Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 4, 2023
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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Reversal of Input Tax Credit - ITC denied since the detail of the supplier is not reflecting in GSTR 1 of the supplier. - The appellant had pointed out that they are in possession of a valid tax invoice and payment details to the supplier have been substantiated by producing the tax invoice and the bank statement. - Straight forward denial of credit is not justified - GST authorities directed to decide the matter in view of CBIC circular - HC
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Maintainability of appeal - The Commissioner (Appeal) was not justified in deciding the matter on merits after having come to a conclusion that the appeal is to be rejected on the ground of no proof of pre-deposit - Commissioner (Appeal) directed to issue a defect memo to the Petitioner pointing out the procedural defect in the appeal and would give adequate opportunity for rectifying the same - HC
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Blocking their Input Tax Credit (ITC) - The effect of the order u/r 86A of the CGST Rules of 2017 would be that the petitioners/assessees would not be entitled to avail the input tax credit available in their Electronic Credit Ledger for a temporary period and otherwise, the petitioners/assessees are free to carry on their business by effecting payment of the requisite amount of tax into their account. - GST authorities directed to afford an opportunity of post- decisional hearing to the petitioners - HC
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Maintainability of petition - availability of alternative remedy of appeal - non-constitution of the Tribunal - The petitioner cannot be deprived of the benefit, due to non- constitution of the Tribunal by the respondents themselves. The recovery of balance amount, and any steps that may have been taken in this regard will thus be deemed to be stayed. - HC
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Condonation of delay in filing appeal - Cancellation of GST registration of petitioner - non-filing of monthly returns - As the appellate authority has dismissed the appeal on the ground of limitation, this Court finds no ground to interfere with the impugned order - HC
Income Tax
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Income taxable/attribuable in India - attributed 15% of the assessee’s income to India - applicability of the Galileo rule[2009 (2) TMI 497 - DELHI HIGH COURT] - Galileo Nederland BV [supra] has now merged with the order of this Court in Travelport [2023 (5) TMI 227 - SUPREME COURT] filed by the Revenue before this Court. - Revenue appeal dismissed - SC
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Assessment u/s 153A - period of limitation - Section 153A was introduced in the Act notwithstanding the provisions, inter alia, of Sections 147 and Section 148. Hence, when no proceedings were taken under Section 153A, after the requisition made u/s 132, the Assessing Authority is disabled from proceeding for any assessment. - HC
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Rectification of mistake u/s 154 - subject income being inadvertently shown under the wrong head - Taxability of income in India - The benefit of Article 121 of India-USA Double Taxation Avoidance Agreement [in short, “Indo-USA DTAA”] was available to the respondent/assessee. - Tribunal rightly allowed the claim of assessee - HC
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Block assessment u/s 158BC - Notice u/s 143(2) not issued - Whether curable defect u/s 292BB? - Since Section 292BB only speaks of a notice being deemed to be valid in certain circumstances, when the assessee has appeared in any proceeding and cooperated in any enquiry relating to assessment or re-assessment. It does not take in the circumstances of a complete absence of notice; which does not stand cured u/s 292BB. - HC
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Power of the AO to rectify mistake of his super senior officer u/s 154 - tax calculation mistake - hierarchy of the Departmental structure - AO is not validly entitled and empowered to rectify mistake of his super senior officer - Sole grievance of assessee is allowed. - AT
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Nature of expenses - video shooting expenses claimed by the assessee as revenue expenditure in the computation of income but capitalized into the books of accounts and shown in the balance sheet - The video shooting expenditure does not give any enduring benefit to the assessee. - Claim cannot be disallowed mere on the basis of treatment in the Balance Sheet - AT
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Income deemed to accrue or arise in India - Royalty Income - AO had treated an amount as royalty income of the assessee during the year purely based on the amount shown in Form 26AS, however, CIT (Appeals) has restricted the addition purely based on the four invoices raised by the assessee. When the admitted factual position is that the assessee has not even received any amount against those four invoices, in our view, the royalty income cannot be added on notional basis. - AT
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Income from other sources or LTCG - When documentary evidences indicate that both the vendor and the vendee, i.e., the assessee and DLF Ltd. have treated the payment of Rs. 7.20 crores as control premium on sale of shares, there is no occasion for the Assessing Officer to rewrite the terms of agreement between the parties unilaterally. - Claim of assessee as long-term capital gain (LTCG) allowed - AT
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Addition u/s 69 - the income surrendered during the course of survey cannot be brought to tax under the deeming provisions of section 69 and the same has been rightly offered to tax under the head “business income”. - Not liable for higher rate of tax u/s 115BBE i.e. @ 60% - AT
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Addition made for interest received on enhanced compensation on account of compulsorily acquisition of Agriculture land - CIT(A) was not correct in upholding the assessment order wherein the AO has granted part relief to the assessee u/s 57(iv) of the Act and not applying the provisions of section 10(37) of the Act on the interest received by the assessee on enhanced compensation. - AT
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Residential status - taxability of income of assessee earned from foreign assignment - The concept of ‘permanent home available’ has been wrongly interpreted by the Ld. Tax Authorities. Ld CIT(A) has further fallen in error to not consider the applicability of other parameters of Article 4 (2)(b), which Ld. AO had infect taken note of and determined against the assessee. - Demand reversed - AT
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Scrutiny assessment u/s 143(3) - the process of selection for scrutiny does not contemplate any discretion in the Assessing Officer. He is bound to follow the CBDT guidelines issued for the purpose of selection of the cases for scrutiny. - There is no violation in the procedure - AT
Customs
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Revocation of Customs Broker License - Overvaluation of export garments - The power to assess including determining the value lies with the importer/ exporter (self-assessment) or with the proper officer (re-assessment). The Customs Broker has neither any authority nor any responsibility to assess the value of the imported goods or export goods. - The appellant had not violated Regulations 11(d), 11(e) or 11(n) of CBLR, 2013 - AT
Corporate Law
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Challenge to NCLT against striking off of companies - grievance of the petitioners is that despite having been struck off, the shell companies have been transacting with shares of the petitioner, thereby adversely affecting the commercial interests of the petitioner - If the companies-in-question are revived under Section 252 of the 2013 Act after having been struck off initially, there is no bar on the said companies to carry on functioning. - HC
Service Tax
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Extended period of limitation - it is found that appellant were under the bonafide belief that no service tax was payable on the brokerage received by them for providing steamer agent service being a sub-agent - also, all the transactions between the appellant and M/s. Freight Connection India Pvt. Limited are recorded in the books of accounts - extended time to demand service tax under Section 73 is not invokable. - AT
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Demand of service tax - GTA - it is settled that the goods for the purpose of Goods Transport Agency service should be qualified as "goods‟ in terms of definition given under Section 65(50) of Finance Act, 1994. Therefore, in the present case the goods being effluent which is neither sold nor saleable, does not qualify in terms “goods”. Therefore, transportation of the same does not fall under the four corners of Goods Transport Agency service, hence the same is not liable to service tax - AT
Central Excise
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Sanction of Refund claim allowed by one authority and denied by other - When an order has already been passed upholding the sanction of part of the refund claim, the same authority cannot pass another order setting aside the sanction of entire claim. Such order is ab initio void and non-est. - AT
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CENVAT Credit - input - Helmet lock, supplied along with the Motorcycles - essential accessory of the Excisable goods or not - It is not Revenue’s case that the Helmet lock is not an accessory. Such a conclusion runs contrary to the classification approved by CBEC. - Credit allowed - AT
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Valuation - non-inclusion of value of certain bought out items - In the instant case, the Department could not prove conclusively that the bought-out items in dispute are integral part of the equipment manufactured; Department did not even prove that the same are fitted into the system, manufactured by the appellants, at least by the use of screwdriver technology. - Demand set aside - AT
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CENVAT credit - As long the service is provided by the service provider for which any input service is received and used for providing output service, the Cenvat credit on such input services shall be available - the location from where the service is provided and received is immaterial for availing the Cenvat credit on input services as well as for payment of service tax on the output services. - AT
VAT
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Nature of transaction - sale or service - tankers given on hire - deemed sale or transfer of the right to use any goods for any purpose - The agreement in clear terms provides for transfer of right to use the trucks for transportation of petroleum products of oil company - the effective control and possession was always with AHS. What was being provided to HPCL was only a transportation service on hire. - Not liable to VAT - HC
Case Laws:
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GST
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2023 (8) TMI 175
Rate of GST to be charged by respondent U.P. Avas Evam Vikas Parishad - taxable at the rate of 1% or 8% - case of petitioners is that the rate of 8% presently specified by the U.P. Avas Evam Vikas Parishad is contrary to the instructions issued by the Government of India, Ministry of Finance dated 07.05.2019 - HELD THAT:- Reference has also been made to certain internal communications between the different authorities of the U.P. Avas Evam Vikas Parishad. Primarily, rate of tax is to be charged as per notification issued under the GST Acts, 2017 (Central U.P.). Therefore, the said issue need not be adjudicated at this preliminary stage that too in a dispute brought by the allottee against the U.P. Avas Evam Vikas Parishad. The writ petition disposed off with the observation, in case the petitioners place a copy of this order before respondent no.2, the said respondent may ascertain the correct rate of tax applicable to the transaction from the appropriate authority under the GST Act and issue necessary communication to the petitioners in that regard.
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2023 (8) TMI 174
Reversal of Input Tax Credit - requirements of Section 16 (2) of WBGST Act fulfilled or not - Failure of the supplier to pay GST to the government - allegation was that the appellant had submitted that the fourth respondent has not shown the Bill in GSTR 1 and hence the appellant is not eligible to avail the credit of the input tax as per Section 16(2) of the WBGST Act, 2017 as the tax charged in respect of such supply has not been actually paid to the Government. HELD THAT:- The show cause notice does not allege that the appellant was not in possession of a tax invoice issued by the supplier registered under the Act. There is no denial of the fact that the appellant has received the goods or services or both - In the reply submitted by the appellant to the said show cause notice the appellant had clearly stated that they are in possession of the tax invoice, they had received the goods and services or both and the payment has been made to the supplier of the goods or services or both. The reason for denying the input tax credit is on the ground that the detail of the supplier is not reflecting in GSTR 1 of the supplier. The appellant had pointed out that they are in possession of a valid tax invoice and payment details to the supplier have been substantiated by producing the tax invoice and the bank statement. The first respondent without resorting to any action against the fourth respondent who is the selling dealer has ignored the tax invoices produced by the appellant as well as the bank statement to substantiate that they have paid the price for the goods and services rendered as well as the tax payable there on, the action of the first respondent has to be branded as arbitrarily. Therefore, before directing the appellant to reverse the input tax credit and remit the same to the government, the first respondent ought to have taken action against the fourth respondent the selling dealer and unless and until the first respondent is able to bring out the exceptional case where there has been collusion between the appellant and the fourth respondent or where the fourth respondent is missing or the fourth respondent has closed down its business or the fourth respondent does not have any assets and such other contingencies, straight away the first respondent was not justified in directing the appellant to reverse the input tax credit availed by them - the demand raised on the appellant is not sustainable. GST authorities directed to decide the matter in view of CBIC circular - Appeal allowed.
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2023 (8) TMI 173
Maintainability of appeal - fulfilment with the requirement of pre-deposit or not - Rejection of application for revocation of cancellation of registration of the Petitioner - HELD THAT:- As per section 107(6) of the CGST Act, 2017, no appeal shall be filed unless the Appellant has paid admitted tax, interest, fine, fee and penalty in full and a sum equal to 10% of the amount of tax in dispute in relation to which the appeal has been filed. Rule 108(2) of the CGST Rules provides that the grounds of appeal and the form of verification as contained in GST APL 01 form shall be signed in the manner specified in Rule 26 - The Commissioner (Appeal) in his order dated 17th June 2022 in para 5.4 to 5.6 observed that the Appellant has not provided challan or proof of having made pre-deposit. The Commissioner (Appeal) further observed that filing of certified copy of the order against which the appeal is filed has not been complied with and further the appeal is not signed by the proprietor nor has the Appellant submitted any authority letter of the signatory. Therefore, the Commissioner (Appeal) held that the appeal is to be rejected on this ground itself. The Commissioner (Appeal) was not justified in deciding the matter on merits after having come to a conclusion that the appeal is to be rejected on the ground of no proof of pre-deposit, failure to file certified copy of the order and the appeal not having been authenticated as per rule 26(2)(a) of the CGST Rules. If the appeal is rejected on this ground, then any adjudication on merits is not permissible by the Appellate Authority and would be without jurisdiction. The contention raised that the procedure for processing the refund application and for cancellation of registration has not been followed and thereby objecting the very procedure adopted by the adjudicating authority was not canvassed before the lower authorities by the Petitioner. The Order in Appeal dated 17th June 2022 is set aside and restored to the file of the Commissioner (Appeal) - Commissioner (Appeal) will issue a defect memo to the Petitioner pointing out the procedural defect in the appeal and would give adequate opportunity for rectifying the same - Petition disposed off.
