Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 28, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
Indian Laws
Highlights / Catch Notes
GST
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Hasty order against GST registration cancellation overturned for lack of fair opportunity.
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Cryptic tax notice lacking details violates natural justice; order passed without hearing chance.
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Suspension upheld for GST officer over improper registration issuance without verification.
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Bail denied in GST scam involving fictitious firms, fraudulent ITC claims, revenue loss.
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Court rejects review plea; upholds GST order. No apparent error found. Petitioner's reliance on case-law misplaced.
Income Tax
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House sale profit rollover on actual price, not deemed value.
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Taxpayer's appeal allowed: Property purchase value & source proved; Addition under 69A deleted.
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Tax Reassessment Quashed: Revenue Overreached Without Material Non-Disclosure.
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Income tax reassessment notice quashed for exceeding limitation period despite 2022 amendment.
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Limitation concerns on assessment order resolved: Remitted for fresh decision on merits.
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Revenue failed to properly dispose of taxpayer's objections before reassessment, leading to order quashed.
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Taxpayer's incorrect claims u/ss 54EC & 54F; Penalty upheld for 54EC, revisit for allowed 54F deduction.
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Cash inflow treated as income, lenders proved genuine; disallowance of interest expense & investment income rightly deleted.
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Associated enterprise charges wrongly adjusted, services proven.
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Taxpayer's right to claim TDS credit and current year business loss evaluation in income assessment.
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Genuine business expenses, loans & cash deposits upheld; Unexplained additions rejected.
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Construction co-op wins tax case for labor deduction despite procuring materials incidentally.
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Co-operative society's tax deduction claim rejected for failure to file valid return on time.
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Software Firm Battles Tax Office Over Transfer Pricing, Pay Issues.
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Legal & Professional Fees Disallowed by Tax Officer, Later Allowed by Tribunal as Ordinary Business Expense.
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Infrastructure project or simple contractor? Tribunal orders fresh examination of agreements.
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Taxpayer's appeal maintainable despite invoking revisional remedy; CIT(A) to re-decide on merits.
Customs
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CPVC imports from China & Korea face extended anti-dumping duties for 5 yrs due to injury to domestic industry.
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Duty drawback rates revised for gold and silver jewellery exports.
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Customs Dept Launches Enhanced Online Portal for Brokers' Licensing, Compliance & Profile Management.
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New Exchange Rate Automation Module launched to streamline currency valuation for customs.
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Customs Department Analyzes Chennai Air Cargo Release Times to Enhance Trade Facilitation.
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Customs Seizure: Examining "Reasons to Believe" for Confiscation.
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Accused granted bail in contraband case, no criminal past or flight risk apprehended.
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Counterfeit goods confiscation allowed. Mis-declared value rectified by market inquiry. Redemption fine reduced, penalties rationalised.
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Customs Duty Refund Rejection: Scrutiny & Compliance Matter Over Clerical Errors.
DGFT
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E-Commerce Export Hubs to smoothen cross-border shipments via integrated processes.
Corporate Law
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Property sale valid despite ownership dispute; NCLT upholds bank's rights under SARFAESI.
Indian Laws
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Contract dispute resolved: Arbitrator's award upheld on establishment expenses and pre-reference interest.
IBC
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Bunker supplier's in rem interim claim for unpaid supplies allowed against vessel under Admiralty Act.
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Rejection of IBC resolution plan's impact on arbitration counterclaims: Court upholds arbitral award.
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Regulatory Suspension of Insolvency Agents During Disciplinary Proceedings Upheld.
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Creditors Reject Settlement Offer Seeking Release of Personal Guarantees in Insolvency Case.
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Discretion allowed to extend the Pre-Package Insolvency Resolution Process beyond 120 days.
PMLA
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Insurers permitted Aadhaar authentication to comply with anti-money laundering laws.
SEBI
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SEBI allows research analysts to charge fees from clients for advisory services.
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Simplified compliance norms for REITs related to investor grievances and fund utilization reporting.
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Easier Complaint Review & Timely Disclosure for InvITs.
Central Excise
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Gear supplier eligible for excise duty exemption on equipment for mega power projects.
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Train Parts Tussle: Railways vs Revenue over Pantograph Classification.
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Duty evasion allegation vs. complex classification issue: Tribunal rejects extended limitation period invocation.
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2024 (8) TMI 1199
Violation of principles of natural justice - the impugned order came to be passed by the respondent without providing any opportunity of personal hearing to the petitioner. Hence, this petition has been filed - HELD THAT:- In the present case, it appears that no opportunity of personal hearing was provided to the petitioner prior to the passing of impugned order. Hence, this Court is of the view that the impugned order was passed in violation of principles of natural justice and it is just and necessary to provide an opportunity to the petitioner to establish their case on merits. In such view of the matter, this Court is inclined to set aside the impugned order dated 28.03.2024 passed by the respondent. The impugned order dated 28.03.2024 is set aside and the matter is remanded to the respondent for fresh consideration on condition that the petitioner shall pay 10% of disputed amount to the respondent within a period of four weeks from today (22.08.2024) and the setting aside of the impugned order will take effect from the date of payment of the said amount - Petition disposed off.
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2024 (8) TMI 1198
Maintainability of petition - whether this Court should at all entertain the instant writ petition taking into account that an efficacious alternative remedy is available? - HELD THAT:- This Court finds it very pertinent to take note of a recent judgment of the Supreme Court in the case of PHR INVENT EDUCATIONAL SOCIETY VERSUS UCO BANK AND OTHERS [ 2024 (4) TMI 466 - SUPREME COURT (LB)] where it would be seen that the High Court should not ordinarily entertain a writ petition under Article 226 of the Constitution, if an effective remedy is available to the aggrieved person. The Supreme Court further emphasized that this Rule should be applied with great rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. It was further observed that though the powers under Article 226 of the Constitution are of widest amplitude, still the courts cannot be oblivious of the rules of self-imposed restraint evolved. Let this Court take note of the case made out by the petitioner. From the facts narrated above, it would be seen that the petitioner received the show cause notice dated 22.10.2021, but the petitioner did not take that opportunity of submitting a reply. It is further seen that the petitioner was duly given the opportunity of personal hearing, however, the petitioner did not avail such opportunity. Under such circumstances, the question of violation of the principles of natural justice do not arise. In addition to that, the other parameters where the writ petition can be entertained is not met in the instant proceedings. This Court is not inclined to entertain the writ petition. It is, however, made clear that the dismissal of the instant writ petition shall not prejudice the petitioner, if any appeal is filed.
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2024 (8) TMI 1197
Refund of certain unutilized CENVAT credit - HELD THAT:- The petitioner, opted to try his luck by filing a fresh TRAN-1 form seeking transition of CENVAT credit which had not been refunded on account of the above orders. This application of the petitioner was rejected by the Deputy Commissioner on 27.02.2023. The application of the petitioner was rejected on the ground that the said application is covered by instruction No.4.7 of the aforesaid circular and as such the request of the petitioner for transitioning further credit is not permissible - A reading of this provision would make it clear that this provision stipulates that if a request made, under TRAN-I/TRAN-2, in the earlier period had been rejected, the same cannot be reiterated under the second chance given by the Hon ble Supreme Court. In such circumstances the only option available to the person making such an application is to file an appeal against the earlier order of rejection of transition. In the present case, the rejection order was passed under the CENVAT regime itself and it is not an order of rejection of TRAN-1/TRAN-2. In the event, the impugned order dated 27.02.2023 in DIN3718012392140 and DIN3718012314992 is set aside, remanding the matter back to the Deputy Commissioner to consider the matter afresh. Needless to say, the Deputy Commissioner shall give adequate opportunity to the petitioner to set out its case and also to reply to any issues raised by the Deputy Commissioner - Petition allowed.
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2024 (8) TMI 1196
Challenge to order passed on remand under Section 73 of the WBGST/CGST Act 2017 - HELD THAT:- Having heard the learned advocates appearing for the respective parties and taking note of the factum of payment made by the petitioners in Form GST DRC 03 dated 29th July, 2024 and the amendment to the CGST Act, 2017, inter alia, including the insertion of Section 128A(1), 128A(1)(b), and the recommendations made in the 53rd GST Council Meeting, the matter requires reconsideration by the respondent no. 1. In view thereof, while remanding the matter back to the respondent no. 1, I direct the respondent no. 1 to reconsider the aforesaid issue and to pass a fresh reasoned order - Petition disposed off by way of remand.
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2024 (8) TMI 1195
Violation of principles of natural justice - impugned order has been passed 24.01.2024 even before the period of 30 days (SCN had granted 30 days time to the petitioner to respond) had elapsed - HELD THAT:- In the present case, the notice was issued on 26.12.2023 granting 30 days time. The impugned assessment order has been passed even before the said period has been elapsed. The petitioner was entitled to gather all the material required for his defense. This would mean that the petitioner would have to be given access to the website of the department, after restoration of registration, with adequate time being given to the petitioner to gather all the details such as e-way bills, e-invoices, etc. In the present case, such an opportunity was not given to the petitioner as the appellate authority s order, restoring registration, was passed on 22.01.2024 and the impugned order has been passed on 24.01.2024. This Court is of the opinion that there has been violation of principles of natural justice rendering the impugned order invalid - Petition allowed.
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2024 (8) TMI 1194
Rejection of petitioner s application for the cancellation of his GST registration - vague SCN - although the impugned SCN called the petitioner to appear for a personal hearing, but no date and time was communicated for the same - Violation of principles of natural justice - HELD THAT:- As is apparent from the tenor of the impugned SCN, it is cryptic and does not contain any specific details of the allegations. It merely refers to the statutory provision Rule 21 (e) of the Central Goods and Services Tax Rules, 2017 without providing any clue as to any transaction alleged to have resulted in wrongful availment of the Input Tax Credit (ITC). The purpose of issuing a show cause notice is to enable the notice to respond to the allegation on the basis of which an adverse action is proposed. It is a fundamental principle of natural justice that a person must not be condemned unheard. He must have an opportunity to meet the allegations as set out against him. The impugned SCN fails to satisfy the requisite standard of such a notice. The impugned SCN does not propose for the cancellation of the petitioner s GST registration with retrospective effect. Thus, the petitioner had no opportunity to contest pursuant to the passing of any such order. Thus, on this ground alone, the impugned cancellation order is liable to be set aside. Additionally, the petitioner was not provided any opportunity to be heard as no date or time for the personal hearing was communicated to the petitioner. It is apparent that the impugned cancellation order has been passed in violation of the principles of natural justice. However, since the petitioner also seeks for the cancellation of his GST registration, it is considered apposite to direct that the impugned cancellation order shall be operative prospectively, that is, from 09.06.2023 being the date of the impugned SCN, and not retrospectively from 01.07.2017. Petition disposed off.
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2024 (8) TMI 1193
Review petition under Order XLVII Rule 1 read with Section 151 of the Code of Civil Procedure, 1908 - Refusal of refund of ITC - application for review of the order filed mainly on the ground of mistake or error apparent on the face of the record for want of consideration of facts and judgments placed on record - HELD THAT:- The review-petitioner has never disputed that the order impugned in the writ petition dated 31.10.2023 passed by Addl. Commissioner of State Tax(Appeal), Balasore under Annexure-9 is an appealable one before GST, Tribunal, but admittedly such GST, Tribunal has not been made functional and, thereby, this Court in M/S. Maa Tarini Traders (supra) has provided protection by way of granting stay of recovery of disputed amount subject to deposit of 20% of the remaining tax amount in dispute, besides, providing protection for filing of appeal, once the GST, Tribunal is constituted and made functional. The petitioner cannot claim any prejudice in the matter, since the order sought to be reviewed has been passed by this Court on the consent of the parties which is clearly reflected from the sentence It is agreed by the parties , in the very first line of the order passed in the writ. Reliance placed upon the decision of Bombay High Court in Principal Global Services Pvt. Ltd. v. The State of Maharashtra and others [ 2023 (4) TMI 69 - BOMBAY HIGH COURT] in support of his contention for review of the impugned order, but although the petitioner claims for review of the order on the ground of mistake or error apparent on the face of record, however, the decision relied on by the petitioner reveals about review of order for some typographical error as revealed in paragraph-7 of the relied on decision. On a careful scrutiny of the entire averments of the review petition together with the admitted facts of the case, this Court does not find any ground as permissible under law to review the impugned order. Consequently, no ground for review of the impugned order having made out by the petitioner, the present review petition lacks merit and is liable to be dismissed. The review petition being devoid of merit stands dismissed on contest, but in the circumstance, no order as to costs.
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2024 (8) TMI 1192
Suspension of GST officer / Tax Officer - Challenge to suspension order based on allegations of issuing registration without proper verification - registration issued to Prabhat Singh without verifying the report submitted by the State Tax Officer who conducted the field survey - HELD THAT:- The order of suspension cannot be revoked, and if the petitioner is allowed to join duty, he may tamper with material evidence. Therefore, this Court finds no infirmity or illegality in the order passed by the second respondent. The respondents are directed to complete the disciplinary proceedings against the petitioner within a period of six months from the date of receipt of a copy of this order - Petition dismissed.
