information received from INV Wing where the additions were made by reopening assessment - HELD THAT:-The contention of the ld. DR that the Assessing Officer has applied his mind while framing assessment order does not hold any water because the application of mind is required while issuing notice u/s 148 of the Act and not during assessment proceedings because the challenge is of the notice for reopening the assessment which when served, sets the law into motion. The original return was selected for scrutiny assessment and the assessment was framed u/s 143(3) of the Act, obviously, after scrutinising the return of income qua the details furnished therewith. Assessee made a statement at Bar that the balance sheet filed with the return of income clearly showed unsecured loans in liability side and therefore, it cannot be said that the assessee has not disclosed true and material facts in the original return of income. As carefully gone through the decisions relied upon by the first appellate authority. We find that in none of the decisions the issue was of multiplicity of the entries in the information received by the Assessing Officer which formed the basis for reopening the assessment. In all the decisions relied upon by the ld. DR, the issue was whether the information received amounts to tangible material evidence for reopening the assessment. Whereas the facts of the case in hand relates to the very information itself which contains 11 entries as mentioned elsewhere, where the total amount of escaped income is mentioned at ₹ 2.05 crores which is part of the reasons recorded for reopening the assessment. We are of the considered view that the assumption of jurisdiction by issue of notice u/s 148 of the Act is bad in law which makes the assessment order framed u/s 147 r.w.s 143(3) of the Act void ab initio. - Decided in favour of assessee.
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2021 (8) TMI 940
Disallowances being CSR expenditure incurred by the assessee and claimed as deductible expenditure - HELD THAT:- Assessee claimed that these are incurred for the business activity of the company. The facts shows that the assessee is machine manufacturer and the expenditure incurred in Odisha has not been shown before the lower authorities that same are incurred for the purpose of the business. In view of this, it does not satisfy the conditions prescribed u/s 37(1) of the Act. Further, it not the case that the expenditure is otherwise allowable to the assessee u/s 37(1) of the Act and because explanation added by Financial Act 2018 applicable from AY 2015-16 the disallowances is made. Therefore, it is imperative that even before the assessment year 2015-16 to get the deduction u/s 37(1) of the act of the corporate social responsibility expenditure assessee must satisfy the conditions envisaged u/s 37(1) - No infirmity in the order of the ld CIT(A) in confirming the disallowances. - Decided against assessee. Disallowances on account of interest paid for late deposit of TDS - HELD THAT:- As relying on CHENNAI PROPERTIES AND INVESTMENTS LIMITED [ 1998 (4) TMI 89 - MADRAS HIGH COURT] we confirm the action of the lower authorities in disallowing the interest expenditure for late deposit of TDS. - Decided against assessee.
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2021 (8) TMI 939
TDS u/s 194I - hire charges paid for the equipment disallowed - addition u/s 40(a)(ia) - As per assessee amount on account of hire charges of equipment was deducted by the Principal Contractor NCC Limited from the amount payable to the assessee-company and since there was actually no payment directly made by the assessee-company on account of hire charges, there was no requirement of deduction of tax at source - HELD THAT:- We are unable to accept the contention of assessee as rightly held by the authorities below, the amount in question on account of hire charges for equipment was payable by the assessee-company to M/s. NCC Limited and even though it was adjusted by NCC Limited against the amount payable to the assessee-company, such adjustment was not possible without crediting the said amount to the account of NCC Limited. The provision of section 194I thus was clearly attracted and the assessee-company was liable to deduct tax at source from the amount in question towards equipment hire charges. Since there was a failure on account of the assessee-company to comply with this requirement, the provision of section 40(a)(ia) was rightly invoked by the Assessing Officer. However find merit in the alternative contention raised by the ld. Counsel for the assessee that the amount of equipment hire charges in question having been already offered to tax by NCC Limited, the assessee-company cannot be treated as assessee in default for non-deduction of tax at source from the said payment as held in the case of Hindusthan Coca Cola Beverages Pvt. Limited [ 2007 (8) TMI 12 - SUPREME COURT] and there is no question of making disallowance under section 40(a)(ia). As rightly contended by the ld. D.R., this claim made by the ld. Counsel for the assessee specifically for the first time before the Tribunal, however, requires verification and the matter may, therefore, be sent back to the AO for the limited purpose of this verification. We accordingly restore this issue to the file of the Assessing Officer for the limited purpose of verifying the claim of the assessee - Appeal of the assessee as partly allowed for statistical purposes.
