TMI Tax Updates - e-Newsletter
August 26, 2023

Case Laws in this Newsletter:

GST Income Tax Benami Property Customs Insolvency & Bankruptcy PMLA Service Tax CST, VAT & Sales Tax

Articles

1. Judgment about Employees Contributions - in case of Checkmate (SC) – need reconsideration – part 1

   By: DEVKUMAR KOTHARI

2. POWER TO IMPOSE PENALTY IN CERTAIN CASES UNDER GST LAW

   By: Dr. Sanjiv Agarwal

3. Discipline regarding “quasi-criminal” penal proceedings

   By: Vivek Jalan

4. Assistant Commissioner has no authority to alter the findings of the higher authority

   By: Bimal jain

News

1. Minutes of the Monetary Policy Committee Meeting, August 8 to 10, 2023 [Under Section 45ZL of the Reserve Bank of India Act, 1934]

2. G20 Trade and Investment Ministers Meeting (TIMM) concluded with adoption of the G20 Trade and Investment Outcome Document and Chair’s Summary.

3. Committee of Experts to ‘Onshoring the Indian Innovation to GIFT IFSC’

4. Launch of Invoice Incentive Scheme “Mera Bill Mera Adhikaar” from 1st September, 2023

Notifications

GST - States

1. 34/2023-State Tax - dated 22-8-2023 - Maharashtra SGST

Seeks to waive the requirement of mandatory registration under section 24(ix) of MGST Act for person supplying goods through ECOs, subject to certain conditions.

2. 33/2023-State Tax - dated 22-8-2023 - Maharashtra SGST

Seeks to notify “Account Aggregator” as the systems with which information may be shared by the common portal under section 158A of the MGST Act, 2017.

3. 32/2023-State Tax - dated 10-8-2023 - Maharashtra SGST

Seeks to exempt the registered person whose aggregate turnover in the financial year 2022-23 is up to two crore rupees, from filing annual return for the said financial year.

4. 37/2023-State Tax - dated 16-8-2023 - Mizoram SGST

Seeks to notify special procedure to be followed by the electronic commerce operators in respect of supplies of goods through them by unregistered persons

5. 36/2023-State Tax - dated 16-8-2023 - Mizoram SGST

Seeks to notify special procedure to be followed by the electronic commerce operators in respect of supplies of goods through them by composition taxpayers

6. 34/2023-State Tax - dated 16-8-2023 - Mizoram SGST

Seeks to waive the requirement of mandatory registration under section 24(ix) of MGST Act for person supplying goods through ECOs, subject to certain conditions

Circulars / Instructions / Orders

SEBI

1. SEBI/ HO/ AFD/ AFD–PoD–2/CIR/ P/ 2023/ 148 - dated 24-8-2023

Mandating additional disclosures by Foreign Portfolio Investors (FPIs) that fulfil certain objective criteria

2. SEBI/HO/MRD/TPD/P/CIR/2023/147 - dated 24-8-2023

Modification in Cyber Security and Cyber Resilience framework of Stock Exchanges, Clearing Corporations and Depositories

3. SEBI/HO/MRD/MRD-PoD-1/P/CIR/2023/82 - dated 1-6-2023

Master Circular for Electronic Gold Receipts (EGRs)

DGFT

4. Trade Notice No. 24/2023 - dated 25-8-2023

Amendment of export policy of Food Supplements containing botanicals

5. 29/2023 - dated 25-8-2023

Allocation of quantity 5841 MT Sugar by EU for export from India under TRQ for the year 2023-24 (October 2023 to September 2024)

Highlights / Catch Notes

Income Tax

• Calcutta University-affiliated college challenges faceless tax assessment and penalty; High Court orders reconsideration u/s 271(1)(c).

  Case-Laws - HC : Validity of Faceless Assessment - Penalty u/s 271(1)(c) - ignorance of an assessee as to his rights - The petitioner is a West Bengal Government aided college duly affiliated under the Calcutta University, enjoying relief under Section 10 (23C) of the Act but not conversant with the Income Tax ‘e-proceeding facilities’. The situation being such, the respondent authority has to consider the plight of the petitioner in the light of departmental circular No. 14(XL-35) dated 11.04.1995. - Matter restored back - HC
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• High Court Finds Non-Application of Mind by Assessing Officer in Reopening Assessment u/s 54 Due to Clear Disclosures.

  Case-Laws - HC : Validity of Reopening of assessment - deduction claimed u/s 54 - In the ITR, the assessee clearly discloses the said sale consideration coupled with the deductions claimed as described above. Apparently, prior to issuance of notice u/s 148A(b) of the Act, the Assessing Officer failed to notice the said disclosures. - It is a clear case of non-application of mind by the AO - HC
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• Court Criticizes 498-Day Revenue Appeal Delay, Urges Government to Address Litigation Delays Due to Negligence.

  Case-Laws - HC : Condonation of delay - delay of 498 days in filing the appeal by Revenue - Time has come to take drastic measures qua lethargy caused litigation delays, lest the chaos in judicial functioning percolated further. Time has come when due diligence has to replace negligence which pervades some of the government agencies as in the present case, so that justice does not hang at the altar of dereliction, default, negligence and indifference. - HC
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• CIT (Appeals) Rules Section 47(xiii)(b) Applies to Firms, Not Partners, in Conversion to Companies Case.

  Case-Laws - AT : Short Term Capital Gain - conversion of the Partnership Firms into Companies - Additions in the hands of partners - CIT (Appeals) correctly deleted the additions on account of capital gain made in the hands of the Partners as he was of the opinion that the applicability of section 47(xiii)(b) at the time of conversion of the Partnership Firms into Companies can be considered only in the hands of the Partnership Firms to which the land belongs. - AT
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• PCIT's Section 263 invocation overturned due to lack of evidence on assessee's indirect expenses for exempt income u/s 14A.

  Case-Laws - AT : Revision u/s 263 - disallowance u/s 14A r.w.r. 8D - the assessee has not incurred any indirect expenses to earn the exempt income and ld. PCIT has not brought any material to show that the assessee has incurred indirect expenses to earn the exempt income. - PCIT has erred in invoking the provisions of Section 263 - AT
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• Trust Penalized for Late Income Tax Filing u/ss 272A(2)(e) and 139(4A) of Income Tax Act.

  Case-Laws - AT : Penalty levied u/s. 272A(2)(e) - trust - failure to furnish return of income which it was obligated to file u/s 139(4A) - ITR could have been filed by the assessee trust latest by 31.03.2014 - A.O. directed to restrict the penalty imposed u/s. 272A(A)(e) of the Act up to the period that was available to the assessee trust for filing its return of income u/s 139 (4A), i.e., up to 31.03.2014. - AT
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• Tax Exemption Denied: Society's Income Assessed u/s 11, AO to Consider Deduction Claims Per Income Tax Act.

  Case-Laws - AT : Assessment of income after denial of exemption u/s 11 - assessing the gross receipts of the assessee society as its income - AO directed to consider the assessee’s claim for deduction of expenses as debited in the income and expenditure account under the provisions of the Act. - AT
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• Tax Exemption Denied for Dharmashala: Section 11 Not Applicable Due to Profit Motive in Commercial Activities.

  Case-Laws - AT : Exemption u/s 11 - letting of “Dharmashala” for commercial activities by the assessee - Profit motive - Nothing is discernible, much less evidenced based on supporting material which would reveal that the booking/ancillary receipts collected by the assessee from the aforesaid commercial activities were nominally above cost. - Exemption was rightly denined - AT
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• Reassessment Order Quashed: No Notice u/s 143(2) Issued After Fresh Return Filed for Section 148 Notice.

  Case-Laws - AT : Reopening of assessment u/s 147 - non issue of notice issued u/s 143(2) - In absence of any notice issued u/s 143(2) after receipt of fresh return submitted by the assessee in response to notice u/s 148, the entire procedure adopted for escaped assessment, shall not be valid. Reassessment order passed by AO u/s 143(3) r.w.s. 147 quashed - AT
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• AO Oversteps Role in Transfer Pricing Case; DRP and ITAT Confirm Deletion of Additions Due to Misapplied Benefit Test.