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2024 (8) TMI 1191
Grant of bail - creating fake companies/ firms and appointing their Directors/ Partners/ Proprietors, who is further involved in passing on the inadmissible Input Tax Credit - illegal passing of inadmissible Input Tax Credit of Goods and Services Tax - HELD THAT:- It is evident that Sumit Gupta without knowledge of so-called directors, proprietors and other staff of company had used to pass inadmissible and indelible input tax credit to various firms without supply of underlying goods/ services. The irregular input tax credit on the basis of invoices were issued by fictious/ fake suppliers without actual supply of goods for services, leading to the wrongful availment or utilization of input tax credit and passing thereof which resulted in huge loss in revenue to the government. Even an ordinary person of country is paying CGST SGST of central and state government for the building and development of nation and state but the persons like petitioner who is white-collar criminals impede and obstruct the development of nation and state as well by creating fake and bogus firm committing forgery in well planned manner in cool calculation and dishonest design with a vulture eye on personal profit causing huge loss of public funds, affects economy of nation and state, should be dealt with different approach to send the eye opening message to such white-collar criminals of society. The Hon ble Apex Court in the case of Y.S. Jagan Mohan Reddy Vs. CBI [ 2013 (5) TMI 896 - SUPREME COURT ] held that ' Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offences having deeprooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country.' In view of the allegations made in the complaint, verified materials on record and also taking into consideration the cognizance order dated 04.06.2024 passed by the learned Presiding Officer, Special Court Economic Offences, Jamshedpur, whereby the cognizance has been taken against the petitioner for the offences under Sections 132 (1) (i) to (iv) read with 132 (4) and (5) of the CGST Act, 2017 as well as under Sections 201 (Part-3), 204, 420, 465, 467, 468 and 471 of the Indian Penal Code, 1860, the petitioner is not entitled for bail. Accordingly, the bail application of the petitioner is, hereby, rejected.
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Income Tax
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2024 (8) TMI 1190
TDS u/s 194H - Discount offered by the appellant on sale of Prepaid SIM cards and Recharge coupons - relationship between appellant and its distributors was not that of a Principal to Principal', but only a 'Principal-Agent relationship' - As decided by HC [ 2024 (1) TMI 1312 - TELANGANA HIGH COURT] Section 194H is applicable in respect of amounts paid to the agents in connection with sale of SIM cards and other services is adaptable HELD THAT:- The issue in this case is squarely covered by the decision of this Court in Bharti Cellular Limited (now Bharti Airtel Limited) v. Assistant Commissioner of Income Tax, Circle 57, Kolkata Anr [ 2024 (3) TMI 41 - SUPREME COURT] . Thus, the present appeals are allowed, and the impugned judgment(s) is set aside by holding that the parties will be bound by the decision in Bharti Cellular Limited (now Bharti Airtel Limited).
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2024 (8) TMI 1189
Validity of Reassessment proceedings - reason to believe - whether any reasonable person could form a belief that income had escaped assessment and that would be adequate to reopen the assessment? - information was the receipt of information from the Deputy Director of Income-tax (Investigation), Mumbai that stock brokers had misused client code modification facility and created fictitious profits and losses to benefit their clients - failure to disclose material facts or not? - HELD THAT:- It is a matter of public knowledge that client codes entered by a stock broker at the time of execution of the trades are permitted to be modified within a stipulated time after execution, if the stock broker finds that there had been any error in entering the correct client code. In the instant case, there is nothing to show whether such modification had been effected by the stock broker to deal with his errors in execution or whether the modification was effected under instructions of the Petitioner. Besides, every transaction executed under the Petitioner s client code and thereby captured in his books of accounts have been subjected to scrutiny assessment. If someone else s client code had been entered by the stock broker and that had been changed to the Petitioner s client code, the transaction would get captured in the Petitioner s books and would be part of the material scrutinized. If it is the Petitioner s client code that had been originally entered by the stock broker, leading to it being modified after execution, it would have no bearing on the income of the Petitioner, since it would be the person whose client code was entered upon modification, whose taxation would be impacted. Therefore, without any basis to show that there had been a failure on the Petitioner s part in making a full and truthful disclosure of material facts, the very jurisdiction to initiate reassessment as provided for in Section 147 would not be attracted. It is because the Revenue cannot demonstrate a failure on the part of the Petitioner to make full and truthful disclosure of facts in his possession, that its stance has been moulded to state that such demonstration is not necessary, and it would suffice if the Revenue formulates a reason to believe that income has escaped assessment. We are afraid that we cannot agree to such a proposition, which would require ignoring the explicit provisions of Section 147 and supplanting it with a new formulation as is being canvassed by the Revenue. Section 147 explicitly stipulates the grounds on which, and the framework within which, such reassessment may be initiated. The Revenue has invoked the first proviso to Section 147(1) in order to initiate the reassessment. An essential ingredient of the first proviso is that no action for reassessment can be taken after the expiry four years from the end of the relevant assessment year, unless the income escaping assessment has been caused by the failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. That vital element is sorely missing in the instant case. It was the Petitioner who had failed to disclose any material fact fully and truly, there is no scope for initiating reassessment. Consequently, this Writ Petition deserves to be allowed, quashing the proposed reassessment. Decided in favour of assessee.
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2024 (8) TMI 1188
Reopening of assessment beyond period of limitation - Section 148 notice was issued on 25 July, 2022, which is almost two years after the limitation period had expired on 31 March, 2020, which was further extended upto 31 March, 2021 because of the notification issued as a result of Covid-19 pandemic. HELD THAT:- The period of six years relevant to the assessment year 2013-14 expired on 31 March, 2020. Thus, the amendment as incorporated in Section 149 (1) (b) was not applicable for the re-opening/reassessment in question, which was for the assessment year 2013-14. It appears that overlooking such position, the Assessing officer, under the presumption that the amendment to the said provision as incorporated by Finance Act, 2022 with effect from 1 April, 2022 had become applicable to the facts in hand, i.e., A.Y. 2013-14, issued notice under section 148 dated 25 July, 2022 inter alia considering the decision of Supreme Court in Union of India vs. Ashish Agarwal [ 2022 (5) TMI 240 - SUPREME COURT] . Being a jurisdictional issue, looked from any angle, the notice dated 25 July, 2022 under Section 148 of the Act could not have been issued for the assessment year 2013-14. It is on such notice, the assessment order dated 26 May, 2023 has been passed. We may observe that this is clearly a case where the Assessing Officer has proceeded without jurisdiction and possibly applying the amended provisions of Section 149 as incorporated by the Finance Act to the case in hand when he issued notice dated 25 July, 2022 overlooking the fact that in the present case as the law would stand, the limitation had already expired and within the extended period of limitation as noted by us herein. Thus, once the notice itself was inherently without jurisdiction, the order passed on such notice although was passed without granting hearing to the petitioner, would obviously be rendered illegal. Thus applying the principles as laid down in New India Assurance Co. Ltd. [ 2024 (1) TMI 803 - BOMBAY HIGH COURT] there is no manner of doubt that the petition would be required to be allowed.
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2024 (8) TMI 1187
Assessment order passed beyond period of limitation - difference in the liability towards sundry creditors - HELD THAT:- Prima facie, it cannot be construed that the impugned Assessment Order was passed after 30.09.2021 as there is a presumption that the order would have passed on the said date. It is also stands confirmed that the order was emailed to the petitioner on the following date i.e., on 01.10.2021 as is evident from Page No.188 of the Typed Set of Papers. The order copy was also dispatched physically to the petitioner on 04.10.2021 and received by the petitioner on 05.10.2021. Therefore, it cannot be said/held that the assessment that was completed vide impugned Assessment Order dated 30.09.2021 was time barred. Also evident that the explanation of the petitioner in petitioner's representation dated 29.09.2021 has not been considered. The assessment has been completed in a hurry as otherwise the assessment would have got time barred after 30.09.2021. Therefore, neither the petitioner nor the respondents can be found fault on account of the limitation, which would operate against the respondents. To balance the interest of the parties, we set aside the impugned Assessment Order dated 30.09.2021 and remit the case back to the respondents to pass orders on merits, within a period of six months from the date of receipt of a copy of this order.
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2024 (8) TMI 1186
Validity of Reopening of assessment - validity of approval granted by the Joint Commissioner u/s 151 - HELD THAT:- As the facts stand, leading to the impugned reassessment order, it is quite clear that such order was passed on the basis of reasons which were furnished to the Petitioner under a notice issued u/s 143 (2) r.w.s. 147, and to which objections were raised by the Petitioner vide reply dated 15 October, 2021 which were not disposed of by passing a speaking order. Thus, as observed hereinabove, the case is clearly hit by the principles of law as laid down in the case of GKN Driveshafts (India) Ltd. [ 2002 (11) TMI 7 - SUPREME COURT] and on this basic issue, the impugned order will be required to be quashed and set aside. We also cannot countenance an argument as urged on behalf of the department that sanctity should be attributed to the fresh reasons which form part of the approval granted by the Joint Commissioner u/s 151 and which now ought to be considered as the appropriate reasons. Such a plea cannot be taken after the assessment order is already passed. In our opinion, it is not permissible for the Respondents-Revenue to raise such contentions as this will be completely contrary to the well settled principles of law and the sanctity of the procedure u/s 148 as it stood applicable for the assessment year in question We therefore reject the case of the Respondents-Revenue in this regard that now the Petitioner needs to respond to the reasons which form part of the approval granted u/s 151 and that too without the same being issued to the petitioner in a manner known to the law by the AO This is a clear case where the AO in fact has adopted different approaches, firstly, in furnishing different reasons to the assessee than what was placed before the Joint Commissioner. Things did not stop here, the AO thereafter decided to proceed in breach of the law, as if he was not aware about the rules which are required to be followed by him, namely, that once he had furnished reasons and to which objections were raised by the Petitioner, as a mandate of law, he was required to pass a speaking order disposing of the objections. He failed to pass such order and nonetheless he proceeded to pass the impugned assessment order. It appears to us that the AO was quite aware that the assessment order when looked from any angle, was illegal and could be set aside by the Court. AO permitting this to happen, as an eye wash the AO purports to take a plea that the reasons as set out before the Joint Commissioner be now set up as a defence to the present proceedings knowing well that referring to such reasons would be an untenable argument. AO in the present case has acted against the interest of the Revenue, and all of his actions has in fact helped the assessee in the present proceedings. This inasmuch as if the AO was to follow the correct path as per the record and if he was to be right, income of such large amount would not have escaped assessment. AO however, maintained technical defects which appears to be quite a conscious attempt. He has failed to diligently discharge his official duties, expected from him in law. We don t know what happens to such officers and whether any action is taken against such Officers in such cases questioning their performance and more particularly when they are responsible to deal with such large amounts of revenue, being not brought to tax, and as to whether any performance audit, vigilance or enquiry is conducted against such Officers and their actions in respect of several assessees is subjected to any scrutiny by the concerned Principal Commissioner of Income-tax under whose jurisdiction, such AO discharges their duties. The assessee in our opinion is correct in questioning the actions of the department that these are flawed, however, whether the AO ought to have been so reckless is the issue, which is an issue which the high officials of the department need to ponder on.
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2024 (8) TMI 1185
Denial of credit of TDS - AR submitted that the assessee is only a commission agent and therefore the total gross sale proceeds cannot be treated as the income of the assessee and thereby the Ld. Revenue Authorities have erred in applying the Rule-37BA - As reiterated that since the assessee is only a commission agent, the assessee is eligible to get credit of the entire amount deducted as tax at source u/s. 194Q HELD THAT:- As through the CBDT Circular No. 452, dated 17th March, 1986 relied on by the Ld. AR and perused the decision of this Tribunal in the case of Yagneswari General Traders [ 2024 (3) TMI 1344 - ITAT VISAKHAPATNAM] as held Kaccha Arahtias turnover includes only the gross commission and not the sales effected on behalf of their principals. It is a f act that the assessee is only a licensed commission agent in Agricultural Market Committee Yard, Guntur which is formed under the rules and regulation of the Government of Andhra Pradesh. Therefore, the Circular issued by the CBDT (supra) squarely applies to the assessee and hence assessee is acted only as an agent (kaccha arahtia) and therefore it is eligible to get credit of the entire amount deducted as tax at source and there is no short fall of TDS as concluded by the Ld. Revenue Authorities - set-aside the orders of the Ld. Revenue Authorities and direct the Ld. AO to grant credit of the entire amount deducted as tax at source in the case of the assessee. As following above no hesitation to set-aside the orders of the Ld. Revenue Authorities and direct the Ld. AO to grant credit of the entire amount deducted as tax at source in the case of the assessee. Thus, the grounds raised by the assessee are allowed.
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2024 (8) TMI 1184
LTCG on sale of the property - deeming provisions of Section 50C - whether the assessee's claim for deduction u/s. 54F of the Act would be looked into based on the investment of the actual sale consideration or the deemed sale consideration adopted for the purpose of Section 50C of the Act? HELD THAT:- Quantification of claim of deduction would be based on the amount of the net consideration of the original asset which is invested by the assessee towards purchase/construction of a new asset, i.e. the residential house. Also, we find that Explanation to Section 54F of the Act defines the term net consideration , as the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer. We, thus, are of a firm conviction that it is the actual sale consideration received or accruing as a result of the transfer of the capital asset which is invested towards purchase/construction of the new asset, i.e. residential house which would form the basis for quantification of the deduction u/s. 54F of the Act. The term net consideration does not make any reference to the deemed sale consideration of the property, i.e. the value adopted or assessed or assessable by any authority of State government for the purpose of payment of stamp duty in respect of such transfer, as provided in Section 50C. Accordingly, AR's contention that now when the assessee had invested his actual share of sale consideration towards construction of new asset, i.e. residential house, he should be allowed deduction u/s. 54F of the Act in respect of the entire LTCG, merits acceptance. Although we principally concur with the aforesaid contention of the Ld. AR, but as claim of deduction u/s. 54F of the Act is subject to satisfaction of certain conditions contemplated in the said statutory provision, therefore, the A.O is directed to re-compute the LTCG which is liable to be brought to tax in the hands of the assessee after reworking out the deduction u/s. 54F of the Act in terms of our aforesaid observations. Thus, the Ground of appeal No.1 raised by the assessee is allowed in terms of our aforesaid observations.
