Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 31, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Validity of Provisional attachment of the bank accounts of the petitioner and of his firm - Facts of the present case clearly reveals that no proceedings under Section 74 of the C.G.S.T. Act has yet been initiated. That apart the respondent No.2 while passing the impugned order, has neither recorded his opinion nor referred to any tangible material which necessitated him to pass the impugned provisional attachment order so as to protect the interest of the Government revenue. - Writ petition is allowed with cost of Rs. 50,000/- which shall be paid by the respondents to the petitioner - HC
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Valuation - transaction value - inclusion of cost / expenditure / supply received on which GST has been paid - Double charging of GST or not - the component of the GST paid by M/s UPCL & M/s PITCUL on the supplies received by them from their vendors, is the cost for them and is one of the many components which constitutes the transaction value for the supply in question and is the price actually payable (transaction value) for the said supply of work contract to the applicant. Therefore, the transaction value arrived by M/s UPCL & M/s PITCUL is in consonance with the provisions of the GST Act, 2017 and the GST is payable on transaction value so arrived. - AAR
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Levy of GST - health-care services provided to patients at their residence by the applicant through qualified nurses and other technically qualified persons - The applicant is a clinical establishment providing health care services that are exempted - AAR
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Exemption from GST - Agent - services provided under the scheme of Kudumbasree - compensation offered by the Department of Insurance of the Government of Kerala - From the MoU it is evident that Kudumbasree is acting only as an agent for the collection of premium and disbursal of benefit to its members and the service is provided by the applicant to the members. Hence the recipient of the services provided by the applicant is the individual members of Kudumbasree and accordingly the services are covered by the exemption - AAR
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Admissibility of Input Tax Credit - GST charged by service provider on hiring of bus/motor vehicle - transportation of employees to and from the workplace - the applicant is eligible for availing input tax credit of the tax paid for hiring of bus/motor vehicle having approved seating capacity of more than 13 persons for transportation of their employees to and from the workplace - the eligibility of the applicant to avail input tax credit will be restricted to the extent of the cost of transportation borne by the applicant - AAR
Income Tax
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Allowable revenue expenditure u/s 37(1) - difference between the price at which stock options were offered to employees of the appellant company under ESOP and ESPS and the prevailing market price of the stock on the date of grant of such options - Claim allowed as revenue expenditure - HC
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Assessment u/s 153C - acceptance of diaries/loose sheets by the respondent - no opportunity was provided to the petitioner as required u/s 127 of the Act inter alia the petitioner being “searched person” and not “Other person” as required u/s 153C - a sheet of paper containing typed entries and in loose form, not shown to form part of the books of accounts regularly maintained by the assessee or his business entities, do not constitute material evidence. - HC
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Benefit of exemption u/s 10(10AA)(i) - surrender of leave salary (SLS) - recovery of amount not deducted as TDS - No doubt in my mind that the petitioners, employees of Tamil Nadu Agricultural University are Government servants, entitled to the benefit of exemption u/s 10(10AA)(i) of the Act. Impugned circular dated 17.02.20215 and consequent communications issued to the petitioners by the University, are contrary to law and are set aside. - HC
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Reopening of assessment u/s 147 - whether Assessment barred by limitation? - Since the burden of establishing the satisfaction of the statutory condition set out in the proviso rests fully upon the Department, and such burden has not been discharged in the present case, the impugned proceedings for reassessment fail. - HC
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Allowability of capital loss as well as the right of deferred tax assets - Disallowance of capital expenditure debited to the profit and loss account - whether CIT-A erred deleting disallowance - At the time of creation, it is not allowable as an expenditure or not chargeable as income and further when it is written off, or written back, it is not charged to tax or granted as deduction. Therefore, write-off of the deferred tax assets is not an expenditure at all. Further, it is not also deductible loss as in fact it is merely a book entry. - AT
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Bogus LTCG - Addition u/s 68 - Long Term Capital Gain claimed exempt u/s. 10(38) denied - primary onus to prove - Capital gain earned by the assessee cannot be held as bogus merely on the basis of some report unearthed in case of third party/parties unless cogent material is brought against particular assessee on record. - AT
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Addition u/s 43B - non deposit of GST before the due date of filing of return of income under section 139(1) - the contention of the assessee that it has not claimed any deduction on account of GST by taking the same directly to the balance-sheet and not taking through the profit and loss account is not acceptable. The assessee cannot be permitted to adopt a modus operandi and giving an accounting treatment to the GST without passing through the profit and loss account to circumvent the provisions of section 43B. - AT
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Disallowance of interest on account of sundry advances - assessee failed to explain before the Ld. CIT(A) that interest free funds were available with assessee for extending interest-free advances to the related parties. In absence of any such evidences submitted by the assessee, we do not find any error in the order of the Ld. CIT(A) - AT
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Disallowing the challan paid in the name of one employee & disallowing the subvend fee paid - CIT-A deleted the addition - as submitted assessee has obtained liquor vend under reserve quota through his employee who was used as dummy bidder and the entire purchases and sale and expenditure was incurred by the assessee - Since the said model of business itself is in violation of licenses issued by the Excise Department, the license fee paid by the assessee who is not the license holder cannot be treated as eligible expenses - Revenue appeal allowed - AT
Customs
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Interpretation of the condition relating to ''use of the goods for specified purpose'' - import of Rotor Blades from China for manufacture and installation of 26 Windmills - The sale of Rotor Blades does not bar the importer to avail credit benefits, who sells it to his customer. The importer still have the contractual responsibility of manufacturing (assembly, erection and installation) of the Windmill at the customer's site, as they are the manufactures of Wind Turbines. As per the contract terms, the full value of the invoices paid only on successful commissioning of Windmills, not by invoice wise. - HC
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IGST refund - data, with regard to the export, not being transferred to the DGFT portal - The concerned member, CBIC is directed to convene a meeting with the Chairperson of NIC and the Director General, DGFT, to find a solution to the problem - if the solution to the problem concerning verification is not available electronically, then the transaction(s) in issue concerning the subject goods, will be verified manually by the DGFT and respondent nos. 2 to 5/Customs. - HC
SEZ
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Information Technology (IT) and Information Technology enabled Services (ITeS) Units in Domestic Tariff Area shall carry out their job-work in a Special Economic Zone Unit subject to conditions of recording / accounting of export revenue by SEZ unit - Sub-contracting for Domestic Tariff Area unit for export - Rule 43 of the Special Economic Zones Rules, 2006
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Work from Home - Rule 43A of the Special Economic Zones Rules, 2006 - An Unit may permit its employees, including contractual employees, specified in sub-rule (2), to work from home or from any place outside the Special Economic Zone in accordance with this rule (subject to some conditions and procedures)
Indian Laws
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Dishonor of Cheque - seeking cross examination of the complainant officer of the bank - In the present application the recall, re-cross examination of the complainant is sought by the petitioner-accused on account of change of counsel. Firstly, the change of counsel is no ground for recall of witness - Even otherwise as per the cross examination of the witnesses concerned, with regard to the service of legal notice it may be mentioned here that as per Annexure P-5 (the cross examination of CW-1 Rajinder Parshad) it is apparent that the question regarding service of notice had been put by the earlier counsel to the witness. - Petition dismissed - HC
PMLA
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Safeguarding and retrieving electronic copies of KYC records - In an International Financial Services Centre, no such receiving, storing, safeguarding and retrieving of records shall be required for a client who is a foreign national - Rule 9A of the PREVENTION OF MONEY-LAUNDERING (MAINTENANCE OF RECORDS) RULES, 2005
Service Tax
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Levy of service tax - Business Auxiliary Service - applicability of reverse charge mechanism - There are no merits in the findings recorded by the Commissioner in para 19.3, highlighting the reasons for payment of service tax, after acknowledging that the services were provided by the TTL, Korea to TDCV, Korea. Commissioner also do not dispute that the entire payment for the services provided by TTL Korea was received by them directly from TDCV, Korea. Having acknowledged so Commissioner could not have come to the finding that these amounts were payment made by the appellant to TTL, Korea, for application of Rule 66 of the Finance Act, 1994. - AT
Central Excise
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Interest on delayed refund of unutilised CENVAT Credit - a fiscal legislation has to be construed strictly and one has to look merely at what is said in the relevant provision; there is nothing to be read in; nothing to be implied; and there is no room for any of intendment. The liability of the revenue to pay interest under Section 11BB of the Act commenced from the date of expiry of three months from the date of receipt of application for refund under Section 11BB(1) of the Act. - HC
Case Laws:
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GST
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2022 (8) TMI 1244
Validity of Provisional attachment of the bank accounts of the petitioner and of his firm - formation of opinion - proximate nexus with the cause - existence of tangible material attach the bank accounts - Section 83 of The Central Goods Services Tax Act, 2017 - HELD THAT:- Plain reading of Section 83 of the CGST Act leaves no manner of doubt that firstly, there is necessity of the formation of opinion by the Commissioner; secondly, the opinion must be formed before ordering a provisional attachment; thirdly, the opinion must indicate that it is necessary so to do for the purpose of protecting the interest of the government revenue; fourthly, the order must be in writing for the attachment of any property of the taxable person; and fifthly, observance of the Rules by the Commissioner in regard to the manner of attachment. Each of these components of Section 83 are integral to a valid exercise of power. The statute has not left the formation of opinion to an unguided subjective discretion of the Commissioner. The formation of the opinion must bear a proximate and live nexus to the purpose of protecting the interest of the government revenue. There must be a valid formation of the opinion that a provisional attachment is necessary for the purpose of protecting the interest of the government revenue. This necessarily requires existence of tangible material before the Commissioner so as to enable him to form his opinion for provisional attachment of the property of an assessee/person including bank account, which may indicates a live link to the necessity to order a provisional attachment to protect the interest of the Government Revenue. Each of the ingredients of Section 83 must be strictly applied and complied before a provisional attachment on the property of an assesses can be made. In the impugned provisional attachment order there is absence of the aforesaid ingredients of Section 83. Therefore, the impugned order having been passed by the respondent No.2 by arbitrarily exercising his power, can not be sustained. Therefore, it deserves to be quashed. Facts of the present case clearly reveals that no proceedings under Section 74 of the C.G.S.T. Act has yet been initiated. That apart the respondent No.2 while passing the impugned order, has neither recorded his opinion nor referred to any tangible material which necessitated him to pass the impugned provisional attachment order so as to protect the interest of the Government revenue. The basic ingredients required for passing the impugned order under Section 83 of the CGST Act as also authoritatively pronounced by Hon ble Supreme Court and binding upon the respondents under Article 141 of the Constitution of India, have been deliberately and completely ignored by the respondent No.2. The impugned order dated 19.05.2022 under Section 83 of the C.G.S.T. Act 2017 passed by the respondent no.2, can not be sustained - Writ petition is allowed with cost of Rs. 50,000/- which shall be paid by the respondents to the petitioner within two weeks.