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2021 (8) TMI 937
Estimating the income of the assessee @ 8% on the sub-contract turnover - addition made being the entire sub-contract receipt not found to be genuine and ₹ 18,00,000/- being the amount received from three parties which remained unexplained - HELD THAT:- From the facts of the case it is apparent that the assessee had not maintained proper books of accounts or produced his bank statements to justify the expenditure incurred by him for undertaking the contracts. The assessee has also failed to produce bills and vouchers even to establish that he was undertaking and executing civil contracts. CIT (A) has arrived at his conclusion based on certain contract agreements, bank account etc., which are cited in his order and after perusing those documents we don t find any strength in the observation made by the Ld. CIT (A). On verifying the paper book of the assessee running to 32 pages, we do not find any concrete evidence to establish that the assessee is actually executing any civil contract works with respect to the contracts he has claimed to have undertaken - assessee could also not furnish proper evidence to establish that the parties from whom the assessee had received the amount of ₹ 18 lakhs is genuine. Therefore, we do not find any infirmity in the order of the Ld. AO. For the above stated reasons, we set aside the order of the ld. CIT (A) and accordingly the order of the ld. AO is hereby reinstated. Appeal of the Revenue is allowed.
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2021 (8) TMI 936
Assessment u/s 153A - incriminating material was found during the course of search or not? - HELD THAT:- As held by the learned CIT A that for assessment year 2008 09 till assessment year 2011 12, no incriminating material was found during the course of search pertaining to these years , we also do not find any material referred in the assessment order, the learned CIT DR also could not show us any incriminating material for all these years, therefore as these are the concluded assessment years, which could have been disturbed only if there is any incriminating material found during the course of search, we also find that the issue is squarely covered by the decision of the honourable Delhi High Court in case of CIT V Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] - Therefore we uphold the order of the learned CIT A deleting all the additions for all these years. Addition of bogus purchases on protective basis in the hands of the assessee - HELD THAT:- Substantive addition has been made in the hands of another entity to womb assessee has supplied material. The learned departmental representative could not show us any evidence that in the hands of the parties where substantive additions have been made what is the fate of the said addition is. Unless, it is brought over knowledge the fate of substantive addition in the hands of another entity, the addition in the case of the assessee cannot be sustained. In view of this we set-aside this ground of appeal back to the file of the learned assessing officer to 1st ascertain the fate of addition made on substantive basis in the hands of another entity. If the addition is sustained there on substantive basis, the addition on protective basis in the hands of this assessee deserves to be deleted. If the addition is not sustained in the hands of that assessee on its own merits, even then the protective addition cannot be sustained in the hands of this assessee. If, a finding is arrived in the case of the assessee in whose case substantive addition is made holding that bogus purchases booked by this assessee and not to that party and therefore no addition can be made in the hands of that party then, in that case the addition is required to be tested in the hands of this party is once again a fresh. Appeal of the learned AO are allowed for statistical purposes.
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2021 (8) TMI 934
Addition u/s 14A - HELD THAT:- CIT(A) applied the law laid down by the Hon ble jurisdictional High Court in the cases of CIT vs. Holcim India Private Limited [ 2014 (9) TMI 434 - DELHI HIGH COURT] and Cheminvest Ltd vs. CIT [ 2015 (9) TMI 238 - DELHI HIGH COURT] wherein it has been held that no disallowance u/s 14 A of the Act can be made in a year in which no exempt income was earned are received by the assessee. There is no dispute as to the fact that in this particular assessment year the assessee did not earn or receive any dividend income. Ld. CIT(A) has rightly applied the law laid down by the Hon ble jurisdictional High Court to the facts of the case and deleted the addition made under section 14A of the Act read with Rule 8D of the Rules. We, therefore, do not find any ground to interfere with such findings and consequently confirm the same. Ground No. 1 of the Revenue s appeal is accordingly dismissed. Addition u/s 36(1) and (2) - loan balance due from Carrier Launcher Education Foundation (CLEF) was written off - HELD THAT:- Since the assessee had declared the amount in question as income in the earlier assessment years and paid in taxes thereon, Ld. CIT(A) held that the conditions required u/s 36(1)(vii) read with section 36 (2) of the Act. It is not the case of the Revenue that in the earlier assessment years the assessee did not declare the impugned amount as income. It goes unchallenged that the assessee declared this amount as income in earlier assessment years and also paid the taxes. In view of the decision of the Hon ble Supreme Court in the case of TRS Ltd vs. CIT [ 2010 (2) TMI 211 - SUPREME COURT] 7, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable; and that,it is enough if the debt is written off as irrecoverable in the accounts of the assessee. There is no doubt that the conditions u/s 36(1)(vii) read with section 36 (2) of the Act are satisfied. The deletion of this addition by the Ld. CIT(A), therefore, does not suffer any illegality or irregularity. We, therefore, confirmed the same and dismiss the other ground of the appeal of the Revenue.