  Case-Laws - AT : TP adjustment - international transaction - expenses - incurred wholly and exclusively for the purpose of business or not - In the present case, the AO, by applying benefit test to the impugned international transaction has attempted to step into the shoes of TPO, since the benefit test could have been applied only for the purpose of determining ALP of the transaction as pointed out by the DRP also from the OECD commentary and from the various decision of the ITAT on this issue. - Additions deleted - AT
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Customs

• Exemption Denied for 100% EOU: Imported Item Used for Safe Transport, Not Production of Exported Goods.

  Case-Laws - AT : Denial of benefit of exemption - 100% EOU - it is an admitted fact that the item imported is used inside the container only for safe transportation and not for the production of exported goods. Moreover, the Notification does not allow any used items to be imported and therefore, the question of extending the benefit does not arise at all. - AT
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• Customs Duty Exemption Challenged Due to Delays and Flawed Sampling in Coking Coal Import from Indonesia.

  Case-Laws - AT : Exemption form Customs Duty - import of consignment of "Coking Coal" from Indonesia - random or systematic sampling - the department has not been able to justify the process of sampling or the delay of more than 11 months in receipt of the report and that too by not indicating actual date of test. The belated communication by CRCL too is without any authoritative supporting material. - AT
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Case Laws:

• GST

• 2023 (8) TMI 1124
  Seeking grant of Regular Bail - creation of false and bogus companies for extracting GST amount from the public - HELD THAT:- The Hon ble Supreme Court in the matter of Prabhakar Tewari Vs. State of U.P., and another [ 2020 (1) TMI 1528 - SUPREME COURT ] has held that the pendency of several criminal cases against the accused cannot be basis to refuse the prayer of bail. Still further, no doubt, several other criminal cases have been registered against the present petitioner, but that cannot be sole ground to confine the present petitioner in jail for an indefinite period. The bail to a petitioner cannot be denied solely on the ground that several other cases are pending against him, even though, the petitioner has been able to make out a case for grant of bail in the facts of the present case. In the present case also, the petitioner has already undergone more than 01 year and 11 months of the custody and the trial is at an initial stage. Even all the offences are triable by the Court of learned Magistrate and the conclusion of the trial may take considerable time. The present petition is allowed and the petitioner is ordered to be released on bail subject to his furnishing bail bonds/surety bonds to the satisfaction of the trial Court/Duty Magistrate/Chief Judicial Magistrate, concerned subject to the conditions imposed.

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• 2023 (8) TMI 1123
  Attachment of Bank accounts of petitioner - One year has passed since the said order was issued - HELD THAT:- Since the order dated 05.08.2022 which was the last provisional order passed by the Commissionerate at Belapur is no longer operative, the present petition has been rendered academic. It is considered apposite to dispose of the present petition by directing the concerned bank (respondent no. 3) that it shall not interdict the operation of the petitioner s bank account on account of any of the orders of the provisional attachment - petition disposed off.

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• 2023 (8) TMI 1122
  Cancellation of GST registration of petitioner - discontinuance of business operations - no specific ground in SCN for proposing the cancellation of the petitioner s GST Registration - violation of principles of natural justice - HELD THAT:- It is settled law that a Show Cause Notice must specify the reasons for the proposed action so as to enable the noticee to respond to the same. In the present case, the impugned Show Cause Notice did not provide any clue as to which provisions of the GST Act or the GST Rules were allegedly violated by the petitioner. The impugned Show Cause Notice was incapable of eliciting any meaningful response. Plainly, the impugned order passed pursuant to the impugned Show Cause Notice cannot be sustained for the same reason - It is relevant to note that the only reason provided in the impugned order for cancelling the petitioner s GST registration is that the petitioner had not submitted any response to the impugned Show Cause Notice and had not appeared for a personal hearing. The petitioner neither responded to the impugned Show Cause Notice nor appeared before the concerned Officer on 17.06.2022 for a personal hearing. Notwithstanding the same, for the reasons as aforesaid, neither the impugned Show Cause Notice nor the impugned order can be sustained. The same are, accordingly, set aside - reasons for rejecting the petitioner s application for cancellation as reflected in the order dated 10.06.2022 is that the petitioner had not responded to the reply or appeared for the personal hearing. However, it is not disputed that no notice of personal hearing was communicated to the petitioner. It is considered apposite to set aside the order dated 10.06.2022 rejecting the petitioner s application and remand the matter to the concerned officer to consider afresh - petition allowed by way of remand.

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• 2023 (8) TMI 1121
  Maintainability of petition - availability of alternative remedy of appeal - non-constitution of the Tribunal - prevented from availing the benefit of stay of recovery of balance amount of tax - HELD THAT:- The respondent State authorities have acknowledged the fact of non-constitution of the Tribunal and come out with a notification bearing Order No. 09/2019-State Tax, S. O. 399, dated 11.12.2019 for removal of difficulties, in exercise of powers under Section 172 of the B.G.S.T Act which provides that period of limitation for the purpose of preferring an appeal before the Tribunal under Section 112 shall start only after the date on which the President, or the State President, as the case may be, of the Tribunal after its constitution under Section 109 of the B.G.S.T Act, enters office. This Court in the case of ANGEL ENGICON PRIVATE LIMITED VERSUS STATE OF BIHAR, ASSISTANT COMMISSIONER OF STATE TAX [ 2023 (3) TMI 879 - PATNA HIGH COURT] has disposed of the writ petition with certain observations and directions, allowing certain liberty to the petitioner holding that In case the petitioner chooses not to avail the remedy of appeal by filing any appeal under Section 112 of the B.G.S.T. Act before the Tribunal within the period which may be specified upon constitution of the Tribunal, the respondent- Authorities would be at liberty to proceed further in the matter, in accordance with law. There is an additional fact in the instant case, as asserted by the petitioner, that in terms of the liberty granted under earlier order dated 09.12.2022, in these proceedings, he has already deposited 20 percent of the remaining amount of tax in dispute. Subject to verification of the fact of deposit of a sum equal to 20 percent of the remaining amount of tax in dispute, or deposit of the same, if not already deposited, in addition to the amount deposited earlier under Sub-Section (6) of Section 107 of the B.G.S.T. Act, the petitioner must be extended the statutory benefit of stay under Sub-Section (9) of Section 112 of the B.G.S.T. Act, for he cannot be deprived of the benefit, due to non- constitution of the Tribunal by the respondents themselves. The recovery of balance amount, and any steps that may have been taken in this regard will thus be deemed to be stayed. Petition disposed off.

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• Income Tax

• 2023 (8) TMI 1120
  Validity of Faceless Assessment - Penalty u/s 271(1)(c) - ignorance of an assessee as to his rights - Addition of cash credit u/s 68 - Non providing opportunity of hearing to the petitioner through video conferencing - whether mere non-filing of return of income is not a valid ground for denial of relief available to the petitioner under Section 10(23C)? - variation between total cash deposits in bank accounts and available cash generated through student fees - HELD THAT:- As this Court finds that the assessment order dated 18.03.2023 is prejudicial to the interest of the writ petitioner. The opportunity of personal hearing could not be availed due to technical difficulties and for such technical fault, the petitioner cannot be made to suffer. No incontestable evidence is provided by the respondent authority to show that the request of the petitioner for providing opportunity of personal hearing by video conferencing was complied with or that the request of the petitioner was considered after pointing out such technical fault in the system. The petitioner is a West Bengal Government aided college duly affiliated under the Calcutta University, enjoying relief under Section 10 (23C) of the Act but not conversant with the Income Tax e-proceeding facilities . The situation being such, the respondent authority has to consider the plight of the petitioner in the light of departmental circular No. 14(XL-35) dated 11.04.1995. The impugned assessment order and notice of penalty is set aside. The matter is remanded to the concerned assessing officer to pass a fresh assessment order in accordance with law after giving an opportunity of hearing to the petitioner through video conferencing by providing a proper link. WA allowed.