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2022 (8) TMI 1242
Classification of services - rate of GST - works contract services or not - Kochi Water Metro Project - scope of exclusion specified for the term 'business' as per the explanation to heading 9954 - applicability of N/N. 11/2017 dated 28th June 2017 - works contract awarded to Kool Home Builders qualifies to tax under CGST Act or not - applicability of N/N. 11/2017 - Central Tax (Rate) dated 28th June 2017 under clause (a) of item number (vi) of serial number 3, under Section 5 of Chapter 99 as amended by Notification No.24/2017 - Central Tax (Rate) dated 21st September 2017 - works contract qualifies to tax under SGST Act or not. HELD THAT:- Section 2(119) of the CGST Act defines a works contract as a contract for building construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract. From this definition it reveals that the term works contract under GST has been restricted to any work undertaken for an Immovable Property wherein transfer of property in goods whether as goods or in some other form is involved - the service rendered by the applicant squarely falls under the definition of works contract in Section 2 (119) of the CGST Act. Whether the works contract services rendered by the applicant attract GST at the rate of 12% under SI No. 3 (vi) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017? - HELD THAT:- As per the above entry, the composite supply of works contract as defined in Section 2 (119) of the CGST Act, 2017 provided to a Government by way of construction of a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession attract GST at the rate of 12%. In the instant case though the contract of construction of the terminals and other infrastructural facilities for the integrated water transport project is awarded to the applicant by Kochi Metro Rail Ltd as the executing and operating agency [Project Management Consultants] the contract is awarded on behalf of the Government of Kerala and the transfer of property in goods in the work contract services rendered by the applicant takes place to the Government of Kerala; the de jure owner of the assets of the integrated water transport project, and hence the recipient of the work contract services rendered by the applicant is the Government of Kerala. Whether this project comes under the exclusion from the definition of the term business as per explanation to SI.No.3 (vi) of the Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017? - HELD THAT:- As per the explanation to entry at SI No.3(vi) of the Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 the term 'business' shall not include any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities. Undoubtedly, the integrated water transport project is an activity undertaken by the Government of Kerala as a public authority and hence squarely covered by the explanation to entry at SI No. 3 (vi) of the Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 and hence the activity is not a business for the purpose of the above-said entry. Thus, the works contract services performed by the applicant as per the above-mentioned contracts awarded by Kochi Metro Rail Ltd are liable to GST at the rate of 12% as per entry at SI No.3 (vi) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017.
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2022 (8) TMI 1241
Valuation - transaction value - inclusion of cost / expenditure / supply received on which GST has been paid - Double charging of GST or not - contract involving supply of equipment/ machinery erection, installation commissioning services with civil work is correct as per the present GST regime or not - Section 15 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- Section 15 of the Central Goods and Services Tax Act, 2017 provides common provisions for determining the value of goods and services. It provides the mechanism for determining the value of a supply which is made between unrelated persons and when price and only the price is the sole consideration of the supply. In the C.B.E. C. Flyer No. 29, dated 1-1-2018 it has been clarified that Compulsory Inclusions- Any taxes, fees, charges levied under any law other than GST law, expenses incurred by the recipient on behalf of the supplier, incidental expenses like commission packing incurred by the supplier, interest or late fees or penalty for delayed payment and direct subsidies (except government subsidies) are required to be added to the price (if not already added) to arrive at the taxable value . It is observed that M/s UPCL M/s PITCUL are correctly including all the components of the cost incurred by them for arriving at the pricing of goods. Furthermore, inclusion of other components namely Contingency Charges, 0/H Supervision Charges, Labor Cess on Centralised Mat., etc. by M/s UPCL M/s PITCUL, appears to be in terms of the agreement entered between the applicant and the said two entities. And in view of the provisions of Section 15 of the CGST Act, 2017, M/s UPCL M/s PITCUL are correctly adding up all the other agreed upon components, to arrive at the transaction value for the purpose of payment of GST - the component of the GST paid by M/s UPCL M/s PITCUL on the supplies received by them from their vendors, is the cost for them and is one of the many components which constitutes the transaction value for the supply in question and is the price actually payable (transaction value) for the said supply of work contract to the applicant. Therefore, the transaction value arrived by M/s UPCL M/s PITCUL is in consonance with the provisions of the GST Act, 2017 and the GST is payable on transaction value so arrived.
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2022 (8) TMI 1240
Benefit of concessional rate of GST - rate of tax - Works Contract Services - services provided by the applicant to Contractees - execution of works for State Central Governmental authorities Governmental entities - HELD THAT:- Some of the institutions are Government entities i.e., local bodies, few are Government authorities, Endowments (Devasthanams) and Public Sectors Undertakings(PSUs). Whether the contracts executed by the applicant fall under at S.No. 3(vi)of Notification No. 11/2017 taxable @6% under CGST SGST respectively? - HELD THAT:- The phrases 'Government Entity' 'Governmental Authority' were deleted from the Entry at S.No. 3(vi) of Notification No. 11/2017 with effect from 01.01.2022. Thus the works executed for 'Governmental Entity or 'Government Authority' from 01.01.2022 are taxable @9% CGST SGST each as covered under Entry S.No. 3(xii).
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2022 (8) TMI 1239
Levy of GST - health-care services provided to patients at their residence by the applicant through qualified nurses and other technically qualified persons - applicability of SI. No. 74 of N/N. 12/2017 Central tax (Rate) dated 2806-2017 - HELD THAT:- As per the entry 74, healthcare services provided by a clinical establishment or authorised medical practitioner or paramedics is exempted from GST. Whether the services rendered by the applicant qualify to be classified as healthcare services? - HELD THAT:- Healthcare service is defined.to include any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognized system of medicines in India. The applicant is rendering medical services to the patient at their residence through qualified nurses and other technical employees. Accordingly, the services rendered by the applicant as explained in the application for the care of patients at their residence by employing qualified nurses and other technical personnel fall within the definition of healthcare services. Whether the applicant qualifies to be categorised as a clinical establishment? - HELD THAT:- On a combined reading of the definitions of health care services and clinical establishment, it is evident that any institution providing services by way of diagnosis or treatment or care for illness etc will qualify to be categorised under the definition of clinical establishment. From the details of the services provided as described by the applicant, it is evident that the applicant is providing services of care for illness to patients at their residence and hence qualify to be classified as a clinical establishment under the category of any other institution providing services of care for illness as per the said definition. The applicant is a clinical establishment providing health care services that are exempted as per entry at SI. No.74 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.
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2022 (8) TMI 1238
Exemption from GST - Agent - services provided under the scheme of Kudumbasree - services offered on MOU for a scheme to provide Subscription-based benefit for compensation in the event of death to the members of the Kudumbasree which is State Government Agency - Kudumbasree is a mission for poverty eradication and women empowerment of the Government of Kerala - compensation offered by the Department of Insurance of the Government of Kerala - applicability of N/N. 12/2017 Central Tax (Rate) dated 28-06-2017 - HELD THAT:- In the instant case, the service is provided by the applicant; a Department of the State Government, which is administering various insurance and other benefit schemes of the Government of Kerala. On perusal of the MoU entered by the applicant with Kudumbasree, it is seen that Kudumbasree is collecting the annual subscription and paying to the applicant along with all the necessary information regarding the beneficiary /members and nominee in the specified format and in the event of death of the insured member the benefit is transferred to the member through Kudumbasree. From the MoU it is evident that Kudumbasree is acting only as an agent for the collection of premium and disbursal of benefit to its members and the service is provided by the applicant to the members. Hence the recipient of the services provided by the applicant is the individual members of Kudumbasree and accordingly the services are covered by the exemption under SI.No.6 of Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 - thus GST is not applicable.
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2022 (8) TMI 1237
Classification of services - rate of GST - Composite supply of works contract - construction, erection, commissioning or installation of original works pertaining to single residential unit otherwise than as a part of a residential complex - applicability of N/N. 11/2017 - HELD THAT:- As per the Scheme of Classification of Services notified as Annexure to Notification No.11/2017-Central Tax (Rate) dated 28.06.2017 the Heading 9954 - Group 99541 - 995411 pertains to construction services of single dwelling or multi-dwelling or multi-storied residential buildings and the Heading 9954 - Group 99546 - 995466 pertains to lift and escalator installation services - As per the submissions of the applicant the work orders are given by clients for supply, erection and commissioning of lifts tailor-made as per customer specifications and hence the services are appropriately classifiable under SAC 995466 being the most specific description. Rate of GST - HELD THAT:- The supply, erection, commissioning and installation of tailor/custom made lifts/elevators undertaken by the applicant falls under SAC 995466 and attracts GST at the rate of 18% as per the above entry irrespective of whether it is installed or intended to be used in a single dwelling or multi-dwelling or multi-storied residential or industrial or commercial buildings.
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2022 (8) TMI 1236
Admissibility of Input Tax Credit - GST charged by service provider on hiring of bus/motor vehicle having approved seating capacity of more than 13 persons for transportation of employees to and from the workplace - credit restricted to the extent of cost borne by the applicant, or not - HELD THAT:- On a plain reading of the provisions of section 17(5), it is evident that only the tax paid on motor vehicles for transportation of persons having approved seating capacity of not more than thirteen persons (including the driver) is not available as input tax credit except under the situations prescribed therein and there is no restriction in availing input tax credit of the tax paid on motor vehicles or hiring or renting of motor vehicles having approved seating capacity of more than thirteen persons. In the instant case, the applicant has engaged the service provider to provide transportation facilities to the employees in non-air-conditioned buses for commuting to and from the workplace and it is stated that the service provider is using motor vehicles having an approved seating capacity of more than thirteen persons (including the driver) for the same - the applicant is eligible for availing input tax credit of the tax paid for hiring of bus/motor vehicle having approved seating capacity of more than 13 persons for transportation of their employees to and from the workplace. Extent to which the input tax credit can be availed by them as they are recovering a part of the cost incurred for transportation from the employees - HELD THAT:- The applicant cannot avail of the input tax credit of tax paid corresponding / attributable to the cost of transportation recovered from the employees - the eligibility of the applicant to avail input tax credit will be restricted to the extent of the cost of transportation borne by the applicant.
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Income Tax
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2022 (8) TMI 1235
Revision u/s 263 - difference of opinion with the assessing officer in determining the nature of income of the settlement amount received by the assessee company from M/s. Danone Group, Singapore - whether the Commissioner could have invoked his power under Section 263 of the Act on the ground that the Assessing Officer did not conduct proper enquiry? - HELD THAT:- We need not labour much to decide this issue as the learned Tribunal has elaborately discussed the factual position and brought out as to how the Assessing Officer had conducted an enquiry into the aspect as to how the amount received by the assessee from foreign entity towards settlement of a civil dispute pertaining to a trademark has to be treated. Hon ble Supreme Court in the case of Pr. CIT vs. Canara Bank Securities Ltd. [ 2019 (10) TMI 1512 - SC ORDER] by order dismissed the department s appeal affirming the view taken by the Bombay High Court [ 2019 (2) TMI 2020 - BOMBAY HIGH COURT] wherein the High Court held that the question whether the income should be taxed as business income or has arisen from other source was a debatable issue and the Assessing Officer had taken the plausible view that it was a business income after due enquiries and therefore not open for the Commissioner to take such an order in revision. We are of the considered view that the learned Tribunal had rightly granted reliefs in favour of the assessee.
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2022 (8) TMI 1234
Allowable revenue expenditure u/s 37(1) - difference between the price at which stock options were offered to employees of the appellant company under ESOP and ESPS and the prevailing market price of the stock on the date of grant of such options - HELD THAT:- As following the judgment of CIT vs. Biocon Ltd. [ 2020 (11) TMI 779 - KARNATAKA HIGH COURT] the question of law is decided in favour of the assessee and it is held that the Income Tax Appellate Tribunal erred in law in holding that the difference between the price at which stock options were offered to employees of the appellant company under ESOP and ESPS and the prevailing market price of the stock on the date of grant of such options was not allowable revenue expenditure under Section 37(1) of the Income Tax Act, 1961. Accordingly, the impugned judgment of the Tribunal is set aside.