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2024 (8) TMI 1183
Penalty u/s 271(1)(c) - specific charge framed while initiating penalty or not? - non striking of irrelevant portion - Whether assessee has concealed the particulars of income or furnishing inaccurate particulars of income? - CIT(A) deleted addition - HELD THAT:- As during survey certain sales were found not to be recorded in the books of accounts and hence, assessee admitted additional income and declared in the return of income filed in response to notice u/s. 148 of the Act. AO initiated penalty proceedings but while issuing notice u/s. 274 r.w.s. 271 AO has mentioned no specific charge in the notice whether the penalty is being levied for concealment of particulars income or for furnishing of inaccurate particulars of income. AO has not struck of the inapplicable words in the notice issued u/s. 274 r.w.s. 271. In these facts, admittedly the issue is covered by the decision of Babuji Jacob [ 2020 (12) TMI 574 - MADRAS HIGH COURT] wherein considering the decision cited in the case of Sundaram Finance Ltd. [ 2018 (5) TMI 259 - MADRAS HIGH COURT] decided the issue in favor of assessee. Hence, we confirm the order of CIT(A) deleting the penalty. The appeal of the Revenue is dismissed.
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2024 (8) TMI 1182
Penalty proceedings u/s. 271(1)(c) - disallowing deduction u/s. 54EC and deduction u/s. 54F - HELD THAT:- So far as the claim u/s 54EC, it is observed that the assessee herself admitted that the claim is incorrect and by filing revised statement of income on 19- 10-2015 withdrew the claim u/s 54EC of the Act, which clearly is an act of furnishing inaccurate particulars. Therefore, in our considered opinion, the Revenue rightly imposed the penalty for intentionally furnishing inaccurate particulars of income within the meaning of section 271(1)(c) of the Act relating to quantum of incorrect deduction under section 54EC of the Act. Quantum of penalty relating to deduction of 54F we are of the opinion that, during the course of assessment proceedings, the assessee repeatedly misrepresented the facts. Therefore, the AO disallowed the deduction, which was confirmed by the Ld.CIT(A), and the Tribunal granted relief to the extent of Rs. 30,00,000/-. There is no doubt that the assessee had claimed wrong deduction u/s. 54F of the Act and, therefore, the AO levied the penalty which was confirmed by the Tribunal. However, it is observed that the assessee's claim under section 54F of the Act, though partially disallowed, was not found to be entirely devoid of merit, as evidenced by the partial allowance in the quantum proceedings, therefore the penalty levied on the allowed portion should be reconsidered. Assessee admitted to an incorrect claim and withdrew the claim under section 54EC of the Act. Therefore, we upheld the penalty related to the incorrect deduction under section 54EC of the Act as the act of furnishing inaccurate particulars of income. We direct the AO to re-compute the quantum of penalty. Relief of Rs. 30,00,000/- should be granted in the penalty computation, reducing the penalty amount accordingly.Appeal of the Assessee is partly allowed.
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2024 (8) TMI 1181
Revision u/s 263 - Deduction u/s. 80P(2)(d) - interest income from Keira District Central Co.Op. Bank of Ltd . - HELD THAT:- It is pertinent to note that at the assessment proceedings the AO has categorically questioned the assessee related to deduction claimed u/s 80P(2)(d) of the Act and the component of interest derived from Nationalised Banks and Co-operative Banks. AO has categorically made the enquiries full-fledged in respect of provisions of Section 80P(2)(d) of the Act and also made addition to that extent regarding interest earned from Nationalised Banks. The observation of the PCIT that no proper enquiry was made and there are binding judicial precedent, will not be justifiable for invoking Section 263 Explanation-2 as there are several other decisions of the various Hon ble Courts which decides this issue in favour of the assessee. Thus, the invocation of Section 263 of the Act by the PCIT is not justifiable and, therefore, order passed by the CPC, Income Tax Department, does not sustain. Appeal of the assessee is allowed.
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2024 (8) TMI 1180
Addition u/s. 69A - non-payment of advance tax - case of the assessee that the document on which the assessment proceedings initiated itself is based on the wrong information and challenged the entire addition and claimed that assessee is not liable to pay any advance tax by disputing the entire addition - HELD THAT:- Since the assessee has alleged that her income is not chargeable for tax, there cannot be any obligation upon the assessee to pay the advance tax, therefore in our opinion invoking the provision of section 249(4) of the act by the CIT(A) is erroneous. Since the Tribunal being a final fact finding authority and considering the fact that the assessee has advanced the argument on the merit of the case as well, we have gone through the material produced by the assessee. As found that the AO based on the information received from National e-Assessment Centre, Delhi initiated proceedings u/s. 148 of the act wherein an information has been provided that the assessee had bought an immovable property from Shri Madhava Gatti for sale consideration which was the sole basis for the initiation of the proceedings. AR has produced the said information at page No. 63 followed by the sale deed of the parties thereon. As per the said document, the sale deed has been executed by Mr. B.N. Radhakrishna Rao and Mr. U. Ramdas Achar in favour of Mr. Nedle Rama Bhat for sale consideration of Rs. 45 Lakhs in respect of the property bearing survey no. 65/2A1P1 measuring 11 cents situated at Kavoor village, Mangalore Taluk, wherein the assessee is neither the purchaser nor the vendor. The assessee has produced her sale deed at page No. 20 which depicts that Mr. Madhava Gatti has sold a property bearing R.S. No. 189/2A measuring 0-05.75 acres situated at Kotekar Village, Mangalore Taluk for a sale consideration of 31 Lakhs (pages 20-31 of the paper book). Thus it is crystal clear that the Ld.AO made addition on the basis of wrong assumption of facts observing that assessee has made purchase of property for Rs. 45 Lakhs, contrary to the fact that the assessee had purchased the property for Rs. 31 lakhs. Apart from the same, assessee has also produced the source for the said transaction which being a loan availed from Vijaya Bank, Mangalore. Thus the basis for making the addition itself does not survive. Considering the above facts and circumstances of the case, we are inclined to delete the addition made by the Ld.AO u/s. 69A - Appeal of the assessee is allowed.
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2024 (8) TMI 1179
Penalty u/sec 271(1)(c) - assessee has filed an appeal against the quantum addition made in the assessment order u/sec 147 r.w.s 144B - HELD THAT:- CIT(A) deleting the addition made by the A.O vide order as dealt in the above paragraph. Therefore the penalty levied by the AO and sustained by the CIT(A) in the order dated 30-04-2024 shall not survive. Accordingly, we set aside the order of the CIT(A) and direct the AO to delete the penalty. And we allow the grounds of appeal in favour of the assessee.
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2024 (8) TMI 1178
Unexplained share capital/share premium u/s 68 - Assessee during the year has issued equity shares to two group companies to note that these group companies have common directors - AO noted that these companies were not having any business and were having only loan transactions and non-current investments HELD THAT:- Pertinent to state that the assessee has filed all the evidences / explanation as called for by the AO during the course of assessment proceedings comprising details as to names, addresses, PANs, audited accounts, bank statements, confirmation letters etc. to prove this transactions. Besides the AO in order to verify these transactions has also issued notice u/s 133(6) of the Act to both the subscribers which were also duly complied with and the share subscribing companies have furnished all the details as called for by the AO. Besides the summon u/s 131 were issued to the director of the assessee company who happens to be director on the subscribing companies and his statement was recorded by the AO. The said director has admitted to have issued equity shares from the assessee company to two group companies and it was also stated that the subscribing companies having substantial resources available to invest in the assessee company. It was also stated that the subscription proceeds were utilized for the purchase of flat. The statement of the said director is extracted. We note that despite all these evidences being furnished as stated above, the AO has only doubted the business of the assessee as well as the investing companies without disputing the evidences filed by the assessee or pointing out any defect/deficiency therein. CIT(A) simply affirmed the order by relying on the preponderance of human probability thereby ignoring the facts on record. We note that in the present case the assessee or its group companies are not shell companies engaged in providing accommodation entries and therefore we find that theory of the AO that the assessee s own money routed through these investing companies appears to be incorrect. As the assessee has filed all the evidences qua the investing companies and these share subscribers have also complied with the notices issued u/s 133(6) of the Act as well as summon issued u/s 131 - The assessee has proved identity and creditworthiness and genuineness of the transactions by furnishing the evidences and the CIT(A) has not controverted these documents by giving substantive findings. Therefore, we are inclined to set aside the order of Ld. CIT(A) and direct the AO to delete the addition. Decided in favour of assessee.
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2024 (8) TMI 1177
Addition u/s 68 - unsecured loans - disallowance of interest payment under section 69C - CIT(A) deleted addition - HELD THAT:- In the present case, it is discernible from the record that the assessee filed documentary evidence including PAN, address and other details of the lenders like extract of bank statement, ledger confirmation, ITR V, and financial statements to prove the identity, genuineness and creditworthiness of each loan lender separately. We find that these documents also form part of the assessee s paper book - even though during the assessment proceedings, these documents do not form part of the record, however, during the appellate proceedings before the learned CIT(A) no remand report was filed by the jurisdictional AO despite multiple opportunities, as noted by the learned CIT(A). Even during the hearing before us, the Revenue could not bring any material on record to doubt the identity and creditworthiness of the loan lenders and the genuineness of the transaction. Therefore find no infirmity in the impugned order deleting the addition made under section 68 on account of unsecured loans taken by the assessee. Consequently, the disallowance of interest payment under section 69C also does not have any basis, and therefore the same is also rightly deleted by the learned CIT(A). Decided against revenue. Disallowance u/s 14A r.w.r. 8D - absence of tax-free income - CIT(A) deleted addition - HELD THAT:- We find that during the year the assessee earned a net gain on the sale of investments and there is no receipt of exempt income u/s 10 - Further from the ledger of the short-term capital gain, we find that the total gain on the sale of investments. Therefore, we find merit in the submission of the assessee that the amount considered as exempt income by the AO is in fact the gains earned by the assessee from the investments. The Revenue could not bring any material to controvert the aforesaid factual position. We find that in Cheminvest Ltd. [ 2015 (9) TMI 238 - DELHI HIGH COURT] held that section 14A will not apply if no exempt income is received or receivable during the relevant previous year. We further find that in Pr.CIT v/s Kohinoor Project (P) Ltd.[ 2020 (1) TMI 1161 - BOMBAY HIGH COURT] rendered similar findings and dismissed the Revenue s appeal on a similar issue. Since, in the present case, the assessee has not earned any dividend income, therefore, respectfully following the aforesaid judicial pronouncements, disallowance of expenditure under section 14A read with Rule 8D is not sustainable. Scope of amendment by the Finance Act, 2022 - The non-obstante clause and explanation were inserted in section 14A of the Act to the effect that the section shall apply even if no exempt income has accrued or arisen or has been received during the year. We find that while dealing with the issue of whether the aforesaid amendment by the Finance Act, 2022 is prospective or retrospective in operation, in PCIT vs M/s Era infrastructure (India) Ltd, [ 2022 (7) TMI 1093 - DELHI HIGH COURT] held that the amendment by Finance Act, 2022 in section 14A is prospective and will apply in relation to the assessment year 2022 23 and subsequent assessment years. Thus, even in view of the aforesaid amendment also, the disallowance under section 14A read with Rule 8D is not permissible in the present case. Disallowance computed under section 14A read with Rule 8D has rightly been deleted by the learned CIT(A). Decided in favour of assessee.
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2024 (8) TMI 1176
TP adjustment - management charges paid to its AE towards intra group services - AO benchmarked by applying TNMM method - HELD THAT:- We find considerable merit in the plea of the assessee that determining the value of management services at Nil by resorting to CUP method runs contrary to the factual matrix as well as overwhelming legal position enunciated in this regard. On facts, the assessee has reasonably demonstrated the rendition of services against the management charges paid to its AE by direct and circumstantial evidences inter-company namely agreement, emails correspondence, invoices, payments and substantive improvement in the revenue and profitability. Ostensibly, no independent reasons whatsoever have been cited by the DRP while upholding the action of the TPO. DRP is completely swayed with the adjustment made by the TPO without objectively examining the factual matrix and applicability of CUP method in the light of judicial precedents and treating the value of services rendered at Nil . Such arbitrary exercise by the DRP without showing any application of mind cannot be countenanced in any manner. The directions made are neither clear nor implemented by the TPO and TP adjustment earlier made was mechanically reiterated. DRP directions are required to be set aside and the adjustment made by the TPO on account of intra group services are liable to be cancelled and reversed. The value of transactions towards management charges under TNMM methodology adopted by assessee thus stands reinstated. The adjustments made towards payment of management services in question are quashed. TP Adjustment - imputed interest on delayed receivables beyond the period of 60 days - HELD THAT:- Recently, the Delhi Bench of the Tribunal in the case of ERM India (P) Ltd. vs. National e-assessment Centre [ 2021 (9) TMI 1422 - ITAT DLEHI] after following the judgment of Kusum Healthcare [ 2017 (4) TMI 1254 - DELHI HIGH COURT] held that once the working capital adjustment is given, it subsumes the interest on receivable and no separate benchmark is to be made. DRP in the instant case has already directed the TPO/AO to allow working capital adjustment. One of the main features of such working capital adjustment is that it takes into account both debtors and creditors. If after making working capital adjustment to the PLI of comparable enterprises, the profit margins of Tax Payers compares well with the adjusted PLIs of comparable enterprises then it can be contended that overdue receivables do not have any adverse impact on profitability of Tax payer and imputing notional interest on overdue receivables is not warranted. The assessee has worked the PLI after working capital adjustment and even after the working capital adjustment as directed by DRP, the PLI is still better vis-a-vis comparables. The impact of imputed interest costs on account of high credit period would thus get offset by the higher profits earned. Therefore, no rationale exists for separate benchmarking of interest on outstanding receivable. The adjustment as made by AO/TPO deserves thus to be deleted. Decided in favour of assessee.
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2024 (8) TMI 1175
Credit of TDS - HELD THAT:- In assessee own case in AY 2007-08 and 2009-10 Tribunal held that the credit of TDS in a financial year can be granted only when income corresponding to such TDS is assessed to tax in the said financial year. Further, the Tribunal directed that the assessee will be at liberty to approach the Assessing Officer for claiming credit of TDS in the concerned year and the AO may allow the claim in accordance with law. We hereby hold that credit of TDS in a financial year may be granted only when income corresponding to such TDS is assessed to tax in the said financial year. Further, the assessee will be at liberty to approach the Assessing Officer for claiming the such credit in the concerned year in which income is offered and the AO may allow the same in accordance with law. Ground no.1 to 4 of the appeal is allowed for statistical purposes. Consideration of current year business loss - AO is directed to verify the claim of the assessee and to consider the current year business loss while computing the assessed income as per law.