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• 2023 (8) TMI 1119
  Validity of Reopening of assessment - deduction claimed u/s 54 - HELD THAT:- As alongwith her reply to notice u/s148A(b) of the Act the petitioner had duly submitted a copy of the concerned sale deed as well as copies of the NHAI Bonds in support of her claim of deductions, but apparently the same were not noticed by the AO which led to passing of the impugned order u/s 148A(d) and issuance of notice u/s 148 of the Act. Not only this, it is also contrary to record to allege that the petitioner did not disclose the amount in her return of income for the Assessment year 2018-19. The copy of the said Income Tax Return for the Assessment Year 2018-19 appended to the writ petition, clearly discloses the said sale consideration coupled with the deductions claimed as described above. Apparently, prior to issuance of notice under Section 148A(b) of the Act, the Assessing Officer failed to notice the said disclosures. Thus the irresistible conclusion we reach is that it is a clear case of non-application of mind by the Assessing Officer and consequently, the notice under Section 148A(b) need to be set aside - Decided in favour of assessee.

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• 2023 (8) TMI 1118
  Condonation of delay - delay of 498 days in filing the appeal - HELD THAT:- We are unable to fathom why the State despite having at its disposal an enormous paraphernalia is unable to act with due expedition. In such cases, plea of the State that it could not obtain copies or even certified copies in time sounds pathetically absurd and hence is unacceptable. In application under consideration, it also stated that if the delay is not condoned, an irreparable injury would be caused to the appellant/revenue appellant and that if the delay is condoned, no prejudice would be caused to the respondent assessee. The argument is fallacious insofar as it ignores the fundamental principle that if the appeal is not filed in time prescribed by law, a substantial right accrues in favour of the person in whose favour the impugned order was passed. So far as the argument of the so called injury that would be caused to the appellant/revenue, suffice it to record that it cannot be accepted as a ground to discard law of limitation. Also, in the case of Bherulal [ 2020 (10) TMI 1231 - SUPREME COURT] the apex court found the proposition preposterous that if there is some merit in the case, the period of delay is to be given a goby. As observed by the apex court in the case of Bherulal (supra), the irony is that no action is taken against the officers who sit on files and do nothing under a presumption that the court would condone the delay in routine and it is time when the concerned officer responsible for such laxity bears the consequences. There is another aspect, which is quite vital. The legislature u/s 260A of the Act has already granted a comparatively much longer period of 120 days to the revenue to file appeals. That in itself should call for a rather stricter scrutiny of the matrix set up by the revenue to explain delays in filing its appeals. But in the present case, as mentioned above, appellant/revenue opted not even to set up a specific factual matrix, apparently under overconfidence that the applicant being a government body and the issue being qua exchequer, the delay in filing the appeal would surely be condoned. Despite anguish expressed by courts at all levels through various judicial pronouncements, no change in work attitude of officials of some of the government departments has taken place. Largely, behind such delays on the part of government agencies in initiating appropriate legal proceedings lies extreme laxity, negligence and dereliction of duties on the part of government officials. Even in this hi-tech click of mouse age some of the government officials are yet to come out of their love for snail pace style of working. Worst is when such delays are aimed at simply completing formalities so that the government appeals get dismissed on the grounds of limitation, to the designed benefit of the other party. Whatever be the reason, it is either the loss to the exchequer or abrogation of the valuable rights of the assessee litigating against the State. Such negligent or deliberate dormancy on the part of government officials cannot be countenanced. It is high time such government officials are taken to task and penalized to recompense the exchequer, though such exercise can be undertaken in some other appropriate lis. Time has come to take drastic measures qua lethargy caused litigation delays, lest the chaos in judicial functioning percolated further. Time has come when due diligence has to replace negligence which pervades some of the government agencies as in the present case, so that justice does not hang at the altar of dereliction, default, negligence and indifference. Before parting, we feel inclined to record an expectation that all the learned counsel who represent the revenue in this court would sensitize their officers regarding the view taken by the apex court on such issues in the case of Bherulal (supra). We are unable to find any cause, what to say of sufficient cause, explaining delay of 498 days in filing this appeal.

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• 2023 (8) TMI 1117
  TP adjustment - rejection of AMP adjustment using BLT method - Whether ITAT was justified in holding that the Bright Line Test was not mandated in law and hence impermissible ? - whether AMP cannot be inferred to be international transaction in the absence of any agreement, arrangement or understanding between the taxpayer and its AE ? - HElD THAT:- As questions of law i.e., A to F, as proposed, are covered against the appellant/revenue by the decision of the coordinate bench in Bausch Lomb Eyecare (India) Pvt. Ltd. [ 2015 (12) TMI 1332 - DELHI HIGH COURT] .This decision has been followed by another coordinate bench in Xerox India Ltd [ 2022 (11) TMI 1391 - DELHI HIGH COURT] As would be evident, the said judgement concerns the respondent/assessee. Depreciation on de-capitalized assets - This issue is covered by the decision of the titled The Principal Commissioner of Income Tax-08 vs M/s Xerox India Ltd.[ 2016 (1) TMI 945 - DELHI HIGH COURT] ,

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• 2023 (8) TMI 1116
  Determination of fair market value of unquoted shares - Difference in value of the shares purchased by assessee - AO had valued the subject shares at Rs. 45.72 per share, albeit, by taking into account Rule 11UA of 1962 Rules, which was operable on the date when the order was passed - HELD THAT:- It is not in dispute that the formula prescribed in Rule 11UA of the 1962 Rules underwent a change, which resulted in the fair market value of unquoted shares being calculated by, inter alia, taking into account, inter alia, the value of assets such as immovable property, which was adopted by any authority of the government for the purposes of payment of stamp duty. If immovable property, such as land, had to be taken into account in arriving at the Fair Market Value of unquoted shares by adopting the formula prescribed in Rule 11UA of 1962 Rules w.e.f. 01.04.2018, i.e., AY 2018-19, AO would have to factor in the value of such land, by taking into account the circle rate prevailing in the area. It is this error which the AO committed, i.e., applying the formula contained in Rule 11UA of 1962 Rules, which was not applicable to the AY in issue, i.e., 2014-15. This error continued upto the stage of CIT(A). The error was corrected by the Tribunal via the impugned order.

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• 2023 (8) TMI 1115
  Rectification u/sec. 154 - interest on refund had not been calculated till the date of refund hence, needs to be modified - HELD THAT:- As in this case, in the refund amount calculated, there was no interest given to the assessee. This is in direct contravention to sec. 244(1A) - CIT(A) had allowed the appeal of the assessee in the original order dated 21/11/2011. Thereafter, the order giving effect was passed and after which the rectification order u/sec. 154 was passed determining the refund amount - Department should have, at that stage itself, calculated the interest component and should have handed-over to the assessee. In this case, there is no failure on the part of the assessee as contemplated and submitted by the Department u/sec. 244A(2) - We, therefore, set aside the order of the NFAC and direct the AO to calculate the interest as per law and remit the same to the assessee. The grounds of appeal stands allowed.