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2022 (8) TMI 1233
Assessment u/s 153C - acceptance of diaries/loose sheets by the respondent - Whether Revenue no opportunity was provided to the petitioner as required under Section 127 of the Act inter alia the petitioner being searched person and not Other person as required under Section 153C? - HELD THAT:- It is established in law by the Hon'ble Apex Court that a sheet of paper containing typed entries and in loose form, not shown to form part of the books of accounts regularly maintained by the assessee or his business entities, do not constitute material evidence. Following the law declared by the Hon'ble Apex Court, the action taken by the respondent- Revenue against the petitioner based on the material contained in the diaries/loose sheets are contrary to the law declared by the Hon'ble Apex Court. In that view of the matter, impugned notices issued under Section 153C of the Act, based on the loose sheets/diaries are contrary to law, which require to be set aside in these writ petitions, as the same are void and illegal. In this connection, it is relevant to deduce the law declared by the Hon'ble Apex Court in the case of ICICI BANK LIMITED AND ANOTHER v. MUNICIPAL CORPORATION OF GREATER BOMBAY AND OTHERS [ 2005 (8) TMI 666 - SUPREME COURT] wherein it is held that, The ratio and effect of the judgment is required to be ascertained with reference to the question of law as decided by the Court. The ratio of the judgment or the principle upon which the question before the Court is decided is alone binding as a precedent. The decision of the Supreme Court upon a question of law is considered to be a binding precedent and this must be ascertained and determined by analysing all the material facts and issues involved in the case. That apart, no opportunity was provided to the petitioner as required under Section 127 of the Act inter alia the petitioner being searched person and not Other person as required under Section 153C of the Act and in this regard, I find force in the submission made by the learned Senior Counsel appearing for the petitioners and accordingly, though the learned Additional Solicitor General for the respondent-Revenue urged about the existence of alternative remedy, I do not find acceptable ground to disallow these petitions as it is trite law that this court is having jurisdiction to entertain writ petition, if the impugned orders are passed in derogation of principles of natural justice and the action taken by the respondent-Revenue is contrary to the law declared by the Hon'ble Apex Court. It is well settled principle in law that administrative or judicial orders must be supported by reasons. It is the duty of the respondent-Revenue being an instrumentality of state under Article 12 of the Constitution of India to give reasons for its conclusion. Recording of reason is the hallmark of a valid Order, while exercising administrative action or judicial review to disclose reasons and recording reasons, has always been insisted upon as one of the fundamentals of sound administration of justice delivery system, to make known that there have been proper and due application of mind by the authorities, which is an essential requisite of principles of natural justice. Reasons introduces clarity in Order and absence of such reasons would render the decision making process null and void. Reasons substitute subjectivity by objectivity and therefore, the recording of reasons is the principle of natural justice and it ensures transparency and fairness in decision making. On careful consideration of the grounds urged in the said writ petition and having regard to the conclusion arrived at that the impugned notices are without jurisdiction, the impugned notices are liable to be set aside which are arising out of wrong interpretation of Section 153C of the Act, and the entire case be remanded to the competent authority/ respondent-Revenue for fresh consideration and to pass appropriate orders in accordance with law, after affording reasonable opportunity to the petitioners in these writ petitions As already concluded that the initiation of proceedings by the respondent-Revenue based on the diaries/loose sheets against the petitioners herein is without jurisdiction and contrary to the law declared by the Hon ble Apex Court and same cannot be touched upon while conducting de novo enquiry afresh. Thus since the impugned notices are issued under Section 153C of the Act, are contrary to the judgment of the Hon'ble Apex Court, the writ petitions filed under Article 226 of the Constitution of India, in the instant case, are maintainable. Thus proceedings initiated under Section 153C of the Act culminating in issuance of Notice are quashed and further proceedings thereof are quashed by remanding the matter to the respondent-Revenue to reconsider the issue afresh in terms of the discussion made above.
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2022 (8) TMI 1232
Recovery of amount not deducted as TDS from the retired employee - Benefit of exemption u/s 10(10AA)(i) - surrender of leave salary (SLS) - petitioners are employees of the Tamil Nadu Agricultural University (University/TNAU) - employees had retired from service in the year 2017 and at the time of retirement had been granted SLS - Audit objections issued by local fund audit calling upon the petitioners to remit income tax on surrender of leave salary (SLS) on the ground that tax has not been deducted at source in terms of the Income Tax Act, 1961 - HELD THAT:- There are vital distinctions between the employers in that case and that in the present one. Firstly, PSUs are constituted under the provisions of the Companies Act, 1956, whereas, the Tamil Nadu Agricultural University is constituted under a State enactment coming directly within and under the control of the State. PSUs are independent companies and regulation by the Government is restricted. As far as Banks are concerned, the regulatory agency is the Reserve Bank of India. TNAU is managed, administered and substantially funded out of Government funds and grants, while PSUs are commercially run companies and have independent sources of revenues. So too with Banks that have a direct source of revenue. The TNAU is administered and managed by Regulations framed by the Statute and relatable to State power. This is not the case with PSUs and banks that are managed by Boards of Directors who exercise independent control over the management. Though a government nominee may be envisaged as part of the Board, their presence is in addition, and supplemental to several other professionals and Directors. The degree of control and oversight by the State in the management of PSUs and Banks is restricted whereas, in the case of the TNAU, such power of the State is overarching. As far as payment of gratuity, pension and provident fund are concerned, the provisions of Tamil Nadu Pension Code including the Tamil Nadu Liberalised Pension Rules, 1960 and Family Pension Rules, 1964 of the Tamil Nadu Government are stated to apply to TNAU employees in terms of Chapter XII of the TNAU Rules. Likewise, provident fund is governed by the General Provident Fund Rules of the Tamil Nadu Government. The rate of interest to be paid to subscribers to the General Provident Rules are the same as adopted by the Tamil Nadu Government from time to time. There are a slew of decisions of the Income Tax Appellate Tribunal, wherein in the context of Section 10(10AA) of the Act, employees of several Universities, such as the Haryana Agricultural University and Mahatma Gandhi University, have been held to be holding civil posts under the State Government. No doubt in my mind that the petitioners, employees of Tamil Nadu Agricultural University are Government servants, entitled to the benefit of exemption under Section 10(10AA)(i) of the Act. Impugned circular dated 17.02.20215 and consequent communications dated 30.10.2018, 19.03.2019 and 14.11.2016 issued to the petitioners by the University, are contrary to law and are set aside. WP allowed.
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2022 (8) TMI 1231
Reopening of assessment u/s 147 - whether Assessment barred by limitation ? - petitioner had claimed deduction under Section 80 IA of the Act, in respect of the profit and gains from infrastructural development - HELD THAT:- A perusal of the reasons as extracted above reveal that the officer intends to revisit the issue of allowability of expenditure, in light of his observations on the VGF grant. Without adverting to the veracity or otherwise of the reasons, it would suffice to look into the bar of limitation set out under the provisions of Section 147 itself. Normally an order of reassessment is to be passed within a period of four (4) years from the end of the relevant assessment year. The assessment year in question is 2012-13 and the period of four (4) years would expire on 31.03.2017. However, in cases where the escapement of income as alleged by the respondent is attributable to an incorrect or incomplete disclosure made by the petitioner, the benefit of another two years is granted to the Department to reassess the income that had escaped assessment in the original instance. The notice under Section 148 of the said Act is dated 29.03.2019 and clearly the respondent has availed benefit of the extended limitation. However, upon a reading of the scrutiny order of assessment as well as the reasons for reassessment, it is of categoric view that there is no escapement that has been occasionedby virtue of an incorrect or incomplete disclosure by the petitioner in this case. The reasons for reopening make no reference to any flaw or failing in the disclosures made by the petitioner originally. Neither do they make reference to any material that has come to the notice of the Department post-completion of the scrutiny assessment. The order of assessment passed initially is detailed in its examination of the VGF grant and the allowability of the expenditure claimed. Admittedly, nothing has come to note after framing of assessment, to indicate an incomplete or untrue disclosure by the petitioner, the bar of limitation would apply on all fours to the present case. Since the burden of establishing the satisfaction of the statutory condition set out in the proviso rests fully upon the Department, and such burden has not been discharged in the present case, the impugned proceedings for reassessment fail. The impugned order is set aside and this writ petition allowed.
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2022 (8) TMI 1230
Validity of assessment - violation of principle of natural justice by depriving her right to participate in the proceeding by receiving notices from time to time - HELD THAT:- The interest of justice will be sub-served if the impugned assessment order dated 15th April, 2021 and subsequent penalty proceeding are set aside and the matter is remanded back to the assessing officer concerned to pass a fresh assessment order in accordance with law and by complying with the formalities required to be observed before passing the final assessment order. All notices required to be served under the law shall be served upon the chartered accountant of the petitioner s at his official registered e-mail address. No unnecessary adjournment should be granted to the petitioner and assessment order should be completed expeditiously.
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2022 (8) TMI 1229
Condonation of delay - Granting exemption u/s. 12A - Order granting Registration u/s. 12AA(1)(b) passed by the ld. CIT-1, Baroda was challenged by the assessee by filing this appeal with a delay of 1379 days - HELD THAT:- It is seen from record, the assessee Trust was created as on 16.03.1996 and registered with the Charity Commissioner, Registrar of Societies, Baroda. The assessee s claim of its application filed in Form No. 10A on 20.09.1996 was not acted upon by the Ld. PCIT for granting exemption u/s. 12A(a) - The assessee seems to have made reminders on 01.11.2001, 12.10.2002, 10.04.2003 but thereafter no action from the assessee in pursuing its registration u/s.12A(a) - It was based on application dated 23.06.2014 filed by the assessee, Registration u/s. 12AA was granted by the PCIT on 12.11.2014 with effect from the assessment year 2015-16. As it can be seen from the letter dated 13.07.2022 produced by the D.R. which clearly states that there is no mention above application dated 13.09.1996 made by the assessee. As noted from records, the assessee has changed its address of the Trust and also informed to the department. But it is seen that the assessee has not pursued the matter immediately after filing its application and moved with the CIT office after a long period of time. Memorandum of Trust is not before us, however the main object of the assessee Trust is to render services to Exporters and Importers. It is not acceptable that how the assessee Trust is so negligent in not claiming its legal rights. It is appropriate to quote at this stage the legal maxim VIGILANTIBUS, NON. DORMIENTIBUS, JURA SUBVENIUNT which means, law will help only those who are vigilant. Law will not assist those who are careless of his/her right. Only those persons, who are watchful and careful of using his/her rights, are entitled to the benefits of law. Thus law confers rights on persons who are vigilant of their rights. We find that the assessee Trust is not vigilant in its legal rights. Amendments taken place in section 12A which is applicable up to 30.05.2007 and section 12AA which is applicable up to 31.03.2021 and present section 12AB applicable from01.04.2021. Considering the various amendments taken place in the Act, the assessee s contention of granting exemption u/s. 12A cannot be given retrospectively. The claim of exemption being a beneficial provision, the assessee ought to have acted upon and followed up with the Authorities in the manner known to law. Having kept silent for such a long period, the assessee is not eligible for the retrospective benefit. Appeal filed by the assessee with a delay of 1379 days and with a delay of 1023 days are not condoned for not adducing sufficient and reasonable cause and therefore the appeals are dismissed in limine. Assessing the Trust as Association of Person in the absence of registration granted u/s. 12AA - As the assessee has not registered u/s. 12AA of the Act during the assessment year 2012-13 A.O. was correct in assessing the assessee as on AOP, we don t find any infirmity in the order passed by the Ld. CIT(A). Therefore the appeal filed by the assessee is hereby dismissed.