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2023 (8) TMI 172
Attachment of Bank account - respondents submits that the letter addressed to various customers of the petitioner was withdrawn, and the same was also communicated to the customers of the petitioners - HELD THAT:- A perusal of the files, produced today in the Court, indicates that no such attachment orders under Section 83 of the CGST Act were issued - Insofar as the provisional attachment of the bank account is concerned, even if an order under Section 83 of the CGST Act was issued, the same would lapse by virtue of Section 83(2) of the CGST Act. Section 83 of the CGST Act empowers the Commissioner to issue orders for provisional attachment of assets including the bank account of the taxpayer provided that it is necessary to protect the interest of the Revenue. There are no specific noting in the files, to the effect, that such an action is imperative in the facts of the present case. Although, the files produced today indicate that there are allegations of wrongful availment of Input Tax Credit. The respondent authorities are also investigating the chain of suppliers, and there is nothing to the effect that indicates that some of the entities which had purportedly supplied material to the petitioner have not responded to the notices issued by the concerned authorities. It is also the respondents' case that no order under Section 83 of the CGST Act operating against the petitioner and the communications issued to various suppliers have been withdrawn - In view of the above, the petitioner's grievance stands addressed. Petition disposed off.
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2023 (8) TMI 171
Seeking grant of Bail - registration of business using fraudulent and forged documents to deceive the Government Authorities - misuse of GST online portal to take advantage of input tax credit - issuing fake invoices and e-way bills to pass on input tax credit to other firms and taxable persons - HELD THAT:- Petitioner has already been languishing in jail for 1 year 5 months and 13 days in preventive custody, he being behind bars since 14.02.2022 - Petitioner is being kept in preventive custody merely on an unfounded suspicion that if he is let out, he may either tamper with evidence and/ or influence witnesses. There is no probability of tampering with evidence as the same has already been seized by the investigating agency. Petitioner is stated to be 46-year old family man and only bread winner of his family who has added responsibility of his wife and one daughter, who is pursing the degree of law and they are living in sheer penury in his absence. It is unlikely that he is flight risk or will flee from the trial proceedings. Offence allegedly committed by petitioner is of non-violent nature and in that sense his release on bail is not a threat to the society at large by committing any violent crime. Thus, no useful purpose would be served to keep the petitioner in further preventive custody - petitioner is ordered to be released on bail, in case not required in any other case, on his furnishing bail bonds and surety bonds to the satisfaction of learned trial Court - petition allowed.
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2023 (8) TMI 170
Blocking their Input Tax Credit (ITC) - invocation of Rule 86A of the Central Goods and Services Tax Rules, 2017 - fraud played by the petitioners in the transaction or not - opportunity of hearing not given - violation of principles of natural justice - HELD THAT:- From a reading of Rule 86A of the Rules of 2017, it is seen that the first part of the Rule deals with the conditions that are required to be fulfilled in order to invoke the powers under the Rule, and the second part of the Rule provides for the consequences that would follow in case Rule 86A of the Rules of 2017 is invoked by the competent authority - the foremost condition to enable the competent authority to invoke Rule 86A of the Rules of 2017 would be that credit of input tax should be available in the electronic credit ledger as on the date the competent authority decides to invoke Rule 86A of the Rules of 2017. Such credit which is available in the electronic credit ledger should be the result of fraudulent transactions. Unless the competent authority is fully satisfied that there is a prima facie case for invoking Rule 86A of the Rules of 2017, he cannot invoke Rule 86A, as the consequence/result of the same would be having a direct bearing not only on the business of the registered person, but also on his credentialities. The powers under Rule 86A of the Rules of 2017 can be invoked or exercised by the competent authority only in the event he has reason to believe that the credit of input tax available in electronic credit ledger have been fraudulently availed or the assessee is ineligible for the same. The powers under Rule 86A of the Rules which are vested with the competent authority is subject to the satisfaction recorded by the said authority on he forming an opinion to the effect that the electronic credit ledger has been fraudulently availed or that the assessee is ineligible to avail the benefits of the same in situations where the Rule provides for the competent authority to invoke the same - reliance can be placed in the case of S.S.Industries [ 2020 (12) TMI 1120 - GUJARAT HIGH COURT ] where the Division Bench of Gujarat High Court held that The power under Rule 86A of the Rules should neither be used as a tool to harass the assessee nor should it be used in a manner which may have an irreversible detrimental effect on the business of the assessee. The particulars of the input tax availed by such tax payer who is said to be not in existence are also given in the impugned order. The action of the respondents is being taken in the interest of the Revenue and it is only a preventive measure. The Court while considering the correctness of the said Act is entitled to examine whether there was any material available with the State Government and if such material is available, whether the reasons recorded in the formation of opinion are found in the order. If such reasons are found, the Court can also examine whether the reasons for formation of opinion have got a rational connection or bearing on the formation of such opinion by the competent authority. If the Court finds that the subjective satisfaction of the competent authority is not based on any credible information, then the act of the competent authority in blocking the ITC in exercise of its power under Rule 86A of the Rules of 2017 may not be sustainable. The first requisite of the Rule which is required to be considered by the competent authority is with regard to the basis of material available before he taking any action for blocking of electronic credit ledger. The second pre-requisite is of recording the reasons in writing for invoking the powers under Rule 86A of the Rules of 2017. Unless the aforesaid two pre-requisites are fulfilled, the competent authority cannot invoke the powers under Rule 86A of the Rules of 2017 for the purpose of disallowing the debit of the determined amount to the electronic credit ledger or to block the electronic credit ledger even to the extent of amount fraudulently or wrongly availed by the petitioners/assessee - In so far as the second pre-requisite of Rule 86A of the Rules is concerned which is of recording of reasons in writing, in the present case, the competent authority has observed that the petitioners/assessee have availed ITC from registered persons who are found to be not in existence or not conducting any business from any place and the registration obtained by them was in contravention of the provisions of the Statute. The details of the input tax availed by such tax payer is also given in the impugned order. This Court, however, cannot ignore the fact that the power under Rule 86A of the Rules of 2017 is drastic in nature and in the event of the said power being exercised against an assessee, it disentitles him to avail of the credit in the electronic credit ledger for discharge of his tax liability which he is otherwise entitled to avail. Therefore, serious civil consequences will have to be faced by the assessee. The order passed under Rule 86A of the Rules of 2017 would act as an obstruction to the right of the assessee to utilize the credit available in his electronic credit ledger - When the impugned order is taken into consideration based on this context, the question that arises for consideration would be whether the power under Rule 86A of the Rules of 2017 can be exercised without complying the principles of natural justice. The question whether the availment of ITC is a vested right, was considered by the Division Bench of Calcutta High Court in Basanta Kumar Shaw [ 2022 (8) TMI 50 - CALCUTTA HIGH COURT ] and it has been held that the right conferred on the assessee is regulated by the provisions of the Act and it is a concession granted under the Statute and unless and until the assessee complies with all the conditions scrupulously, he would not be entitled to avail the ITC. Considering the scope, applicability and the manner of power exercised by the competent authority under Rule 86A of the Rules of 2017, it may not be feasible for the authority to have a normal pre-decisional hearing and since the nature of order passed under Rule 86A is provisional, it would be reasonable to consider granting a post-decision hearing to the petitioners which would comply with the principles of natural justice - The effect of the order under Rule 86A of the Rules of 2017 would be that the petitioners/assessees would not be entitled to avail the input tax credit available in their Electronic Credit Ledger for a temporary period and otherwise, the petitioners/assessees are free to carry on their business by effecting payment of the requisite amount of tax into their account. Therefore, even after orders are passed under Rule 86A of the Rules of 2017, the petitioners/assessees can carry on their business activities. The writ petitions are disposed of directing respondent no.2 to afford an opportunity of post- decisional hearing to the petitioners, who shall be permitted to file their objections along with the relevant supporting documents/material and on consideration of the same, respondent no.2/competent authority shall pass a reasoned order in compliance of the requirement of Rule 86A of the Rules of 2017.
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2023 (8) TMI 169
Validity of assessment order - rectification of order - Maintainability of petition - availability of alternative remedy of appeal - non-constitution of the Tribunal - HELD THAT:- The assessment order indicated that the tax was assessed on the basis of the deductions made by the Executive Engineer, Road Division and paid to the Department, on behalf of the petitioner, as TDS. The allegation was that the works on which the tax was deducted was not disclosed by the petitioner in the returns filed - assessment order was challenged in appeal which also was dismissed. In fact, the specific contention of the appellant-petitioner that deductions of another concern have been made and shown in the account of the petitioner, was specifically rejected by the Tribunal. The Tribunal also noticed that there was absolutely no evidence produced to substantiate the contention. The learned Government Advocate brings notice to Section 39 of the GST Act, which also prohibits the petitioner to make a rectification of the error, if any, caused. In any event, the appeal having been dismissed on facts, the jurisdiction under Article 226 of the Constitution need not be invoked, however, the petitioner essentially has a statutory remedy of appeal against the impugned order before the Appellate Tribunal under Section 112 of the Bihar Goods and Services Tax Act - However, due to non-constitution of the Tribunal, the petitioner is deprived of his statutory remedy under Sub- Section (8) and Sub-Section (9) of Section 112 of the B.G.S.T. Act. Petition disposed off subject to conditions imposed - petitioner directed t o deposit of a sum equal to 20 percent of the remaining amount of tax in dispute, if not already deposited, in addition to the amount deposited earlier under Sub-Section (6) of Section 107 of the B.G.S.T. Act, the petitioner must be extended the statutory benefit of stay under Sub-Section (9) of Section 112 of the B.G.S.T. Act. The petitioner cannot be deprived of the benefit, due to non- constitution of the Tribunal by the respondents themselves. The recovery of balance amount, and any steps that may have been taken in this regard will thus be deemed to be stayed. Petition disposed off.
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2023 (8) TMI 168
Time Limitation for filing rectification application - it is alleged that rectification application filed beyond period of limitation - rectification application under section 161 of TNVAT Act filed but opportunity of personal hearing not given - Validity of assessment order - Transition of credits - inadvertently specified the CENVAT credit accrued on purchase of inputs under TNVAT Act - HELD THAT:- It is seen from the records that the assessment order was passed on 06.01.2020 and the rectification application ought to have been filed on or before 06.04.2020. However, the period from 15.03.2020 to 06.04.2020 ought to be excluded based on the suo motu extension order. Then the 90 days ought to be calculated from 01.03.2022, wherein the time is available until 30.05.2022, but the petitioner had filed the application on 02.09.2020 itself, which is within the period of limitation. Therefore, the impugned order stating that the rectification application is filed beyond the period of limitation is incorrect. Reliance placed in TVL. SHANDONG TEIJUN ELECTRIC POWER ENGINEERING COMPANY LTD. VERSUS THE STATE TAX OFFICER, CHIDAMBARAM [ 2022 (3) TMI 542 - MADRAS HIGH COURT ] where it was held that It is brought to the notice of this Court by the learned counsel for the petitioner in respect of the limitation, there could be no much quarrel from respondent side also as these all are the materials on records. Therefore, the limitation insofar as the petitioner is concerned, is saved by the orders of the Hon'ble Supreme Court of India, hence, on that ground mainly if the rectification application is rejected through the impugned order, the same shall not stand in the legal scrutiny. This Court is inclined to allow this writ petition and the impugned order is quashed. Consequently, the respondent is directed to reconsider the case of the petitioner in the light of the Section 161 of the GST Enactments by granting opportunity of personal hearing and the said exercise shall be completed within a period of eight weeks from the date of receipt of the copy of the order. Petition allowed.
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2023 (8) TMI 167
Condonation of delay in filing appeal - Cancellation of GST registration of petitioner - non-filing of monthly returns - HELD THAT:- A careful perusal of the impugned orders brings to light that the date of communication of the cancellation order to the writ petitioner is 10.03.2022. Three months therefrom elapsed on 09.06.2022 i.e., the prescribed period qua Section 107 of CG ST Act elapsed on 09.06.2022. Condonable period of one month thereafter elapsed on 09.07.2022. The appeal was preferred by the writ petitioner only on 13.10.2022. Law is well settled that when there is a cap, Section 5 of the Limitation Act cannot be applied. As the appellate authority has dismissed the appeal on the ground of limitation, this Court finds no ground to interfere with the impugned order however it is made clear that this writ Court is not expressing any view or opinion on the merits of the matter and it is also made clear that it is open to the writ petitioner to apply afresh for registration. Petition disposed off.
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Income Tax
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2023 (8) TMI 166
Income taxable in India - Income attributable to the operations carried out in India - attribution of only 15% of the revenue as income accruing /arising in India - HELD THAT:- Learned counsel appearing for the petitioner/Revenue(s) as well as learned counsel for the respondent(s) jointly submit that these petitions could be dismissed in terms of the order of Director of Income Tax, New Delhi vs. Travelport Inc. [ 2023 (5) TMI 227 - SUPREME COURT] We are of the view that the impugned order(s) of the High Court do not call for interference. Insofar as the second issue, namely the question of permanent establishment is concerned, we are not going into the same, as we have concurred with the High Court on the first issue.