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Customs
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2021 (8) TMI 978
Classification of goods - components for the assembly of iPERL flowmeter - HELD THAT:- The impugned product is intended for use in water supply. However, iPERL is not merely used to measure the volume of the liquid consumed. The device measures the rate of flow of liquid, based on which eventually volume of the liquid consumed can be calculated. The application of General Interpretation Rules (1-4) should always be in sequential order. As per Rule 1, classification shall be determined according to the terms of the heading and any relative section or chapter notes. The applicant had informed vide email dated 05.08.2021 that they may import excess components over and above required for assembly of iPERL . For classification of such parts and accessories relevant Chapter and Section notes are required to be referred. General Explanatory Note 1 (f) to Chapter 90 excludes parts of general use, as defined in Note 2 to Section XV, of base metal (Section XV) or similar goods of plastics (Chapter 39). The Senses iPERL smart meter merit classification under heading 90.26 and more specifically, under subheading 90261010 of the first schedule to the Customs Tariff Act, 1975.
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2021 (8) TMI 972
Clearance of goods imported by the petitioner - return of bank guarantees furnished at the time of provisional assessment - classification under CTH 23065020 or not - HELD THAT:- On 14.06.2021 time was sought for finalisation and an extension of four weeks was granted. On 14.07.2021, since the matter was still hanging fire, some more time was granted putting the respondents to terms. The terms imposed have been complied with, as stated in memo dated 10.08.2021. As regards the finalisation of the assessments R3, under cover of memo dated 13.08.2021, has stated that provisional assessment has been finalised in line with the classification declared by the petitioner in the bills of entry in question being CTH 23065020. The mandamus sought for thus stands achieved and this writ petition is closed.
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2021 (8) TMI 969
Provisional release for re-export of the goods - mis-declaration of declared goods - exaggerated value of the goods - suppression, misdeclaration, misclassification and import of prohibited goods - HELD THAT:- The petitioner is a 100% export-oriented unit and thus, any difference in the declaration of the value of the goods to be exported by the petitioner would not make much difference, as the petitioner would be entitled to seek 100% refund of the duty paid. The petitioner is directed to furnish a bond amounting to ₹ 15 crores within seven days of the petitioner submitting the said bond and complying with the other formalities as per law, the respondents are directed to provisionally release the goods in question for re-export. The writ petition has been disposed off.
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2021 (8) TMI 968
Seeking finalization of provisional release of goods - re-assessment of Bill of Entry - Section 17(5) of the Indian Customs Act - HELD THAT:- It becomes apodictic clear that this Court will be fully justified in issuing orders, as prayed for by the petitioner. However, as regards Ext.P11 Bill of Entry, the only order considered, is to direct the respondents to issue the petitioner an order as per Section 17(5) of the Customs Act. The competent among the respondents will immediately take up Ext.P1 and issue final orders qua the provisional release of goods covered by it, after affording an opportunity of hearing to the petitioner, as expeditiously as is possible, but not later than one month from the date of receipt of a copy of this judgment - appeal disposed off.
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2021 (8) TMI 967
Maintainability of appeal - availability of alternative remedy - Provisional release of seized goods - Gold Ornaments - section 110A of Customs Act - HELD THAT:- The attempt of the Department is to bypass the remedy of an appeal against Ext.P10 and that too when, in the appeal preferred by them, interim orders have not been obtained as of yet. The extraordinary jurisdiction under Article 226 of the Constitution of India cannot be utilised by a party to a lis to arm themselves with a sword from this Court, while their statutory remedies are being pursued, unless there are extraordinary circumstances. The claim of the Department that there are extraordinary circumstances based upon the Circular issued on 16.08.2017, though attractive in the initial blush, on a deeper analysis, not of much substance. Since it is submitted across the Bar that the appeal against Ext.P10 order is pending consideration before the Appellate Tribunal, it is not proper to express any opinion on the merits of the issue - Appeal dismissed.