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2022 (8) TMI 1228
Estimation of NP - net profit at 8% on the gross contract receipts - Applicability of provisions of section 44AD - AO by taking the intent of provisions of section 44AD of the Act, assessed the net profit rate at the rate of 8% of the gross contract receipts without allowing depreciation whether current depreciation or carry forward depreciation - CIT(A) confirmed the application of profit rate of 8% on the gross receipts and also confirmed the action of the AO in not considering the claim of depreciation of current year and the claim of set off of unabsorbed depreciation brought forward in earlier years - HELD THAT:- We are of the view that this issue is covered against Revenue and in favour of assessee by the decision of Hon ble Madras High Court in the case of K. Kannan [ 2013 (10) TMI 1230 - MADRAS HIGH COURT] and the fact that in the present case, the amount prescribed in the provisions of section 44AD of the Act for this year is Rs.1 crore, whereas gross receipts of assessee being Rs.13,54,68,125/- , which is more than the prescribed limit. Hence, the lower authorities have wrongly taken cognizance of section 44AD of the Act for applying the profit rate. Hence, this proposition will decide in favour of assessee. Net profit computation - As gone through the profit rate adopted by the AO in assessee s own case in earlier years and future years and noted from the above chart that profit rate varies from 1.05% to 13.02% i.e., profit before depreciation and in this year, the AO in the original assessment has accepted the profit rate at 7.2% and made assessment which was subject matter of revision before PCIT and the AO applied profit rate at 8% in consequence to the order giving effect to revision order passed by PCIT u/s.263 of the Act. In our view, the profit rate accepted by assessee as applied by the AO originally at 7.2% seems to be genuine and reasonable and we upheld the same. The AO is directed to recompute the net profit by applying profit rate at 7.2% of the gross receipts. After application of profit rate, even though the assessee has not maintained books of accounts, depreciation is to be allowed to the assessee - Once the assessee s books of accounts are not available or rejected by the AO, the AO has to estimate the profit rate and thereafter has to allow depreciation as claimed, after verifying the details. In the present case before us, the assessee has made claim and originally, the AO allowed the claim of depreciation that means, the details are available and therefore, we direct the AO to allow the same. This proposition is also allowed in favour of assessee. Carry forward of depreciation relevant to assessment years 2011-12 and 2012-13 - We direct the AO to treat the unabsorbed depreciation as part of current year depreciation and the same is to be set-off against any other income. Hence, we direct the AO to verify the facts and then allow the claim of assessee accordingly. This issue of assessee s appeal is allowed subject to verification by the AO.
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2022 (8) TMI 1227
Allowability of c apital loss as well as the right of deferred tax assets - Disallowance of capital expenditure debited to the profit and loss account - whether CIT-A erred deleting disallowance of fixed assets without considering that since the assets are not part of the inventory which has been sold off in auction, they are a capital loss and thus cannot be written off as expenditure by the assessee? - DR submitted deferred tax write-off cannot be allowed as a deduction in any circumstances because of the reason that it is merely an entry for provision which does not impact the tax liability of the assessee at all - HELD THAT:- We find that the right off the loss on transfer of capital asset cannot be allowed to the assessee as a revenue loss. The learned CIT A is incorrect in allowing such loss. Only a revenue loss which are incurred during the year are allowable as a deduction. Such loss debited by the assessee is not at all a revenue loss. Hence, we reverse the order of the learned CIT A on account of allowing the deduction of write-off of the asset to the assessee as revenue expenditure. Similarly, the deferred tax asset is not an item which can be claimed as a deduction as revenue expenditure on its right for the simple reason that it is not at all an expenditure. Further such deferred tax assets are created on account of timing difference between profits and tax profits. At the time of creation, it is not allowable as an expenditure or not chargeable as income and further when it is written off, or written back, it is not charged to tax or granted as deduction. Therefore, write-off of the deferred tax assets is not an expenditure at all. Further, it is not also deductible loss as in fact it is merely a book entry. Therefore, the learned CIT A has erred in allowing the deduction to the assessee on this account. All the decisions cited by the learned authorised representative clearly shows that only revenue loss which is incurred during the year arising out of the business being carried on by the assessee is allowable as deduction u/s 29 of the act. The loss claimed by the assessee is not at all a revenue loss. Thus the orders of the learned CIT A is reversed on both the accounts in allowing the capital loss as well as the right of deferred tax assets. Both the grounds raised by the learned assessing officer are allowed.
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2022 (8) TMI 1226
Proceedings u/s 153A - disallowances under section 80- IA - Assessee argued since the original assessment was already concluded and no incriminating material was found during the course of search, such additions are not sustainable under section 153A - HELD THAT:- From the facts placed on record, we observe that there was no incriminating material found during the course of search on the basis of which deduction claimed under section 80IA(4) was disallowed by the Ld. Assessing Officer and also confirmed by Ld. CIT(Appeals). The Department has not been able to produce any material to suggest / substantiate that the assessment order was passed on the basis of any incriminating material found during the course of search. in view of well settled proposition of law that completed assessment can be interfered by the Assessing Officer while making assessment u/s. 153A only on the basis of some incriminating material unearthed during the course of search documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made in the course of original assessment, we are of the considered view that in the instant facts, the Ld. CIT(A) has erred in facts and in law in upholding the additions for assessment years 2005-06 and 2006-07. Since we have set aside the assessment order on the issue of jurisdiction itself, we are not separately discussing the merits of the case. Appeal of assessee allowed.
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2022 (8) TMI 1225
Order passed by CIT(A) without providing opportunity to appellant - CIT(A) decided the appeal on ex-parte basis - HELD THAT:- Assessee claimed that ld. CIT(A) has not provided opportunity to the assessee. The assessee claimed that adjournment applications on account of non-availability of Authorized Representative due to ill health of his father and personal reasons. However no such adjournment letter or medical certificate produced before us by the assessee. Therefore, this ground of the assessee is hereby rejected. Disallowance u/s 80GGC - donation made to political party - HELD THAT:- The assessee has not produced any additional evidence in support of its claim. In fact the assessee had stated that it had cordial relationship with Mr. Kamlendu Tripathi Secretary of RSP and no other criteria was followed for making these donations. A.O. made a detailed enquiry of RSP and its Bank accounts and transfer of funds to one Shri Mukesh Mehta proprietor of two firms and he transferred it to Waheguru Enterprise and Sapan Traders, which is clearly a systematic financial maneuver to legitimate illicit moneys and evade taxes. It is appropriate to follow the Hon ble Supreme Court judgment, wherein SLP filed by the assessee is dismissed confirming the Tribunal s decision to come to the conclusion that the entire loan transaction was not genuine, in the case of Pavankumar M. Sanghvi [ 2018 (7) TMI 1155 - SC ORDER] . In the absence of any evidence from the assessee, the grounds raised by the assessee are untenable and therefore the same is rejected. The findings given by the lower authorities does not require any interference and the addition is sustained. Addition u/s. 56(2)(vii)(b) - Difference between value adopted for stamp duty and purchase consideration for the land - HELD THAT:- A.R. could not produce before us the assessee s share of 24.35% namely the proportionate amount being the difference in market value and purchase consideration which is being treated as income of the assessee u/s. 56(2)(vii)(b) of the Act. In the absence of any further details, we have no other option of confirming the disallowance made by the Assessing Officer. Thus this ground raised by the assessee is also rejected.
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2022 (8) TMI 1224
Validity of Reopening of assessment - validity of jurisdiction u/s.147 - AO had alleged escapement of income in the hands of the assessee for the A.Y.2012-13 in respect of import of pulses from Aster DMCC, Dubai which had allegedly resulted in over invoice of import of pulses thereby reducing the profits of the assessee in India - HELD THAT:- The only disallowance made in the re-assessment proceedings was on account of loss of trading in gold jewellery - It is not in dispute that the issue of disallowance of loss of trading in gold jewellery was not subject matter of reasons recorded. Hence, it could be safely concluded that the reasons for which the assessment was reopened, no addition was ultimately made by the ld. AO in respect of such issue. Once, no addition has been made for an issue contemplated in the reasons recorded by the ld. AO, then the entire satisfaction of the ld. AO of reason to believe and formation of belief , within the meaning of section 147 of the Act, fails. Hence, the re-assessment proceedings deserve to be quashed on this count itself. It is trite law that jurisdiction of Section 147 of the Act for the ld. AO is to be tested based on reasons recorded by the ld. AO. It is also pertinent to note that the TPO did not make any disallowance / addition for A.Y.2012-13 in respect of fresh reference made during re-assessment proceedings with regard to over pricing of import of pulses from the associated enterprises. This fact is evident from the order passed by the ld. TPO u/s. 92CA(3). Though it is a fact on record that for A.Y.2014-15, TPO had made certain addition on the said transaction vide his order dated 31/10/2017, still he chose not to make any addition in respect of the very same transaction of import of pulses from Aster DMCC, Dubai for A.Y.2012-13 while passing his order on 31/01/2020. These facts collectively go to prove that the entire reasons recorded by the ld. AO for A.Y.2012-13 is without any basis and is merely decided on suspicion, surmise and conjecture not supported by any tangible material. In any case, as stated earlier, no addition has been made by the ld. AO in the re-assessment proceedings with regard to the issue for assessment has been reopened. Hence, as stated earlier, the very basic premise of the ld. AO that he had reason to believe regarding escapement of income in the hands of the assessee, miserably fails. Thus the re-assessment is hereby quashed. - Decided in favour of assessee. Effect of rectification of mistake u/s.154 - We hold that the order passed u/s.154 is only to rectify an error that is already prevailing in the previous order. Hence, the rectified order will take effect from the date of original order i.e. in this case, the re-assessment order dated 19/03/2020. Accordingly, it could be safely concluded that in the re-assessment order dated 19/03/2020, AO could not have made any transfer pricing adjustment and actually not made any transfer pricing adjustment with regard to purchase transactions from Aster DMCC Dubai. Reliance in this regard is placed on the decision in the case of S. Arthanari [ 1971 (3) TMI 14 - MADRAS HIGH COURT] wherein the Hon‟ble High Court by placing reliance on yet another decision of the Hon‟ble Madras High Court in the case of Vedantham Raghaviah [ 1963 (3) TMI 64 - MADRAS HIGH COURT ] had held once an order of rectification is passed, the assessment itself is modified and what remains is not the order of rectification, but only the assessment as rectified. No addition for an issue for which assessment has been reopened has been ultimately made by the ld. AO in the re-assessment proceedings dated 19/03/2020. Hence, the basic formation of belief for the AO that income of the assessee has escaped assessment, fails. For the elaborate reasoning given by us for A.Y.2012-13 hereinabove by placing reliance on various judgments, we quash the re-assessment proceedings framed for the A.Y.2015-16 also. Since the entire re-assessment proceeding is quashed, the other grounds raised by the assessee on merits, need not be adjudicated and they are left open. Appeal of the assessee for A.Y.2015-16 is allowed.
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2022 (8) TMI 1223
Bogus LTCG - Addition u/s 68 - Long Term Capital Gain claimed exempt u/s. 10(38) denied - primary onus to prove - Whether appellant has duly discharged the primary onus in terms of Section 68? - whether a person who genuinely purchases the shares at a low price and sold at high price, therefore, he enjoyed the windfall from such scripts, can he be disallowed the benefit of tax exemption provided under section 10(38) of the Act in a situation where it is established that the share price of the company was rigged up to extend the benefit to certain parties/ - HELD THAT:- The Justice cannot be delivered in a mechanical manner. In other words, what we see on the records available before us, sometime we have to travel beyond it after ignoring the same. Furthermore, while delivering the justice, we have to ensure in this process that culprits should only be punished and no innocent should be castigated. An innocent person should not suffer for the wrongdoings of the other parties. In the case on hand, admittedly there was no evidence available on record suggesting that the assessee or his broker was involved in the rigging up of the price of the script of M/s Comfort Fincap Ltd. Thus, it appears that the assessee acted in the given facts and circumstances in good-faith. Respectfully, following the judgment of Pr. CIT vs. Smt. Krishna Devi [ 2021 (1) TMI 1008 - DELHI HIGH COURT] we hold that in absence of any specific finding against the assessee in the investigation wing report, the assessee cannot be held to be guilty or linked to the wrong acts of the persons investigated as far as long term capital gain earned on sale of share. Capital gain earned by the assessee cannot be held as bogus merely on the basis of some report unearthed in case of third party/parties unless cogent material is brought against particular assessee on record. Therefore, we hereby set aside the finding of the learned CIT(A) and direct the AO to delete the addition made by him. Hence the grounds of assessee s appeal are allowed.