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2023 (8) TMI 165
Income taxable in India - Income attributable to the operations carried out in India - attribution of only 15% of the revenue as income accruing /arising in India - Permanent establishment in India - HELD THAT:- As in view of case Director of Income Tax, New Delhi vs. Travelport Inc.[ 2023 (5) TMI 227 - SUPREME COURT] and having regard to the fact that the Coordinate Bench observed that since the first issue was held against the department, it was not necessary to go into the second issue, namely, the question regarding permanent establishment. Therefore, appropriate orders may be made in these cases filed by the assessee(s). We find that though the High Court has stated that there was no substantial question of law in the appeals filed by the assessee(s) before the High Court, the fact remains that at this stage going into the question as to whether there was a permanent establishment of the assessee(s) in India is now wholly academic and therefore would not require consideration and answer in these appeals.
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2023 (8) TMI 164
I ncome taxable in India - Income attributable to the operations carried out in India - attribution of only 15% of the revenue as income accruing /arising in India within the meaning of Section 9(1)(i) read with Article 7 of the Treaty - HELD THAT:- These appeals could be disposed of by following the order passed by this Court in TRAVELPORT INC. [ 2023 (5) TMI 227 - SUPREME COURT] As respondent-Jet Lite (India) Limited is in Liquidation and therefore the said fact may be borne in mind while passing orders in these cases. The impugned order(s) of the High Court do not call for interference. Insofar as the second issue, namely the question of permanent establishment is concerned, we are not going into the same, as we have concurred with the High Court on the first issue. The petitions filed by the petitioner/department(s) of income tax are dismissed. Pending application(s), if any, shall stand disposed of
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2023 (8) TMI 163
Income taxable/attribuable in India - attributed 15% of the assessee s income to India - applicability of the Galileo rule - HELD THAT:- As decided in GALILEO INTERNATIONAL INC. [ 2009 (2) TMI 497 - DELHI HIGH COURT] looking at the nature and the character of the functions undertaken in India viz., the functions and assets outside India, 15% was attributed to India. (Aspect of risk has not been discussed but it has never been the case of the revenue that risk factor tilts the scale for higher attribution of income to Indian PE). This worked out to Euro 0.45 and this was less than the commission of Euro 1, which was paid by the appellant- assessee to the distributor in India. Galileo Nederland BV [supra] has now merged with the order of this Court in Travelport [ 2023 (5) TMI 227 - SUPREME COURT] filed by the Revenue before this Court. In view of the fact that the judgment of the Delhi High Court has been affirmed by this Court by dismissing the appeals filed by the Revenue, we find that the appeals filed by the assessee(s) are liable to be allowed.
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2023 (8) TMI 162
Block assessment u/s 158BC - penalty levied u/s 158BFA - offences allegedly committed under section 276C and 277 r.w.s. 278B - HELD THAT:- Since the satisfaction note which formed the very basis for issuance and authorisation of the search warrant u/s 132(1) has not been made available in spite of a specific direction given by the Tribunal way back on 17.06.2002 and repeated by this Hon ble Court on 30.06.2023 an adverse inference needs to be drawn in respect of the same especially having regard to the circumstances set out hereinbefore. Since, the Revenue has failed to produce the satisfaction note we have to and we hereby hold that the search action u/s 132(1) and, consequently, the block assessment order dated 31.12.1999 passed u/s 158BC, the order dated 04.10.2001 levying penalty u/s 158BFA and the Criminal Case filed by the Revenue before the 4th Court of the Additional Chief Metropolitan Magistrate at Esplanade Mumbai, which is now pending as renumbered Criminal Case before 38th Court of Additional Chief Metropolitan Magistrate cannot survive as they are all predicated on the existence of a valid search. The complaint being Criminal Case before 38th Court of Additional Chief Metropolitan Magistrate is quashed. Undoubtedly the contention of the Revenue that, even assuming that the search is to be held invalid the information or material gathered during the course thereof may be relied upon by them for making adjustment to the Assessee s income in an appropriate proceeding has merit. Assessee disputes that no new information or material has been gathered by the Revenue in the present case other than what is already available in its books of account, it is clarified that this order does not preclude the Revenue from taking any such proceedings as they may be so advised and to utilise the information or material in such proceeding against the assessee as is permissible in law.
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2023 (8) TMI 161
Assessment u/s 153A - period of limitation - HELD THAT:- As limitation to proceed under Section 153A, as provided in Section 153B is a period of 21 months from the end of the financial year in which the last of the authorization for search u/s 132 or requisition under Section 132A was executed. In the present case, there is no dispute as to the first and last requisition having been made on 06.06.2017 in the assessment year 2018-19, corresponding to financial year 2017-18. The last of the relevant assessment year in which the requisition was made would be 31.03.2018 and the period of limitation would expire on 31.12.2020. No assessment was initiated on or before the said date under Section 153A. The assessments were initiated that too under Section 148 for the assessment years 2013-14 to 2018-19 on 31.03.2021, long after the assessment period had expired. Section 153A was introduced in the Act notwithstanding the provisions, inter alia, of Sections 147 and Section 148. Hence, when no proceedings were taken under Section 153A, after the requisition made under Section 132, the Assessing Authority is disabled from proceeding for any assessment. Insofar as assessments pending and abated under Section 153A, after the expiry of 21 months limitation period under Section 153B there can be no proceeding taken under the Act either for regular assessment under Section 143 or under Section 153A or reassessment under Section 147 read with 148. WP allowed.
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2023 (8) TMI 160
Revision u/s 263 against company as dissolved - petitioner as the agent of Monet [company as dissolved] - share transfer transaction, prima-facie appears to be a tax avoidance arrangement to avoid paying taxes in India - Who may be regarded as agent u/s 163? - As decided by ITAT order passed u/s 163 by the CIT deserves to be quashed and treated as nonest. CIT assumed jurisdiction u/s 263 of the Act on the basis of order passed u/s 163 of the Act. HELD THAT:- Since the very basis [order u/s 163 of the Act] has been removed, the super structure i.e. order u/s 263 of the Act must fall. Having regard to the operative directions issued by the Tribunal, according to us, these writ petitions would not lie, as obviously, the court cannot quash something, which has already been quashed by the Tribunal.
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2023 (8) TMI 159
Rectification of mistake u/s 154 - subject income being inadvertently shown under the wrong head - Taxability of income in India - income received by assessee for the services rendered to an Indian company - HELD THAT:- It is not the case of the appellant/revenue that the subject income, i.e., the income received by the respondent/assessee for the services rendered to an Indian company, i.e., HSIPL, was taxable. The benefit of Article 121 of India-USA Double Taxation Avoidance Agreement [in short, Indo-USA DTAA ] was available to the respondent/assessee. The rectification had been ordered by the CPC with respect to two other group companies, i.e., Heidrick and Struggles Pvt. Ltd. Singapore, Heidrick and Struggles Pvt. Ltd. UK, in similar circumstance, via order dated 27.02.2020 and 30.01.2020, respectively. CBDT s Circular No. 14/1955 dated 11.04.1955 was applicable in the instant case, which, inter alia, casts a duty on the officers of the appellant/revenue to draw the attention of the assessee towards any relief that may be available to them, which the assessee may have inadvertently omitted to claim. Having regard to the aforesaid, we are of the view that the Tribunal has taken a just view in consonance with the provisions of the Act and the aforementioned circular issued by the CBDT. Undoubtedly, the appellant/revenue can seek to levy tax only on income which falls within the ambit of the Act. Merely because the respondent/assessee placed the income under a wrong head, cannot possibly make it amendable to imposition of tax.
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2023 (8) TMI 158
Block assessment u/s 158BC - limitation for filing a return - HELD THAT:- The provision mandates that in a notice issued under Section 158 BC, the assessee shall be provided a minimum period of fifteen days; which is a reasonable period for the assessee to file a return or a maximum period of forty-five days; after which the Assessing Officer can proceed with the assessment. In the present case, a notice, as we see from the orders on record, provides a time of thirty days to file a return which is in accordance with the above quoted provisions. Since there is no limitation for filing a return, the assessee cannot be faulted if a return is filed at any time before the completion of assessment. No notice u/s 143(2) issued - AO also, after the time provided in the notice, if it is within 15 to 45 days can proceed further if no return is filed. In the present case, a subsequent notice was issued u/s 142(1), which was responded with a return filed, within almost twelve days. The assessment was completed much after, but without issuing a notice u/s 143(2). This is not a case where there was no return filed, in which event it was also held in CIT v Devendranath G. Chaturvedi [ 2017 (6) TMI 732 - GUJARAT HIGH COURT] that a notice is required u/s 143(2). As held that in the circumstances when there was no return filed pursuant to a notice u/s 142(1), there is a requirement for a further notice u/s 143(2), which provision has been made applicable to Section 158BC. The assessment completed under Section 158BC without a notice under Section 143(2) cannot be sustained and the same has to be set aside Whether curable defect u/s 292BB? - Since Section 292BB only speaks of a notice being deemed to be valid in certain circumstances, when the assessee has appeared in any proceeding and cooperated in any enquiry relating to assessment or re-assessment. It does not take in the circumstances of a complete absence of notice; which does not stand cured under Section 292BB, especially in the teeth of such notice being found to be mandatory under the Act. We need to only notice the decision of Laxman Das Khandelwal [ 2019 (8) TMI 660 - SUPREME COURT] to find the last question also in favour of the assessee and against the Revenue.
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2023 (8) TMI 157
Rectification of mistake - Refund partially remitted - Amount refundable has been wrongly adjusted towards a non-existent demand - HELD THAT:- Given the aforesaid position, according to us, the best way forward would be to direct the concerned authority to deal with the rectification application at the earliest. Respondent says that he cannot have an objection to a direction being issued in that behalf. It is ordered accordingly. The concerned authority will dispose of the rectification application dated 06.06.2022 at the earliest, though not later than six (6) weeks from the date of receipt of a copy of the judgment rendered today.
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2023 (8) TMI 156
Revision u/s 263 by CIT - scrap sale undisclosed - Apart from `Other income , only one item has been shown as Sales (net) - HELD THAT:- There was collection of tax at source by the assessee, there was a corresponding receipt from sale of scrap at Rs. 88.06 lakh, which ought to have been included in the total sales of the assessee. There is no specific mention of this amount on the face of Profit and loss account. AO did not enquire into this aspect of the matter and simply passed a five-lined assessment order observing that the case was selected for Complete scrutiny assessment on the issue of Non furnishing of quantitative details . Thereafter, he records that On above issue, no addition is made and eventually notes that the assessment of income is done as per computation sheet and the sum payable is determined as per the demand notice . Neither, there is any discussion about the scrap sale in the assessment order nor any such issue was taken up by the AO during the course of scrutiny assessment proceedings. This shows that an important aspect of the matter about the inclusion of scrap sale in the total sales, remained to be examined by the AO, which is a clear-cut case of non-application of mind. This action of the AO, in our considered opinion, rendered the assessment order erroneous and prejudicial to the interest of the Revenue Pr.CIT was right in holding the assessment order to be erroneous and prejudicial to the interest of the Revenue justifying revision. Decided against assessee.
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2023 (8) TMI 155
Addition u/s 68 - interest income - AR submitted that the assessee did not recognize any interest income during AY 2010-11 and no TDS has been claimed by the assessee - HELD THAT:- On being asked by the bench the ld. Senior DR, in all fairness did not controvert a factual position that neither the assessee has shown any amount as interest income nor has claimed TDS thereon. The addition made by the AO and upheld by the CIT(A) u/s. 68 of the Act is not sustainable as the copy of return of income and computation clearly reveals that neither the assessee has shown any interest income nor the assessee has claimed any TDS thereon as, picked up by the Assessing Officer for making addition in the hands of assessee. Decided in favour of assessee.
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2023 (8) TMI 154
Power of the AO to rectify mistake of his super senior officer - hierarchy of the Departmental structure - AO by way of invoking provisions of section 154 passed impugned order rectifying the tax calculation error in the form 5 issued by ld. PCIT - HELD THAT:- On being asked by the bench Senior DR could not assist us as to under which provision the AO was empowered to invoke provisions of sec 154 of the Act to rectify the order passed by his super senior officer i.e. ld. PCIT. In our humble view form no. 5 dated 13.01.2021 under VSVS scheme was issued by the ld. PCIT, Ghaziabad and the Assessing Officer rectified tax calculation mistake in the same form by invoking provisions of sec 154 of the Act on 20.09.2022. AO is not validly entitled and empowered to rectify mistake of his super senior officer therefore we are inclined to hold that impugned rectification order u/s. 154 is without jurisdiction, invalid and bad in law thus the same is not sustainable and we set aside the same. Sole grievance of assessee is allowed.