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• 2023 (8) TMI 1114
  Short Term Capital Gain - conversion of the Partnership Firms into Companies - Additions in the hands of partners - provisions of section 47(xiii) have not been fulfilled by the assessee and thereby made an addition being the difference in the revaluation of land and assessed as Short Term Capital Gain (STCG) - CIT[A] deleting the addition on the ground that the provisions of sections 45 and 47(xii) are not applicable to the stock in trade - HELD THAT:- It is seen from records that when the Partnership Firms were converted into four companies, at that time entire Capital and Reserves were not converted into equity of the company, but rather the Revaluation Reserve was converted into unsecured loans in the hands of share holders namely erstwhile Partners. The transfer and vesting at para 3 clearly pointed out that the undertaking of the transferor companies shall be transferred to and vested in the transferee company as a going concern and undertaking was to include all assets and interest of the transferee companies further all debts, liabilities, contingent liabilities and obligations of every kind of the transferor companies were now to be discharged by the transferee company. Based on the above facts the Ld CIT (Appeals) correctly deleted the additions on account of capital gain made in the hands of the Partners as he was of the opinion that the applicability of section 47(xiii)(b) at the time of conversion of the Partnership Firms into Companies can be considered only in the hands of the Partnership Firms to which the land belongs. CIT[A] order that has referred to case of ITO -Vs- Orchid Gruh Nirman Pvt. Ltd. [ 2016 (11) TMI 247 - ITAT KOLKATA] - Revenue s Appeal is also dismissed in the case of PCIT -Vs- Orchid Gruh Nirman Pvt. Ltd. [ 2022 (2) TMI 186 - CALCUTTA HIGH COURT] observing that Section 45(3) would be applicable only in respect of a capital asset; thus, where a land was brought in a firm at its cost as current asset and said firm upon receipt of said land also accounted same as a current asset, in instant case section 45(3) would not be applicable merely because said land was converted into fixed asset and revalued in relevant assessment year. Thus no hesitation in confirming the order of the order of the Ld CIT[A] who deleted the additions made by the assessing officer. Decided in favour of assessee.

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• 2023 (8) TMI 1113
  Reopening of assessment - validity of reasons to believe - HELD THAT:-reasons state the incorrect assessment year on the top of the reasons recorded as A.Y. 2009-10 whereas in the bottom the same is stated as AY 2010-11. Besides we note that the AO has only referred to letter of the Investigation wing stating that the assessee has deposited cash in a number of dubious accounts however no such accounts were brought on record in the reasons recorded . In our opinion, there is no application of mind by the AO and this is the case of borrowed satisfaction as the AO has not applied his mind to the information received from Investigation Wing. Under this circumstance, we are not in a position to sustain the re-opening of assessment and therefore the same is bad in law.

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• 2023 (8) TMI 1112
  Rectification application u/s 154 - period of limitation - assessee has wrongly filled one income at two different places - AR submitted that the assessee while filing Income-tax return, speculative income has been entered at two different columns and while processing the return this has been considered twice by the CPC - HELD THAT:- The assessee itself accepted that it was a mistake on their part then it will also come u/s 154 of the Act for rectifying the mistake as per records. CIT(A) has dismissed the appeal of the assessee by observing that the rectification application filed by the assessee is time barred, this view is also not correct. The assessee filed rectification applications first, second and third time within the time. The Hon ble Supreme Court interpreted the word order sought to be amended used in Sec. 154(7) as relied by the ld.AR in his return submission at para No.7.4. Therefore, considering the judgment of Hindwire Industries ( 1995 (1) TMI 2 - SUPREME COURT] the assessee filed rectification application within the time, to which the AO ought to have considered. In view of this, we hold that the rectification application field by the assessee is well in time and it is a mistake apparent on record which should have been rectified by the Revenue Officer on the request made by the assessee .Appeal of the assessee is allowed and the AO is directed to compute the correct income as per law.

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• 2023 (8) TMI 1111
  Revision u/s 263 - pre-requisites to exercise of jurisdiction by the ld. Pr.CIT u/s 263 - disallowance u/s 14A r.w.r. 8D - HELD THAT:- Section 263 provision cannot be invoked to correct each and every type of mistake or error committed by the AO; it is only when an order is erroneous as also prejudicial to revenue s interest, that the provision will be attracted. An incorrect assumption of the fact or an incorrect application of law will satisfy the requirement of the order being erroneous. The phrase prejudicial to the interest of the revenue has to be read in conjunction with an erroneous order passed by the AO. Every loss of Revenue as a consequence of the order of the AO cannot be treated as prejudicial to the interest of the Revenue. In the present case assessee has explained source of investment by submitting that it has total investment in equities and mutual funds against which its share capital and reserves stands for Rs. 38508.89 lacs. As assessee had not used borrowed funds for making investments. Entire investments were made out of owned funds. Consequently, borrowing cost incurred in investment is NIL. When mixed funds (interest bearing and interest free) are available, the right of appropriation is vested with the assessee. In the case of the assessee interest income earned outweigh the interest expenditure. It clearly shows that no interest cost has been incurred to make any investment which shall result in exempt income. As decided in the case of Adani Infrastructure Developers (P.) Ltd.[ 2021 (2) TMI 486 - GUJARAT HIGH COURT] held that Rule 8D(2)(ii) shall have no application where interest income earned outweigh interest expenditure. AO has considered the information filed by the assessee and arrived at conclusion that no disallowance is warranted under section 14A - The view of the AO is duly supported by the decisions of Hon ble High Courts and Tribunals relied upon by the assessee. SLP filed by the revenue in this regard against the decisions of Hon ble High Courts have been dismissed in the cases PCIT vs. Oil Industry Development Board [ 2019 (3) TMI 1571 - SC ORDER ] and CIT vs. Chettinad Logistics Pvt. Ltd. [ 2018 (7) TMI 567 - SC ORDER ] as relied upon by the A/R of the assessee in the detailed submission. This position was duly taken into consideration by the AO while passing the assessment order, which is evidently clear from the assessment order itself, as reproduced herein above and the order passed by the AO is not warranted revision. In our considered opinion, the assessment order cannot be regarded as erroneous, or being prejudicial to the interests of the Revenue more so the assessee has non- interest bearing funds in the shape of share capital and reserves are much more than the investment which may result exempt income. the assessee has not incurred any indirect expenses to earn the exempt income and ld. PCIT has not brought any material to show that the assessee has incurred indirect expenses to earn the exempt income. PCIT has erred in invoking the provisions of Section 263 of the IT Act and in passing the impugned order. Accordingly, we find merit in the grievance raised by the assessee.

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• 2023 (8) TMI 1110
  Deduction u/s 80P - Interest on deposits were made under the provisions of Karnataka Souharda Sahakari Act, 1997 - HELD THAT:- The assessee has received interest on deposits from DCCB but not the interest from credit facilities provided to members during the ordinary course of business. However the ld. AR submitted that the assessee is required to maintain certain funds as per the relevant Act/Rules but he has not shown under which Act/rules and how much funds are required to deposited. Since the assessee is registered under the Karnataka Souharda Sahakari Act, 1997 therefore the issue is remitted back to the file of the AO and assessee is directed to demonstrate the mandatory requirement for following the mandatory maintaining of funds as per Karnataka Souharda Sahakari Act, 1997. If it is found in order, then the amount of deposits which are required to be maintained as per statutory requirement and interest earned to such extent will qualify for deduction u/s. 80P(2)(a)(i) of the Act. However, interest earned on deposits exceeding the statutory requirement will not be considered for allowing deduction u/s. 80P(2)(a)(i) - This issue is partly allowed. Further, the assessee has also raised issue in regard to deduction u/s. 80P(2)(d) on such interest received is also not sustainable because the assessee has not received the interest from cooperative society. Accordingly this issue raised by the assessee is also dismissed. Alternative ground that the expenditure should be allowed towards earning of such income - We are in agreement that the necessary expenditure should be allowed towards earning of such income. As relying on M/S THE TOTGARS CO-OPERATIVE SALE SOCIETY LTD. VERSUS THE INCOME TAX OFFICER, WARD-1, SIRSI [ 2015 (4) TMI 829 - KARNATAKA HIGH COURT] we hold that the assessee is entitled for cost of funds and only the net interest income is taxable u/s. 56 of the Act. Considering the alternative submissions this issue is remitted to the file of AO for determination of net income after set off of cost of funds/interest expenditure in earning the interest income for the purpose of taxability u/s. 56 of the Act as per law. This issue is allowed for statistical purposes.