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2024 (8) TMI 1174
Denial of depreciation - method adopted by the assessee in writing off the expenditure incurred therein basing on the life expectancy of items i.e., 3-5 years - nature of business of the assessee is sale of high end branded readymade garments and its accessories for men and women in reasonably decorated showrooms which are obtained on lease basis for 3 5 years and assessee improves the said leased premises by interior decoration like false-ceiling, racks, electrical light fittings, paining, partitions and change of flooring, etc. and expects life of the said items from 1 to 5 years HELD THAT:- ACIT did not dispute the original scrutiny assessment proceedings and the method of write-off and claiming by way of depreciation. Admittedly, there is no dispute with regard to leased premises by the assessee as it is clear from the order of the AO and the CIT(A). Thus, following the decision of AMRUTANJAN FINANCE LIMITED [ 2011 (8) TMI 320 - MADRAS HIGH COURT] taking into account of facts and circumstances of the case, we find that the claim of depreciation as allowed by the Assessing Officer in the original scrutiny proceedings, are justified. Thus, the order of the ld. CIT(A) is quashed and the ground raised by the assessee is allowed.
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2024 (8) TMI 1173
Ad-hoc disallowance of 20% expenses - assessee has not filed any supporting documents - HELD THAT:- Assessee has claimed expenditure of employee benefit expenses, other expenses and fianc costs in its profit and loss account, however, while filing return of income assessee has not claimed any expenditure nor shown to have carry forward the loss, therefore, the assessee has not claimed any expenditure during the year hence, making adhoc disallowance is not proper. Accordingly, ground No.2 raised by the assessee is allowed. Addition u/s 68 - genuineness of the transaction of loan is not substantiated by the appellant company - HELD THAT:- We observed that assessee has received unsecured loan from its sister concern - the assessee has demonstrated that the assessee has received above said unsecured loan from its sister concern and merely because the assessee has not submitted relevant information during assessment proceedings, the AO proceeded to make the disallowance. Even in the remand proceedings, and the amount sustained by the CIT(A) with the observation that the bank statements of the creditors other than sister concern was not submitted by the assessee company. We fail to understand that CIT(A) has sustained the addition with the observation that assessee has not submitted bank statement of the creditors other than sister concern while making the findings whereas that assessee has already submitted the confirmation and bank statements before the lower authorities, non submissions of the bank statements of other creditors has no role to play to adjudicate the issue in hand i.e. relating to unsecured loan, from sister concern when the assessee has submitted all the relevant data of this transaction before Lower Authorities, therefore, we are inclined to allow the grounds raised by the assessee. With regard to ground No.4, assessee has not pressed the same, therefore, the same is dismissed. Unexplained cash deposits in bank account - assessee has failed to prove the source of these cash deposits, therefore, the same are disallowed - HELD THAT:- As we observed that the assessee has submitted cash book in the Paper Book wherein assessee has received share application money on various dates and received the same by way of cash on verification of the cash book submitted before us. We observed that on various dates, the assessee has maintained sufficient cash which are out of share application money and some bank withdrawals and it is substantiated that sufficient source of cash available with the assessee to make the bank deposit of Rs. 8 lacs - assessee has sufficient cash in hands to make above said dash deposit. Accordingly, additions made by the AO is deleted. Decided in favour of assessee.
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2024 (8) TMI 1172
Deduction u/s 80P(2)(vi) - Deduction in respect of income of co-operative societies - income earned by the assessee is not only from collective disposal of labour but also from amount received on account of material - HELD THAT:- The words Collective Disposal of labour of its Members assumes significance. In our considered view the dominant purpose of assessee is collective disposal of labour in area of civil works. The assessee admittedly while rendering civil works majorly in the terms of labour collectively works for gain. Since civil works is highly fragmented industry in India at times both the Central Government, the State Government, the Local Bodies like Municipal Corporation, Councils, etc. including PSU, State PSU, Electricity Boards, CPWD, PWD Corporate, firms, NGO etc. Nowadays by way of tenders for small and medium size civil works invite the bids which are consisting of both material and labour as such civil works primarily are highly labour intensive consequently small to medium society have to bid for both in a competitive world even though their domain field is only pure labour. In order to survive in the competitive world they under quote on labour and a bare minimum on cost of material so that being lowest bidder they get the tender finally. The above requisite submissions are on record of the present case which has not been disputed by the Department seriously either before Ld. AO and / or before CIT(A). Consequently we are of the considered view that in the given context the services offered by the assessee society cumulatively comes within the mischief of the words Collective disposal of labour of its members falling under section 80P(2)(a)(vi) and therefore order of Ld. CIT(A) is sustained. The nature of broad activity which dominates the field is collective disposal of labour of its Members . Purchases are thus incidental and ancillary to main object of rendering labour services collectively . Society survives and makes profit income by sacrificing their collective labour in process to earn their livelihood on both counts. The dominating activity and purpose in the instant case is collective use of labour by societie s each member / collective disposal of labour of its members and is not of doing business of procuring and selling toddy and thereby making profit. Hence we hold the facts in CIT Vs. Uralungal [ 2009 (10) TMI 890 - KERALA HIGH COURT ] to be more parimateria and almost identical with activity of present assessee and respectively disagree with the submissions made by Ld. DR of Revenue. In respect of the Revenue s contention that its database of the assessee shows Tara Singh as the only member having 100% share we observe that in the proceedings before Ld. AO and so also before CIT(A) this issue does not arises and consequently there is no finding. However before us this issue has been raised for the first time without any material evidence in support of same. There is no application to bring additional evidence on record consequently we reject the contention of the Revenue. Further such contention is not legal question of law. Decided against revenue.
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2024 (8) TMI 1171
Deduction u/s 80IA - filing of return of income belatedly - HELD THAT:- As relying on case CIT v/s Shelcon Propertyies (P) Ltd [ 2015 (3) TMI 579 - CALCUTTA HIGH COURT] we hold that once the return of income has been filed belatedly, no benefit under section 80IA of the Act is allowed. Decided in favour of revenue.
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2024 (8) TMI 1170
Deduction u/s 80P(2)(a)(i) - invocation of provisions of section 80A(5) for denial of captioned deduction - assessee has not filed a valid return of income as per the provisions of section 139, thus, claim denied - HELD THAT:- Unable to appreciate the argument of the Ld. AR that the provisions of section 80AC are not applicable to the case of the assessee as the substitution came into effect from 01/04/2018 ie., for the AY 2018-19 onwards because even after the substitution by Finance Act, 2018, to claim the deduction u/s. 80P(2)(a)(i) of the Act, the assessee has to file a valid return of income within the stipulated time as per the provisions of section 139 of the Act which is missing in the instant case. Since the return of income has not been filed in accordance with the provisions of section 139 of the Act, it was rightly held by the Ld. Revenue Authorities that the claim made by the assessee for deduction u/s. 80P(2)(a)(i) cannot be held as an admissible deduction under the Act - Decided against assessee.
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2024 (8) TMI 1169
Income tax proceedings against company in liquidation - proceedings instituted or against the corporate debtor - HELD THAT:- Once the liquidation process has been initiated then, subject to Section 52 of the IBC, no suit or other legal proceedings shall be instituted or against the corporate debtor save and except the liberty of the liquidator. Since there is a bar for initiating any suit or any other legal proceedings during moratorium, it also includes the income tax proceedings. Therefore, under these circumstances, it is premature to decide these appeals on merits. Accordingly, all these appeals are consigned to records and the parties shall be at liberty to restitute the appeal, once the committee of creditors or NCLT directs the Liquidator or corporate creditors (including Income Tax department) to pursue the appeal; or the liquidator after completion of process may approach to get the appeal disposed after filing revised Form 36. All the appeals are dismissed in limine.
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2024 (8) TMI 1168
Condonation of delay filling appeal before CIT(A) - Delay due to the prevailing pandemic situation the same could not be filed before 8/12/2021 with a delay of about 21 months - HELD THAT:- There was a delay in preferring appeal before the First Appellate Authority and the reason for the delay in filing the appeal was attributed to the pandemic Though the DR does not concede to condone the delay, there is no denial of the fact that the entire country was under complete lockdown for 21 days starting from 25/3/2020 to contain the COVID-19 Pandemic. Hon'ble Supreme Court in the Suo Motu proceedings in the case of IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION [ 2022 (1) TMI 385 - SC ORDER] held that in cases, where the limitation would have expired during the period between 15/03/2020 and 28/02/2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 01/03/2022, and in the event of actual balance period of limitation remaining with effect from 01/03/2022 is greater than 90 days, that longer period shall apply. The limitation period applicable to this appeal is covered by the above decision and, therefore, this appeal deserve to be heard on merits by condoning the delay. Thus, we condone the delay in filing the First appeal before the learned CIT(A) , set aside the impugned order and the rest of the appeal to the file of the learned CIT(A) for deciding the same on merits.
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2024 (8) TMI 1167
TP Adjustment towards software developments services and related support services - Comparable selection - assessee has benchmarked this transaction by selecting Transaction Net Margin Method (TNMM) with PLI of OP/OC - HELD THAT:-Deselection of comparables on the basis of functional dissimilarity. Accordingly, we direct the TPO to exclude Cadsys (India) Ltd., Cygnet Infotech Pvt. Ltd., Dun Bradstreet Technologies Data Services Pvt. Ltd., E-Infochips Ltd., Interglobe Technology Quotient Pvt. Ltd., Cybage Software Pvt. Ltd. , Nihilent Ltd. InfoBeans Technologies Ltd. (Formerly known as InfoBeans Systems India Pvt. Ltd.). T.P. Adjustment towards interest on receivables - HELD THAT:- As decided in own case [ 2024 (1) TMI 26 - ITAT MUMBAI ] Charging of interest by the TPO on the closing balance without looking into delay of each and every invoice is incorrect. Therefore, we direct the TPO to compute the amount and number of days outstanding beyond the grace period for each and every invoice. The assessee shall provide complete information in this regard to the TPO. Also, turning to the number of days of grace period, there is no thumb rule that grace period of 30 days, 60 days or 90 days should be allowed AR submitted that the assessee is a captive service provider and there are no comparable transactions with the Non-AEs. Thus, we are left with no choice but to remand this issue to the file of the TPO to examine if there are any agreements with the AE and what is the grace period in those agreements. If there are no agreements with the AEs, the TPO should consider the market practice in the relevant sector and then grant the grace period. Respectfully following the above decision of the Co-ordinate Bench in assessee's own case we direct the AO to re-compute the interest on receivable with similar directions. Disallowance of employee contribution to PF in the intimation under section 143(1) - HELD THAT:- Respectfully following the decision rendered by in case of Checkmate Services P. Ltd. [ 2022 (10) TMI 617 - SUPREME COURT ] we are of the considered view since the assessee has failed to comply with the condition precedent for depositing the employees contribution on account of PF ESI before the due date prescribed under the Act, the assessee is not entitled for any deduction - Decided against assessee. Addition on account of accretion to reserves under LTCG - assessee has merged with VMSS pursuant to which the shares of the assessee were allotted to the shareholders of VMSS - HELD THAT:- The plain reading of the provisions of section 47(vi) also leads as to the conclusion that the amount recorded as part of amalgamation scheme is not to be treated as transfer and therefore does not result in capital gains. In view of these discussions, we hold that the addition made towards amount credited to capital reserve account as part of merger of assessee and VMSS cannot be treated as LTCG and the addition made in this regard is hereby deleted. This ground is held in favour of the assessee. AO while preparing the computation statement of assessed income has considered the addition sustained by the DRP twice - We have already held that the addition of Rs. 1.26 crores is not tenable and that the same does not result in capital gains. We therefore direct the AO examine the issue of double addition claimed to be made in the statement of computation and to give relief to the assessee accordingly. Disallowance of Finance Cost u/s 37(1) - AO based on the information furnished by the assessee with regard to the amount reflected as outstanding from the AEs disallowed the finance cost incurred by the assessee by adopting SBI Prime Lending Rate at 11% - HELD THAT:- AO levied interest by applying SBI Prime Lending Rate on the amount outstanding from Varian Medical Systems International AG and Varian Medical Systems Inc. The DRP gave relief to the assessee stating that no interest is leviable on the amount outstanding from Varian Medical Systems International AG and sustained the interest on amount outstanding from Varian Medical Systems Inc. However from the above extracted observations of the TPO, we noticed that the TPO did not propose any TP Adjustment towards interest on amount receivable from Varian Medical Systems Inc. for the reason that the aging of amount outstanding is less than 20 days. Therefore, we see merit in the contention of the AR that the interest levied by the AO as sustained by the DRP on the amount outstanding from Varian Medical Systems Inc. is not correct. Accordingly, we delete the interest charged on the amount receivable from Varian Medical Systems Inc. This ground of the assessee is allowed. Short grant of advance tax credit and credit towards TDS - AR submitted that the AO failed to give credit towards advance tax paid by VMSS, which merged with assessee and that the AO did not consider the TDS deducted in the name of VMSS. Our attention in this regard was drawn to the relevant evidences to substantiate the claim. Accordingly, we issue direction to the AO to consider the claim of the assessee based on the documentary evidences and give credit in accordance with law.