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2023 (8) TMI 153
Maintainability of appeal filed by the assessee against the order u/s. 143(1) - second rectification order passed by the CPC - income determined on setting off of business loss from the capital gain - HELD THAT:- As it is noted that the CIT(Appeals) has dismissed the appeal as infructuous since the rectification application filed by the assessee has been disposed of by the CPC. CIT(Appeals) has not considered the issue on merits about the setting off of loss claimed by the assessee in his return and that even after the rectification order passed by the CPC, the position remains the same as in the intimation order. The assessee has filed appeal against the intimation letter passed by the CPC u/s 143(1) of the Act. Therefore, in the interest of justice, this issue is remitted to the CIT(Appeals) for fresh consideration and decision on merits as per law. Appeal by the assessee is allowed for statistical purposes.
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2023 (8) TMI 152
Nature of expenses - video shooting expenses claimed by the assessee as revenue expenditure in the computation of income but capitalized into the books of accounts and shown in the balance sheet - HELD THAT:- We find that the assessee has incurred the video shooting expenditure of various tourist locations for the business purposes. Undoubtedly, the assessee has capitalized the same in its books of account following the AS-26 on intangible assets. DRP following the decision of PROCTOR GAMBLE HOME PRODUCTS LTD. [ 2015 (3) TMI 272 - BOMBAY HIGH COURT] held that the expenditure is allowable to the assessee. This shows that in the books of account the expenditure have been wrongly capitalized by the assessee. Though we fully agree with the learned assessing officer that the guiding principles classifying the expenditure as revenue on as a capital expenditure cannot be different for the books of account of the assessee and to claim as deduction in the income tax return. The video shooting expenditure does not give any enduring benefit to the assessee. Therefore, the above expenditure may be wrongly capitalized in the books of account. However for the income tax purposes, the learned dispute resolution panel after considering the facts of the case held that the same is revenue expenditure. The learned departmental representative could not show that how the video shooting expenditure with respect to the two central business of the assessee can be considered as capital expenditure - Decided against revenue. Expenditure incurred on issue of non-convertible debenture - HELD THAT:- DRP has categorically held that expenditures incurred on issue of non-convertible debentures are similar to the expenditure incurred as interest on non-convertible debentures. DRP has further restricted disallowances of such expenditure to the extent of proportionate amount invested in fixed assets which have not been put to use during the year. AO could not show any infirmity in the order of DRP. Further, apparently the accounting treatment given by the assessee by reducing share premium account by expenditure incurred for issue of non-convertible debenture is incorrect. Accordingly, we dismiss ground of the appeal of AO.
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2023 (8) TMI 151
Addition u/s 68 - treating gift received as unexplained cash credit - assessee had failed to prove creditworthiness of donor to advance the money as Gift - gifts, have been received in the form of foreign remittances, through the HSBC account of assessee s son - HELD THAT:- AO failed to take note of the fact that donor[assessee son] is NRI since long he only had some receipt interest income and STCG and LTCG on investments made in India which were declared in the return filed for the AY 2014-15. Income declared by the assessee's son in India is not only his income and his major income is from abroad in the capacity of NRI, hence genuineness of the transaction should not be doubted. We find that in the instant the case, the assessee has adduced sufficient evidences to explain the gifts as valid by proving the identity and creditworthiness of the donor and genuineness of the transaction. As decided many times where the assessee by way of documentary evidence satisfactorily established the identity and creditworthiness of the donor and genuineness of the transaction, there is no justification to treat the credit / gift as unexplained or non-genuine. Therefore, it is abundantly clear that where the assessee had produced enough evidence to prove identity of donor, his creditworthiness and also genuineness of gift, addition on account of such gifts could not be sustained. Appeal of the Revenue are dismissed.
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2023 (8) TMI 150
Revision u/s 263 - short levy of income under the head income from house property - case of assessee was selected for limited scrutiny details of assets and liabilities - Pr.CIT recorded that AO has not made any inquiry or verification regarding the deemed income with respect to properties of assessee owned during the year under consideration nor the assessee offered income from house property, except of one property, though the assessee is owner of nine residential properties - HELD THAT:- Pr.CIT in his show cause notice referred nine properties owned by assessee. In response to show cause notice, the assessee has explained about each and every property and user thereof or explaining that out of such property, is open plot and Kailash nagar property is still now owned by assessee and rest of the properties were either self-occupied or under the use of partnership firm wherein the assessee is a partner being Doctor in the hospital. Assessee has also furnished necessary evidence with regard to each and every property as well as confirmation by the nurses who is occupying the flat No. 10, Piplod. We further find that despite giving all such details, the ld. Pr.CIT instead of giving his independent finding, directed the Assessing Officer to pass fresh assessment order. We find that on similar submission, this combination of this Bench in Nilkanth Stone Industries [ 2021 (6) TMI 133 - ITAT SURAT] by relying upon the decision of Vikas Polymers [ 2010 (8) TMI 745 - DELHI HIGH COURT] held that it is a prerequisite that Pr.CIT must giving his reason to justify the exercise of suo moto revision. Mere reiteration that order of Assessing Officer is erroneous and in so far as prejudicial to the interest of revenue will not suffice. The exercise of power being quasi-judicial in nature must be of such as to show that the enhancement or modification of assessment or cancellation of the assessment or directions issued for fresh assessment was called for and must irresistibly lead to the conclusion that the assessment order is not only erroneous but prejudicial to the interest of revenue Thus we find that when the case of assessee was selected for limited scrutiny and the Assessing Officer made complete investigation about the issue of limited scrutiny and accepted the return of income, the assessment order cannot be branded as erroneous. Decided in favour of assessee.
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2023 (8) TMI 149
Exemption u/s 11 - rejecting application u/s 12AB - CIT(E) dismissed the application of the assessee by taking view that that objects of assessee are otherwise charitable in nature is / are for the benefits of any particular religious community - HELD THAT:- As assessee submits that the activities are not disputed, however, we find that, in fact the activities were not examined by ld CIT(E). On examination of various evidence, we find that assessee is in existence from 1983 and registered under the provisions of Bombay Public Charitable Trust vide registration No. A-75 - Tapi. Further the assessee was allowed provisional registration certificate up to AY 204-25 on the basis of similar objects and activities. However, as noted above the activities of the assessee was not examined by ld CIT(E). We find that in CIT Vs Bayath Kutchhi Dasha Oswal Jain Mahajan Trust [ 2016 (9) TMI 8 - GUJARAT HIGH COURT ] held that where Trust had large number of other objects for benefit of general public apart from objects for benefit of a religious community, Tribunal was correct in allowing registration to it. Also in CIT Vs Chandra Charitable Trust [ 2006 (7) TMI 96 - HIGH COURT , GUJARAT ] it was held that when from covenants of trust deed, it was spelt out that objects of trust were not only to propagate Jainism or help and assist maintenance of temple, Sadhus, Sadhvis, Shraviks and Shravaks, but other goals were also set out in trust deed, it could be said that trust was a charitable religious trust and section 13(1)(b) would not be applicable. As we deem it appropriate to restore the issue back to the file of ld. CIT(E) reconsider the registration of assessee under Section 12AB of the Act afresh and pass order in accordance with law. Needless to direct that before deciding the application afresh, the ld. CIT(E) shall grant opportunity of hearing to the assessee and further to allow to make further submission to prove the object of assessee-trust and its activities.
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2023 (8) TMI 148
Transfer pricing Assessment - draft assessment order u/s 144C (1) is in the name of non-existing entity but final assessment order is passed in the name of an existing entity - HELD THAT:- As the final assessment order is passed in the name of an existing entity. But the final assessment order was based on invalid Transfer pricing order, Draft assessment order and Direction of Dispute Resolution panel all passed in the name of non-existing entity. Therefore, as all the additions etc. are made on the basis of invalid orders, the final assessment order also cannot be sustained.
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2023 (8) TMI 147
Validity of assessment - non-issuance of notice u/s 143(2) - whether a curable defect? - HELD THAT:- Since the Revenue itself has admitted the fact that issuance of notice u/s 143(2) is not ascertainable therefore, in the absence of any proof of issuance of notice u/s 143(2) and the service of the same to the assessee, it can be inferred that no such notice was issued by the AO to the assessee. The law is well settled that non-issuance of notice u/s 143(2) of the Act is not a curable defect u/s 292BB . Thu respectfully following the judgment of Shri Jai Shiv Shankar travels (P.) Ltd.[ 2015 (10) TMI 1765 - DELHI HIGH COURT] to that the impugned assessment order suffers from patent legality and deserves to be quashed. The additional ground raised by the assessee is thus, allowed. GP estimation - Calculation of Income - Assessee had taken only 2000 cable connections from service provider. Therefore, he could not have subscribed higher numbers. The AO has not verified this fact and estimated the gross profit. From the records, it is clear that the AO did not verify the claim of the assessee and proceeded purely on estimate basis which was not justified. Therefore, hold that the addition made by the AO purely on estimation basis without verifying the correctness of the claim of the assessee, is not in accordance with law, the same deserves to be deleted. AO is therefore, directed to delete the impugned addition. Assessee appeal allowed.
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2023 (8) TMI 146
Income deemed to accrue or arise in India - Royalty Income - assessee is a non-resident corporate entity incorporated under the laws of United Arab Emirates (UAE) and stated to be engaged in the business of leasing of helicopter to the clients across the world - assessee claimed that the amount received, being in the nature of business income, is not taxable in India, in absence of a Permanent Establishment (PE) - HELD THAT:- As per the definition of royalty in paragraph 3 of Article 12, the royalty income has to be received for use or right to use of any copyright, trademark, patent etc. In the facts of the present appeal, admittedly, no income was actually received by the assessee from the lessee. This factual position has been accepted by the departmental authorities. The receipt of lease income is fraught with uncertainties as parties are in dispute and litigations are pending for past so many years. Even, there is no likelihood of end of the litigation in near future. In the aforesaid scenario, it cannot be said that the assessee has received any royalty income, either under the domestic law or under the treaty provisions.The expression received used in paragraph 3 of Article 12 of India UAE DTAA read in conjunction with paragraph 1 2 of Article 12 would mean actual receipt of royalty and not any receipt on accrual or deemed basis. AO had treated an amount as royalty income of the assessee during the year purely based on the amount shown in Form 26AS, however, CIT (Appeals) has restricted the addition purely based on the four invoices raised by the assessee. When the admitted factual position is that the assessee has not even received any amount against those four invoices, in our view, the royalty income cannot be added on notional basis. Thus, we direct the AO to delete the addition - Decided in favour of assessee.
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2023 (8) TMI 145
Capital gain computation - disallowance of expenses claimed u/s 48(1) - HELD THAT:- When the assessee has furnished supporting documentary evidences to establish on record that it had incurred expenditure in connection with transfer of shares, such claim of the assessee cannot be rejected/disallowed on conjectures and surmises. FAA has examined the issue with proper application of mind and having found that a part of the expenditure was actually incurred by the assessee for facilitating the transfer of shares, has allowed the expenditure. No contrary evidence has been brought on record by the Revenue for enabling us to disturb the factual finding of learned first appellate authority. Decided against revenue. Income from other sources or LTCG - as per the Escrow Agreement at the time of sale of shares the value per share was shown less as compared value in the computation of capital gain the assessee has shown total sale consideration of shares - HELD THAT:- As extra payment made to the assessee does not find place in the Escrow Agreement is due to the fact that in addition to the assessee, there are other share holders, who are party to the Escrow Agreement. Therefore, the excess payment made to the assessee could not have formed part of the Escrow Agreement. However, undeniably, the assessee was holding the controlling block of shares of EKPL When documentary evidences indicate that both the vendor and the vendee, i.e., the assessee and DLF Ltd. have treated the payment of Rs. 7.20 crores as control premium on sale of shares, there is no occasion for the Assessing Officer to rewrite the terms of agreement between the parties unilaterally. Moreover, the Assessing Officer has observed that the amount of Rs. 7.20 crores was paid to the assessee for some other purpose. The aforesaid observation of the Assessing Officer clearly indicates that he himself was not sure for what purpose the payment was made. Thus, when the Assessing Officer had no other material in his possession to disprove the claim of the assessee that the amount was received towards sale consideration of shares, he could not have disallowed the claim - Decided against revenue. Accepting the Fair Market Value (FMV) of the shares as declared by the assessee - CIT accepted FMV of the shares as on 01.04.1981 as claimed by the assessee. - HELD THAT:- It is well known that valuation is a highly technical subject, hence, has to be dealt by the experts. Therefore, when the Departmental Valuation Cell is available, the Assessing Officer, instead of referring the valuation process to the Valuation Cell, should not have taken the burden of valuation himself. Assessing Officer has observed that the nature and character of land is dairy farming land, however, the facts on record reveal that EKPL has applied for conversion of dairy farming use to residential use in the year 1970, which was eventually allowed in the year 1992. Therefore, the FMV of the lease hold rights has to be ascertained based on its character of residential use. It is further observed, though, the Assessing Officer has alleged that the Accurate Surveyors in their valuation report has not considered the value of land in same locality, however, the observation is factually incorrect. We may also observe, merely because the assessee purchased shares of EKPL over a period of 20 years at the same face value of Rs. 10 per share, it cannot be said that the FMV of the shares as on 1st April, 1981 would be Rs. 10 per share. This is so because, the actual cost of acquisition cannot be the FMV as provided under section 55(2)(b) of the Act. Decided against revenue.