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• 2023 (8) TMI 1109
  Penalty levied u/s. 272A(2)(e) - failure to furnish return of income which it was obligated to file under subsection (4A) of Section 139 - Alternative contention of the AR that penalty u/s. 272A(2)(e) could have been imposed only for the period reckoned from the due date of filing of the said return u/ss (1) of Section 139 of the Act, i.e., from 30.09.2012 till the date specified in sub-section (4A) of Section 139 of the Act, i.e., up to 31.03.2014 - HELD THAT:- Admittedly, though the time for filing the return of income for the year under consideration, i.e., A.Y. 2012-13 under sub-section (4) of Section 139 had lapsed on 25.09.2014, but are unable to fathom that as to why the assessee made no effort to get its return for the year under consideration, i.e., A.Y. 2012-13 regularized by filing a letter and bringing the aforesaid factual position to the notice of the A.O. If the assessee would have come up with clean hands and fairly brought the facts above to the notice of the A.O., the latter would have, at his behest, issued notice u/s. 148 of the Act. We are afraid that the assessee chose to adopt an evasive approach, sat tight, and filed its return of income for the year under consideration only after notice u/s. 148 of the Act was issued to him on 30.03.2019 at the instance of the A.O. Conduct of the assessee as observed by us hereinabove does not inspire any confidence as regards his claim of holding a bonafide belief that having been registered u/s 12A, no obligation was cast upon it to file return of income. Our conviction above is fortified by the fact that the assessee despite being well conversant about its obligation to file its return of income on 25.09.2014 (supra), had still not taken any step for facilitating the filing of its return of income for the year under consideration. As Section 272A(2)(e) did cast an obligation on the assessee trust to furnish its return of income under sub-section (4A) of section 139 of the Act, which in turn, refers to the period contemplated under sub-section (1) of Section 139 of the Act; or to furnish the same within the period and manner prescribed under said sub-section, falling which the assessee is to be visited with the penalty therein prescribed, i.e. @Rs. 100/- for every day during which failure continues. As the assessee trust/society could have validly filed its return of income under sub section (4A) of Section 139 of the Act, latest within the period specified under sub section (4) of Section 139 of the Act, therefore there is a substance in the claim of the Ld. AR that no penalty could have been validly imposed upon the assessee for the period falling thereafter. We say so because, after the lapse of the period specified for filing a delayed return as contemplated in sub section (4) of Section 139 of the Act, no return of income on a suo-motto basis could have been filed by the assessee. As the return of income could have been filed by the assessee trust under sub-section (4A) of Section 139 of the Act latest by 31.03.2014, i.e., the period provided under sub-section (4) of Section 139 of the Act, therefore, obligation cast upon the assessee under sub section (4A) of Section 139 of the Act, i.e., filing of the return of income, having been rendered as unworkable after the lapse of the period within which the return of income could be filed u/s. 139 of the Act; therefore, the penalty for the period falling thereafter could not have been imposed. Our aforesaid conviction is fortified by case of G Pulla Reddy [ 2010 (2) TMI 1322 - ITAT HYDERABAD ] as observed that for levying penalty u/s. 272A(2)(e), the period of default was to be counted up to the time limit laid down in section 139(4) of the Act. Thus direct the A.O. to restrict the penalty imposed u/s. 272A(A)(e) of the Act up to the period that was available to the assessee trust for filing its return of income under sub-section (4) of Section 139 of the Act, i.e., up to 31.03.2014., the Ground of appeal No.1 is partly allowed

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• 2023 (8) TMI 1108
  Rectification u/s. 154 - Assessment of income after denial of exemption u/s 11 - assessee had failed to file Form No.10A and Form No.10B within the stipulated period as per the mandate of the Income Tax Act - as argued both the lower authorities had erred in assessing the gross receipts of the assessee society as its income - claim of the Ld. AR that the A.O., after treating the assessee as an unregistered society, was obligated to have considered its claim for deduction of expenses raised in the income and expenditure account while deducing its taxable income - HELD THAT:- As where the assessee s claim for exemption u/s. 11 12 of the Act is declined, it is incumbent for the A.O. to deduce its total income in line with commercial principles. Accordingly, assessing the gross receipt of the assessee society by the A.O. suffers from a mistake which being glaring, patent, evident, and apparent from the record, had rendered the same amenable for rectification u/s. 154 of the Act. Before proceeding any further, we may herein observe that the declining of the assessee s claim for exemption u/s. 11 12 of the Act, perse would not justify assessing its gross receipt as its income for the year under consideration. Even though the assessee society may not be entitled to exemption u/s. 11 12 of the Act, its income under any circumstance must be deduced per commercial principles, i.e., after considering its claim of expenses per extant law. Our view above is fortified by the order passed in the case of Jain Shwetamber Murtipujak Sangh [ 2023 (5) TMI 960 - ITAT RAIPUR ] wherein involving identical facts, though declining of the assessee s claim for exemption u/s. 11 12 for delayed filing of Form 10 was upheld by the Tribunal but its alternative claim that the A.O was obligated to have considered its claim for deduction of expenses raised in the income and expenditure account was accepted. The matter was restored to the file of the A.O. to consider the assessee s claim for deduction of expenses as debited in the income and expenditure account under the provisions of the Act. As restore the case of the assessee appellant to the file of the A.O with a direction to consider its claim for deduction of expenses as debited in the income and expenditure account, i.e., to the extent the same was allowable under the Act.

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• 2023 (8) TMI 1107
  Exemption u/s 11 - letting of Dharmashala for commercial activities by the assessee - HELD THAT:- Assessee had garnered a substantial amount by commercially exploiting the Dharmashala for multi-facet purposes by giving diversified nomenclature to the receipts, i.e., booking/cancellation charges, repairing and maintenance expenses, cleaning charges, receipts towards fines imposed, electricity charges, etc., which as claimed by the AR was on a cost basis or nominally above cost because after being set off against the actual expenditure/notional expenditure in the profit and loss account, the assessee trust was left with a minuscule surplus We cannot find favor with the said claim. Nothing is discernible, much less evidenced based on supporting material which would reveal that the booking/ancillary receipts collected by the assessee from the aforesaid commercial activities were nominally above cost. On the contrary, if the notional expenditure of depreciation is ignored, then the fact that the assessee was carrying out purely commercial activities is proved to the hilt. Also, drawing support from the judgment of Ahmedabad Urban Development Authority [ 2022 (10) TMI 948 - SUPREME COURT] letting of Dharmashala for commercial activities by the assessee as observe that as the letting of Dharmashala for commercial activities by the assessee, as claimed by the AR was its lifeblood for sustaining its activities of running the Dharmashala, but the same being in the nature of business or services in relation to a business, for cess or fee/charges; therefore, the receipts garnered from such activities would be hit by Section 2(15) of the Act. Thus lower authorities who had rightly declined the assessee s claim for exemption u/s. 11 - Decided against assessee.

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• 2023 (8) TMI 1106
  Reopening of assessment u/s 147 - non issue of notice issued u/s 143(2) - Whether defect curable u/s 292BB? - HELD THAT:- As decided in Cebon India Ltd [ 2009 (7) TMI 26 - PUNJAB AND HARYANA HIGH COURT ] absence of a statutory notice cannot be held to be curable u/s 292BB of the Act. A plain reading of section 148 of the Act reveals that within the statutory period specified therein, it shall be incumbent to send a notice under section 143(2) of the Act. The provisions contained in sub-section (2) of section 143 is mandatory and the legislature in their wisdom by using the word reason to believe had cast a duty on the Assessing Officer to apply mind to the material on record and after being satisfied with regard to escaped liability, shall serve, notice specifying particulars of such claim. After receipt of return in response to notice under Section 148, it shall be mandatory for the assessing officer to serve a notice under sub-Section (2) of Section 143 assigning reason therein. In absence of any notice issued under sub-section (2) of section 143 after receipt of fresh return submitted by the assessee in response to notice under section 148, the entire procedure adopted for escaped assessment, shall not be valid. Reassessment order passed by AO u/s 143(3) r.w.s. 147 quashed - Appeal of the assessee allowed.