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2021 (8) TMI 965
Levy of penalty - Section 11AC of the Central Excise Act, 1944 - opportunity of hearing provided - HELD THAT:- The order was followed by a show cause notice for the imposition of penalty dated 18.11.2020. The notice called for a reply in writing within one week as well as fixed a personal hearing on 30.11.2020 through video conference. It appears that in the meanwhile the petitioner has challenged the order of the learned single Judge. Vide letter dated 27.11.2020 the petitioner has brought to the notice of the respondent the details of filing of the Writ Appeal, requesting the Commissioner, Central Excise to keep the matter in abeyance till such time the Writ Appeal was heard. It is also not in dispute that on 30.11.2020, the petitioner as well as the second respondent had telephonically communicated with each other wherein the petitioner reiterated the request for keeping the matter in abeyance. This is not a matter that would justify intervention under Article 226 of the Constitution of India. Admittedly, due opportunity has been provided to the petitioner prior to the passing of the impugned order. The petitioner, however was more inclined to pursue the Writ Appeal and thus did not avail of the opportunity that was extended. Incidentally, the Writ Appeal has also come to be dismissed by order of the Division Bench dated 01.02.2021. Thus the petitioner is relegated to alternate remedy, if it so desires. If an appeal challenging the impugned order is filed within a period of eight (8) weeks from today, the same shall be taken on file by the respondents without reference to limitation, but ensuring compliance with all other statutory conditions. Petition dismissed.
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2021 (8) TMI 958
Refund of SAD - Appeal found to be filed beyond the period of one year from the relevant date - applicability of N/N. 102/2007-Cus dated 14.9.2007 - HELD THAT:- In terms of N/N. 102/2017, no doubt utmost requirement is that the refund of SAD will be available only after the imported goods are being sold by the importer with the necessary proofs of the said sale along with certificate of the statutory auditor. The relevant time for seeking refund of SAD is the date when the imported goods have been sold. It is an admitted fact that substantial quantity of imported goods was sold by the appellant in the year 2016 itself under the invoice No. R1/240 dated 22.12.2016. Output VAT on such sale was also charged and was paid vide State Government treasury. The N/N. 102/07 of 14.9.2007 (amended) was very much in existence. Ignorance, thereof is not right to be pleaded by the appellant - There is no sufficient reason quoted for waiting till March, 2018. In the absence of such explanation it is held that limitation mentioned in the amended N/N. 102/2007 is rightly invokable for the impugned refund claim. Appeal dismissed.
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2021 (8) TMI 932
Smuggling - foreign currency - Indian currency - reasons to believe - Section 110 (1B) of Customs Act - HELD THAT:- The decision interpreting the word Magistrate to be Judicial/Metropolitan Magistrate seemed flawed and it was categorically held that it is an Executive function. Thereby, giving strength to the decision of this Court about the application not being maintainable before this Court. This Court also feels the need to discuss another decision of the Hon ble High Court of Delhi pronounced recently in AIR CUSTOMS VERSUS MOSAFIER ALIZAHI ORS. [ 2021 (2) TMI 310 - DELHI HIGH COURT] wherein the Hon ble High Court held that the proceedings under Section 52A of NDPS Act were to be carried out by the Metropolitan Magistrate. The order emphasized on 52A (4) of the NDPS Act however, there is no provision akin to Section 52A (4) in the Customs Act. The application is not maintainable before this Court and therefore, the same is dismissed liberty to invoke the same before the Competent Authority.
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Corporate Laws
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2021 (8) TMI 947
Sanction of Scheme of Amalgamation - Section 230(1) read with Section 232(1) of the Companies Act, 2013 - HELD THAT:- Various directions regarding holding, convening and dispensation of various meetings issued - directions regarding issuance of various notices issued. Application disposed off.