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2022 (8) TMI 1222
Revision u/s 263 - validity of reassessment proceedings - Lack of enquiry v/s Inadequate enquiry - exact nature of agricultural income and justification for claiming it as exempt being income derived from agricultural operations - As per CIT reassessment order passed by AO is without conducting suitable, independent inquiries and non-application of mind by the AO, thus it is an erroneous order and prejudicial to the interest of Revenue - HELD THAT:- Evidences and other materials on record, the Assessing Officer satisfied that cultivation of Teak trees and Sevan trees by the assessee s firm. Thus, the assessing officer accepted the income derived on the sale of Teak trees and Sevan trees rom the agricultural land. However, the claim of expenditure incurred by the assessee was found to be on a very lower side and therefore adopted at 5% on the sale of agricultural income as allowable expenditure by the assessee. Thus we are of the considered view that the AO while framing assessment order as well as reassessment order made proper enquiries with evidences - AO has accepted the explanations and completed the reassessment order u/s. 143(3) rws 147 of the Act. It is not the case of the assessee that the A.O. has not conducted necessary inquiry, verification before passing the reassessment order. The same cannot be construed either as Lack of enquiry or as Inadequate enquiry . Thus the ld. PCIT cannot revise the reassessment order merely because he held a different opinion than that is verified by the Assessing Officer during the reassessment proceedings. In the present case, the Assessing Officer has issued a detailed notice u/s. 142(1) calling for various details from the assessee and the assessee also had made detailed replies to the above notice with proper evidences and necessary records which are discussed in para 12 of this order. Thus the Assessing Officer having carried out such detailed enquiries satisfied with the explanation offered by the assessee, it is not open for the Ld. PCIT to thereafter Revise the assessment on mere apprehensions and surmises. We are of the considered view that the Assessing Officer had made detailed enquiries and after applying his mind and satisfied genuineness of the claim of agricultural income, which is plausible view adopted by the Assessing Officer. Therefore the Revisional proceedings initiated u/s. 263 is liable to be quashed. Thus, we find no error in the reassessment order passed by the Assessing Officer so as to justify initiation of revision proceedings u/s. 263 - Decided in favour of assessee.
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2022 (8) TMI 1221
Revision u/s 263 by CIT - Disallowance of deduction u/s 43B on delayed employees contribution to provident fund - HELD THAT:- Hon‟ble Bombay High Court in the case of Ghatge Patil Transports Ltd. [ 2014 (10) TMI 402 - BOMBAY HIGH COURT ] wherein it has been held that deduction for payment of employees‟ contribution cannot be disallowed in case the contribution of employees‟ share in the welfare funds got credited on or before the due date. In this case before us, admittedly, the amount in question was deposited before the due date u/s 139 clause (1) of the Act. D.R also could not refute the fact that the A.O had examined all these aspects and therefore, in our considered view the assessment order is neither erroneous nor prejudicial to the interest of the revenue. Respectfully following the aforesaid judicial pronouncement, we quash the revisionary order passed u/s 263 of the Act by the ld. Pr. CIT and allow the grounds of appeal of the assessee.
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2022 (8) TMI 1220
Validity of Reopening of assessment u/s 147 - Sufficient reasons for reopening of assessment or not? - recourse to section 148/147 mechanism based on the contents of seized material(s) found in the course of the search issue - HELD THAT:- As relying on SANJAY SADASHIV NAVALE AND SUKHDEO NIVRUTTI NAVALE, [ 2022 (5) TMI 1442 - ITAT PUNE] we are of the considered view that the reasons recorded by the Assessing Officer, as set out earlier, were not sufficient reasons for reopening the assessment proceedings. We, therefore, quash the reassessment proceedings. - Decided in favour of assessee.
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2022 (8) TMI 1219
Addition u/s 43B - non deposit of GST before the due date of filing of return of income under section 139(1) - accounting treatment to the GST - assessee has contended before the authorities below that the assessee has not claimed the deduction of GST in the profit and loss account and therefore, no disallowance can be made under section 43B - DR has submitted that the assessee has bye-passed the profit and loss account and directly taken the GST amount to the balance-sheet which is not permissible - HELD THAT:- There is no dispute that the assessee has not paid the GST within the time limit as prescribed under section 43B and shown in the Balance-Sheet as outstanding. This fact is also evident from the Audit report in Form No. 3CB, balance-sheet as on 31.03.2019 wherein this amount as shown as outstanding being GST payable. Auditor has also reported this amount in para 26 in respect of the sum which is referred under section 43B. Even otherwise, the assessee has not disputed this fact that it has not paid the GST. The only contention of the assessee is that it has not debited this amount in the profit and loss account but directly taken to the balance-sheet. This modus operandi of the assessee is not acceptable as the GST is part and partial of the sales and turnover of the assessee and it has to be shown as part of the inventory / closing stock. The assessee is required to maintain the books of accounts as per the accounting standards which are notified in the official gazette from time to time as per section 145 of the Act. The method of accounting is required to be regularly followed by the assessee. Even as per the provisions of section 145A, the valuation of the purchase and sales of goods and services and sale of inventory shall be adjusted to include the amount of duty, cess or fee actually paid or incurred by the assessee. Hence, the contention of the assessee that it has not claimed any deduction on account of GST by taking the same directly to the balance-sheet and not taking through the profit and loss account is not acceptable. The assessee cannot be permitted to adopt a modus operandi and giving an accounting treatment to the GST without passing through the profit and loss account to circumvent the provisions of section 43B. - Decided against assessee.
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2022 (8) TMI 1218
Revision u/s 263 - PCIT had assumed revision jurisdiction u/s 263 based on audit objection i.e Internal Audit Party of Income tax department - allowability of interest income from co-operative banks and its consequential eligibility of deduction u/s 80P(2)(d) - HELD THAT:- PCIT had assumed revision jurisdiction u/s 263 of the Act purely based on audit objection i.e Internal Audit Party of Income tax department. Merely because the ld. CCIT Pune had granted permission to take remedial action by accepting the audit objection raised by Internal Audit Party of Income Tax Department, PCIT having jurisdiction over the assessee herein, is bound to independently examine the records of the assessee and apply his independent mind before invoking revisionary jurisdiction u/s 263 of the Act. This is admittedly not done in the instant case. No hesitation in holding that the revision jurisdiction u/s 263 of the Act had been assumed by the ld. PCIT purely on borrowed satisfaction and not based on independent examination of records which is the mandate provided in section 263(1) of the Act. Hence the revision order passed u/s 263 of the Act deserves to be quashed on this count itself. From the perusal of the entire order of ld. PCIT u/s 263 we find that there is no mention of even issuance of show cause notice u/s 263 of the Act to the assessee by the ld. PCIT. Hence the reply of the assessee to the said show cause notice, if any, is also not reflected / considered by the ld. PCIT before concluding that the order passed by the ld. AO is erroneous and prejudicial to the interest of the revenue warranting revision u/s 263 of the Act. Hence the entire order passed u/s 263 of the Act by the ld. PCIT suffers from this basic legal infirmity and deserves to be quashed on this count also. PCIT himself had defended the assessment order framed u/s 143(3) dated 27.11.2019 before the Internal Audit Party of Income Tax Department specifically stating that the order passed by the ld. AO on 27.11.2019 is neither erroneous nor prejudicial to the interest of the revenue. Having done so, how the same PCIT could say that the order of the ld. AO is erroneous and prejudicial to the interest of the revenue while passing revision order u/s 263 of the Act. Hence the order passed by the ld. PCIT u/s 263 of the Act suffers from this legal infirmity also. On merits we hold that the interest income derived from co-operative banks would be eligible for deduction u/s 80P(2)(d) of the Act. Dividend income, the same is also squarely covered in the provisions of section 80P(2)(d) of the Act itself. The provisions of section 80P(4) of the Act which has been heavily relied upon by the ld. PCIT is applicable only for co-operative banks claiming deduction u/s 80P of the Act. The said sub-section (4) does not deny the benefit of deduction u/s 80P of the Act to co-operative credit societies. Hence the objection of the ld. PCIT in this regard deserves to be dismissed on merits also. With regard to processing and other income, the same is squarely covered in the provisions of section 80P(2)(e) of the Act. The decision rendered hereinabove for dividend income would hold good for this issue also. Examination of applicability of provisions of section 269SS we find that the entire receipts by the assessee society in cash was subject matter of examination and verification by the ld. AO in the course of assessment proceedings. This fact is duly addressed by the ld. AO in page 2 of his order. Hence it could be safely concluded that the ld. AO had made adequate enquiries in this regard in the assessment proceedings itself and had arrived at only possible view on the matter. Hence the same cannot be disturbed by the ld. PCIT by invoking revision jurisdiction u/s 263 of the Act. Infact, we further find that in none of the audit objections (which is the primary basis of ld. PCIT invoking revision jurisdiction u/s 263 of the Act in the instant case) , the aspect of violation of provisions of section 269SS of the Act , was even addressed. Hence we hold that the ld. PCIT grossly erred in directing the ld. AO to examine the applicability of provisions of section 269SS. Hence we hold that the revision order passed by the ld. PCIT u/s 263 of the Act deserves to be quashed for more than one reason - Decided in favour of assessee.
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2022 (8) TMI 1217
Disallowance of 10% of expenses on account of speed money paid to dock labourers - assessee has submitted that all the bills and vouchers were furnished by the assessee before the Assessing Officer and further that the books of accounts of the assessee have not been rejected that even the ld. CIT(A) has also accepted this fact that in the line of business of the assessee, the certain additional payments are required to be made to the dock labourers for speedy work - HELD THAT:- Taking into consideration the facts and circumstances of the case, 10% of the total expenditure claimed in each assessment year would make a reasonable disallowance. Assessee has agreed in the open court for disallowance of 10% of the total expenses on account of speed money paid to dock labourers in each of the assessment year. We accordingly restrict the disallowance to the 10% of the total expenditure claimed in each of the assessment years of the total expenditure paid as speed money to dock labourers. However, it is made clear that out above order will not affect the disallowance made by the Assessing Officer in respect of illegal speed money paid to certain officers/authorities which has been agreed to by the assessee even before the CIT(A). However, it is also made clear that our above order will not be taken as precedent for any other assessment year.
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2022 (8) TMI 1216
Rejection of books of accounts - addition for gross profit - HELD THAT:- In view of the defect/deficiencies pointed out by the Assessing Officer, which have been partly accepted by the assessee also, we do not find any error in the order of the Ld. CIT(A) in sustaining the rejection of books of accounts in the case of the assessee. The ground No. one of the appeal is accordingly dismissed. Once section 145(3) has been invoked, the assessment could have been only passed u/s 144 of the Act, whereas the AO has passed assessment under section 143(3) of the Act and therefore assessment is bad in law - When section 145(3) is invoked, the word may has been mentioned for making assessment in the manner provided under section 144 of the Act. The section 145(3) does not specify that scrutiny assessment post invoking section 145(3) should be passed under section 144, but it only mention for assessment of income in the manner provided in section 144 of the Act. The section 144 prescribe for taking into account all relevant material on record for making assessment of total income or loss by the Assessing Officer to the best of his judgement and then determine the sum payable by the assessee on the basis of such assessment. Thus mandate of the section that assessment post invoking of section 145(3) should be in the manner of assessment u/s 144 of the Act. In view of the above, the ground of the appeal of the assessee that order should have been passed under section 144 of the Act, is without any basis and accordingly dismissed. Addition restricted at the rate of 8% on sales in terms of section 44AD - The assessee has not availed benefit of presumptive taxation scheme under section 44AD of the Act. In circumstances, the request of the assessee for assessing the income in terms of section 44AD of the Act cannot be accepted. While making addition, the gross profit rate declared by the assessee in preceding assessment year has been applied on the turnover of the assessee during the year under consideration, which is one of the best estimate that could have been made in the case of the assessee. Therefore, we do not find any error in the order of the lower authorities in sustaining the disallowance. The ground No. 3 of the appeal of the assessee is accordingly dismissed. Addition on account of access stock of Chana commodity - Whether once addition has been made estimating gross profit, no further addition is required to be made? - Discrepancy in quantitative tally is the reasons on the basis of which books of account have been rejected and trading results of current year have been estimated in view of trading results of preceding assessment year. In such circumstances, making separate addition for shortage or excess of any particular item of trading is not required when books of accounts have been rejected and gross profit has been estimated. We accordingly set aside the finding of the Ld. CIT(A) of sustaining the addition for shortage of Gwar commodity and addition on account of access stock of Chana commodity. The ground No. 4 of the appeal the assessee is accordingly allowed. Addition on account of transactions entered into a thok-khata basis - Before us also no documentary evidence in support of the transactions carried out by the assessee have been filed. In such circumstances, we do not have any alternative other than confirming the finding of the Ld. CIT(A) on the issue in dispute. The ground of the appeal of the assessee is accordingly dismissed. Disallowance of interest on account of sundry advances - AO noted that assessee paid interes at the rate of 9% per annum to related parties, whereas not charged interest on the advances made to related parties - AO has noted that one of such advance was made to Sh Rajendra Chhajer and shown under the head sundry debtors - We find that assessee failed to explain before the Ld. CIT(A) that interest free funds were available with assessee for extending interest-free advances to the related parties. In absence of any such evidences submitted by the assessee, we do not find any error in the order of the Ld. CIT(A) on the issue in dispute and accordingly we uphold the same. The ground No. 8 of the appeal of the assessee is accordingly dismissed.