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• 2023 (8) TMI 1105
  TP adjustment - international transaction of sales made by the assessee with its Associate Enterprise (AEs) - MAM selection - HELD THAT:- As agreeing with assessee that the basis of rejecting the segmental accounts by the TPO was totally frivolous and agreeing with him that what mattered for accepting these accounts was whether they had been prepared on a just and reasonable basis and noting the fact that the assessee had not been given an opportunity to submit its justification for the basis of preparation of its segmental accounts, nor was it examined by the TPO on this basis, it was considered fit to restore the issue to the AO/TPO to examine the basis of preparing segmental accounts by the assessee. Both the parties fairly agreed with the same. Since the entire basis of the TPO for rejecting benchmarking analysis done by the assessee and proposing the adjustment to the international transactions of sale by adopting TNMM method, began with the rejection of the segmental accounts of the assessee, we deem it fit to restore this issue to the file of the TPO. The entire issue relating to the determination of ALP of international transaction of the sale is restored back to the TPO, to be determined afresh after first dealing with the aspect of justifiability of segmental data submitted by the assessee along with the MAM adopted by it for determining the ALP of the transaction. Needless to add the assessee be provided due opportunity of hearing in this regard. Addition u/s 37(1) - payment of Management fees, SAP and Opti-mill fees and Business Area Service fees disallowed by concluding that the expenses are not incurred wholly and exclusively for the purpose of business - HELD THAT:- The said expenses could not be held as not having been incurred wholly and exclusively for the purpose of business of the assessee. As rightly pointed out by the ld. counsel for the assessee, there are several judgments including that of Apex Court laying down the principle to be applied for determining allowability of expenses under section 37(1) of the Act and this principle have emerged over years by virtue of judicial interpretation of expression wholly and exclusively for the purpose of business appearing in section 37(1). As interpreting term wholly and exclusively for the purpose of business no case has been made out by the Revenue showing that the assessee does not fulfill the required parameter to qualify for deduction under section 37(1) - The only basis being that the assessee was unable to establish necessity of incurring the expenses and benefit accrued to it, which has been outrightly ruled out by Courts for establishing commercial expediency of incurrence of the expenditure, the basis with Revenue authorities therefore for disallowing the impugned expenditure in the present case is found to be not in accordance with law. Once the TPO has given his finding on the issue of determination of ALP of international transactions entered into by the assessee, they are to be accepted by the AO and cannot be inquired into by the AO further. In the present case, the AO, by applying benefit test to the impugned international transaction has attempted to step into the shoes of TPO, since the benefit test could have been applied only for the purpose of determining ALP of the transaction as pointed out by the DRP also from the OECD commentary and from the various decision of the ITAT on this issue. Therefore also, disallowance made by the AO on the impugned expenses is held to be not sustainable in law, and directed to be deleted. Decided in favour of assessee. Disallowance on reimbursement of Bank guarantee commission - HELD THAT:- We find that the invoices were raised by the Ahlstrom Corporation, Finland on the assessee during the impugned year itself. These facts are all evident from the copies of invoices which were placed before us also in the paper book at page no. There is no iota of doubt, therefore, that the expenses pertained to the impugned year alone and could not be categorized as prior period expenses. We have noted that basis for the AO for treating it as prior period expenses was that the loan agreement entered into by the assessee with the ICICI Bank, which was guaranteed by Pohjola Bank Plc., and commission expenses reimbursed from the assessee to the Ahlstrom Corporation, Finland, was dated 8.5.2009. From the same, we deduced that the bank guarantee commission pertained to the financial year 2009-10 relating to the Asst. Year 2010-11, the preceding year. The assessee has sufficiently demonstrated before us that the invoices were raised during the year by Ahlstrom Corporation, Finland on the issue and related to the bank guarantee commission for the impugned year alone. No hesitation in holding that the bank guarantee expenses paid by the assessee pertained to the impugned year, and could not disallowed as prior period expenses u/s 37(1) - order of the DRP/ AO holding so, is accordingly set aside. Disallowing bank guarantee expenses, as being disallowable in terms of section 40(a)(i) of the Act for non-deduction of tax at source - assessee pointed out that despite exhaustive contentions raised by the assessee against the applicability of Article 21 of the DTAA between India and Finland to the transaction of reimbursement of Bank guarantee commission, the DRP held Article 21 applicable without dealing with the contentions of the assessee - HELD THAT:- As agreed that the issue needed reconsideration by the AO. In view of the same, the issue of disallowance of bank guarantee commission is restored back to the AO to be dealt with after considering the arguments raised by the assessee. The AO is directed to pass a speaking order after granting due opportunity of hearing to the assessee.

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• Benami Property

• 2023 (8) TMI 1104
  Benami transaction - true owner of property - Whether application for setting aside the sale can be entertained, which is not supported by any affidavit, but based on a report of the Administrator/Official Liquidator? - HELD THAT:- It has been an established practice of this Court that the Official Liquidator does not file an affidavit accompanied by a judge s summons. He only files a report which is of course signed and sealed by him at the end of every page. This is a practice which has been followed by this Court for decades. The Learned Judge felt that even an Official Liquidator should follow the same practice as being done by a private litigant by filing an affidavit together with a judge s summons. We would like to recall a latin maxim at this point Cursus curiae est lex curiae . The meaning of this latin maxim is that the practice of the Court is the law of the Court . Following this maxim, Coke C.J. in Burrowes Vs. High Commission Court held that the Court should always adopt the practice which has been prevailing before it. We hold that the practice developed by this Court of the Official Liquidators or Administrators filing a report instead of an affidavit, has to be followed till a new procedure is introduced. We answer the first question accordingly. Whether in view of the provisions of the Benami Transactions (Prohibition) Act, 1988, the Company can be said to be the owner of the property, though the property is shown to be under ownership of the true owners throughout? - In order to apply the plea of Benami, there has to be a sale/a conveyance. Title must pass from the existing owner to an other person who is a benamidar for the other. The transaction in the present case required 3 persons namely, the vendor, the benamidar/ostensible owner and the actual owner. The effect of the Benami Act, is that the relationship between the ostensible owner the real owner is snapped. In this case, as pointed out by the Learned Judge in his order of reference, there is no transfer at all. On receipt of monies, the owner executes a Power of Attorney in favour of the employees of the Company. The transfer in favour of the customers is done by the employee as a Power of Attorney agent of the original owner. Therefore, the question of benami does not arise here. It is at best a Power of Attorney Sale which we shall address later. In the case before us, the powers of attorney were executed in the last decade of the previous millennium and therefore, the argument based on Suraj Lamps [ 2011 (10) TMI 8 - SUPREME COURT] necessarily has to fail. This makes it clear that neither the Act as it stood in 1988 nor its subsequent avatar apply to the provision of the Benami Act as to the transactions among the landowner, powers of attorney the company. We answer the second question accordingly. Whether in absence of a petition under Sections 542 and 543 of the Companies Act, the transaction in favour of third party can be questioned by way of simple company application or company is required to file a civil suit to challenge the sale in competent Court having jurisdiction with permission of Company Court ? - . The powers of the Company Court under section 446 (1) and (2) are necessary for answering the question. If a winding up petition is pending and a Provisional Liquidator is appointed, the Company Court ipso facto would have jurisdiction to entertain all the proceedings that are covered under Sections (a) to (d) of Section 446 (2). This principle has been laid down at least five (5) decades ago in Sudarsan Chits (I) Ltd vs O. Sukumaran Pillai Ors [ 1984 (8) TMI 242 - SUPREME COURT] We answer this question stating that a combined reading of Section 446 read with Section 456 of the Companies Act, shows that the Company Court will have jurisdiction to deal with the issue relating to a transaction alleged to be in favour of a third party. The caveat to this proposition is that the jurisdiction of the Company Court, commences one year prior to the date of presentation of the company petition. The said power cannot be exercised by a Company Court for the transactions which have been concluded to which the company is a party and if the title has vested in third parties, one year prior to the presentation of the petition. What is the effect of Civil Court decree which has attained finality? - Whether in absence of positive evidence of false misrepresentation, a finding can be recorded of fraud and misrepresentation, without trial only on basis of Administrator/Provisional Liquidator? - As seen from Section 446 of the Companies Act, the power of the Company Court is wide. Therefore, the Company Court can always decide on the validity of a decree when it is presented before it. Whether the decree is binding on the Company and consequently on the official liquidator are matters which have to be gone into at the time of the Trial. We add, the Company Court has the power not only to entertain suits or other proceedings but it can also decide the said suit or proceeding after taking evidence. Whether the Company Court has the jurisdiction to determine question of title of land falling outside jurisdiction of this Court in view of Clause 12 of Madras High Court Letters Patent? - The answer to this question lies under Section 10 of the Companies Act of 1956. If a Company is registered within the jurisdiction of a High Court exercising its jurisdiction under the Companies Act of 1956, then necessarily by virtue of Section 10 of the Act, the Company Court has the power to determine the title of the land of properties falling outside the Ordinary Original Jurisdiction of the Court. We have to note that Letters Patent has been treated as a parliamentary statute and it is held to be in force till it is replaced by another parliamentary statute. Companies Act of 1956 is a parliamentary statute and it has conferred the power on the company courts under section 10 of the Companies Act. We hold in this case, though the properties in this case are situated in the state of Telangana and Andhra Pradesh, as the company was registered within the jurisdiction of this Court, the Company Court has the jurisdiction to deal with the said issues.