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Insolvency & Bankruptcy
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2021 (8) TMI 956
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - Pre-Existing Dispute or not - invocation of Arbitration Clause by Operational Creditors - time limitation - HELD THAT:- The contention of the Learned Solicitor General that the Application under Section 9 is barred by Limitation cannot be sustained as the Pre-Existing Dispute was an ongoing one continuing from the date when the Arbitration Clause was invoked by the Operational Creditor themselves. Additionally, the fact remains that the Appeals under Section 37 were dismissed for default only on 29.11.2019. Hence, the Appeal cannot be stated to be barred by Limitation. Whether pendency of a proceeding for execution of an Award or a Judgement/decree bar an Operational Creditor to prefer a Petition under the Code. The Judgement of M/S. ANNAPURNA INFRASTRUCTURE PVT. LTD. AND ANR. VERSUS M/S. SORIL INFRA RESOURCES LTD. [ 2017 (8) TMI 1330 - NATIONAL COMPANY LAW TRIBUNAL, NEW DELHI ] relied upon by the Learned Counsel is not applicable to the facts of this case as the Dispute in this instant case is still pending as Arbitration under Section 37 Appeal is still pending till date. If the Appeal under Section 37 had been decided, then Execution comes into the picture. Money Recovery and Triggering of Insolvency are not parallel proceedings. Section 8(2)(a) provides that Existence of a Dispute, [if any, or] record of the pendency of the suit or Arbitration Proceedings filed before the receipt of such Notice or invoice in relation to such Dispute. At the outset, what has to be seen is whether there is any Existence of Dispute , if any or record of the pendency of the suit or Arbitration Proceedings - In the instant case, it is an admitted fact by both the parties that disputes arose way back in the year 2003 and 2004, and based on the terms of MoU entered into, the Operational Creditor themselves invoked the Arbitration Proceedings. Both the Arbitral Awards were assailed by the Corporate Debtor under Section 34 of A C Act, 1996 and were dismissed by separate Orders dated 27.02.2012 and 29.02.2012 respectively - the Demand Notice was issued on 14.02.2020. The Application was filed on 02.03.2020. Upon restoration, the Appeal relates back to the original date of filing and therefore we note that there was a Pre-Existing Dispute prior to the date of issuance of the Demand Notice. There is a possibility that the Corporate Debtor may succeed on any claim or part of the claim. Hence, it is apposite to observe that the Operational Debt herein, could not be said to be an undisputed debt . Following the ratio in Mobilox Innovations Pvt. Ltd. [ 2017 (9) TMI 1270 - SUPREME COURT ] wherein it was inter alia held that so long as a dispute truly exists in fact and is not spurious, the Adjudicating Authority ought to have dismissed the Application. Appeals are allowed and the Impugned Order is set aside.
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2021 (8) TMI 950
Liquidation of Corporate Debtor - seeking withdrawal of CIRP in relation to the Corporate Debtor - 330 days period of CIRP in relation to the Corporate Debtor expired - Section 12A of IBC, 2016 - HELD THAT:- The Applicant has not disclosed the Liquidation value in relation to the Corporate Debtor. It is stated in the said Application that in order to maintain the confidentiality the Applicant has not disclosed the Liquidation value. However, it is very strange on the part of the Applicant to state so, since the Applicant/RP has disclosed the purported settlement proposal given by the promoter of the Corporate Debtor as ₹ 328.21 Crore, however fails to disclose the Liquidation value under the pretext that it is confidential, which statement, it is found that paradoxical and not amenable to ordinary prudence. The Corporate Debtor is required to be ordered for liquidation as per Section 33(1)(a) of IBC, 2016 - Application allowed.
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2021 (8) TMI 949
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - requirement of verification of genuineness of the Loan Agreement - HELD THAT:- In view of what has been stated in the Application, the Financial Creditor, Dewesh Auto Creative Service, is hereby directed to submit before this Tribunal, the original Loan Agreement dated 19th December, 2014, within 15 days of the receipt of this Order, for Forensic Audit by the Government recognized laboratory for verification of the genuineness of the document. The copy of this Order be sent to the Resolution Professional and the Financial Creditor at its registered Office address by Speed Post and by E-mail, both, with proof of service.
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2021 (8) TMI 948
Dissolution of Corporate Person - Section 59 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The affairs of the Corporate Person have been completely wound up and its assets are liquidated. This Corporate Person, through its Liquidator, voluntarily liquidated itself so as to get dissolved. We hereby allow the Company Petition. Hence ordered. The Applicant Company is dissolved in terms of section 59 of the Code - Petition allowed.