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2024 (8) TMI 1166
Applicability of the amendment made in section 50C - retrospective or prospective effect - dispute of valuation of the property for stamp duty purposes - HELD THAT:- Based on the set of evidence furnished by the assessee in the proceeding before the ld. CIT(A) has considered the plea of the assessee that the Hon'ble High Court of Rajasthan had decided the matter and directed the stamp duty valuation authority to make assessment of value for the purpose of stamp duty and accordingly Collector (Stamps), Jaipur Circle Third ( Raj.) had assessed the property for the purpose of stamp duty at Rs. 67,81,105/-. The appellant further submitted that after considering the stamp duty value at Rs. 67,81,105/- as determined by Collector (Stamps), Jaipur, the difference between sale consideration and value adopted for the purpose of stamp duty remained only 1.045% (Difference in value Rs 70,105/-, i.e. Stamp duty value Rs. 67,81,105/- minus Sale consideration Rs. 67,11,000/-). Hence it was requested to accept the stated sale consideration i.e. 6711000/- at face value and not to invoke the provisions of section 50C. In this regard the appellant relied on order of Smt. Cheryl Maria Fernandes [ 2021 (1) TMI 620 - ITAT MUMBAI ]. The bench noted that the difference in the valuation remain after the direction of the High Court is only 1.04% and therefore, considering the specific exclusion provision which is benefit in nature and ld. CIT(A) has already considered the judicial decisions cited by the assessee has granted the benefit to the assessee. Decided against revenue.
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2024 (8) TMI 1165
Allowability of business expenditure - Disallowance of legal and professional charges - AO observed that the expenses are incurred in respect of the ownership of the firm and takeover of its business assets and liabilities which is a capital expenditure as well as personal expenses cannot be allowed as expenses wholly and exclusively for business purposes - HELD THAT:- No payment has been made by the assessee in the form of any penalty and that no penalty had been levied by any statutory authority for violation of any law for the time being in force. All the aforesaid payments are made only to the advocates who are defending the assessee company in the ordinary course of its business. These expenses are nothing but expenses incurred to protect the image of the assessee company and for ensuring the smooth conduct of the business of the assessee company. None of the explanations given by the assessee hereinabove were found to be false by the revenue and that all these payments together with the purpose of payments are duly covered by documentary evidences. All the payments are made by regular banking channels after due deduction of tax at source and the payees are identifiable. The assessee on its part had duly filed the details of payments, purpose of payments, name and address of the advocates, TDS details, details of litigation, court papers and the relevant court orders. None of the payments fall under the ambit of provisions of Explanation 1 to Section 37 of the Act. They are neither penal in nature nor capital or personal in nature. In our considered opinion, the entire payments made are only mere payments made to advocates for defending the case of the assessee company. This is similar to a lawyer being paid fees for appearance before the Tribunal, Commissioner (Appeals) or before the AO in connection with income tax dispute of the assessee company. Hence they are squarely allowable as deduction. We direct the ld. AO to allow deduction to the assessee.
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2024 (8) TMI 1164
Deduction u/s. 80IA(4) - claim denied as assessee is not a developer of any infrastructure project, but a simple works contractor executing civil construction work for various government and semi-government departments - Arguments of the assessee is that, the AO has simply disallowed claim of deduction u/s. 80-IA(4) for the impugned assessment year based on the findings of the AO for the assessment year 2009-10 and nature of agreement entered into by the appellant in the assessment year 2009-10 and for the impugned assessment year may be different and further, on the basis of agreement entered by the appellant for the assessment year 2009-10, conclusion cannot be drawn against the assessee to hold that the assessee is a works contractor, but not a developer. HELD THAT:- We find merit in the arguments of assessee, because in order to ascertain the nature of works executed by the assessee, the basic documents required to be examined is an agreement entered into with the principals. The terms and conditions and the nature of work specified in the agreement can only decide whether the assessee is a developer of an infrastructure project or a simple work contractor who executes civil construction work for a developer. Since, the AO has not examined the agreement entered into by the appellant with various government and semi-government departments, in our considered view, the matter needs to go back to the file of the AO for fresh examination. Thus, we set aside the order of the CIT(A) on this issue and restore the issue back to the file of the AO and direct the AO to re-examine the claim of deduction u/s. 80IA(4) of the Act, in light of necessary evidences including agreement entered into by the appellant with various departments and ascertain the nature of works executed by the assessee, in order to consider for the purpose of section 80IA(4) - Appeal filed by the assessee is allowed for statistical purposes.
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2024 (8) TMI 1163
Maintainability of appeal when alternative remedy u/s 264 already availed - HELD THAT:- No doubt, the assessee vide letter has waived his right of appeal but Hon ble Madras High Court in the case of CIT vs. D. Lakshminarayanapathi [ 1998 (12) TMI 12 - MADRAS HIGH COURT] has considered this issue and held that the provisions dealing with appellate jurisdiction do not bar an appellant from invoking the appellate jurisdiction for filing of appeal before CIT(A), even though the assessee had invoked revisional jurisdiction u/s.264. Thus set aside the order of CIT(A) holding the assessee s appeal as not-maintainable and direct him to re-decide the appeal as per law on merits. In term of the above, appeal of the assessee is allowed for statistical purposes.
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Customs
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2024 (8) TMI 1162
Quantum of penalty - use of his IEC code for import to be made by Sh. Rajan Arora - it was held by High Court that ' We note that it is the undisputed position that the appellant had lent the Importer Exporter Code [ IEC ] for the purposes of facilitating import. Bearing in mind the fact that there was no connivance, the CESTAT had found it fit to reduce the penalty imposed on the appellant from Rs. 12 lakhs to Rs.50,000/-.' HELD THAT:- It is not required to interfere with the impugned judgment and order passed by the High Court of Delhi at New Delhi - appeal dismissed.
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2024 (8) TMI 1161
Seeking release of seized goods - reasons to believe - Section 110 of the Customs Act, 1962 - HELD THAT:- Reasons to believe words incorporated under section 110 of the Customs Act, 1962 has been interpreted by this Court in the case of M/S OM SAI TRADING COMPANY AND M/S MAA KAMAKHYA TRADERS, VERSUS THE UNION OF INDIA, THE COMMISSIONER OF CUSTOMS AND ORS. [ 2019 (9) TMI 1283 - PATNA HIGH COURT ] and it was subject matter of litigation before the Hon ble Supreme Court, however, having regard to the facts of the case interpretation of reasons to believe has not been examined and it was left over to be examined in some other cases. Para-4 of the circular dated 08.02.2017 stipulated that at the time of seizure Panchnama was required to be drawn clearly mentioning the reasons to believe that goods are liable for confiscation. There is disputed issue as to whether driver of the vehicle had produced relevant documents at 21.00 hrs. on 19.06.2021 or not. In fact, at para 13 of the writ petition, petitioner has admitted that documents have been produced in the office of customs department, therefore, one has to draw inference that driver of the vehicle was not carrying the documents in respect of transportation of seized goods and other ancillary papers. Further, RUD-05 E-way Bill generated on 19.06.2021 9.26 pm and seizure is at 9.30 pm on 19.06.2021, some alleged discrepancies are reflected. Be that as it may, under Article 226 Court cannot examine disputed issues among the parties. The petitioner has not made out a case. Accordingly, the present writ petition stands dismissed.
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2024 (8) TMI 1160
Seeking grant of bail - recovery of contraband items - Submission of applicant is that the applicant has been falsely implicated in the case - HELD THAT:- Looking into the fact that the applicant does not have any criminal history and considering the facts and circumstances including that the counsel for the respondent did not dispute that the applicant is at flight risk and he is not in a position to influence any witness or tamper with the evidence; coupled with the fact that all contentions issues are yet to be tested in trial. Moreover, the co-accused Ameer Ahmad, Mohd. Rafeeq, Mohd Alkama, Mohd. Ahad and Mohd. Kashif have been enlarged on bail vide orders dated 07.05.2024, 27.05.2024 and 25.05.2025 passed in Criminal Misc. Bail Application nos.4723 of 2024, 4914 of 2024, (5768 of 2024, 5662 of 2024 and 5664 of 2024 respectively. Copies of the bail orders of Ameer Ahmad and Mohd. Rafeeq have been annexed as Annexure nos.5 and 6 of the bail application. Looking into the severity of the punishment if convicted and the period of incarceration as well as the fact that no apprehension has been expressed by the learned counsel for the Customs that the applicant is at the risk of fleeing justice or that he would tamper with evidence or influence any witness, hence, at this stage, without expressing any opinion on the merits of the case, this Court is of the view that the applicant is entitled to be released on bail. Let the applicant Zareef Ahmad involved in the aforesaid FIR/Case Crime Number be released on bail on his furnishing a personal bond with two reliable sureties each in the like amount to the satisfaction of the court concerned - application allowed.
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2024 (8) TMI 1159
Absolute Confiscation of prohibited goods - Undeclared counterfeit goods - Mis-declared goods other than counterfeit - rejection of transaction value of the remaining goods under Rule 12 and re-determining their value under Rule 9 of the Valuation Rules - levy of penalty. Branded goods - HELD THAT:- The appellant abandoned these goods and had also explained the reason for abandoning them that they did not belong to him at all and that he had not placed any order for them - It is not only a clear a case of relinquishing the title to the goods but, in fact, he went one-step further to claim that he had never placed had any order for them and that the goods did not belong to him. He had not responded to the show cause notice or participated in the personal hearing. It is found impermissible to the appellant to now take U-turn and claim those goods which did not belong to him at all. Therefore, the absolute confiscation of the counterfeit goods needs to be sustained. Valuation of other goods - HELD THAT:- The show cause notice proposed to reject the declared transaction value under rule 12 for this reason. In paragraph 17 of the show cause notice, it was indicated that valuation could not be done under rule 4, 5, 7 and 8 of the Valuation Rules and that there was no contemporaneous data of identical or similar goods. For this reason, it was proposed to conduct a market survey or inquiry as per rule 9 ( Residual Method). The market survey was conducted after taking the representative samples of the goods in the presence of Pankaj Gupta, proprietor of the appellant firm and others to ascertain their market value in India. From the prices found in market inquiry, abatement of 60% was given in lieu of the duty and profit margin and other expenses to arrive at the assessable value - It is recorded in the show cause notice that this method of valuation was accepted by the importer and its Customs Broker and importer had paid duty on the enhanced value. In respect of certain other items such as wind cheater, PU ball, baby car, PVC table cover, PU wheel cover and resin show piece, the declared values were accepted - the total assessable value was proposed to be re-determined in the show cause notice. The total unbranded goods were valued at Rs. 1,65,49,893/- and a redemption fine of the same value was imposed by the Commissioner in the impugned order. He also confiscated 2880 of reading glasses/ sun goggles valued at Rs. 11,42,993/- and allowed them to be redeemed on payment of an redemption fine of an equal amount. In other words, the amount of redemption fine imposed by the Commissioner in the impugned order is equal to the value of the goods itself - this is harsh and the amount of redemption fine must be reduced. The penalty imposed on Sh. Pankaj Gupta, the proprietor of the appellant is Rs. 94,51,763/- under section 112(a) read with Section 114A and section 114AA of the Act. No breakup is given on the amount of penalty imposed under the three sections. We find section 114A provides for penalty but if a penalty is imposed under that section no penalty can be imposed under section 112 also. Section 114AA provides for penalty for a person knowingly or intentionally making, signing, using or causing to be made signed or used any declaration, statement of documents which is false or incorrect in any material particular in the transaction of any business for the purposes of Act - it would meet the ends of justice if penalty under section 114A and 114AA are set aside and the penalty under section 112(a) is reduced to Rs. 9,00,000/-. Appeal allowed in part.
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2024 (8) TMI 1158
Refund of the Special Additional Duty of Customs (SAD) - rejection on the ground that description of the imported goods does not match - non-compliance with N/N. 102/2007-Cus dated 14.9.2007 - HELD THAT:- The fact remains that the appellant has produced a Chartered Accountant s Certificate along with the reconciliation statement as required by Boards Circular. In such a case the decision to discard the certificate should be based on certain incriminating and reliable documents and the reasons for disbelieving the certificate should be clearly spelt out. In the absence of such action the claim cannot be rejected. In Chowgule Company Pvt. Ltd. v. Commissioner of Customs C. Ex., [ 2014 (8) TMI 214 - CESTAT MUMBAI (LB)] , a Larger Bench of this Tribunal examined a reference of a related matter as to whether to avail the benefit of N/N. 102/2007, the condition 2(b) of the Notification is mandatory for compliance being a trader who cleared the goods on the strength of commercial invoices. The judgment went on to examine the genesis and object of the levy and the role of the exemption notification, which is very useful in understanding the issue. A similar view is also relevant for discrepancies noticed in the description of goods between the sales invoice and the Bill of Entry in the impugned case. Grounds such as minor mismatch in description of goods in the invoice, and clerical errors in dates do not go to the root of the validity of the refund claim and are curable. The CA s Certificate along with the reconciliation statement has been prescribed in Boards Circular to provide a ledger/ document-based scrutiny of the claim and should ordinarily be relied upon to sanction the claim - Regular cash inflows are the lifeline of a trade / business and blocking legitimate claims on half-baked reasons does a great dis-service and should be avoided. The Hon ble Madras High Court in its judgment in PP PRODUCTS LTD. VERSUS COMMISSIONER OF CUSTOMS, CHENNAI SEAPORT COMMISSIONERATE-IV [ 2019 (5) TMI 830 - MADRAS HIGH COURT ], examined whether the Tribunal, in the face of documentary evidence produced by the appellant, was correct in setting aside the order of the Appellate Authority, holding that there was no correction between the imports and subsequent sales? It held that ' the adjudicating authority has not come to a conclusion that the product sold was entirely different. In fact, there was nothing on record to disbelieve the Chartered Accountant s certificate which certified that both products are one and the same. If the adjudicating authority had to disbelieve such certification, then there should have been material to do so. However, the larger question would be whether at all such jurisdiction is vested with the adjudicating authority, when there is no allegation of any fraud or misrepresentation against the appellant.' The impugned order rejecting the refund claims is not proper. The same is hence set aside - The appeal is allowed.