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• 2023 (8) TMI 1103
  Benami Transaction - True owner of property - Whether the Trial Court was right in concluding that Items 1 to 3 of suit properties were belonged to Ramasamy Chettiar, though the sale deeds dated 27.10.1948 stood in the name of Sowdammal? - HELD THAT:- We have considered contents of Ex.A2, sale deed, which clearly shows that consideration for the said sale was paid by Ramasamy Chettiar on behalf of the Sowdammal. There is a specific endorsement to the effect made by the Sub-Registrar, which is an Official act done under Section 58 of the Registration Act. We find force in the contention of the respondents to the effect that Ramasamy Chettiar, who was the head of the joint family having seven children would not have intended to benefit his wife alone. The fact that he was forced to sell away the property in 1961 to get the 1st defendant married is projected as a pointer. When we look at the totality of the circumstance and evidence of the D.W.1, the eldest daughter of Ramasamy Chettiar and Sowdammal, we find that we have to agree with the Trial Court in its conclusion that the property was purchased by Ramasamy Chettiar out of his own funds and he was intend benefit Sowdammal / his wife through the said purchase. No doubt, there was some ancestral property but it is not shown that it had yielded necessary income for the purchase. Therefore, we should necessarily proceed on the finding that the property was self acquisition of Ramasamy Chettiar. Once it is held that the property was a self-acquisition of Ramasamy Chettiar, the plaintiff and the defendants 1 to 6 along with Sowdammal would each be entitled to 1/8th share. The 1/8th share of Sowdammal would devolve, on her death, on her heirs depending on her intestacy or otherwise. Validity of the Will left by the Sowdammal - Whether the Will dated 05.06.1995 has been proved to be true and valid ? - As rightly pointed out by the learned counsel for the plaintiff the signatures made at the time of execution of the Will are vastly different from the signatures made before the Sub-Registar. We are unable to persuade ourselves to agree with the contention of defendants 2, 9 and 10 regarding execution of the Will. Despite being a registered instrument, the Court is not precluded from examining the suspicious circumstances. As rightly pointed out by the learned counsel for the plaintiff Sowdammal, who was the mother of at least seven children would not have, but for very strong reason, executed a Will excluding six of her children from inheriting her property. We do not find any explanation either in the Will or in the evidence of D.W.2 and D.W.3. As we have already pointed out that the disinheritance of at least six of the heirs and preference to a daughter-in-law and married grand daughter by itself is a suspicious circumstance. We are unable to find any evidence that would justify such exclusion by Sowdammal. The above coupled with differences in signatures found in the document compel us to conclude that the Will has not been proved in accordance with law and the same cannot be said to be valid and binding on the other heirs. Once we reach a conclusion that the Will has not been proved, the share of Sowdammal in Items 1 to 3 namely, 1/8th will also devolve under Section 15 of the Hindu Succession Act under which her children will get an equal share. Therefore, the plaintiff will get 1/7th share in Items 1 to 3. Purchase of Item 4 and the character of 5th item of Schedule 1 and 1st Item of Schedule 2 - Whether the ancestral nucleus found to be in existence earned a sufficient income to leave a surplus to enable purchase of Items 4 and 6 of the 1st schedule in the name of the defendants 2 and 9 respectively ? - Since Ramasamy Chettiar was alive at that time, a purchase by a junior member of a joint family does not entail the same presumption as purchase in the name of the Karta. Therefore, person claiming the property to be joint family property will have to establish by cogent and convincing evidence that the purchase was made out of the funds from the joint family properties. We also find that the nucleus that was available was only a house property, which would not have generated so much of income to enable purchase of Item 4 in the name of the 2nd defendant. Apart from the above, the 2nd defendant has also produced evidence in the form of sales tax returns Ex.B15 and assessment orders under Exs.B18, 19, 20 and 21 to show he has been doing some business at that time. We are therefore, inclined to accept the finding of the Trial Court regarding the character of Item 4 of the suit schedule properties. 6th item of the suit schedule properties was purchased under two sale deeds - Whether it is shown to the plaintiff to plead that Item 6 belonged to the joint family ? - Item 6 is the absolute property of the 9th defendant and the plaintiffs are not entitled to any share in the suit properties. The Trial Court has granted 1/7th share to the plaintiff in Item No.5 of Schedule 1 and Item 1 of Schedule 2, which are admittedly joint family properties. Defendants 2, 9 and 10 is unable to pick holes in the findings of the Trial Court with reference to those properties, since the character of those properties has been admitted. The Trial Court granted 1/7th share treating the children of Ramasamy Chettiar as coparceners in view of the advent of Hindu Succession (Amendment) Act 39 of 2005. We therefore, affirm the said findings of the Trial Court. a) the plaintiff is declared entitled to 1/7th share in Item 1 to 3 and 5 of Schedule 1 and Item 1 of Schedule 2. There will be a preliminary decree for partition as above. b) the parties will be entitled to move the Trial Court for determination of mense profits. c)The Trial Court s decree stands confirmed in respect of Item No.5 of Schedule 1 and Item 1 of Schedule 2.

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• Customs

• 2023 (8) TMI 1102
  Denial of benefit of exemption - 100% EOU - Import of used Enviro-tuff Liner (ETL) packing material - eligibility for N/N. 52/2003 dated 01.03.2003 - Benefit denied on the ground that the Enviro-tuff Liner (ETL) was neither used in the process of manufacture of the articles of exported goods nor it was used in connection with production or packing of exported goods - restricted goods or not - confiscation - redemption fine - penalty. HELD THAT:- It is an admitted fact that the goods imported were used Enviro-tuff Liner (ETL) and on examination, it was found that it is a packing material to be used inside the 40 FT container to cover the goods inside the container. From the Notification, it is amply clear that the items specified therein are meant for manufacture of articles for export or for being used in connection with the production or packing of these goods for export by the EOUs - Admittedly, in this case, the imported goods are used as liners inside the container to ensure that the goods are safely transported. In similar circumstances, in the case of International Creative Foods Ltd. versus Commissioner of Customs, Cochin [ 1997 (12) TMI 400 - CEGAT, MADRAS] , the appellant had imported refrigeration units to be mounted on trucks used for transport of raw materials. The Commissioner had held that the refrigeration trucks were mainly used for transportation and not for production or packing; therefore, the benefit of Notification No. 13/81-C.E. which was meant for material handling equipment was denied. The Tribunal observing that the refrigerated trucks were used for the transport of goods which was essential for transporting the raw materials but that itself cannot be the reason to hold that the trucks have been used for production of the goods as envisaged in the Notification and accordingly, the benefit of the Notification was denied. In the case on hand, it is an admitted fact that the item imported is used inside the container only for safe transportation and not for the production of exported goods. Moreover, the Notification does not allow any used items to be imported and therefore, the question of extending the benefit does not arise at all. The items imported were also found to be used ETL Liners which are categorised as second-hand goods fall under the category of restricted items. As per Para 2.17 of the Foreign Trade Policy, all second-hand goods are restricted for import and by importing used ETL liners, the importer had violated the provisions of Foreign Trade Policy thereby rendering the goods liable for confiscation. In view of the above, the Commissioner (A) had rightly confiscated the goods and imposed redemption fine and penalty - however, the redemption fine reduced from Rs.1,00,000/- to Rs.75,000/- (Rupees Seventy-five Thousand Only) under Section 125 of the Customs Act, 1962 and penalty from Rs.50,000/- to Rs.35,000/- (Rupees Thirty-five Thousand Only) under Section 112(a) of the Customs Act, 1962. Appeal allowed in part.