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2023 (8) TMI 144
Addition u/s 56(2) (vii) (b) in the head other sources - Valuation of industrial shed/ constructed portion - difference in value adopted by stamp valuation and the value shown on the sale deeds - CIT(A) adopted the average value of the cost of construction suggested by DVO and the registered valuer - HELD THAT:- Assessee right from the beginning has taken a stand that at the time of registration of the sale deeds of both the plots the depreciation value of constructed portion was not taken into consideration. We find merit in the submissions of the assessee that when the plot alongwith the constructed structured was transferred, the depreciation value of structure (s) should be taken in to account while estimating cost of such construction. Assessee has placed on record the notification of Inspector General of Registration and Superintendent of Stamp, according to which the assessee is eligible for depreciation @ 1.2% per year. The structure/ constructed on both the plots were 19 years old, thus, the assessee is eligible for requisite depreciation. Further, the Jantri rate of Industrial shed in rural area is Rs. 11,200/- per square meter. Hence, direct the assessing officer to recalculate the value of industrial shed/ constructed portion @ 8646/- per square meter (depreciation for 19 ys @1.2 % i.e. 22.80% of Rs. 11,200/-). And to take the value of land of plot No. 4/B @ 580/ per square meter and for plot No. G-1 @ 600/-per square meter as there is no much variation in the rate of land in the report of DVO and Government approved valuer. Grounds of appeal raised by the assessee are partly allowed.
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2023 (8) TMI 143
Addition u/s 69 - income surrendered during the course of survey - Tax on surrendered income disclosed by the assessee towards business stock applying provisions of Section 115BBE @ 60% - HELD THAT:- In the instant case, we find that through various questions raised during the course of survey, the partner of the assessee firm has been asked about the nature and source of partnership s income and various discrepancies so found during the course of survey. The stock physically found was valued and then, compared with stock as recorded in the books of accounts, thus, there was clear nexus of stock with the assessee s business. There is no finding that the difference in stock so found out by the authorities has any independent identity and the same was thus part and parcel of entire stock, therefore, it cannot be said that there is an undisclosed asset which existed independently and thus, what is not declared to the department is receipt from business and not any investment as it cannot be co-related with any specific asset and the difference should therefore be treated as undeclared business income rather than deemed income. What is equally relevant is that though the excess stock has been found and valued but whether the investment in the excess stock has happened during the year or the same has been carried over from the earlier years is not emerging from the findings of the AO which is also a prerequisite condition before invoking the deeming provisions of section 69 of the Act. Thus the income surrendered during the course of survey cannot be brought to tax under the deeming provisions of section 69 and the same has been rightly offered to tax under the head business income . In absence of deeming provisions, the question of application of section 115BBE doesn t arise for consideration. Decided in favour of assessee.
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2023 (8) TMI 142
Assessment of trust - entitlement to accumulation @ 15% u/s. 11(1)(a) - HELD THAT:- As decided in own case [ 2023 (6) TMI 1212 - ITAT AHMEDABAD] when application of income is more than receipts of year, excess application of income i.e., expenditure in the hands of the assessee can be carried forward to succeeding Year. Thus the ground raised by the assessee is hereby allowed. Entitlement to claim capital expenditure as application of income - HELD THAT:- As assessee fairly conceded that if any item of income has been accepted by the Department as capital in nature and hence not forming part of the taxable income of the assessee then the assessee is not eligible to claim corresponding expenditure incurred in relation thereto, against the same. However, if any item reflected as a capital receipt in the balance sheet is treated as having been earned on revenue account, then the assessee would be eligible to claim corresponding expenditure against the same as well in accordance with law. The Ld. A.O. may carry out the necessary verification and allow the claim of the assessee as per the above directions. Entitlement to depreciation on fixed asset created out of such funds - HELD THAT:- As assessee fairly conceded that w.e.f. assessment year 2015-16, the law has undergone a change and accordingly depreciation would not be allowed on such assets purchased after 01-04-2015. However, the counsel for the assessee submitted that in the interest of justice, the matter may be set aside to the file of Assessing Officer to check the applicability of provisions of section 11(6) of the Act to the extent, the assessee has not claimed such depreciation on fixed assets created out of grant given for a specific purpose. Depreciation as plant and machinery - HELD THAT:- As assessee is entitled to claim depreciation as plant and machinery since the assessee is promoting public objects which are activities in the nature of trade, commerce or business but without a commercial motive. Whether assessee is not entitled to exemption u/s 11 and 12 of the Act since it is covered by first and second proviso to section 2(15)? - This issue has been settled by the Hon ble Supreme Court in assessee s own case ACIT (E) vs. Ahmedabad Urban Development Authority [ 2022 (10) TMI 948 - SUPREME COURT] held that the fact that bodies which carry on statutory functions whose income was eligible to be considered for exemption u/s 10(20A) ceased to enjoy that benefit after deletion of that provision w.e.f. 01.04.2003, does not ipso facto preclude their claim for consideration for benefit as GPU category charities, under Section 11 read with Section 2(15) of the Act. Statutory Corporations, Boards, Authorities, Commissions, etc. (by whatsoever names called) in the housing development, town planning, industrial development sectors are involved in the advancement of objects of general public utility, therefore are entitled to be considered as charities in the GPU categories. Such statutory corporations, boards, trusts authorities, etc. may be involved in promoting public objects and also in the course of their pursuing their objects, involved or engaged in activities in the nature of trade, commerce or business. Nature of receipt - Not to consider certain receipts as revenue receipts - HELD THAT:- In deciding whether the income would qualify as capital or revenue receipt, the entire purport of the claim has to be gathered. Accordingly, Gujarat Safai Kamdar Vikas Nigam [ 2011 (5) TMI 815 - GUJARAT HIGH COURT] held that aforesaid amount received by the assessee should be treated as capital receipt of the assessee. Further, the counsel for the assessee submitted before us that in all fairness if the aforesaid receipts are treated a capital receipts, the corresponding expenditure should also be disallowed in the assessee s hands being capital in nature. In view of the above discussion, we are of the considered view that ld. CIT(A) has not erred in holding the aforesaid amounts to be capital receipts. However, corresponding expenses if any claimed against the aforesaid receipt shall also be disallowed.
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2023 (8) TMI 141
Addition u/s 69A/68 - cash deposits in bank account maintained with SBI unexplained - assessee case has been selected under limited scrutiny to verify the cash deposit during the demonetization period - HELD THAT:- Admittedly, it is a case of limited scrutiny as evident from the notice issued u/s 143(2) - The notice issued u/s 132 of the Act states that case has been selected under limited scrutiny to verify the cash deposit during the demonetization period. Thus, to our understanding, the scope was limited to the extent of cash deposited during the demonetization period. We find that the AO under the assessment order has treated the cash deposits made by the assessee during the entire year as unexplained money/ cash credit under section 69A/68 - The action of the AO is clearly in violation of the instruction issued by the CBDT Circular No. 5 dated 17/07/2016. In view of the above, we hold that the AO while framing the assessment has exceeded his jurisdiction by making an addition of the cash deposit of the entire year as income of the assessee. We note that the cash has been deposited during the demonetization period by the assessee which can only be considered for the purpose of determining the income. Admittedly, there were also withdrawals of cash deposit from the bank account as evident from the submission made by the assessee before Ld. CIT(A). We are of the view that the entire cash deposit cannot be treated as income of the assessee. Computation of income - The dispute before us relates to the cash deposits during the demonetization period which to our understanding represents business receipts and therefore only a percentage of such deposits should be taken for calculating the income of the assessee. Thus, in the interest of justice and fair play, we are of the view that a lumpsum addition of Rs. 82,825.00 being 5% of Rs. 16,56,500 over and above the income declared, will serve justice to the assessee as well as revenue. Hence, the ground of appeal of the assessee is partly allowed.
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2023 (8) TMI 140
Addition made for interest received on enhanced compensation on account of compulsorily acquisition of Agriculture land - As argued it is only an accretion to the value of land and not in the nature of interest and the same is liable to be treated as per the provision of section 45(5) r.w.s. 10(37) and if the Original compensation is Taxable then the same will also be taxable and if original compensation is exempt u/s 10(37) on account of compulsorily acquisition of agriculture Land then the same will also be exempt because this interest has been awarded by the Apex court under the provision of section 28 of the Compulsorily Land acquisition act - AO allowed 50% of deduction on total interest received, u/s 28 of enhanced compensation by following the provisions of section 57(iv) of the Act and treated the remaining 50% as Income from other sources. as confirmed by CIT(A) HELD THAT:- As the land of the assessee was acquired under the old Land Acquisition Act, but, the intention of the legislature is also clear as per the said Circular wherein the compensation received by the assessee u/s 96 of the RFCTLAAR Act has to be held as exempt from levy of income-tax. CIT(A) was not correct in upholding the assessment order wherein the AO has granted part relief to the assessee u/s 57(iv) of the Act and not applying the provisions of section 10(37) of the Act on the interest received by the assessee on enhanced compensation. Therefore, the orders of the authorities below are set aside being not sustainable and not in accordance with the provisions of the Act. Therefore, the grounds of appeal of the assessee are allowed and the AO is directed to allow deduction u/s 10(37) of the Act to the assessee on the entire amount of interest received on enhanced compensation u/s 28 of the Act. Decided in favour of assessee.
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2023 (8) TMI 139
Revision u/s 263 - carry forward of capital loss by selectively applying provisions of tax treaty/the Act - segregation of capital gains and capital losses for drawing benefits of DTAA - distinction between Source of Income and Head of Income - As per CIT income under the head capital gains would be inclusive of all capital gains and losses as permissible under the Act, the assessee cannot selectively take the benefit of tax treaty and no losses will be selectively allowed to be carry forward under the Act - HELD THAT:- The assessee has claimed that it has validly treated gains/losses arising from each type of security to be a distinct source of income though under the head Capital Gains , the assessee is entitled to apply the provisions of the Act/India Singapore DTAA to the extent they are more beneficial. It is evident that there is no impediment in segregating capital losses and capital gains from different source of income under the head capital gains for the purpose of claiming the benefit of DTAA/ provisions of the Act as the case may be, whichever is more beneficial to the assessee in terms of section 90(2) of the Act. Thus, we are of the considered view that on merits, the issue raised in revisional proceedings u/s. 263 of the Act, the assessee has merit. There is no error in the assessment order in accepting claim of the assessee. The twin conditions for invoking section 263 i.e. assessment order should be erroneous and prejudicial to the interest of Revenue are not satisfied in the instant case, hence, the impugned order is set aside and appeal of the assessee is allowed. Revision u/s 263 - whether receipt of foreign remittances had been correctly offered to tax? - Assessee's assessment was selected for limited scrutiny - HELD THAT:- The limited scrutiny was confined to examine outward foreign remittances and whether receipt of foreign remittances had been correctly offered to tax. The issue raised by the CIT in proceedings u/s. 263 of the Act relating to carry forward of capital gains was not within the scope of limited scrutiny. Hence, the Assessing Officer could not have enquired into the issue of assessee s claim of carry forward of capital loss. Once the Assessing Officer had no jurisdiction to enquire into an issue on account of limited scrutiny, the revisional powers u/s. 263 of the Act can only be exercised on the issues which are subject matter of limited scrutiny. It is not the case of Revenue that limited scrutiny was expanded to complete scrutiny. CIT under section 263 of the Act cannot delve on the issue which was not within the domain of limited scrutiny under CASS. Similar view was expressed by the Tribunal in the case of Sonali Hemant Bhavsarin [ 2019 (5) TMI 1547 - ITAT MUMBAI] and various other decisions. Decided in favour of assessee.
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2023 (8) TMI 138
Residential status - taxability of income of assessee earned from foreign assignment - attributing the tax residency of resident to one of the contracting States - permanent home available OR habitual abode - Tax Authorities have primarily focused on the fact that the assessee has a house in India therefore, the assessee cannot be considered to be resident of Indonesia - HELD THAT:- Admittedly assessee is not a person having permanent home available to him in Indonesia as he has occupied a leased premises provided by local employer there. House located in India is under lease and rent received is submitted as rental income. Therefore, as per Article 4(2)(a) the assessee has to be assumed to be a person who does not have a permanent home available to him. So, the concept of the centre of vital interest referred in Article 4 (2) (a) is not relevant and for that reason Article 4(2)(b) becomes applicable and the status of assessee had to be determined on the basis where he has a habitual abode In the case in hand the evidence on record about the assignment of job at Indonesia, shifting of family by the assessee to Indonesia, children getting education at Indonesia, submitting income earned from foreign assignment for taxable purposes in Indonesia and having economic communication on the basis of holding a bank account and insurance in Indonesia are sufficient to show that the habitual abode of the assessee is at Indonesia. The period is irrelevant and what is relevant was the income earned on the job assigned at Indonesia cannot be considered to be global income of the assessee to be taxable in India. Thus the concept of permanent home available has been wrongly interpreted by the Ld. Tax Authorities. Ld CIT(A) has further fallen in error to not consider the applicability of other parameters of Article 4 (2)(b), which Ld. AO had infect taken note of and determined against the assessee. The findings of the Tax Authorities below in regard to taxing the income of assessee earned from foreign assignment are liable to be reversed. Decided in favour of assessee.