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Corporate Laws
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2024 (8) TMI 1157
Validity of the sale of immovable property by the National Company Law Tribunal - transmission of shares under SARFAESI Act - Inability to sell its flats due to lack of permission from its lessor MHADA - crux of appellant is the shareholder of the appellant company does not have any title or ownership in the property of the appellant - HELD THAT:- Admittedly Respondent No.1 had acquired shares under share certificate No.23 and a flat viz. bearing No.101 situated at Satsang Building for valuable consideration pursuant to an enforcement proceedings initiated by the Bank under the SARFAESI Act. The said acquisition tantamounts to transmission of shares in favour of Respondent No.1 by operation of law and hence Respondent No.1 had acquired, shares and flat through valid SARFAESI proceedings. In Dinesh Nagindas Shah Ors Vs. Pankaj Aluminium Industries Pvt Ltd [ 2010 (7) TMI 288 - HIGH COURT OF BOMBAY] it was held an award passed by an Arbitrator would fall in the ambit of transmission by operation of law and such transfer would not be based upon volition of the parties but by operation of law. Instead of effecting transmission of shares, the appellant No.1 vide letter dated 19th September, 2018 sought inspection of documents despite having complete details and all documents in its possession and with a view to frustrate the rights of Respondent No.1 had filed the petition before the NCLT Mumbai. There is no delay in filing the present company petition by Respondent No.1. The Ld. NCLT has held the protracted correspondence at the instance of the appellant constitutes sufficient reason to condone the delay in filing of this present company petition. In Akal Spring Limited Ors V Amrex Marketing Pvt Ltd, [ 2019 (11) TMI 1131 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI] , it was held the Ld. NCLT has powers to condone the delay under Section 58 of the Companies Act, 2013. Further in Sesh Nath Singh Anr V Baidyabati Sheoraphuli coop Bank Ltd and anr Civil Appeal No.9198 of 2019, it was held a delay can be condoned by Tribunal without a formal application as Section 5 of the Limitation Act does not envisage the requirement of formal application for condoning of delay. There is no reason to interfere with the reasoned order of Ld. NCLT. There being no force in the appeal - Appeal dismissed.
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Insolvency & Bankruptcy
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2024 (8) TMI 1156
Maintainability of the interim Application seeking Summary Judgment under Order XIII-A, Rule 1 read with Order XII Rule 6 of the Code of Civil Procedure, 1908 - seeking to enforce claims arising out of supplies of bunker made to the Defendant-Vessels - proceeding in rem against res - Section 14 of the IBC - HELD THAT:- The Plaintiff though claiming Defendant No. 2 to be a party liable in personam in respect of the Plaintiff s claim has stated in paragraph 31 of the Plaint that the Plaintiff is entitled to arrest any vessel in the ownership of Defendant No. 2 as per the provisions of Section 5 (2) read with Section 5 (1) (a) of the Admiralty Act. Thus, the Plaintiff has proceeded in rem against a res i.e. against the Defendant No. 1 vessel claimed to be beneficially owned by Defendant No. 2 in respect of defined class of maritime claim against the vessels viz. M.V. Sea Jaguar and M.V. ATH Melody under Section 4 of the Admiralty Act. In the present case, the Plaintiff had supplied bunkers to the vessels M.V. Sea Jaguar and M.V. ATH Melody and which had not been paid for by Defendant No. 2 (the time charterer of the aforementioned vessels). Accordingly, the Plaintiff has sought to enforce its maritime claims under Section 4(1) (h) of the Admiralty Act, against the Defendant No. 1 Vessel, (against whom separate claim arises for bunker supplied) which the Plaintiff claims is beneficially owned by the Defendant No. 2. Thus, the contention of the Defendant No. 2 that the Plaintiffs claim is an in personam claim against Defendant No. 2 and that precludes the Plaintiff from proceeding in rem against the res cannot be accepted. It has been held in Raj Shipping Agencies [ 2020 (5) TMI 450 - BOMBAY HIGH COURT ] that an action in rem against the ship and / or sale proceeds thereof is not an action against the owner of the ship who may be corporate debtor as defined under the IBC. Further, the principle that an action in rem continues as an action in rem notwithstanding that the owner may have entered appearance, if the security is not furnished for release of the vessel. Thus, it is a settled position of law that Section 14 of the IBC does not prohibit an action in rem or continuation of in rem proceedings against the maritime vessel. In order to affect an arrest under Section 5 (1) (a) read with Section 5 (2), the owner of the vessel must be liable for a maritime claim and must be the owner of the vessel sought to be arrested when the arrest is effected. There is no restriction in so far as a time charterer is concerned who is liable for a maritime claim provided that the time charterer is the owner of the other vessel when the arrest is affected. Accordingly, the defence raised by the Defendant No. 2 that a vessel owned by a time charterer cannot be arrested is rejected. The Plaintiff cannot seek summary judgment in respect of supplies II and III without evidence being led and a full fledged trial for establishing that the Defendant No. 2 is the real owner of the Defendant No. 1 vessel - the Summary Judgment must fail against Defendant No. 2 in respect of Supplies II and III for which the Plaintiff has a maritime claim. The Suit shall continue against Defendant No. 2 in respect of Supplies II and III. Interim Application is accordingly disposed of.
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2024 (8) TMI 1155
Challenge to an interim award under Section 31 (6) of Arbitration and Conciliation Act, 1996 - rejection of the respondent/petitioner s application under Section 16 of the 1996 Act operates as res judicata in respect of the impugned interim award - alleged future losses covered by the counter claim could be dismissed at the outset on the ground of approval of the Resolution Plan in respect of the claimant/company or not. Whether the rejection of the respondent/petitioner s application under Section 16 of the 1996 Act operates as res judicata in respect of the impugned interim award? - HELD THAT:- The basis of the decision turning down the objection to the arbitrator s jurisdiction under Section 16 of the 1996 Act was the moratorium under Section 14 of the IBC which attends a CIRP mandatorily. The learned Arbitrator held that since the claim and the counter claim were interconnected, the moratorium did not prevent the Arbitrator from taking up the counter claim as well. There was no adjudication, nor was any issue raised in respect of the effect of approval of a Resolution Plan on the counter claim. The subsequent approval of the Resolution Plan, which extinguished the rights of the creditors, altered the scenarioaltogether, furnishing a fresh cause of action for the interim award. Hence, there cannot arise any question of the previous rejection of the Section 16 application operating as a bar to the learned Arbitrator deciding independently on the application for interim award - this issue is decided in the negative, holding that the earlier order of rejection of the claimant s application under Section 16 of the 1996 Act did not operate as res judicata or prevent the impugned award from being passed. Whether the alleged future losses covered by the counter claim could be dismissed at the outset on the ground of approval of the Resolution Plan in respect of the claimant/company? - HELD THAT:- It has been repeatedly held, time and again, by different authorities including the Supreme Court that all claims, even if pending on the date of the Resolution Plan stand extinguished upon its approval. The convoluted arguments advanced by the petitioner on the meaning of future losses are not relevant in the context of the IBC, since even if the losses continue to occur prospectively, the seed of the said losses already came into existence in a nascent form on the date of making of the claim - in terms of Section 31 of the IBC and as per the ratio laid down in Ghanashyam Mishra [ 2021 (4) TMI 613 - SUPREME COURT] , the claims incorporated in the petitioner s counter claims pending before the learned Arbitrator stood finally extinguished with the approval of the Resolution Plan and need not or could not have been further adjudicated by the Arbitral Tribunal - the issue is decided against the petitioner and it is hereby held that the alleged future losses covered by the counter claim could be dismissed at the outset on the ground of approval of the Resolution Plan in respect of the claimant/company. Hence, the learned Arbitrator was perfectly justified in dismissing the counter claims of the respondent/petitioner at the inception in view of the approval of the Resolution Plan in respect of the claimant-Company - no ground for interference with the impugned interim award passed under Section 31 (6) has been made out under Section 34 of the 1996 Act, since this Court does not find any patent illegality or anything to shock the conscience sufficiently to set aside the said interim award. The learned Arbitrator arrived at quite plausible and legally correct findings in dismissing the counter claims. Petition dismissed.
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2024 (8) TMI 1154
Suspension of AFA pending adjudication of the show cause notices - Restoration of Authorization for Assignment -validity of Clause 23A provided in the Schedule to the Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016 - Clause 23A of the Bye-Laws of ICSI Institute of Insolvency Professionals - HELD THAT:- Clause 23A provides for suspension of the AFA on initiation of disciplinary proceedings by the agency or by IBBI as the case may be. The Explanation to Clause 23A states that the date of issuance of a show cause notice till its disposal would amount to pendency of a disciplinary proceeding. In other words, issuance of a show cause notice amounts to initiation of such disciplinary proceedings. The validity of Clause 23A was questioned before the Madras High Court in CA V. Venkata Sivakumar [ 2024 (1) TMI 1284 - MADRAS HIGH COURT] . After considering the challenge in detail, the Division Bench held that Clause 23A of the 2016 Regulations was valid and there was no illegality in providing for suspension of an AFA on initiation of disciplinary proceedings. It is found that (a) the 2016 and 2017 Regulations have been framed pursuant to the power conferred by the provisions of the Code and especially Sections 196 and 217 to 220 read with Section 240 of the Code. The same having been laid before both the Houses of the Parliament, they have got statutory force thus empowering the IBBI to take necessary action in accordance therewith. The power includes issuance of a show cause notice by the IBBI for taking any action under Section 220 of the Code. (b) the show cause notices dated 26th October 2023 and 10th April 2024 were preceded by reports of the investigating authority which undertook investigation after being duly authorised by orders passed under Section 218 of the Code. (c) Clause 23A of the 2016 Regulations as well as Clause 23A of the Bye-laws framed by the ICSI Institute of Insolvency Professionals are valid. The suspension of the petitioner s AFA is legal as it is the consequence of initiation of disciplinary proceedings against him. The same is duly provided by Clause 23A of the 2016 Regulations and the Bye-Laws in that regard. Thus, no exceptional case is made out to interfere with the issuance of show cause notices dated 23rd October 2023 and 10th April 2024. The same do not suffer from any jurisdictional infirmity. It is clarified that the observations made in the judgment are only for the purposes of considering the validity of the show cause notices.
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2024 (8) TMI 1153
Rejection of the settlement proposal under Section 12A of IBC - whether the decision of the CoC, not to accept the settlement proposal submitted by the Appellant, can be said to be an arbitrary decision? - HELD THAT:- The settlement proposal submitted by the Appellant was with the condition that on approval of the same, liability of CD, Promoter and Guarantors shall stand extinguished, meaning thereby that the Bank has to release the personal guarantees of Promoter and Guarantors, which part of the proposal was duly considered in the 14th CoC meeting and relevant extract from 14th CoC meeting has already been extracted above, which indicates that the settlement proposal in which the Bank has to release the guarantees held with the Bank is not in compete with the Resolution Plan received. It is, thus, noted by the CoC that when the Resolution Plan of the SRA is approved, the personal guarantees be still with the Bank and it is submitted by the learned Counsel for the Bank that total amount due is Rs.238 crores, hence, CoC after due deliberations decided not to accept the settlement proposal and approved the Resolution Plan. The decision of the CoC, which was taken through e-voting declared on 08.01.2023, was well considered and deliberated decision, in which Appellant was given full opportunity. The decision, which was taken with 100% vote share on 08.01.2023 to reject the settlement proposal of the Appellant, can in no manner be held to be arbitrary. The Hon ble Supreme Court in Arun Kumar Jagatramka vs. Jindal Steel and Power Limited and Anr. [ 2021 (3) TMI 611 - SUPREME COURT ] has held that a withdrawal under Section 12-A is distinguishable both from a Resolution Plan, which is approved under Section 31 and a scheme which is sanctioned under Section 230 of the Companies Act, 2013. The Adjudicating Authority did not commit any error in rejecting IA No.2594 of 2023 filed by the Appellant. There is no error in the judgment of the Adjudicating Authority, the Appeal being devoid of merit is dismissed.
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2024 (8) TMI 1152
Prayer for for extension of period of Pre-Package Insolvency Resolution Process (PPIRP) for 60 days has been rejected - whether maximum time period of 120 days provided for completion of process is mandatory and on completion of the time period, the PPIRP has to be terminated and after 90 days in event, the Resolution Plan was not approved, RP has to file an Application for termination of the proceeding? HELD THAT:- Section 54D and Section 54N which we have noted above clearly indicates that termination of PPIRP happens after an Order is passed by the Adjudicating Authority. The statute makes one thing clear that there is no concept of automatic termination of PPIRP after expiry of 120 days. No exception, can be taken for providing 120 days of completion of PPIRP. Since all IBC process have timelines, which have its own importance. Completion of process in a timeline has its own object and purpose - the Application which was filed by the RP before the Adjudicating Authority was on the strength of resolution passed by the CoC in its 3rd CoC Meeting held on 30.04.2024. The CoC, in its 3rd CoC Meeting has noticed that revised base Resolution Plan submitted by the Corporate Debtor is under consideration of the CoC. The Hon ble Supreme Court had occasion to consider the said second proviso in `Committee of Creditors of Essar Steel India Ltd. [ 2019 (11) TMI 731 - SUPREME COURT ]. The second proviso which provided for mandatory completion of CIRP within 330 days came for consideration before the Hon ble Supreme Court in the above case and Hon ble Supreme Court has struck down the word mandatorily . It was held by the Hon ble Supreme Court that in appropriate case even after 330 days, Adjudicating Authority or Appellate Tribunal can extend the period - The above Judgment of the Hon ble Supreme Court clearly indicates that where legislature provided for mandatorily completion of CIRP within 330 days the word mandatory was struck down and it was held that in appropriate cases, Adjudicating Authority shall have jurisdiction to extend the time beyond 330 days. On looking into the provisions of Section 54D, it is clear that the provision does not contemplate any automatic termination of the PPIRP, the provision contemplates for filing of an Application by RP seeking termination of the process. The discretion of the Court is very well contemplated in the Scheme of the Statutory Scheme and Adjudicating Authority is free to exercise its statutory discretion while ordering termination of the proceeding. Thus, even if period of 120 days has been passed and the question of termination of proceeding comes for consideration before the Adjudicating Authority. Adjudicating Authority on sufficient reason can refuse termination and the proceeding and extend the period, which shall be within its jurisdiction. The Adjudicating Authority has taken the view in the Impugned Order that when the Resolution Plan is not approved within 90 days, RP was obliged to pray for termination of the proceeding and after expiry of 120 days, proceedings have to be terminated. The Adjudicating Authority committed an error in rejecting the Application filed by the Appellant for extension of PPIRP for 60 days. The impugned order is set aside - appeal allowed.