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2021 (8) TMI 946
Seeking dissolution of the Corporate Debtor - Section 54 of the Insolvency and Bankruptcy Code, 2016 (the Code) r/w Regulation 45 of Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - HELD THAT:- It appears that the affairs of the Corporate Debtor have been standstill since FY 2016-17. The liquidation proceeds have also been realised and distributed to the stakeholders. It is satisfying from the documents on record that the dissolution is not with intent to defraud any person. The liquidation process has been duly completed as per the provisions of the Code without success. From the facts narrated and the law on the subject it would be just and equitable to dissolve the Corporate Debtor. No party is going to be adversely affected or prejudiced thereby. In view of the above the Corporate Debtor deserves to be dissolved. Application allowed.
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2021 (8) TMI 945
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:- The Operational Creditor issued demand notice on 30.01.2019 (annexed at annexure 2 at page No. 12 to the company Petition under section 8 of the Code calling upon the Corporate Debtor to pay the above amount of ₹ 5,99,638/-. It was mentioned in the said notice that the date of default is 31.03.2016. The Operational Creditor also annexed the statement of account relating to the Corporate Debtor as per his books of accounts annexed as Annexure No. 4 at Page 16 to the Company Petition covering from the period 29.07.2015 to 31.03.2016 - As per section 34 of the Evidence Act, mere entries in the books of accounts is not enough to charge the other persons with liability. It is well settled proposition of law that the Operational Creditor or a plaintiff is not entitled for automatic order of admission simply because the defendant did not file any reply nor advance any arguments - this Tribunal is of the considered opinion that the above Company Petition is barred by limitation and is liable to be rejected - Petition dismissed.
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2021 (8) TMI 944
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial creditors - inter-Corporate Loan - absence of proper documents - suppression of material facts of filing of a Title Suit against the Financial Creditor before the City Civil Court - HELD THAT:- First of all, it is not clear as to how a request for inter-corporate loan was made by the Corporate Debtor to the Financial Creditor. There is no document placed on record by the Financial Creditor indicating any demand or requests made on behalf of the Corporate Debtor. There is no agreement to indicate the rate of interest being claimed by the Financial Creditor @ 9% per annum. In the absence of any such document, it is very difficult to put the payment of ₹ 25,00,000/- sent through RTGS by the Financial Creditor to the Corporate Debtor, in the category of financial debt. What is more surprisingly is that the Financial Creditor did not write to the Corporate Debtor about the dishonouring of its cheque for ₹ 25,00,000/- even after the cheque was returned by the Bank till the date of filing of this application on 27th December, 2018 which speaks volumes about the whole issue between the parties. First of all, there was no reason to keep the cheque pending till it becomes stale and once it has been returned by the Bank, the natural conduct of a creditor is to at least send an email or letter informing the Corporate Debtor to make the payment due from it to the Financial Creditor, instead of straightway rushing to this Adjudicating Authority by way of an application under section 7 of the Code, which is the harshest step for any person to take particularly with a person who is stated to be a friend as stated in the application and the loan was also allegedly given as friendly loan. This is not a fit case for admission of the application or for initiation of CIRP in respect of the Corporate Debtor. The application has so many infirmities, due to which the application of the Financial Creditor is to be rejected. Application dismissed.
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2021 (8) TMI 943
Liquidation of Corporate Debtor - Section 33 of the Insolvency and Bankruptcy Code, 2016 read with Rule 11 of the NCLT Rules, 2016 - HELD THAT:- It is clear that when a Resolution Professional at any time during the CIRP but before confirmation of Resolution Plan approaches the Adjudicating Authority with the decision of the COC approved by not less than sixty six percent of the voting share, the Adjudicating Authority shall pass a liquation order. In this case the CoC with 100% voting right approved the resolution for liquidation of the Corporate Debtor. Hence, this is a fit case to order liquidation under Section 33(2) of the IBC, 2016. The Corporate Debtor, M/s Nova Steels (India) Limited is ordered to be liquidated with immediate effect under Section 33(2) of IBC, 2016 - Application allowed.
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Service Tax
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2021 (8) TMI 960
Levy of service tax - sharing of Revenue received by the appellant under joint venture agreement - demand where there is no joint venture agreement and the appellant were liable to pay service tax but the service tax was deducted - Business Auxiliary Service - difference between the telephone recharge amount paid by the customers and appellant remitted the amount to BSNL - HELD THAT:- The difference amount between the sale of SIM card / recharge of SIM card and the amount remitted to the telephone company is nothing but only commission on which suffered service tax in the hands of principal. Entire matter needs reconsideration. Our views being prima-facie should not influence the findings to be given afresh by the Adjudicating Authority - Appeal allowed by way of remand.