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2023 (8) TMI 137
Deduction u/s 35(1)(ii) grant of donation to School of Human Genetics and Population Health - whether the appellants are entitled to weighted deduction @ 175% of the donations given by them to allege Research Institute? - HELD THAT:- As it is not a simple case of claiming deduction on fulfilment of conditions u/s 35(1)(ii) of the Income Tax Act, rather it is a case where Revenue has disproved this claim and proved that, with a criminal mind all such donors have layered their transaction in such a manner which apparently appears to be genuine, but in reality not genuine. They took such a step to commit fraud, an economic offence against the economy of the country. The bonafide of the assessees can be appreciated if they have demonstrated that they have given the donations in the past or subsequent periods to some Institution of national importance, such as Tata Research Centre, certain Hospitals, etc. but none of them has given such a donation except a small amount of few thousand in the case of Abhilasha Tradecom Pvt. Limited. The moment Assessing Officers have dispelled onus discharged by the assessee, then it was their duty to prove the genuineness of their claim with circumstantial evidence as pointed out by the ld. Commissioner in the case of Tarasafe International Pvt. Limited, i.e. what was the purpose of the donation; whether such donation has been given to the School in the past or in the future; whether the Corporate Houses have discussed in the meeting and the Management Committee passed the Resolution for giving the donations; what influenced the assessee to give this donation to the Institution other than deduction under section 35(1)(ii) etc. Benefit of claim under section 35(1)(ii) is outcome of an organized fraud with the help of certain manipulators. Therefore, we do not find any material in the first-fold of arguments raised by the ld. Counsels for the assessees. The appellants are not entitled for deduction under section 35(1)(ii) of the Income Tax Act. As argued notice issued u/s 143(2) for scrutinising the return of assessee for A.Y. 2013-14 is without jurisdiction - The argument of the assessee is that had the returns were placed before the Deputy Commissioner of Income Tax. He might have not formed an opinion to issue notice under section 143(2) of the Income Tax Act. This argument is misplaced because this selection of the cases for scrutiny has been computerized and the cases are being selected under CASS means Computer Assisted Scrutiny System. A unanimous view is being taken laying down the procedure that which type of cases will be selected for scrutiny that would eliminate pick and choose and discretion of any Assessing Officer. There is no jurisdictional element involved in that. Notice is to be issued after the analysis of the computer on the basis of PAN data of an assessee. In other words, the first jurisdiction is with the ITO, Ward-10(3) and for the purpose of distribution of work in order to remove the hardship to the taxpayers/ the professionals, it is to be assigned to particular authorities on the basis of monetary limit. As far as the contention of assessee that a jurisdiction cannot be infused on the consent of an assessee in an authority is concerned, we do not have any dispute. The authority assumes jurisdiction by virtue of the provisions of the Act and not on the strength of the consent given by the party. Similarly there cannot be any waiver on behalf of an assessee qua a jurisdictional aspect, namely if an authority is not having jurisdiction, then assessee cannot give concession for assumption of jurisdiction, but that issue is not involved in the present case. Here a simple issue is, whether section 143(2) contemplates that in selection of the cases for scrutiny assessment, there is a jurisdictional issue involved. If it is to be construed as involved, then what is the meaning of CBDT guidelines providing the process for selection of cases for scrutinies. There is not even a single judgment from any of the Hon ble High Court or of the Hon ble Supreme Court propounding therein that if ld. Assessing Officer failed to record his satisfaction for selecting a particular case for scrutiny assessment and issuance of a notice under section 143(2) would be invalid. If that be so, how it will become a jurisdictional aspect. As on distribution of work amongst the ITOs, vis-a-vis Addl. Commissioner/Deputy Commissioner even no order for transfer of jurisdiction under section 127 is required to be passed. This is an exercise after the process of selection of the case for scrutiny. Once computer identifies a particular case for selection of scrutiny, then on the basis of PAN data, notice is to be issued upon the assessee providing an opportunity to the assessee that its case has been selected for scrutiny assessment and kindly submit what the assessee wants to submit in support of the return. As observed earlier, the process of selection for scrutiny does not contemplate any discretion in the Assessing Officer. He is bound to follow the CBDT guidelines issued for the purpose of selection of the cases for scrutiny. Thus in this case also, the ld. Assessing Officer has issued the notice on the basis of PAN Data, which infuses jurisdiction in ITO, Ward-10 and thereafter following the Instruction No. 1 of 2011, the case was taken up for determination of taxable income by the ld. Deputy Commissioner. There is no violation in the procedure. Hence, additional ground of appeal is rejected. Validity of reopening of assessment - reasons to believe - HELD THAT:- As we are of the view that ld. Assessing Officer did not commit any error in reopening the assessment. The information supplied by the Principal DIT(Investigation), Kolkata was sufficient to harbour belief that income in the shape of alleged claim of donation to Herbicure is a bogus one, because the Department was able to lay its hand on a large number of material, which was available with the Revenue and it was intimated to all the Assessing Officers. The ld. Assessing Officer has made reference to the statements of the Founder and Director Shri Dasgupta as well as other persons, who have deposed during the survey and post-survey inquiries. Thus we are of the view that sufficient material was available with the ld. Assessing Officer for forming an opinion that income has escaped assessment
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2023 (8) TMI 136
Addition u/s 68 - bogus LTCG on shares - HELD THAT:- Assessee has furnished the financials, details of broker, affidavit and the transactions status and MCA website details of the company. AO has doubted the purchase and sale of shares and observed that the price rigging is not commensurate with the financials of the assessee company. Assessee has substantiated with all details and information and the revenue could not make out a case that there is unaccounted money transactions took place in the hands of the assessee and the AO has relied on the investigation report of income tax department and treated the long term capital gains on sale of shares as not genuine. A.O. has not made any enquiry or independent investigation and relied on the statement of the parties and the assessee s name is not included in the list of investigation report. The fact remains that the assessee has submitted the requisite details in respect of purchase and sale of shares and were not disproved. The transaction of purchase and sale of shares is through banking channel. Accordingly, addition cannot be sustained and set aside the order of the CIT(A) and direct the assessing officer to delete the additions and allow the grounds of appeal in favour of the assessee.
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Customs
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2023 (8) TMI 135
Leviability of interest and penalty in relation to amounts payable as duty other than basic customs duty - mis-declaration of goods - intent to evade customs duty or not - it was held by High Court that In the present case, it is not disputed that petitioner has paid a sum of Rs.11.84 Crores much prior to the issuance of show cause notice. There is no determination of duty under Section 28(2) of the Customs Act, 1962 and, therefore, Section 28AB of the Customs Act, 1962 is also not applicable. HELD THAT:- There are no merit in the Special Leave Petition - SLP dismissed.
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2023 (8) TMI 134
Seeking Direction to short close the Bulk Bills of Entry by foreclosing the said Bills of Entry in respect of quantities of goods and materials not cleared under the Domestic Tariff Area (DTA) and lying as unutilised balance - seeking refund of unutilised balance amount deposited by the petitioner - HELD THAT:- On going through the facts, vis-a-vis the stand of the respondents, it transpires that the glitch in the way of consideration of petitioner's request for short closing the Bulk Bills of Entry and issuance of necessary certificate about uncleared quantities is procedural. The respondents have been insisting that the petitioner should follow certain procedures before its claim could be considered. It would be proper to require the petitioner to make an application before the competent authority of the respondents by making request regarding the prayers made in this petition - grievance of the petitioner shall be looked into by the competent authority of the respondents on merits. It would be open for the petitioner to submit to the satisfaction of the competent authority the procedural formalities, if so required in law by the authorities. Petition disposed off.
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2023 (8) TMI 133
Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - Duty Drawback - allegation is that the garments which were exported were highly overvalued by the exporter so as to claim ineligible drawback - violation of Regulations 11(d), 11(e) and11(n) of the CBLR, 2013 or not - HELD THAT:- Drawback is a mechanism of reimbursing to the exporter, the taxes and duties which would have been paid or borne by the exporter on the finished goods as well as on the raw materials. Instead of calculating these taxes and duties each case, based on the average incidence of the taxes and duties on each type of goods, a drawback schedule is notified by the Government which indicates the drawback for each type of goods usually as a percentage of the Free on Board FOB value. For some goods, the rate could be on per piece basis and on some goods, the duty could be as a percentage of FOB with a value cap and in such cases even if the FOB value is higher, drawback will be paid only on that amount. The appellant had filed the Shipping Bills as per the documents provided to it by the exporter. While the transaction value is decided between the exporter and importer, value for determining the duty under the Customs Act is a part of assessment. The power to assess including determining the value lies with the importer/ exporter (self-assessment) or with the proper officer (re-assessment). The Customs Broker has neither any authority nor any responsibility to assess the value of the imported goods or export goods. In all the Shipping Bills, exports were allowed by the Customs in the normal course. It is only the subsequent intelligence and investigations by the DRI which revealed the alleged over valuation of exports. The Customs Broker is neither authorized under the Act nor is obligated under the CBLR to re-determine the value of any goods. Transaction value (be it FOB, CIF or C F) is a matter of negotiation between the overseas buyer and the Indian exporter. It is the consideration which is paid or payable to the Indian exporter by the overseas buyer. The Customs Broker is a stranger to this contract and has no locus standi with respect to the transaction value - Nothing in the facts of the case show that the appellant failed to fulfil its obligations under Regulation 11(d). Hence, the appellant has not violated Regulation 11(d). Violation of Regulation 11(e) - HELD THAT:- This Regulation requires the Customs Broker to NOT impart any incorrect information to the exporter. After perusing the records and the appeal we find no allegation that the appellant, as the Customs Broker, has imparted incorrect information. The case of the Revenue is that the exporter had over-valued export goods and the appellant did not report it. Therefore, evidently, the appellant did not violate Regulation 11(e). Violation of Regulation 11(n) - HELD THAT:- The KYC documents submitted by the appellant and verified and confirmed by the Commissionerate, leave no manner of doubt that the appellant had fully met its obligations under regulation 11(n) and had not violated it. The appellant had not violated Regulations 11(d), 11(e) or 11(n) of CBLR, 2013 - the cancellation of the licence of the appellant, forfeiture of the security deposit and imposition of penalty on the appellant are not sustainable and need to be set aside. - Appeal allowed.
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Corporate Laws
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2023 (8) TMI 132
Challenge to NCLT against striking off of companies - grievance of the petitioners is that despite having been struck off, the shell companies have been transacting with shares of the petitioner no. 1, thereby adversely affecting the commercial interests of the petitioner no. 1-Company, which amounts to financial fraud and corporate offence - HELD THAT:- A perusal of Section 248 of the 2013 Act indicates that the same merely extends up to the striking off of a company if it is not carrying on any business or operation for a period as stipulated in Section 248(1). Upon taking the steps as contemplated in sub-sections (1) to (4) of Section 248, the Registrar, under sub-section (5) thereof, may strike off the name of the company from the Register of Companies and publish a notice in the Official Gazette, upon which the company stands dissolved - However, there is nothing in the provisions of the 2013 Act which empowers the ROC to enquire into the antecedents and activities of a dissolved company. Section 250 of the 2013 Act provides that where a company stands dissolved under Section 248, it shall, from such date, cease to operate as a company and the Certificate of Incorporation issued to it shall be deemed to have been cancelled from the said date, except for the purpose of realizing the amount due to the company and for the payment or discharge of the liabilities or obligations of the company. The argument of the petitioners, that the petitioners cannot go on filing repeated appeals against the revival orders, is not acceptable, since it is the aggrieved party who has to prefer such an appeal - In the event the petitioners feel that they are aggrieved in any manner with the revival of any of the previously struck off companies which are the shareholders of the petitioner no. 1-company, it is open for the petitioners to prefer a challenge before the NCLAT. However, it is not for the petitioners to route their own grievances through other agencies, including the ROC, by avoiding the responsibility of preferring such challenges in due course of law. If the companies-in-question are revived under Section 252 of the 2013 Act after having been struck off initially, there is no bar on the said companies to carry on functioning. Hence, the cause of action in respect of the revived companies, as argued by the petitioners, lies only in a challenge before the NCLAT - it is well-known that the Ministry has been specifically sensitized to look into economic offences of the nature as complained of by the present petitioners, such as functioning of struck-off shell companies by transacting shares of companies like the petitioner no. 1. Application disposed off.