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Service Tax
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2024 (8) TMI 1151
Refund of the amount deposited twice as service tax - relevant date for time limitation - whether one year period would be determined mechanically or from the date of knowledge of mistake of wrong deposit? - HELD THAT:- Section 11B of the Act, 1944 was made applicable to service tax by Section 83 of the Finance Act, 1994. In the present case, service tax has been paid twice and the service provider has claimed the said amount from the appellant company which cannot be passed on since the appellant company itself has deposited the amount with the state exchequers. It is a case of dual payment. The other party namely TDS Management has not moved any application for refund. In the circumstances, the refund of the appellant-company cannot be denied solely on account of delay which has actually not occurred as it is from the date of knowledge. The respondents are directed to refund the amount of Rs. 4,46,187/- deposited by the appellant-company along with interest. The refund shall be released within six months from today - appeal allowed.
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2024 (8) TMI 1150
Refund of an amount along with interest paid for the period from April 2007 to September 2008 on the ground that it was paid by him under mistake of law - time limitation - principles of unjust enrichment. Time limitation - HELD THAT:- It is observed that the second refund application was filed by the appellant after five years from the date of CESTAT order and therefore show cause notice rightly been issued; not submitted any proof that they approached the department to adjudicate the matter in 5.5 years; Further, CESTAT directed to examine availability of common facility within the approval layout, in terms of statutory definition of the work executed the appellant, and therefore, onus of providing the documentary evidence w.r.t. said details was on the claimant within in time limit os Section 11B, which they failed to do. Accordingly, there are no infirmity in the order under challenge when refund claim is held to be barred by time. Principles of unjust enrichment - HELD THAT:- The appellant failed to submit any evidence which show that constructed house is not part of any apartment/township developed by the Rajasthan Housing Board; the work order was inclusive of service tax and the assessee have not produced any evidence that they have refunded the same to the service receiver. Accordingly, no infirmity found in the order under challenge when refund claim is rejected on the ground of unjust enrichment. In light of discussion the findings that services rendered by appellant are taxable also do not suffer any infirmity. The findings in the Order-in-Appeal are sustainable. The appellant has deposited the impugned amount considering it to be his service tax liability. Nothing has been produced by the appellant to show that the burden of the amount deposited has not been passed on. Hence there are no infirmity in the findings arrived at by the commissioner (Appeals) on this aspect. Appeal dismissed.
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2024 (8) TMI 1149
Recovery of service tax - service tax short/not-paid due to non-incorporation of entire amount of income from commission, Brokerage, Processing Fees, Locker Rent, etc. - non-payment of service tax on Finance Leasing/Hire Purchase income. Rs.4,97,545/- has been confirmed as service tax short/not-paid due to non-incorporation of entire amount of income from commission, Brokerage, Processing Fees, Locker Rent, etc., in the taxable value of service - HELD THAT:- The appellant gave a comparative chart showing the figures as adopted by the auditing officials and confirmed by the Ld. Commissioner, and the figures as per audited statement of accounts of the relevant period. It is observed that the ld. adjudicating authority has not given any finding in the impugned order on the above submissions made by the appellant. Thus, it is found that the issue is to be referred back to the adjudicating authority to examine the claim of excess payment made by the appellant as reflected in the table reproduced. Accordingly, this issue is remanded back to the adjudicating authority to give a clear finding on the claim made by the appellant. Rs.98,33,759/- has been confirmed towards non-payment of service tax on Finance Leasing/Hire Purchase income - HELD THAT:- This demand has been confirmed under the category of the taxable service 'Finance Leasing/Hire Purchase' u/s.65(12)(a)(i) of the Finance Act, 1994.However, the appellant claimed that this income pertains to Interest on Loan' which is exempted from payment of service tax. It is observed that the contract is for lending of money for acquiring any asset and not for lease of any specific asset, their use and occupation. Terms of payment is calculated to cover the money borrowed and interest thereon and not for to cover full cost of asset together with interest charges as the money borrowed may or may not cover the full cost of asset. The borrower is entitled and becomes owner of the asset immediately on purchase of the asset with the help of borrowed money and he need not wait till the lease period comes to an end. The borrower purchases the assets with the help of the borrowed money and ownership and title of the asset immediately passes on to the borrower, and also remains with the borrower at all times and it never lies with the lender, and the lender has no control over the said asset, and the borrower has not to wait till payment of last instalment to become the owner of the assets - the contract entered in this case is meant for lending of money and not for leasing or hire purchase - the demand of service tax confirmed in the impugned order on this count is not sustainable and hence the same is set aside. Disallowance of CENVAT Credit - HELD THAT:- The appellant claims that though CENVAT Credit of Rs.22,60,357/- for the year 2010-11 and of Rs.17,48,644/- for the year 2011-12 were recorded in the books of account, those CENVAT amounts were never availed and utilized by them and as such, the appellant had not shown the same in ST-3 return for the respective period - it is observed that the adjudicating authority has not given any finding in the impugned order on the above submissions made by the appellant. Thus, the issue is to be referred back to the adjudicating authority to examine the factual position. Accordingly, this issue is remanded back to the adjudicating authority to give a clear finding on the claim made by the appellant. Disallowance of CENVAT credit of Rs.8,21,910/- - HELD THAT:- It is observed that the appellant made some investment along with 60 other member banks in the Consortium for Food Credit under leadership of State Bank of India. For the period from October 2011 to March 2012, State Bank of India charged service tax of Rs.8,21,910/-. During the said period, the appellant had taxable service of Rs.8,27,787/- and service tax liability including Education Cess and Higher Education Cess of Rs.85,263/-, and the appellant utilized Rs.85,263/- out of the aforesaid CENVAT Credit of Rs.8,21,910/- for payment of service tax, Education Cess and Higher Education Cess. Subsequently the appellant came to know that the said CENVAT Credit is not available to them as the interest income from Food Credit Consortium is an exempted service on which no service tax is payable. So, subsequent to return period from October 2011 to March 2012, the appellant stopped to claim and avail CENVAT Credit for the said service and also not carried forward the unutilized CENVAT Credit for the period from October 2011 to March 2012 to the next return period. The service tax liability, including Education Cess and Higher Education Cess, of Rs.85,263/-, has been paid by the appellant by utilizing the aforesaid CENVAT Credit of Rs.8,21,910/-. The appellant claimed that they have not carried forward the balance credit. This fact also needs to be verified. Thus, the issue is to be referred back to the adjudicating authority to examine the factual position. Accordingly, this issue is remanded back to the adjudicating authority to give a clear finding on the claim made by the appellant. However, the appellant is liable to pay back credit of Rs.85,263/- which has been wrongly utilized by them. Penalty - HELD THAT:- It is observed that they have regularly paid their service tax liability as per books of accounts and as per the Provisions of Finance Act, 1994, as amended. None of the conditions precedent for imposing penalty under section 78 of the Finance Act, 1994 read with Rule 15 of CENVAT Credit Rules, 2004 as amended, are applicable in the case of the appellant. Accordingly, no penalty is imposable on the appellant. Hence, we set aside the penalty of Rs.1,51,50,155/- imposed on the appellant in the impugned order. Appeal disposed off.
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Central Excise
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2024 (8) TMI 1148
Appropriate forum - Jurisdiction of the High Court under Section 35G of the Central Excise Act, 1944 regarding excisability of goods - whether the activity of Respondent-Assessee is manufacturing activity for the purpose of levy of excise duty under the said Act? - HELD THAT:- On a conjoint reading of Section 35G(1) read with 35L, there are no doubt that since the issue involved in the present appeal relates to whether the activity of Respondent-Assessee is manufacturing or not so as to be liable for excise duty, it is a question relating to excisability of goods and, therefore, the appropriate Court for filing the appeal to challenge the Tribunal s order would be Supreme Court and not this Court. The reliance placed by counsel for Appellant-Revenue on the decision of Andhra Pradesh High Court and the Supreme Court in the case of COMMR. OF C. EX., HYDERABAD-IV VERSUS SHRIRAM REFRIGERATION INDUSTRIES [ 2008 (5) TMI 290 - ANDHRA PRADESH HIGH COURT] and COMMR. OF C. EX., HYDERABAD VERSUS SHRIRAM REFRIGERATION INDUSTRIES [ 2023 (2) TMI 213 - SUPREME COURT] is not appropriate. The Andhra Pradesh High Court and the Supreme Court in Shriram Refrigeration Industries (supra) were considering the provisions of Sections 35G and 35L as existing prior to insertion of sub-section (2) in Section 35L by Finance (No. 2) Act 2014 with effect from 6th August 2014 and amended provision was not the subject matter of consideration. The appeal is not maintainable before this Court - the Appellant is permitted to present the same before the Supreme Court.
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2024 (8) TMI 1147
Penalty on co-noticee for goods purchased from main noticee - case of appellant is that only because the appellant had not filed declaration under the scheme, the penalty imposed against them cannot sustain on the ground that the penalty against the main noticee has been set aside - HELD THAT:- The main appellant M/s. Ogun Steel Rolling Mills (P) Ltd. has opted for SVLDR Scheme and have been issued Discharge Certificate. As per Section 124 (1) (b) of the Finance Act, 1994, if only penalty is in dispute and the duty demand is NIL, then such penalty shall be waived under the scheme. The relief under Section 124 (1) (b) is not subject to the satisfaction of the Designated Committee and it is as per the provisions of the scheme. In case, the appellant had filed declaration, the Committee would not have any option but to grant relief under Section 124. The filing of declaration is only procedural option to be made by the appellant. The very same issue has been considered by the Tribunal in the case of M/S JPFL FILMS PRIVATE LIMITED, JALAN JEE POLYTEX LTD., KAVITA INTERNATIONAL AGENCY, KULDEEP SINGH, DP SINGH, R KNITFAB, PERFECT DESIGNER, VK KALRA, RELIANCE INDUSTRIES LIMITED, KANPUR WOOL INDUSTRIES, SWASTIK TRADING CO., APEX CORPORATION AND MANSA TRADERS VERSUS COMMISSIONER OF CENTRAL EXCISE, LUDHIANA [ 2023 (12) TMI 304 - CESTAT CHANDIGARH] . It was held by the Tribunal that when the main appellant has been granted immunity and relief from penalty under Section 124 of the SVLDR Scheme, the assessee, against whom penalty has been imposed in the very same proceedings, cannot be denied relief of penalty merely because they have not filed declaration under the scheme. Taking note of the fact that the main appellant has settled the dispute under SVLDR Scheme and only penalties have been imposed against these appellants, the penalty imposed against these appellants also require to be set aside. The impugned orders are set aside to the extent of setting aside the penalty imposed against these appellants - Appeal allowed.
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2024 (8) TMI 1146
100% EOU - Non-compliance with the conditions of the Notification No.31/2007--CE (NT) dt. 2.8.2007 for supply of the items to the DTA unit - non-submission of CT--1 certificate as required under Notification No.31/2007 dt. 2.8.2007 - time limitation - penalty on Managing Director - HELD THAT:- From the conditions and procedure of the notification explained above, it can be seen that the condition is to make sure that the finished goods which are manufactured by the duty free inputs are used for export only. In the present case, the appellant has cleared the hangers to the DTA customers who have exported the goods along with garments. The Department has not made any allegation that the goods manufactured by the appellants have not been exported. The only allegation is that they have not complied with the procedure of removal of goods on the basis of CT--1 certificates. The appellant has explained the difficulty of procuring the CT1 certificate during the disputed period - the appellant has furnished Form--H which is sufficient to prove that the goods cleared from the factory have been sold to the DTA customers only for the purpose of export. The document in the nature of Form--H establishes that sale of the goods is in the course of transaction of export of goods. The very same issue in respect of clearances of hangers to the domestic exporters and non--production of CT--1 certificates was examined by the Tribunal in the case of RAMANI PLASTICS PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE CHENNAI-I [ 2015 (1) TMI 988 - CESTAT CHENNAI] where it was held that ' The Commissioner (Appeals) observed that there is procedural lapse in so far as the goods were not directly exported but through merchant exporter. The Board has clearly clarified that this facility is not available to the supplies made to any other domestic manufacturer who may or may not export its finished products. In the present case, it is observed from the record that the merchant exporter exported the goods which was not disputed at any point of time.' Time Limitation - HELD THAT:- The entire allegation is with regard to non--compliance of the procedure. There were audits conducted who have not objected to the clearances made to DTA exporters. The appellant has been making repeated representations to higher authorities informing inability to furnish CT1 certificates. Later, the notification No.20/2015(NT) dt.24.09.2015 was issued wherein the requirement of CT--1 certificate was omitted. All these would go to show that there no ingredients for invoking the extended period. The show cause notices are time--barred. The issue on limitation is also answered in favour of the appellant. Penalty on Managing Director - HELD THAT:- The penalty imposed on Shri Atul Bhayani, Managing Director is set aside. The impugned orders are set aside - Appeal allowed.