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• 2023 (8) TMI 1101
  Exemption form Customs Duty - import of consignment of Coking Coal from Indonesia - denial of benefit of N/N. 19/94-CUS dated 1-3-1994 on the ground that the ash content as per the said test report of CRCL, New Delhi was above 12% - HELD THAT:- In this case, department was asked to disclose the sampling procedure by providing various opportunities. The department was also asked to disclose if any particular method of testing was evolved for checking of ash content in accordance with Customs Tariff or any particular procedure was formulated. It being a settled law, that if no procedure of testing is evolved the same can be done as per the ISI Standard which, in the case of coke required it be done not through random sampling but through systematic sampling as provided in IS-436 which required that a lot while it is being discharged be divided into a number of sub lots approximately of equal weight. A gross sample is then required to be drawn from each sub lots by drawing of samples from the same sub lots. In relation to requirement of testing of Coking coal which as per the appellant required reasons to be recorded under Section 18(b) in view of decision in case of Tata Chemicals [ 2015 (5) TMI 557 - SUPREME COURT] by the proper Officer indicating why it deemed if necessary to do the chemical test - It is found that the department has not provided any reason as to why the commodity was subjected to chemical test other than the emphasized portion above. Despite affording opportunity, department has not brought on record any administrative instructions or any circular etc. which required the Coking coal was required to be subjected to chemical test. It has also not brought on record any file note indicating why Proper Officer deemed it necessary to conduct chemical test or other test. There is nothing on record that the sampling was done by the department by segregating lots and sub-lots and not randomly. Further, the date of sampling by CRCL has not been indicated by the department even while seeking explanation in the year 2013 from the CRCL authorities regarding their opinion as to what will happen to ash content of coal if coals samples are tested after long gap of time i.e. more than 11th months. It is found that as substantively found in the instant case also process of sampling is relevant to arrive at correct findings, it is held that the department has not been able to justify the process of sampling or the delay of more than 11 months in receipt of the report and that too by not indicating actual date of test. The belated communication by CRCL too is without any authoritative supporting material. Appeal allowed.

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• Insolvency & Bankruptcy

• 2023 (8) TMI 1100
  Jurisdiction of High court - Article 226 of the Constitution - HELD THAT:- Proceedings under Article 226 of the Constitution are pending before a Single Judge of the High Court of Delhi. The petitions are being argued on a day to day basis. The jurisdictional issues which are sought to be raised in these proceedings can be addressed before the High Court. SLP dismissed.

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• 2023 (8) TMI 1099
  Maintainability of application - initiation of CIRP - Operational Creditors - claim of the Appellant was that his EMD is not refunded - HELD THAT:- Present is a case where the Appellant was only a tenderer who has submitted EMD along with the tender which tender was admittedly rejected. The EMD payment by the Appellant was not towards any goods or services and the submission that in event the tender was accepted the Appellant would have provided services is far-fetched to accept the claim relating to goods and services. The judgment which has been relied by the Counsel for the Appellant in Consolidated Construction Consortium Limited vs. Hitro Energy Solutions Private Limited [ 2022 (2) TMI 254 - SUPREME COURT ] was in entirely different facts where amount of Rs.50 lakhs was paid towards the project which was directed to be paid and on account of non-payment of the said amount the proceedings were initiated. The facts of the present case are clearly distinguishable and the above judgment does not help the Appellant. Thus, no error has been committed by the Adjudicating Authority in rejecting Section 9 Application - Appeal is dismissed.

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• PMLA

• 2023 (8) TMI 1098
  Transcripting the interview - affidavit placed on record - HELD THAT:- After considering the transcript, it is directed that the Acting Chief Justice of the High Court at Calcutta shall reassign the pending proceedings in the case to some other Judge of the Calcutta High Court. The Judge to whom the proceedings are reassigned by the Acting Chief Justice would be at liberty to take up all applications which may be moved in that regard. The Special Leave Petitions are accordingly disposed of.

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• Service Tax

• 2023 (8) TMI 1097
  Rejection of application of Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - resending amount back to the beneficiary - HELD THAT:- This Court in M/S. SUBRAMANIYA SIVA CO. OPERATIVE SUGAR MILLS LTD. VERSUS UNION OF INDIA, THE DESIGNATED COMMITTEE (SABKA VISHWAS) , THE DEPUTY COMMISSIONER GST CENTRAL EXCISE, THE COMMISSIONER OF GST CENTRAL EXCISE, STATE BANK OF INDIA [ 2022 (6) TMI 1055 - MADRAS HIGH COURT] held that The facts on record indicate that the amount of Rs. 41,331.20 was indeed paid by the petitioner which however was re-credited back due to technical glitches. Therefore, the legitimate the benefit of the above scheme cannot be denied to the petitioner. Mistake is on account of the system evolved which failed to accept the payment. The issue is covered in favour of the petitioner and therefore the writ petition deserves to be allowed. At the same time, a sum of Rs. 2,83,14,2710/- has remained with the petitioner after an amount of Rs. 2,83,14,330/- was debited from the petitioner s Account after cheque issued by the petitioner on 30.06.2020 was cleared and re-credited. Petition disposed off.

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• CST, VAT & Sales Tax

• 2023 (8) TMI 1096
  Levy of Entry Tax on purchase turnover - purchase of iron steel from unregistered person - dispute relates to the assessment year 2013-14 - H ELD THAT:- It is not in dispute that against the order of the Tribunal partly allowing the second appeal of the respondent, any revision has been has been preferred under the UP VAT Act. It is also not in dispute that while allowing the second appeal in part, the Tribunal has confirmed the levy of tax apart from purchases being made from outside the country as well as purchases made from outside the State of U.P. It is admitted between the parties that the tax levied by the Assessing Authority has been confirmed, which goes to show that the purchases from unregistered dealer have been confirmed upto the Tribunal. Once the said finding is not assailed by the respondent, the Tribunal was not correct in holding that the respondent has not made purchase of iron steel from unregistered dealer. The Tribunal, by the impugned order, has tried to blow hot cold at the same time. It may further be observed that the Tribunal, while recording the finding under the Entry Tax Act that the purchased have not been made from unregistered dealer by the respondent, has neither made any discussion, nor any material was brought on record to justify the said observation. The impugned order passed by the Tribunal is set aside to the extent that the levy of entry tax as assessed by the Assessing Authority is confirmed - revision allowed.

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• 2023 (8) TMI 1095
  Legality of Recovery Notices and Garnishee notice sent to the sixth respondent / Indian Oil Corporation Limited - Stay granted not taken note of - violation of principles of natural justice - HELD THAT:- It appears that the respondents have issued the Impugned Recovery Notice without properly taking note of the stay that was granted by the Tribunal in the appeals that are pending before it for the Assessment Year 2007-2008 to 2015-2016. The petitioner has also paid the tax for these Assessment Years. As far as the rest of the Assessment Years for 2016-2017 2017-2018, which is covered partly by the Impugned Recovery Notice as mentioned above, some of the demands have been set aside and the cases have been issued back to the Assessing Officer to pass a fresh order. Therefore, there are no justification in the Impugned Recovery Notice to recover the amounts from the sixth respondent/Garnishee. The impugned order stands quashed. The respondents are to await for the final order to be passed by the Tribunal for the assessment year 2007 to 2008 to 2015 to 2016, which is likely to be taken up for hearing on 21.07.2023 - Petition allowed.

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