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2023 (8) TMI 131
Oppression and Mismanagement - foreclosure of the Concession Agreement regarding construction of Kiratpur Ner Chowk section of National Highway - Approval of proposed settlement between the National Highways Authority of India (NHAI) and Kiratpur Ner Chowk Expressway Limited (KNCEL) - power of NCLT to approve the Settlement Agreement between KNCEL and NHAI - senior creditors were required to be heard before according such approval or not - calculation of Debt Due and the Full and Final Settlement amount has been done correctly or not - any estoppel would operate in view of the fact that the creditors/Appellants had accepted the distributed share of the settlement amount or not. Whether the settlement agreement between KNCEL and NHAI is in accordance with the proposed Resolution Framework for IL FS and its group companies? - HELD THAT:- It is noted that the procedure suggested by Union of India through its Affidavit dated 17.2.2020, which has been approved by NCLT and NCLAT dated 17.2.2020, gives various options for final resolution. These options include modalities for Group Level Resolution, Vertical Level Resolution and Asset Level Resolution. The Resolution Framework considers Asset Level Resolution as the most feasible option and includes sale of entity as Asset Level Resolution. This sale of entity can take place wherever feasible. The Resolution Framework also stipulates that Asset Level Resolution is to be undertaken in a fair and transparent manner to determine the best possible price to effect a change in the ownership and the relevant company in accordance with process supervised by the New Board and approved under section 242 of the Companies Act. In the present case, it is seen that the resolution of KNCEL is proposed under the Guidelines of MoRTH for resolution of stuck projects . These Guidelines provide for settlement between the Concessionaire KNCEL and Concessioning Party NHAI and execution of a Supplementary Settlement Agreement to finalise and concretise the settlement between the two parties. Further, the settlement between the parties is worked out under the guidance of the Conciliation Committee of Independent Experts-II, which comprises of a Retired Hon ble Judge of High Court and two Learned Technical Experts as conciliators. Admittedly, the Concessionaire and Concessioning Party had signed the original Concession Agreement. Therefore, in our view they are the necessary parties to enter into a settlement agreement. We have noted earlier in this judgment that the settlement agreement has been worked out under the supervision of CCIE-II, which in para 2.1 notes the gross settlement amount of Rs.708.40 crores and the net due amount, after taking into account Rs.35.78 crores towards recoveries, is Rs. 672.42 crores - the Settlement between KNCEL and NHAI was in consonance with the provisions of the Resolution Framework for IL FS and its group entities and approved by NCLAT, which was further approved by CCIE-II and Hon ble Shri Justice D.K. Jain. Whether the Termination Payment in accordance with Article 37.3.1 of the Concession Agreement as claimed by the Appellant will be applicable in the present case? - HELD THAT:- The procedure set out in the MoRTH Guidelines stipulates that Concession Agreement may be foreclosed vide a Supplementary Agreement, mutually agreed and executed between the parties. Annexure I of these guidelines refers to 90% of Debt Due amount, which is calculated in accordance with the formula which is discussed and then accepted by both the parties. Since the two original parties in the Concession Agreement were entering into a Supplementary Settlement Agreement, there does not appear to be any requirement to consult all stakeholders including financial creditors at the stage when the two parties to the Concession Agreement are settling their dispute. The amount of Debt Due which has been calculated by the Appellants based on the claims admitted by the Claim Management Consultant cannot be the amount of settlement. In the present case, a settlement has been entered into between KNCEL and NHAI and a Supplementary Agreement was signed non mutually agreed terms between the two parties. Therefore, any reference to the clauses of the Concession Agreement for calculation of Termination Payment is not justified and the full and final settlement amount in the present case is as per the settlement agreement. The settlement entered into by KNCEL and NHAI for foreclosure of the Concession Agreement relating to Kiratpur - Ner Chowk Project under the MoRTH Guidelines is in accordance with the approved Resolution Framework in relation to the ILF S and its group entities which are correctly approved by the NCLT by the Impugned Order. The Appeal is, therefore, devoid of merit and is accordingly dismissed.
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2023 (8) TMI 130
Professional Misconduct - Acceptance of appointment as EQCR without ensuring eligibility criteria - Failure to Perform the role of EQCR Objectively - penalty and sanctions. Acceptance of appointment as EQCR without ensuring eligibility criteria - HELD THAT:- The audit firm had the option to engage some other person, but CA Riya Agarwal had the option to refuse such appointment, if she felt that she was not qualified - the charge for acceptance of the role as Engagement Quality Control Reviewer without having prior experience is established. Such lapses have been viewed seriously by international regulators as well. Failure to Perform the role of EQCR Objectively - HELD THAT:- The EQCR partner performed the review by routinely ticking a yes/no checklist and signing on some of the WPs prepared by the ET. The work of EQCR partner is not separately identifiable from that of the ET, which raises serious doubts on the performance of her statutory obligations. Accordingly, it is established that the EQCR Partner failed in her assigned role in the Statutory Audit of BCL by virtue of noncompliance with the requirements of SQC 1, SA 220 and SA 230 - Such lapses have been viewed seriously by international regulators as well. Penalty and sanctions - HELD THAT:- It is the duty of an EQCR partner to conduct the review of the work of the ET and ensure that the Independent Auditor's Report issued is appropriate, as it provides useful information to the stakeholders and public, based on which they make decisions on their investments or do transactions with the public interest entity - Without a credible Audit, Investors, Creditors and Other Users of Financial Statements would be handicapped. The entire corporate governance system would fail and result in a breakdown in trust and confidence of investors and the public at large if the auditors do not perform their job with professional scepticism and due diligence and adhere to the standards. Section 132(4) of the Companies Act, 2013 provides for penalties in a case where professional misconduct is proved. The seriousness with which proved cases of professional misconduct are viewed, is evident from the fact that a minimum punishment is laid down by the law. Considering the proved professional misconduct and keeping in mind the nature of violations, principles of proportionality and deterrence against future professional misconduct, and also keeping in mind that the EQCR Partner has accepted all the charges and taken responsibility for the lapses pointed out in the SCN, in exercise of powers under Section 132(4)(c) of the Companies Act, 2013, it is hereby ordered the imposition of a monetary penalty of Rs.1 Lakh upon CA Riya Agarwal.
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2023 (8) TMI 129
Professional Misconduct - Improper Assessment of Going Concern Basis - lmproper reporting of Going Concern in Independent Auditor's Report - Inconsistency in audit documentation - Penalty and Sanctions. Improper Assessment of Going Concern Basis - HELD THAT:- Under the going concern basis of accounting, the financial statements are prepared on the assumption that the entity is a going concern and will continue its operations for the foreseeable future. According to para 21 of SA 570, if in the auditor's judgment the management's use of the going concern basis is inappropriate, then the auditor shall express an adverse opinion. The auditor has admitted that he performed limited quantitative analysis and also did not maintain sufficient documentation. The auditor failed to comply with SA 570 in failing to determine if the management's use of the going concern basis was inappropriate and express an opinion accordingly - the auditor has not performed analysis in accordance with the provisions of SA 570 and therefore the Auditor's opinion does not take into account his judgment on the Going Concern basis arrived at in accordance with SA 570. This is a clear violation of SA 570 - In addition the auditor has also violated Para 8 of SA 230 Audit Documentation, which requires an auditor to prepare audit documentation that is sufficient to enable an experienced auditor, having no previous connection with the audit to understand the procedures performed - It is evident that the EP's use of the Emphasis of Matter to include the Going Concern basis, without determining if he needed to modify his opinion on this account, was in clear violation of SA 706 - the EP failed to comply with SA 230, SA 570, SA 705 and SA 706 in applying the prescribed audit procedures to evaluate BCL's assumption of the use of going concern basis for the preparation of its Financial Statements. lmproper reporting of Going Concern in Independent Auditor's Report - HELD THAT:- As per Para 22 of SA 570, if adequate disclosure about the material uncertainty is made by the entity in its financial statement, the auditor shall express an unmodified opinion and the auditor's report shall include a separate section under the heading Material Uncertainty Related to Going Concern . However, in terms of para 23 of SA 570, if adequate disclosure is not made and the auditor opines that the use of going concern is doubtful, the auditor is required to express a qualified opinion or adverse opinion, as appropriate, in accordance with SA 705 - the charge against the EP that he violated SA 570 and SA 705 is established - Such lapses have been viewed seriously by international regulators as well. Inconsistency in audit documentation - HELD THAT:- As per para 13 of SA 580, the date of written representation shall be as near as practicable to, but not after, the date of the auditor's report on the financial statements. In light of this, the charge is not further proceeded with. Penalty and sanctions - HELD THAT:- It is the duty of an auditor to conduct the audit with professional scepticism and due diligence and report his opinion in an unbiased manner. Statutory audits provide useful information to the stakeholders and public, based on which they make their decisions on their investments or do transactions with the public interest entity - Section 132(4) of the Companies Act, 2013 provides for penalties in a case where professional misconduct is proved. The seriousness with which proven cases of professional misconduct are to be viewed, is evident from the fact that a minimum punishment is laid down by the law. The EP in the present case was required to ensure compliance with SAs to achieve the necessary audit quality and lend credibility to Financial Statements - Despite the presence of a plethora of negative indicators indicating serious threat to the financial health of BCL, CA Shekhar Sharad failed to obtain sufficient appropriate audit evidence in support of assumption of Going Concern basis and failed to report the conclusions in accordance with the applicable provisions of SA 570 read with SA 705. The EP vide his reply to the SCN has accepted all the charges listed in the SCN and also stated that BCL was his first audit of a listed company, and the lapses have not occurred due to gross negligence, but due to error in making professional judgement. Considering the proved professional misconduct, the nature of violations, principles of proportionality and deterrence against future professional misconduct, and also keeping in mind that the EP has accepted all the charges and taken responsibility for the lapses pointed out in the SCN, in exercise of powers under Section 132( 4)( c) of the Companies Act, 2013, it is hereby ordered the imposition of a monetary penalty of Rs.1 Lakh upon CA Shekhar Sharad.
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Insolvency & Bankruptcy
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2023 (8) TMI 176
Search and seizure of records of the corporate debtor and issuance of summons to applicant/resolution profession during moratorium period - HELD THAT:- The Karnataka High Court in Associate D cor Limited Rep. by Resolution professional vs Deputy Commissioner of Commercial Taxes [ 2021 (12) TMI 1408 - KARNATAKA HIGH COURT] , after referring Apex court citations held that the notice issued under section 65 the State Goods and Services Tax Act 2017, R/w Rule 101(4) of KGST Rule, informing the discrepancies found in audit and asked the registered person to submit reply, is hit by mortarium order passed under section 14 of IBC 2016 and stayed/kept in abeyance, the proceedings pursuant to the said impugned notice till the lifting of moratorium. The Government of India, Ministry of Finance, finance Department also issued Circular No.134/04/2020-GST under section 168(1) CGST Act, Annexure A1 of the petition explaining that no coercive action to be taken in respect of dues of GST pertaining to corporate debtor, under the CIRP. The respondent despite the supra guidance taken the coercive action - the acts of the respondent undermined the authority of Resolution professional and because of seizure of Books of accounts of the corporate debtor causes much inconvenience and paralyzed the Resolution process, the same shall be completed in time bound manner. In the circumstances it is concluded that the search and seizure of records of the corporate debtor and issuance summons to applicant/resolution profession are violative of mortarium order passed under section 14 of IBC, 2016 - the respondent are directed to return all the records seized from the premises of the corporate debtor mentioned in seizure mahazar - summon dated 13.03.2023 issued by the respondent to the corporate debtor is hereby set aside - respondent is hereby directed to pay a compensatory cost of Rs.50,000/- to the applicant towards the CIRP cost. Petition allowed.
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Service Tax
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2023 (8) TMI 128
Demand of service tax on advances received - contract for construction and commissioning of railway sliding and signaling telecommunication systems including associated electrical and mechanical instruments for facilitating handling of coal at the Kudgi and Gadarwara super thermal power projects - benefit of N/N. 25/2012-ST dated 28th June 2012 - it was held by Tribunal that It is, thus, clear that the proposition of strict construction of intent of exemption notification must also go hand in hand with strict construction of every word/phrase therein. The exemption from tax is available to railways , excluding mono rail or metro, by notification no. 25/2012-ST dated 20th June 2012 after 1st July 2012 and, as conceded by the adjudicating authority, there being no definition of railway , either therein or in Finance Act, 1994, the distinction between railway for private purpose and railway for public service cannot be artificially contrived to suit tax administration; neither can the definition in another statute be drawn upon for the purported purpose of illumination. HELD THAT:- This Court is of the opinion that the impugned judgment does not call for interference. The civil appeal is accordingly dismissed.
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2023 (8) TMI 127
CENVAT Credit - input/capital goods - SS Pipes, SS/CR Coils, MS Angles, Plastic Hose assembly, various types of Valves and Valve Automation system - disallowance of credit on the ground that the tank constructed and erected by the appellant is not moveable goods accordingly, in terms of Rule 3(1) of CCR - HELD THAT:- In view of the submission pointed out by learned Counsel that despite various decisions on the identical issue and the subsequent view taken by the department, the Adjudicating Authority has not considered the judgments viz-a-viz facts of the present case. Therefore, Adjudicating Authority must reconsider the entire matter based on the judgments which were passed much after the impugned order passed by him. Therefore, it is incumbent on the Adjudicating Authority to reconsider the whole issue in the facts of the present case equitable with various judgments delivered subsequent to the passing of the impugned order. Matter remanded back to the Adjudicating Authority for passing a fresh order - appeal allowed by way of remand.