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2022 (8) TMI 1215
Revision u/s 263 by CIT - Unexplained deposits and withdrawals in bank account - HELD THAT:- As every month, there is atleast one deposit and in some months, there are few deposits and few withdrawals. Thus, the argument of the assessee accepted by the AO that these were normal deposits and withdrawals for the stated business activity of the assessee gains strength. Hence, it is not a case where the assessee is seen to have made a lumpsum deposit. Such an action may have been open to the interpretation that there was no business activity in the unorganized sector. Frequent deposits and withdrawals from the bank are available. Hence, in the absence of any evidence of any nefarious illegal activity referred to on record, the inference that the stated claim was incorrectly accepted, cannot be so concluded. It is seen that in the festive month of July, there are 5 deposits on 5 different dates and 2 withdrawals of Rs.2,87,000/- and Rs.85,000/- on two specific different dates. Similarly in the festive month of Sept and October, it is seen that there are 15 specific instances of deposit and withdrawal. These facts available on record support the claim that the assessee was engaged in some small scale business trading activity. As observed, we find that no contrary fact or evidence has been referred by the ld. PCIT to show that the claim was incorrectly accepted by the AO. The assessee is stated to be currently engaged as a farm labourer and is stated to have overtly engaged in the business to gain financial legitimacy. The efforts in the unorganized sector even if sporadic in order to gain a credible financial legitimacy should be encouraged and not allowed to be stunted by the administrative brunt. The enterprise and efforts of a farm labourer to have a footprint in financial sector by engaging in trade in cloth etc, from house to house/village mart on a cart should be given due consideration. There is a rising India which inhabits the unorganized sector having aspirations to rise on their own steam and courage. On a perusal of the facts on record and the impugned order we find that no fact or evidence has been referred to by the ld. PCIT to show that the assessee was engaged in any nefarious activity from which the amounts were deposited and withdrawn. There is no fact referred to show that the AO has committed an error in accepting the claim of the assessee. Accordingly in the facts as they stand we find no infirmity in the AO having accepted the claim of the assessee. Appeal of assessee allowed.
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2022 (8) TMI 1212
TDS u/s 195 - disallowance of commission expenses under section 40(i) - commission paid to foreign agents - assessee was unable to produce evidences to prove the genuineness of such payments and also the factum of actual rendering of services by such recipients - CIT-A deleted the addition - HELD THAT:- As decided in own case [ 2016 (9) TMI 107 - ITAT AHMEDABAD] for application of Section 195, it is sine qua non that the payment to no-resident must have an element of income liable to be taxed under the Indian Income Tax Act, 1961. On the facts of this case, as we have already concluded, no part of the remittance to the commission agent was taxable in India. The assessee was, therefore, not under any obligation, on the facts of this case, to deduct any tax at source from the commission payments to the non-residents. Since there was no obligation to deduct tax at source, the very foundation of impugned disallowance under sect/on 40(a)(i) ceases to hold good in law. Learned CIT(A) was, therefore, quite justified in deleting the impugned disallowance. - Decided in favour of assessee.
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2022 (8) TMI 1211
Disallowing the challan paid in the name of one employee disallowing the subvend fee paid - CIT-A deleted the addition - as submitted assessee has obtained liquor vend under reserve quota through his employee who was used as dummy bidder and the entire purchases and sale and expenditure was incurred by the assessee - HELD THAT:- It is not in dispute that the liquor license has been issued in the name of one Mr. Harish Kumar who is only a sales man, whose income is below taxable. As per remand report the 26AS from of past 5 years show that no TCS has been collected against the PAN nor any TDS made and no refund was issued to Mr. Harish Kumar. During the appellate proceedings, the assessee was asked to furnish the indemnity bond of Mr. Harish to ensure that no such claim of expenditure incurred by him for licensee fee is made by him, but no such indemnity has not been given during the appellate proceedings in spite of the direction. Even in the absence of the indemnity, the Ld. CIT(A) has proceeded to delete the addition made by the A.O. It is also in dispute that the assessee is not the licensee to do the liquor business directly, the assessee has set up his staff who is eligible for the liquor license under reserve quota. But the entire business has been run by the assessee by using his staff Mr. Harish who is a dummy bidder. Since the said model of business itself is in violation of licenses issued by the Excise Department, the license fee paid by the assessee who is not the license holder cannot be treated as eligible expenses - Accordingly, we allow the Grounds of Appeal of appeal.
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2022 (8) TMI 1210
Validity of the revision order passed by the PCIT u/s. 263 - gross violation of the principles of natural justice by not affording a reasonable opportunity of being heard to the assessee - HELD THAT:- We find that the PCIT had granted only one opportunity of hearing to the assessee to explain as to why the power of revision cannot be exercised and posted the matter for hearing on 26.3.2020 i.e. during which the lock down was imposed nation-wide on account of Pandemic Covid 19 situation. Further more, the order of the revision was passed on 30.03.2020; on the date faling within the period of Covid 19 lock down imposed. Thus it is clear that the PCIT had granted unreasonable short time to respond to the show cause notice and posted the matter for hearing during complete lock down period. We are at loss to understand as to how the learned PCIT could pass the order when the nation was under complete lock down i.e. on 30.03.2020. We also fail to understand as to how the PCIT failed to understand that an assessee could not respond to the show cause notice during the lock down period. The order passed by the PCIT is in gross violation of principles of natural justice and we are considered opinion that the assessee was prevented from responding to the show cause notice for sufficient reasonable cause, therefore, we set aside the order of the revision passed by the learned PCIT and direct the learned PCIT to pass fresh order after giving reasonable opportunity of hearing to the assessee. Appeal of the assessee stands partly allowed for statistical purposes.
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2022 (8) TMI 1209
Depreciation on FSI - CIT(A) had allowed depreciation @ 10% on the actual payment - HELD THAT:- CIT(A) noticed that the identical issue has been decided by the ITAT in assessee s own case [ 2016 (10) TMI 490 - ITAT MUMBAI] relating to A.Y. 2005- wherein the Tribunal has held that the depreciation is allowable @ 10% and depreciation has to be allowed on the whole consideration towards FSI. Disallowance of depreciation on intangible assets - HELD THAT:- As decided in own case relating to A.Y. 2004-05 allocation of cost of acquisition for each block of assets in a fair and reasonable manner as permitted by law had to be accepted. Further, the CIT(A) observed that even the Assessing Officer has not denied that the hotel business could not be carried out without the sale licenses and permits. CIT(A) further stated that 5 proviso to Section 32 of the Act would not be attracted to the case of the assessee. We, therefore, do not find any reason to interfere in the order of CIT(A). Disallowance of interest expenses paid to M/s Cox Kings - assessee justified payment of interest @ 24% stating that the debentures could not be redeemed on the date of maturity and it was constrained to roll over the maturity for further period after accepting the terms and condition that the interest shall be paid at rate of 24% - AO was not convinced with the explanations of the assessee and accordingly, he restricted the interest rate on Debentures @ 12% - HELD THAT:- We notice that the Tribunal has deleted an identical disallowance made in AY 2010-11 following the decision rendered by Jaipur bench of Tribunal passed [ 2016 (7) TMI 1657 - ITAT JAIPUR] wherein it was observed that the revenue has not placed any material under identical facts and circumstances that the fair market rate of interest is lower than what the assessee has claimed. It was further held that the AO has to give a finding having regard to fair market rate. Accordingly, it was held that the AO could not have made disallowance u/s 40A(2)(a) of the Act. We notice that the Hon ble Bombay High Court, vide its order [ 2021 (12) TMI 22 - BOMBAY HIGH COURT] , has upheld the view expressed by the co-ordinate bench in AY 2010-11. In the years under consideration also, the AO has not given any finding having regard to the fair market rate. The Ld A.R further submitted that the assessee has been continuously incurring losses and the said losses could not be set off by the assessee for want of profits. Accordingly, he submitted that there was no tax benefit to the assessee by paying interest at the alleged higher rate. - Decided against revenue. Disallowance of interest u/s 36(1)(iii) - AO noticed that the assessee has given interest free advances to its sister concerns, while it was paying interest on moneys borrowed by it - AO disallowed proportionate interest expenditure in all the five years under consideration - CIT-A deleted the addition - HELD THAT:- We notice that the quantum of interest free funds taken by the assessee from its related parties are more than the amount of interest free advances given to other related parties. Under identical set of facts, the co-ordinate bench has deleted the disallowance of interest expenses in AY 2010-11 following the decision rendered in the case of Reliance Utilities and Power Ltd [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] - Accordingly, following the above said decision, we confirm the orders passed by Ld CIT(A) in deleting the disallowance in all the years. Disallowance of travelling expenses - as no details like proof of payment, nature and allowability of travelling expenses were furnished, the AO disallowed entire claim - HELD THAT:- We notice that the AO has made disallowance only in AY 2012-13 and in all other years, the claim has been allowed. Since the assessee has failed to furnish the details, some disallowance is called for. We find that the disallowance of 50% made by CIT(A) is reasonable. Accordingly, we uphold the order passed by Ld CIT(A) on this issue. Disallowance of claim made u/s 40(a) - deduction/payment of tax deducted at source - HELD THAT:- In the earlier paragraphs, we had upheld the decision rendered by the Ld CIT(A) on the issue of disallowances made u/s 40(A)(2)(a) and 36(1)(iii) in AY 2013-14 and 2014-15. Hence the claim made by the assessee u/s 40(a) in AY 2014-15 and 2015-16 was rightly allowed by Ld CIT(A). Accordingly, we uphold the order passed by Ld CIT(A) on this issue in AY 2014-15 and 2015- 16.
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2022 (8) TMI 1193
TP Adjustment - Comparable selection - HELD THAT:- Companies functionally dissimilar with that of assessee as software service provider company need to be deselected. Working capital adjustment - There would remain no comparable uncontrolled transactions for the purpose of comparison. The transfer pricing exercise would therefore fail. Therefore in keeping with the OECD guidelines, endeavor should be made to bring in comparable companies for the purpose of broad comparison. Therefore the working capital adjustment as claimed by the Assessee should be allowed.