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2021 (8) TMI 933
Rebate of service tax paid - rebate claims rejected on the ground that the activities of the received services had no nexus with export consignment - Clause (e ) of para 3 of N/N. 41/2012-ST dated 29.06.2012 - HELD THAT:- The invoices in question were issued by the Chartered Accountant- Anuj Maheshwari and Company, copy of which is available in the appeal record. The invoices reads as professional consultancy for export against export consignment as per details, giving the export invoice number, date and quantity etc. Further, Service Tax has been charged by the Consultant and it is undisputed that such invoices were paid along with service tax. There is no bar by a professional Chartered Accountant in giving business consultancy for the purpose of export. Further, the Commissioner (Appeals) has travelled beyond the scope of Show Cause Notice rejecting the appeal on a new ground i.e. Chartered Accountant in practice cannot give consultancy for export - the appellant is entitled to rebate on the Service Tax paid on the consultancy bill, for consulting the Chartered Accountant. Appeal allowed - decided in favor of appellant.
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Central Excise
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2021 (8) TMI 963
CENVAT Credit - services provided by the dealers to the customers on behalf of the appellant - meaning of input services pre and post 01.04.2011 - reliance to be placed on precedent decisions - whether the earlier Division Bench decisions of the Tribunal in M/S. CARRIER AIRCONDITIONING REFRIGERATION LTD. VERSUS CCE, GURGAON [ 2016 (3) TMI 124 - CESTAT NEW DELHI] , M/S HONDA MOTORCYCLE SCOOTER INDIA PVT. LTD., SHRI SUNIL GUPTA AND SHRI NAVEEN KUMAR VERSUS CCE ST, ALWAR [ 2018 (12) TMI 929 - CESTAT NEW DELHI] and M/S SAMSUNG INDIA ELECTRONICS PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS CENTRAL EXCISE SERVICE TAX [ 2016 (11) TMI 867 - CESTAT ALLAHABAD] should be relied upon as precedents and the decision of the Tribunal rendered on 24.11.2017, in the own case of the appellant, should be taken to have been rendered per incuriam? - HELD THAT:- The principle of per incuriam can be applied for such decisions which have been given in ignorance of some statutory provision or some authority that is binding. In the present case, the Tribunal in M/S CASE NEW HOLLAND CONSTRUCTION EQUIPMENT (I) PVT LTD VERSUS CCE INDORE [ 2017 (11) TMI 1481 - CESTAT NEW DELHI] , distinguished the earlier binding decisions of the Tribunal on a mistaken belief that an amendment had been made in a definition of input service , whereas the means clause of the definition had come up for consideration before the Tribunal and it had not been amended. The Division Bench proceeded on an assumption that the benefit of CENVAT credit was being taken by the appellant therein either under the includes clause or excludes clause of the definition of input service , which portion had been amended whereas reliance had been placed by the appellant on the decisions which had interpreted the means clause of the definition of the input service . It was, therefore, clearly a case where that part of the statutory provision that should have been applied was ignored and that part of the statutory provision that was not relevant to the controversy was considered. When CENVAT credit was sought to be justified by the appellant under the means clause, for which reliance was placed on the earlier decisions of the Tribunal, there was no necessity to examine whether it can be justified under the includes clause or excludes clause of the definition. The decision rendered by the Tribunal on 24.11.2017 is, therefore, clearly per incuriam. It is, therefore, considered appropriate to follow the three decisions rendered by the Tribunal in Carrier Airconditioning Refrigeration, Honda Motorcycle and Samsung India Electronics in preference to the later decision in M/S CASE NEW HOLLAND CONSTRUCTION EQUIPMENT (I) PVT LTD VERSUS CCE INDORE [ 2017 (11) TMI 1481 - CESTAT NEW DELHI] , which has distinguished these three decisions on a non-existent ground. The appellant correctly availed CENVAT credit on the amount of service tax paid for the services provided by the dealers to the customers on behalf of the appellant for fulfilling the warranty obligations of the appellant - Appeal allowed - decided in favor of appellant.
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2021 (8) TMI 957
Condonation of delay in filing appeal - proper explanation for delay provided - HELD THAT:- The delay has been reasonably explained, and there appears to be no deliberate latches on the part of the appellant. Accordingly, the condonation of delay application is allowed. As the appellant have died, this appeal abates. Accordingly, the appeal is also disposed of as abated.