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2024 (8) TMI 1145
Supply of gear boxes to Mega Power Projects - Availing exemption benefit without fulfilling the conditions stipulated in the exemption Notification No. 06/2006-C.E. dated 01.03.2006 - appellant could not produce evidence to confirm that the contracts were entered into under international competitive bidding and the appellant has not submitted the certificates issued by the appropriate authority for availing the benefit of the exemption Notification - HELD THAT:- The documents as required under the conditions of Notification No. 06/2006-C.E. have been submitted. In respect of all these projects, the appropriate authority has certified that they are Mega Power Projects. There is no dispute regarding receipt of the goods by the concerned projects. Appropriate certificate, as required under the Notification, has been submitted. Wherever there is some variation in the certificate issued, they have submitted additional evidence to establish that the goods were supplied to Mega Power Projects as certified by the Project Authority. Thus, the appellant has fulfilled the conditions stipulated in the Notification No. 06/2006-C.E. dated 01.03.2006. Another ground raised by the ld. adjudicating authority in the impugned order to deny the benefit of the exemption Notification is that the goods manufactured by the appellant do not fall under Heading 98.01 as mentioned in the Notification No. 21/2002. In this regard, it is observed that Notification No. 21/2002 exempts all goods supplied against international competitive bidding. The goods cleared by the appellant under Chapter Heading 8483 are also covered within scope of the Notification No. 21/2002. Thus, the appellant fulfilled all the conditions as stipulated in the Notification No. 06/2006-C.E. dated 01.03.2006, as amended, for availing the benefit of the said Notification. The appellant is eligible for the exemption and they have rightly cleared the goods without payment of duty by availing the benefit of the exemption Notification No. 06/2006-C.E. dated 01.03.2006. Thus, the demand of central excise duty confirmed in the impugned order by denying the benefit of the exemption Notification is not sustainable and hence, we set aside the same - Since the demand of duty itself is held to be not sustainable, the question of demanding interest and imposing penalty does not arise. The impugned order is set aside - appeal allowed.
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2024 (8) TMI 1144
Adjustment of refund against duty demand - Refund of additional amount deposited based on High Court order - HELD THAT:- Going back to the legality of issue of adjustment of refund against duty demand, that has become infructuous in view of the order passed by the Hon'ble Supreme Court as no amount, by way of reversal of CENVAT Credit on removal of capital goods, is held to be payable after the same is paid on its depreciated value. What remains here to be seen is that on the basis of Appellant s request letter dated 12.12.2023 the entire amount of ₹18,38,774/- (13.5 lakhs + 4.88 lakhs paid earlier) is required to be refunded to the Appellant within 15 days of receipt of such request letter in view of Board Circular dated 10.03.2017, falling which interest under Section 11BB is also payable but as could be noticed here, no order was passed by the Refund Sanctioned Authority in that respect. The most important point that would be required to be determined by this forum is concerning its jurisdictional competency to deal with such an issue that occurred subsequent to passing of order by the Commissioner (Appeals), which is assailed herein. This Tribunal which has denied the relief granted by the Commissioner (Appeals) to the Appellant, is duty bound to enforce the order passed by the Hon'ble Supreme Court as contained in order 2(a) of the said Enforcement Order 1954 and therefore, in exercise of the power conferred on this Tribunal under Rule, 41 of the CESTAT (Procedure) Rules, 1982, that provides in a way for implementation of order. Appellant is entitled to get refund of payment of ₹18,38,774/- against demand raised for inadmissible credit taken by the Appellant alongwith applicable interest and for this purpose the order passed by the Commissioner (Appeals) is hereby set aside - Appeal allowed.
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2024 (8) TMI 1143
Classification of goods supplied to the Indian Railways - major items manufactured are brake systems, HVAC, couplers, doors, pantographs etc. - to be classified under Chapter 86 or under chapters 84, 85 etc.? - Extended period of limitation - interest - penalty. Classification of goods - HELD THAT:- The discussion on pantographs and its parts occurs at para 26 of the impugned order and is very cryptic. It accepts that pantograph and its parts are exclusively used in railways or tramway locomotives, however it states that the classification of any item under the Central Excise Tariff is not guided by usage or application of the goods but guided by the notes prescribed under Section / Chapters of the Schedule to the Central Excise Tariff, 1985. Revenue has failed to establish its case for classification of pantographs and its parts under CTH 8535. The order is cryptic and non-speaking on the issue. A lack of reasoning in an order makes it difficult for Appelate Authorities to discharge their appellate function properly. Extended period of limitation - HELD THAT:- It is not merely a blame worthy act that would trigger the evocation of the extended period of limitation, something more is required. The act should have been done with the intention to evade payment of duty. There is a positive finding of intended duty evasion has not been arrived at in the impugned order. Hence the demand of duty for the extended period must fail. Interest - HELD THAT:- The appellant is liable to pay duty for the normal period. Further whenever the payment of interest is mandated by statute, it automatically comes into play, when the happening or non-happening of an event mentioned in the relevant section of the statute occurs. The liability gets extinguished only when the statutory payments are made as required by the statute. A similar issue relating to payment of interest under the Central Excise Act was examined by the Hon ble Supreme Court in COMMISSIONER OF CENTRAL EXCISE, PUNE VERSUS M/S SKF INDIA LTD. [ 2009 (7) TMI 6 - SUPREME COURT] wherein it was held that interest was payable even in a case of short payment of duty which was indeed completely unintended and without any element of deceit etc. We thus find that the appellant is lawfully bound to pay interest on the duty demanded, and that interest is leviable on delayed or deferred payment of duty for whatever reasons. Penalty - HELD THAT:- It is found that revenue has not made out a case of a blame worthy act with intention to evade payment of duty, hence the question of penalty does not arise and the same is set aside. Appeal disposed off.
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2024 (8) TMI 1142
Extended period of limitation - suppression of facts or not - Classification of RAB - to be classified as concentrated sugar syrup under ETI 1702 90 90 as other sugar syrups not containing added flavouring or colouring matter or not - benefit of excise exemption under the Notification dated 16.03.1995 denied on the ground that RAB was captively used in the manufacture of rectified spirit (non excisable commodity) - HELD THAT:- It would be seen from a perusal of sub-section (1) of section 11A(1) of the Central Excise Act that where any duty of excise has not been levied or paid, the Central Excise Officer may, within one year from the relevant date, serve a notice on the person chargeable with the duty which has not been levied or paid, requiring him to show cause why he should not pay amount specified in the notice - The proviso to section 11A(1) of the Central Excise Act stipulates that where any duty of excise has not been levied or paid by reason of fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of the Act or the Rules made there under with intent to evade payment of duty, by the person chargeable with duty, the provisions of the said section shall have effect as if, for the word one year , the word five years has been substituted. It needs to be noted that the show cause notice did allege that suppression of facts by the appellant was with an intent to evade payment of central excise duty but such a finding has been recorded by the Commissioner. This apart, there is no discussion in the order as to why the appellant suppressed facts with an intent to evade payment of excise duty. The reply filed by the appellant on this aspect has not been considered at all by the Commissioner. The appellant had pointed out in reply to the show cause notice that the issue involved was complex in nature and the department also was not sure about the classification of RAB - The contention raised by the appellant have not been considered at all by the Commissioner. It was imperative for the Commissioner to have examined the aforesaid facts placed on record by the appellant as the consideration of the same was necessary for recording a finding one way or the other regarding invocation of the extended period of limitation. The provisions of section 11A (4) of the Central Excise Act, which are as similar to the provisions of section 11A(1) of the Central Excise Act, came up for interpretation before the Supreme Court in PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX., BOMBAY [ 1995 (3) TMI 100 - SUPREME COURT] . The Supreme Court observed that section 11A(4) empowers the Department to reopen the proceedings if levy has been short levied or not levied within six months from the relevant date but the proviso carves out an exception and permits the authority to exercise this power within five years from the relevant date in the circumstances mentioned in the proviso, one of it being suppression of facts. It is in this context that the Supreme Court observed that the act must be deliberate to escape payment of duty. There can be a difference of opinion between the department and Revenue and an assessee may genuinely believe that it is not liable to pay duty. On the other hand, the department may have an opinion that the assessee is liable to pay duty. The assessee may, therefore, not pay duty in the self-assessment carried out by the assessee, but this would not mean that the assessee has wilfully suppressed facts. To invoke the extended period of limitation, one of the five necessary elements must be established and their existence cannot be presumed merely because the assessee is operating under self assessment. In the present case, all that has been stated in the impugned order, even in the absence of any allegation in the show cause notice regarded intent to evade duty, is that since the appellant suppressed facts, the provisions of the extended period of limitation contemplated under the proviso to section 11A(1) of the Central Excise Act would be applicable since such suppression of facts was with an intent to evade payment of duty. The extended period of limitation could not have been invoked in the present case even if the returns were self assessed. Thus, as the extended period of limitation contemplated under the proviso to section 11A(1) of the Central Excise Act could not have been invoked, the impugned order dated 09.05.2019 passed by the Commissioner deserves to be set aside as the entire demand is covered under the extended period of limitation. The impugned order dated 09.05.2019 passed by the Commissioner is, accordingly, set aside - appeal is allowed.
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Indian Laws
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2024 (8) TMI 1141
Challenge to award under Section 34 of the Arbitration and Conciliation Act, 1996 - Arbitrator accepted the claim of loss on the ground of on-site establishment as permissible to the extent of 3% of the contract amount by the Hudson s formula for expenses of engineers, supervisors, etc. - interest claim. HELD THAT:- The conclusion of the High Court, that it appears that the bills were paid soon after they were prepared or that, in that case there could not have been any claim for interest cannot qualify as grounds for interference under Section 37. Equally, the approach of the High Court in holding that the Arbitrator neither established nor discussed the questions posed by it is not a ground to set aside the Award. The reasoning of the Arbitrator is reflected in that portion of the Award extracted hereinabove and we see nothing perverse in it. Nor such conclusion is against our public policy. The scope of Section 37 is enunciated in many decisions of this Court, and we apply the principles laid down therein to the facts of the present case. The judgment of the High Court in relation to claim no. 4 is set aside - the Award is restored and thereby the judgment of the District Court upheld the Award. Interest claim - HELD THAT:- While pendente lite interest is a matter of procedural law, prereference interest is governed by substantive law. CENTRAL BANK OF INDIA VERSUS RAVINDRA [ 2001 (10) TMI 1065 - SUPREME COURT] . Therefore, the grant of pre-reference interest cannot be sourced solely in Section 31(7)(a) (which is a procedural law), but must be based on an agreement between the parties (express or implied), statutory provision (such as Section 3 of the Interest Act, 1978), or proof of mercantile usage - the High Court had no reason to interfere with the Arbitral Award with respect to grant of pre-reference interest, since the Contract between parties does not prohibit the same. Appeal disposed off.
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2024 (8) TMI 1140
Seeking an appropriate Writ or Direction to the effect that the personal bonds and sureties executed by the petitioner registered at P.S. Sadar, District Gurugram, shall hold good for eleven other bail orders passed in his favour from the Courts of different States - Whether the petitioner entitled to the relief of treating the personal bond and one set of sureties already furnished as holding good for the other bail orders also? HELD THAT:- From time immemorial, the principle has been that the excessive bail is no bail. To grant bail and thereafter to impose excessive and onerous conditions, is to take away with the left hand, what is given with the right. As to what is excessive will depend on the facts and circumstances of each case. In the present case, the petitioner is experiencing a genuine difficulty in finding multiple sureties. Sureties are essential to ensure the presence of the accused, released on bail. At the same time, where the court is faced with the situation where the accused enlarged on bail is unable to find sureties, as ordered, in multiple cases, there is also a need to balance the requirement of furnishing the sureties with his or her fundamental rights under Article 21 of the Constitution of India. An order which would protect the person s fundamental right under Article 21 and at the same time guarantee the presence, would be reasonable and proportionate. As to what such an order should be, will again depend on the facts and circumstances of each case. It is directed that for the FIRs pending in each of the States of Uttar Pradesh, Rajasthan, Punjab and Uttarakhand, in each State, the petitioner will furnish his personal bond for Rs. 50,000/- and furnish two sureties who shall execute the bond for Rs. 30,000/- each which shall hold good for all FIRs in the concerned State, for cases mentioned in the chart set out hereinabove. The same set of sureties is permitted to stand as surety in all the States. This direction will meet the ends of justice and will be proportionate and reasonable. Petition allowed.
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2024 (8) TMI 1139
Sufficient ground to proceed as contemplated under Section 227 of the Criminal Procedure Code - whether the materials collected during investigation even if admitted for the sake of the arguments discloses commission of an offence under Section 306 and 420 of the Indian Penal Code? HELD THAT:- It is true that additionally there is charge under Section 420 of the Indian Penal Code. The main offence is under Section 306 of the Indian Penal Code. If there is delivery of the property in pursuance to the cheating, it is punishable under Section 420 of the Indian Penal Code. There is an allegation that the Applicant induced the deceased to join her company. The deceased has given all his best for the progress of the Company. It will not fall under Section 420 of the Indian Penal Code, because there is no delivery of the property. The first informant in his supplementary statement has stated about issuance of the cheque after the incident. Cheque is of Rs. 4,50,000/- and cash of Rs. 41,83,000/-. If the deceased is upset due to the decision of the Applicant, we cannot say that she has intentionally aided the deceased to commit suicide. A person may not like decision of another person. Ultimately whether to continue business or personal relation is choice of the parties. If other party may not like that decision and if he puts to an end to his life, it does not fall within the meaning of the intentionally aiding under Section 107 of the Indian Penal Code. The learned trial Judge has failed to consider the provision of Section 107 of the Indian Penal Code. Learned Judge has failed to consider the absence relationship in between acts alleged and the consequence - Merely on account of the dispute, it cannot be said that it can be abetment. This Court has taken this view after perusing the statements and panchnamas on one hand and considering the ingredients of the Section 306 read with Section 107 of the Indian Penal Code on the other hand. The Order dated 10/04/2015 passed by the Court of the Additional Sessions Judge, Greater Mumbai in Sessions Case No. 658 of 2014 is set aside - Applicant is discharged for an offence under Sections 306 and 420 of the Indian Penal Code - Revision application is allowed.
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