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Customs
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2022 (8) TMI 1214
Interpretation of the condition relating to ''use of the goods for specified purpose'' - import of Rotor Blades from China for manufacture and installation of 26 Windmills - exemption of basic customs duty under Serial No.362(3) of Notification No.12/2012 Cus, dated 17.03.2012 and exemption of special additional duty under Notification No.21/2012 Cus, dated 17.03.2012 - eligibility for exemption from special additional duty under Clause 14C of Notification No.21/2012, dated 17.03.2012. The petitioner submitted necessary certificate from the Ministry of Non-Conventional Energy, Government of India, and gave an undertaking that they would use the imported goods for the ''specified purpose''. HELD THAT:- The respondent admits that the petitioner is engaged in the business of manufacture and installation of Wind Operated Electricity Generators, for which, they have imported Rotor Blades - Parts of Wind Operated Electricity Generators and filed three bills of entry through their Customs Broker, by availing Basic Customs Duty [BCD] concession under Sl.No.362(3) of the Customs Notification No.12/2012-Cus., dated 17.03.2012 (read with Condition No.45) and exemption from additional duty of customs under Sl.No. 14-C of the Customs Notification No.21/2012-Cus, dated 17.03.2012, as amended (read with condition No.46 of the Customs Notification No.12/2012- Cus, dated 17.03.2012). The sale of Rotor Blades does not bar the importer to avail credit benefits, who sells it to his customer. The importer still have the contractual responsibility of manufacturing (assembly, erection and installation) of the Windmill at the customer's site, as they are the manufactures of Wind Turbines. As per the contract terms, the full value of the invoices paid only on successful commissioning of Windmills, not by invoice wise. It is an admitted fact that the petitioner used the Rotor Blades only in the manufacturing of Wind Operated Electricity Generators and further, Rotor Blades is not used for any other purpose. The only objection is that, clause (b) of Condition No.45 of Notification No.12/2012-Cus, dated 17.03.2012, is not followed for the reason that the petitioner/importer, shall not use them for specific purpose. In this case, it has been used for the specific purpose in the Windmill. It is only the word ''he'' is stressed against the petitioner. This cannot be looked into in isolation and it has to be considered as a whole. The petitioner had been awarded Turnkey project and there were two contracts and one of the contracts is for erection, installation and commission. This needs expertise. It is a known fact that the Windmill has to be necessarily erected only in the site. It cannot be assembled in a factory and thereafter, moved to the site, which is impracticable. The imported Rotor Blades, thus, need no customization and mechanization. Hence, by raising an invoice in the name of his client namely, Sun Photo Voltaic Energy Private Limited after import and thereafter, transporting the same to the customer's site is only an notional exercise, by that alone, it cannot be said that the petitioner is not the importer and he is the person, who has used the same for a specific purpose, for which, it was imported. The payment to the petitioner is not on invoice to invoice basis, it is a turnkey project, wherein, the payments made at stages, which is no way correlated to the invoices raised. Petition allowed.
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2022 (8) TMI 1208
IGST Refund - Merchandise Exports From India Scheme (MEIS) benefits against some of the shipping bills, not received - HELD THAT:- It was unanimously agreed to present before the Hon ble Delhi High Court that the best possible solution that can be readily implemented is that DGFT will issue a manual MEIS scrip in this case and the same would be honoured by the ICD-Tughlakabad Customs without insisting on electronic transmission of the same. This exercise will be completed no later than three weeks from the date of receipt of the copy of this order - Petition disposed off. List the matter for compliance on 06.10.2022.
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2022 (8) TMI 1207
Seeking grant of waiver of the rent/demurrage/other charges for the period for which the goods were detained by Respondent No.2 - Respondent No.3 who despite being given sufficient opportunity have chosen not to file affidavit in reply - HELD THAT:- Respondent No.3 are directed to consider the certificate dated 11th September 2018 (Exhibit H to the petition) as the proper waiver certificate issued by Respondent No.2. As undertaken by Mr. Shroff, the excess amount which petitioner says is Rs.19,02,455/- recovered from petitioner (for the period 5th November 2015 to 29th August 2018 less for the period 10th February 2016 to 13th April 2018) shall be returned to petitioner within four weeks from the date this order is uploaded. The petitioner should also be paid interest on the amount refunded at 9% p.a. from the date the amount was paid until the amount is refunded. Respondent No.2 also consider if any action is required to be taken against Respondent No.3 in view of the Public Notice No.26/2010. Petition disposed off.
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2022 (8) TMI 1206
Seeking release of seized goods - Betel Nut product known as Supari (unflavoured Supari) imported from the Republic of the Union of Myanmar - Issuance of Waiver Certificate for Detention and Demurrage Charges under Regulation of Handling of Cargo in Customs Area Regulations, 2009 - HELD THAT:- In a similar case, this Court in M/S. GENUINE SPICES VERSUS THE COMMISSIONER OF CUSTOMS, THE JOINT/ADDITIONAL COMMISSIONER OF CUSTOMS (IMPORTS) , THE DEPUTY DIRECTOR, TUTICORIN [ 2022 (8) TMI 1148 - MADRAS HIGH COURT] has passed an order directing the Commissioner of Customs (Imports) to release the cargo provisionally subject to furnishing of PD bond for full value of the goods and furnishing of bank guarantee at 50% of the differential duty considering Duty Free Tariff Preference Scheme for Least Developed Countries (LDC) benefit. The Writ Petition is disposed of permitting the petitioner to make an application for provisional release under Section 110-A of Customs Act and on filing such application, the same shall be disposed of by the Adjudicating Authority, after hearing the petitioner and simultaneous with a prima facie determination of the classification of the commodity, within a period of two (2) weeks from the date of receipt of the application.
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2022 (8) TMI 1194
IGST refund - linkage of the data concerning the petitioner s exports amongst Customs, DGFT and concerned bank has not taken place - data, with regard to the export, not being transferred to the DGFT portal - HELD THAT:- Quite clearly, the various facets concerning the subject goods which have been exported, as it appears, (apart from anything else), are verifiable manually - however, since the verification, takes place electronically, DGFT has expressed difficulties in validating the transactions for the purpose of processing the request of the petitioner for grant of MEIS benefits. We are informed that the electronic system has been in place since 2015. The concerned member, CBIC is directed to convene a meeting with the Chairperson of NIC and the Director General, DGFT, to find a solution to the problem - We also make it clear that if the solution to the problem concerning verification is not available electronically, then the transaction(s) in issue concerning the subject goods, will be verified manually by the DGFT and respondent nos. 2 to 5/Customs. - List the matter on 23.08.2022.
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Corporate Laws
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2022 (8) TMI 1205
Seeking restoration of the name of the respondent Company, i.e., M/s. Ghantakaran Mahavir Developers Pvt. Ltd. in the register maintained by the Registrar of Companies - Section 252(3) of the Companies Act, 2013 - HELD THAT:- To render assessment order valid in the eyes of Law and to enable the Appellant to take steps for recovery of taxes and for any further consequential proceedings, the respondent company's name needs to be restored to the Register of Registrar of Companies as if the name of the company was never struck off. Denial to restore the name of the respondent company in the Register of the RoC will not only condone the wrong doing of the respondent company but it will also encourage escapement of tax liabilities by such subterfuge, which will be prejudicial to the interest of the revenue in the long run. With respect to the objections raised by the Respondent No. 2 with respect to RoC not following the procedure required under law, the provisions of the Companies Act, 2013 r/w respective Rules, the respondent has right to approach the appropriate Court for quashing the order of striking off of the company. This Tribunal is required to consider whether the appellant is entitled u/s. 252(1)/252(3) of the Companies Act, 2013, for any order or not. The other objections is that the appellant has failed to establish prima-facie case of being a creditor to approach this Tribunal u/s. 252 of the Companies Act, 2013 on the ground that mere notice by the I.T. Department u/s. 148 of the I.T. Act and on presumption/possibility of any escapement, the appellant does not become creditor. The department can also be considered as aggrieved party as there is apprehension of escapement of tax from Respondent No. 2 and qualify u/s. 252(1) of the Act - the instructions issued by the Ministry of Finance, CBDT are required to be followed/complied by the appellant and hence, this appeal needs to be entertained. The Registrar of Companies is directed to restore the name of the Respondent Company in the Register of RoC - application allowed.
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2022 (8) TMI 1204
Seeking restoration of name of the Company namely, M/s. ES Recycle Private Limited on the Register maintained by the Respondent - Section 252 of the Companies Act 2013 - HELD THAT:- On perusal of the Income Tax returns for a period of two (2) years preceding's the date of struck off, shows the Company has been active and carrying on its business activities and also paid a tax to the tune of Rs. 2,97,275/- for the Assessment year 2017-18. Further, the Applicant Company has also filed the GST returns for the Financial year 2017-18 and also the Central Sales Tax filed by the Company for the year 2012 to 2017. A perusal of the above documents show that the Company has been active and carrying on its business activities two (2) years preceding from the date of strike off. Taking into consideration the provisions of Section 252 of the Companies Act, 2013 which vests this Tribunal with a discretion where the Company whose name has been struck off and such Company is able to demonstrate that there is a running business as on the date when the name of the Company was struck off and also keeping in consideration that it is just to do so can restore the name of the Company in the register - Application allowed.
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Insolvency & Bankruptcy
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2022 (8) TMI 1203
Seeking dissolution of the monitoring Committee of the Corporate Debtor - Section 60(5) of the Insolvency and Bankruptcy Code, 2016 read with Rule 11 of the NCLT Rules, 2016 - HELD THAT: - The Supplementary Affidavits filed by the Resolution Applicant- BRS Ventures Investment Limited are taken on record. It is found that on the assurance given by the Resolution Applicant, BRS Ventures Investment Limited for undertaking and declaration, the Members of the Monitoring Committee have unanimously agreed for dissolution of the Monitoring Committee on 18.05.2022 and subsequently the Resolution Applicant, BRS Ventures Investment Limited has provided the said declaration and undertaking on 06.06.2022. The Monitoring Committee is dissolved with effect from the date of this Order - application allowed.
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2022 (8) TMI 1202
Seeking dissolution of Sime Darby Edible Products India Private Limited - section 59(7) of the Insolvency and Bankruptcy Code, 2016 read with Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 - HELD THAT:- After the public announcement was made, the Liquidator received a claim from an operational creditor i.e. B. Samrish Co., Company Secretaries for a sum of Rs. Rs. 8,85,000/- which was settled. The copy of verification and admission of claim by the liquidator is annexed with the Application - since the liquidation process continued for more than 12 months, the Applicant has complied with Regulation 37(2) of the IBBI Regulations and held a meeting of contributories on 21.03.2020 and 22.03.2021 and also prepared the Annual Status Report indicating the progress made in the liquidation process. Since the Liquidator had already obtained no objection certificate dated 17.07.2019 from the Income Tax Department, therefore, the Income Tax Department was not served and hence no report from the Income Tax has been filed - In view of the foregoing steps taken and the satisfaction accorded by the Liquidator by way of the present application, there is no legal impediment in allowing the prayer of the applicant. The company is ordered to be dissolved - application allowed.
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Service Tax
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2022 (8) TMI 1243
Validity of SCN issued - Levy of service tax on municipalities - Renting of immovable property service - Seeking a mandamus forbearing the respondents from proceeding with the investigation with regard to Good and Services Tax under the provisions of the Central Goods and Service Tax Act, 2017 - HELD THAT:- Since the issue is only at the stage of show cause notice and several facts have to be ascertained in regard to the nature of transactions and the applicability of the aforesaid decision to the case of the petitioner, this Court is not inclined to interfere at this stage. Suffice it to state that the petitioner is at liberty to establish that the above decision is applicable to its case, and that the authority shall consider the matter, in accordance with law. Petition disposed off.
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2022 (8) TMI 1201
Levy of service tax - Transportation of Coastal Goods and Goods Transported through National Waterways and Inland Water - HELD THAT:- It is not in dispute that the amended definition of Transportation of Coastal Goods and Goods Transported through National Waterways and Inland Water came into effect from 01.09.2009, whereas, the period in dispute is from 2006 to 2009 i.e. prior to the amended definition came into force. There are no case to interfere with the impugned order dated 15.03.2022 passed by the Customs, Excise Service Tax Appellate Tribunal, West Zonal Bench At Ahmedabad - appeal dismissed.