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2021 (8) TMI 938
CENVAT Credit - inputs not received in the factory premises - purchase of inputs from the suppliers on high seas sales basis - cross-examination of persons whose statements were taken - additional corroborative evidences present - challenge to penalty of much less amount by only 1 co-noticee among 19 co-noticees - maintainability of appeal - HELD THAT:- The impugned appeal is filed by only one co-noticee among said 19 co-noticees, that too with respect to the amount of penalty confirmed against him i.e. ₹ 10,000/-. This observation is sufficient to hold that the present appeal is challenging the imposition of penalty of much less amount than the pecuniary limit of the Single Bench of this Tribunal. Therefore, the appeal can definitely be heard by this Single Member Bench. Earlier the demand against the appellant was confirmed based on the statements recorded by the investigating officers at the time of investigation itself. None of those witnesses were allowed to be cross-examined by the appellant despite his request. The present order under challenge is the order at second round of litigation where the adjudicating authority below - It is observed that though the said Final Order has been complied with by the adjudicating authority, as 13 out of 40 witnesses have been cross-examined. But it is perused that the outcome of the cross-examination has not at all been considered while passing the impugned order. It is clearly apparent from the testimony of the witnesses cross-examined that their earlier statements were got recorded forcibly under pressure with use of coercion. It has been the deposed by most of the witnesses during their corss-examination that nickel was very-much available in the factory of M/s. JVIPL at the time of the visit by the Department, but was still not shown in Panchnama by the Investigating Officers due to reasons best known to the Department. The witnesses have specifically stated that M/s. JVIPL otherwise used to make copper-nickel alloys. There is no effort apparent on the part of the Department to ascertain the exact temperature range required of a furnace to melt nickel. None of the expert had suggested that the fire furnace of M/s. JVIPL was actually not capable of attaining the melting point of the nickel. Despite this absence, the Commissioner has placed utmost reliance on the said statement. His findings are accordingly, held to be unreasonable and unjustifiable and nothing more than presumptive - Apparently there is no physical inspection by the investigating team about the process of manufacture being adopted by M/s.JVIPL. In the absence thereof, the mere fact that M/s. JVIPL had no such furnace as is required for melting nickel purchased from the appellant, that too without any evidence verifying the same, is not sufficient to fasten the liability upon the appellant to the extent of imposition of penalty alleging his involvement in the alleged clandestine production by M/s. JVIPl. The findings of adjudicating authority below, being highly presumptive are absolutely insufficient for imposition of penalty upon the raw-material supplier of such manufacturer i.e. the appellant - Appeal allowed - decided in favor of appellant.
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2021 (8) TMI 935
Reversal of CENVAT Credit - inputs written off - provision made in the books of accounts on account of Non-Moving Inventory, without reducing the value of inventory - Rule 3(5B) of Cenvat Credit Rules - HELD THAT:- Rule 3(5B) of the CCR is attracted only when the value of the asset and or inventory is written off fully or partially, or wherein any specific provision to write off fully or partially has been made in the books of accounts - Admittedly, in the facts of the present case, the appellant has made only a general provision , which is not attributable to any particular capital asset/input. Admittedly, Revenue has not been able to identify the details of inventory or any asset, for which the general provision has been made. The show cause notice is erroneous as the amount of ₹ 57,52,999/- is for stores and spares provision appearing in the Trial balance as on 31.03.2017 ( a Credit Balance) whereas the amount of ₹ 20,04,324/-is debit balance of stores and spares expenses . The two being different account heads, have been wrongly taken together, making the show cause notice vague and misconceived. Appeal allowed - decided in favor of appellant.
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Indian Laws
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2021 (8) TMI 977
Grant of anticipatory Bail - appellant had already joined the investigation before approaching this Court and the chargesheet was stated to be ready to be filed - Section 170 of the Cr.P.C. - HELD THAT:- The occasion to arrest an accused during investigation arises when custodial investigation becomes necessary or it is a heinous crime or where there is a possibility of influencing the witnesses or accused may abscond. Merely because an arrest can be made because it is lawful does not mandate that arrest must be made. A distinction must be made between the existence of the power to arrest and the justification for exercise of it. In the present case when the appellant has joined the investigation, investigation has completed and he has been roped in after seven years of registration of the FIR we can think of no reason why at this stage he must be arrested before the chargesheet is taken on record - the learned counsel for the appellant has already stated that on summons being issued the appellant will put the appearance before the trial court. Appeal allowed.
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