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2022 (8) TMI 1200
Levy of service tax - Business Auxiliary Service - applicability of reverse charge mechanism - appellant received onsite services from TTL Korea - Service provided from outside India and received in India (Import of Service) or not - HELD THAT:- Undisputedly, TTL Korea had entered into agreement with TDCV Korea for provision of certain services. TTL Korea entered into agreement with the appellants for provision of offsite services. Appellants executed the offsite portion, as was sub contracted to them. For the services rendered by them to TTL Korea, Appellant raised the invoice and also raised debit note on TTL Korea for reimbursable expenses incurred by them for providing these services. TTL Korea for the services provided to TDCV Korea raised the invoices for both off-shore and onsite services. TTL, Korea discharged liability under Korean VAT on both the offshore as well as on-site services. There is not even whisper of any invoice being issued by TTL Korea on the appellant for any services provided by the Appellant to them. Even if it is held that the contractual agreement for the provision of service was between appellant and TDCV Korea, then also the service is provided by the appellant to their client in Korea and no service is provided to any one in India. The appellants have for the provision of the said service has not raised any invoice on their branch office located in Korea. Nor the branch office has raised any invoice on the appellant in respect of any services provided by them to TDCV as per the agreement - Nothing has been brought on record in the impugned order to show that TTL Korea was raising the invoices or receiving payments from appellant in any manner for provision of the onsite services to TDCV. There are no merits in the findings recorded by the Commissioner in para 19.3, highlighting the reasons for payment of service tax, after acknowledging that the services were provided by the TTL, Korea to TDCV, Korea. Commissioner also do not dispute that the entire payment for the services provided by TTL Korea was received by them directly from TDCV, Korea. Having acknowledged so Commissioner could not have come to the finding that these amounts were payment made by the appellant to TTL, Korea, for application of Rule 66 of the Finance Act, 1994. Since the demand cannot be sustained, there cannot be any demand for interest or case for imposition of penalties on the appellant. Appeal allowed - decided in favor of appellant.
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Central Excise
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2022 (8) TMI 1199
Interest on delayed refund of unutilised CENVAT Credit - refund was issued after the expiry of three months, or not - time limitation - section 11BB of CEA - HELD THAT:- As held by the Apex Court in RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. [ 2011 (10) TMI 16 - SUPREME COURT] , a fiscal legislation has to be construed strictly and one has to look merely at what is said in the relevant provision; there is nothing to be read in; nothing to be implied; and there is no room for any of intendment. The liability of the revenue to pay interest under Section 11BB of the Act commenced from the date of expiry of three months from the date of receipt of application for refund under Section 11BB(1) of the Act. The Division Bench of this Court in SWARAJ MAZDA LIMITED VERSUS UNION OF INDIA [ 2008 (7) TMI 420 - HIGH COURT OF JUDICATURE AT BOMBAY ] also held that perusal of Section 11BB shows that if any duty recovered is found to be refundable, still the payment is not made within a period of three months from the receipt of application for refund then interest is liable to be paid. The respondent shall pay interest to petitioner in compliance with provisions of Section 11BB of the Act for the period after the expiry of three months from the date of respective applications till the date of payment of refund amount in accordance with law - Petition disposed off.
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2022 (8) TMI 1198
Clandestine Removal - MS ingots - reliance placed on third party evidences - reliability of statements - demand based on document recovered from the premises of Shree Ram Transporting Co - HELD THAT:- The present case has been originated pursuant to the search being conducted not in the premises of M/s. H R Steel Pvt Ltd. but in the premises of M/s GI SW and in the premises of transporter of said M/s. GI SW i.e,. Shree Ram Transporting Co. It is further observed that the sole basis for confirmation of demand herein is the document recovered from the premises of Shree Ram Transporting Co. i.e. Mangla register and the statements of Shri Vikram Bisht, of GI SW, Shri Rohtas Bidhuri and Shri Suparas Banthia - In absence of any documents to corroborate the entries of Mangla register , the said document is held to be nothing but an evidence of third party having no bearing on the present appellant. Such a document cannot be used to adversely affect the appellant. The onus was on the department to procure such documentary evidence from the appellants premises which would have corroborated the said Mangla register but apparently and admittedly nothing was recovered from the appellants premises. In the present case, there are no other evidence or document in the form of some verification of the raw material of appellant or the material received in the appellants premises from M/s. GI SW. No transportation material in the appellant premises was recovered. None of the documents as mentioned, got recovered from appellant s premises. It stands clear that Mangla register relied upon by the Adjudicating Authority below is nothing but a third party evidence. It has been settled in catena of decisions that third party evidence cannot be used for duty demand and for imposition of penalty. The duty demand has wrongly been confirmed against M/s. H R Steels Pvt. Ltd. Once there is no evidence of any clandestine removal or duty evasion, as alleged, by M/s. H R Steels Pvt Ltd., no question arises for imposition of penalty on its Director or the Manager. Resultantly, the order imposing penalty on Shri Suresh Chand Sharma, Manager and Shri Harish Dang, Director is also held to be not sustainable. Penalty imposed upon the partners of M/s. GI SW - Rule 26 of CER, 2002 - HELD THAT:- Apparently M/s. GI SW is not a co-noticcee in the present case despite that the search was conducted in their premises. The penalty imposed upon both of its Directors have been confirmed under Rule 26 of CE Rules, 2002 - A bare reading of Rule 26 makes it clear that penalty under that Rule is applicable only in the case where the person is dealing with the goods which are liable for confiscation - In the present case, apparently and admittedly, no goods were confiscated, question of invoking Rule 26 does not at all arises. Otherwise also there is no evidence on record to show that these partners were in any way concern with these goods - the imposition of penalty upon both the partners is also not sustainable. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2022 (8) TMI 1197
Classification of goods - Chewing Tobacco - to be classified under Entry 69 of part C of the First Schedule to the Tamil Nadu Value Added Tax, 2006 or exempt from tax? - applicability of N/N. II(1)/CTR/52(a)/2007-G.O.No.146, dated 08.08.2007 - HELD THAT:- It is seen that as per Notification No.II(1)/CTR/52(a)/2007-G.O.No.146, dated 08.08.2007, chewing tobacco was exempted from tax. By Notification No.II(1)/CTR/12(R-1)/2011-GO.No.75, dated 11.07.2011, chewing tobacco was brought under taxation. Following the same, notification has been issued to the petitioner informing that snuff and cheroot and chewing tobacco included in G.O.Ms.No.149, dated 12.10.2009 thereby, levying 12.5% tax. It is seen that from 01.04.2007 to 12.10.2009, chewing tobacco was exempted. The tobacco manufacturers association had filed W.P.No.21237 of 2011 and this Court by order, dated 15.09.2011, granted stay and thereby restrained the Commercial tax officials to levy Value Added Tax on chewing tobacco for sale effected from 01.04.2007 to 12.010.2009. This Court finds that deduction of Rs.2,05,000/- from the petitioner s State Bank account on 25.05.2022 is not proper. Hence, the said amount to be re-credited to the petitioner s account. Further, the petitioner s rectification petition to be considered by the assessing officer. The Commissioner of Commercial Taxes, Trichy is directed to consider and dispose of the R.P.Nos.5 and 40 of 2010 within a period of three months from the date of receipt of copy of this order and the Assessing Officer to conclude the rectification proceedings by then - Petition disposed off.
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Indian Laws
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2022 (8) TMI 1213
Dishonor of Cheque - insufficiency of funds - trial for an offence under Section 138 of the Negotiable Instruments Act - seeking cross examination of the complainant officer of the bank - service of proper notice on the accused or not - complaint had been filed by a lawful attorney of the bank or not - HELD THAT:- In the present case a perusal of the application and reply filed thereon would clearly establish that the moving of the present application is a delaying tactic on the part of the petitioner/accused. The complaint under Section 138 of the Negotiable Instrument Act is pending since 2016 and has not been decided uptill now. As per the reply, virtually every interim order has been challenged by the petitioner-accused. A number of applications have been filed during the course of proceedings, all of which have delayed the conclusion of trial. In the present application the recall, re-cross examination of the complainant is sought by the petitioner-accused on account of change of counsel. Firstly, the change of counsel is no ground for recall of witness - Even otherwise as per the cross examination of the witnesses concerned, with regard to the service of legal notice it may be mentioned here that as per Annexure P-5 (the cross examination of CW-1 Rajinder Parshad) it is apparent that the question regarding service of notice had been put by the earlier counsel to the witness. Whether the complaint not having been filed by a lawful attorney? - HELD THAT:- The complaint has been filed by a Bank which is a juristic person being a company. A bank/company can deputy any officer of his choice to represent the bank with permission of the Court. The attorney holder Rajinder Parshad was allowed by the court to represent the bank vide order dated 26.07.2017. Once the court had already allowed the application for substitution of the attorney of Rajinder Parshad in place of the previous attorney then the question of complaint not having been filed by a lawful attorney and that question being needed to be put to the witness in re-cross examination does not arise. Apparently the application seems to have been filed with a view to further delay the proceedings. Petition dismissed.
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2022 (8) TMI 1196
Dishonor of Cheque - existence of legally chargeable debt against the applicant, or not - validity of summon order - sufficient material present or not, for issuance of summon order - whether the present criminal proceedings are otherwise not maintainable for non-compliance of the mandatory provisions of the N.I. Act? - HELD THAT:- The law regarding sufficiency of material which may justify the summoning of accused and also the court's decision to proceed against him in a given case is well settled. The court has to eschew itself from embarking upon a roving enquiry into the last details of the case. It is also not advisable to adjudge whether the case shall ultimately end in conviction or not. Only a prima facie satisfaction of the court about the existence of sufficient ground to proceed in the matter is required. The submissions made by the applicants' counsel call for adjudication on pure questions of fact which may be adequately adjudicated upon only by the trial court and while doing so even the submissions made on points of law can also be more appropriately gone into by the trial court in this case. This Court does not deem it proper, and therefore cannot be persuaded to have a pre-trial before the actual trial begins. A threadbare discussion of various facts and circumstances, as they emerge from the allegations made against the accused, is being purposely avoided by the Court for the reason, lest the same might cause any prejudice to either side during trial. But it shall suffice to observe that the perusal of the complaint, and also the material available on record make out a prima facie case against the accused at this stage and there appear to be sufficient ground for proceeding against the accused - there are no justification to quash the complaint or the summoning order or the proceedings against the applicants arising out of them as the case does not fall in any of the categories recognized by the Apex Court which may justify their quashing. Thus, it is directed that the accused may appear before the court below within a period of one month from today through the representing counsel and move an application seeking compounding of offence through compromise. On such application being moved the concerned court may take adequate steps in accordance with law - application disposed off.
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2022 (8) TMI 1195
Use of dominant position or not - installation and commission of home automation solution - contravention of the provisions of Section 3 or Section 4 of Act was made or not - allegation is that even after receipt of the payment as per work order, installation, programming and commissioning of the project was not done within the stipulated time - Scope of group as explained in Explanation (c) of Section 4 or Explanation relating to Group in Section 5 of the Act - HELD THAT:- On perusal of the facts noticed by the CCI in its impugned order, prima facie it appears that it was a consumers dispute without application of provisions contained either in Section 3 or Section 4 of the Competition Act. Learned CCI has rightly observed that Informant/appellant itself had admitted in letter dated 23.08.2018 sent to OP-1 with the subject Deficiency in services and incomplete work as per the order No.4500015629 dated 06.105.2017 . Besides this it has been noticed by the CCI that there were number of players providing Smart Home Solutions in India and in such a situation there can not be element of dominance in the relevant market. Explanation of Scope of group as explained in Explanation (c) of Section 4 or Explanation relating to Group in Section 5 of the Act - HELD THAT:- The appellant has not brought on record any material to show as to how either of the Respondents were having control over the Management or having their shares, voting rights in consonance with three categories in Explanation (b) of Section 5 of the Act. There is no infirmity in the order and appeal is fit to be dismissed - Appeal dismissed.
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