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2023 (8) TMI 126
Demand the service tax along with interest and for imposing penalty - Real Estate Services - rendition of such service or not - non-registration for the said service and non-discharge of service tax liability - invocation of extended period of limitation - reasonable cause for non-imposition of penalties under Section 80 of the Finance Act 1994 or not - HELD THAT:- The appellant has strenuously argued that the appellant had not rendered any service as Real Estate Agent and that the amount received is profit from purchase and sale of immovable property. The documents relied to support this argument are the General Power of Attorney and declaration executed by the land owners to the appellant. On bare perusal, it can be seen that these documents do not confer any legal title or possession over the property to the appellant. These documents only facilitate the appellant to find a buyer for the land without the involvement of the land owners. The documents are executed for a trust and assurance that the land owners will not sell their land to any other buyer - The General Power of Attorney is only an authorisation to sell and to find a buyer. This facilitates the appellant for finding a buyer for the land and also avoid the need of each land owner to come to the Register Office. It saves stamp duty also. The sale deed has been ultimately executed by the land owners and not by the appellant. From the facts it is clear that the appellant has acted as a middleman/ agent in the purchase and sale of immovable property and the amount received is consideration for such services - the findings of the adjudicating as well as the Commissioner (Appeals) on the merits of the case, agreed upon - the issue on merits is found against the appellant and in favour of the Revenue. Extended period of limitation - penalties - HELD THAT:- It has to be seen that the appellant did not obtain registration under the Real Estate Agent Service and did not pay the service tax. The same would have gone unnoticed, but for the scrutiny by the audit party. Therefore there are no grounds to set aside the demand on the ground of limitation. However, the appellant has put forward explanation that they were under bonafide belief that the transaction is purchase and sale of immovable property and that it did not fall under Real Estate Agent Service. For this reason, in terms of Section 80 of finance Act, 1944 the penalties imposed under Section 77 78 alone, 1994 require to be set aside. The impugned order is modified to the extent of setting aside the penalties imposed under Section 77 and 78 of the Finance Act, 1994 without disturbing the demand of service tax or the interest thereon - appeal allowed in part.
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2023 (8) TMI 125
Classification of services - facility for accessing and retrieving date from the common server with the aid of SAP software for accounting and other purpose through private international lease lines - Computer Network Services / Online Information and Database Access or Retrieval Service or Information Technology service, provided from a remote location outside the taxable territory? - extended period of limitation - penalty - HELD THAT:- It is found that Computer Network Services means the inter connection of one or more computers. Online Information and Data Base Access or Retrieval or both in Electronic form through Computer Network relates to providing data or information, retrievable or otherwise, to any person, in electronic form through a computer network. Whereas Information Technology Software service covers the manipulation or interactivity provided to a user on any representation of instruction, data sound, or image including source code or object code by machines of a computer or an automatic data processing machine. It has been admitted in the Order in Original that the appellant has installed a common server and implemented SAP in the premises of BPLSL for use by the appellant for access and retrieving data from the common server with the aid of SAP software for accounting and other purposes through international lease lines. Hence it is clear that the activity rendered by the appellant is basically related to manipulation of data and not merely the inter connection of one or more computers or the access or retrieval of data - the classification of the service under dispute as a computer network service is not correct. The services are correctly classifiable under Information Technology Software services which have been introduced only with effect from 16.5.2008. The nature of the services are such that it can be provided online from a remote location outside the taxable territory also. The service provided from a remote location outside the taxable territory, to recipients in India would be taxable under the reverse charge mechanism. The appellant has placed reliance of Hon ble Bangalore Tribunal s decision in the case of IBM INDIA PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX, BANGALORE [ 2009 (4) TMI 314 - CESTAT, BANGALORE] wherein it was held that ERP implementation, which the appellant asserts is equivalent to the services rendered in the present case, falls under the category of Information Technology Software services only with effective from May 16, 2008. Extended period of limitation - penalty - HELD THAT:- The appellant has agreed that leased line services are classifiable under Computer Network Services from 2006 onwards and has paid the service tax thereon. Since the issue has been decided on merit and the appellant having paid the dues under the correct service classifications, the question of extended time limit does not arise nor are any penalties imposable. The disputed service to be defined under Section 65(53a), being a taxable service under Section 65(105)(zzzze) of the Finance Act, 1994 as Information Technology Software service from 16.5.2008 - impugned order set aside - appeal allowed.
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2023 (8) TMI 124
Wrongful (amount) payment of service tax - part amount do not pertain to any service rendered - amounts are not reflected either in the invoices or in the books of accounts under relevant Heads and the appellants did not provide any proof like invoice etc. to show that those payments were for the purposes cited - conditions laid down in the N/N. 12/2003 not satisfied - extended period of limitation - HELD THAT:- A simple perusal of the Notification would indicate that the exemption contained therein is applicable subject to condition that there is documentary proof specifically indicating the value of the said goods and materials. The documentary proof could be in any form such as invoices, debit/ credit notes, books of accounts etc. - it is found that the appellants did not produce any evidence to that effect, either before the original adjudicating authority or before appellate authority. Payment of service tax payable within one month of the issuance of OIO - HELD THAT:- The appellants claim to have paid only Rs.1,88,220/- out of total demand of Rs.4,46,078/- along with interest and 25% of the penalty. We find that in terms of Section 73 (3) of the Finance Act, 1994, the appellants are required to pay the service tax confirmed along with interest and 25% of the penalty; it is not open to the appellant to pay a portion of the demand that they think is payable and claim the benefit of the provision of law. Therefore, the appellants cannot take shelter under the provisions of Section 73 (3) of the Finance Act, 1994. Extended period of limitation - suppression of material facts or not - HELD THAT:- Suppression by itself may not indicate any intent. However, suppression coupled with the appellant s failure to disclose the amounts collected in the ST-3 returns; failure to deposit the applicable service tax, which they are not disputing, leads to the inevitable conclusion that the intent, to evade payment of service tax, is presentin this case considering the facts and circumstances - the extended period is rightly invoked. Levy of penalties - HELD THAT:- The interest of justice will be more than met if penalty under Section 78 is imposed - penalty imposed under Sections 76 and 77 are being set aside. The appeal is partly allowed by upholding the confirmation of duty, interest and penalty under Section 78; penalties under Sections 76 77 are, however, set aside.
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2023 (8) TMI 123
Classification of services - steamer agent service or not - amount received by them as brokerage - extended period of limitation - HELD THAT:- The factual position as emerged from the entire discussion is that appellant were engaged in booking, canvassing or advertising cargo as sub agent of various shipping lines. The work undertaken by the appellant is primarily on behalf of the steamer agent namely M/s. Freight Connection India Pvt. Limited and thus the work which was to be undertaken by the main steamer agent M/s. Freight Connection India Pvt. Limited was done by the appellant and for which certain brokerage was paid to them. In reality the work of steamer agent was performed by the appellant as sub-agent of the main steamer agent. Therefore, the services rendered by the appellant will be rightly classifiable under the category of steamer agent - the decision of the Larger Bench in the case of COMMISSIONER OF SERVICE TAX VERSUS MELANGE DEVELOPERS PVT. LTD. [ 2019 (6) TMI 518 - CESTAT NEW DELHI] noted, wherein it has been categorically held that it is not open to a sub-agent contend that he should subject to service tax liability in respect of service tax liability when the main contractor has paid service tax on the gross amount. Thus, since the appellant being a sub-contractor has provided the service of the steamer agent, they are liable to pay service tax. Extended period of limitation - proviso to Section 73 of Finance Act, 1994 - HELD THAT:- There has been a lot of confusion and mis-understanding in the trade whether the sub-agent need to pay service tax on the amount charged by them from the main contractor/ agent who has already discharged service tax liability on the gross amount - it is found that appellant were under the bonafide belief that no service tax was payable on the brokerage received by them for providing steamer agent service being a sub-agent - also, all the transactions between the appellant and M/s. Freight Connection India Pvt. Limited are recorded in the books of accounts - extended time to demand service tax under Section 73 is not invokable. The appellant are liable to pay service tax on the service provided by them as steamer agent however, the demand confirmed by invoking extended time proviso under Section 73 need to be set-aside - show cause notices issued within normal period to demand service tax is sustainable - Appeal allowed in part.
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2023 (8) TMI 122
Classification of services - Goods Transport Agency Service (GTA) or not - transportation of effluent generated during effluent treatment of the appellant - HELD THAT:- The facts in the present case is not under dispute that the goods which were transported for the appellant is effluent and the same is transported for throwing the same and the same is not sold or saleable in the market. As per definition in the Finance Act, 1994, the definition of goods as provided under Section 65(50) goods has the meaning assigned to it in clause (7) of section 2 of the Sale of Goods Act, 1930 - As per the combined reading of both the definitions, it is clear that only for such transportation which is for transport of goods defined under Section 65(50), will be covered under the service of Goods Transport Agency. In the present case, the transport of goods is in respect of effluent which is neither sold nor saleable in the market therefore, the same is not qualify as goods defined under Section 65(50). Accordingly, the transportation of effluent will not fall under the Goods Transport Agency service. In the case of M/S GUJARAT STATE FERTILIZERS CHEMICALS LTD. VERSUS CCE VADODARA [ 2014 (7) TMI 893 - CESTAT AHMEDABAD] the Tribunal held that As the relevant facilities/services of transportation provided by appellant are not for the goods as defined in Section 2(7) of the Sale of Goods Act, 1930, the same cannot be considered as a service provided for transportation of goods as per Section 65(105)(zzz) of the Finance Act, 1994 read with Section 2(7) of Sale of Goods Act, 1930. Thus, it is settled that the goods for the purpose of Goods Transport Agency service should be qualified as goods‟ in terms of definition given under Section 65(50) of Finance Act, 1994. Therefore, in the present case the goods being effluent which is neither sold nor saleable, does not qualify in terms goods . Therefore, transportation of the same does not fall under the four corners of Goods Transport Agency service, hence the same is not liable to service tax - appeal allowed.
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2023 (8) TMI 107
Export of service or not - condition specified in the 2005 Export Rules that the order for provision of service should be made by the recipient of such service from offices located outside India is not fulfilled since there is no written contract between Arcelor India and Arcelor France and the condition that the service is delivered outside India and is used outside India is also not fulfilled - HELD THAT:- The Central Government had issued a notification dated 28.02.1999 granting exemption to taxable services provided in respect of which payment was received in convertible foreign exchange. This notification was superseded by a notification dated 09.04.1999, which extended the same exemption but added a proviso that the exemption will not apply when the payment received in convertible foreign exchange was sent outside India. This notification dated 09.04.1999 was subsequently rescinded by a notification dated 01.03.2003. In M/S GAP INTERNATIONAL SOURCING (INDIA) PVT. LTD. VERSUS CST, DELHI [ 2014 (3) TMI 696 - CESTAT NEW DELHI] , the dispute before the Tribunal was for the period from 19.04.2006 to 31.05.2007. The service provided by the appellant situated in India to GAP International was in relation to procurement of goods from India and for this purpose the appellant conducted survey of the manufacturers of various products required by GAP, USA and recommended vendors who could supply the goods. The appellant also conducted inspection of the export consignments and issued the inspection certificates. It was, therefore, not in dispute that the services provided by the appellant were BAS. The dispute, however, was whether the services qualified as export of service in terms of the 2005 Export Rules and, therefore, not taxable in India. It clearly transpires from the decision of the Bombay High Court in THE COMMISSIONER OF SERVICE TAX, MUMBAI-VI COMMISSIONERATE VERSUS M/S. A.T.E. ENTERPRISES PVT. LTD. [ 2017 (8) TMI 1233 - BOMBAY HIGH COURT] that in a case where the Indian entity only helps the foreign entity to place orders on an Indian Company and it is the foreign entity which actually executes the orders with the Indian Company and the consideration for such orders is directly paid to the foreign entity, the activity may culminate in supplies to the Indian company but this would not mean that services have been provided in India and the services rendered by the Indian entity to the foreign entity would qualify as export of service under the 2005 Export Rules. In the present case, Arcelor India is a sub agent of Arcelor France which is an agent for the steel mills situated outside India. For procuring sale orders for the products manufactured by the foreign mills from customers in India, the requests of prospective customers identified by Arcelor India is forwarded to the foreign mills who, thereafter, directly get in touch with the Indian customer to determine the terms and conditions and execute a contract after which the goods are supplied by the foreign mills directly to the Indian customers. For this provision of service, Arcelor India receives consideration from Arcelor France in convertible foreign exchange. Thus, there exists a relationship of service provider and service recipient between Arcelor India and Arcelor France. It was the consistent view of the High Courts and the Tribunal that export of service would take place under rule 3(1)(iii) of the 2005 Export Rules if a person residing in India provides a service to a foreign entity to enable it to book orders for customers in India. This is for the reason that the foreign entity is located outside India and the payment is received by the person residing in India in convertible foreign exchange. The reference is answered in the following manner: (i) Arcelor India, a service provider, is providing BAS service to Arcelor France, which is a service recipient. Arcelor India is, therefore, providing service to Arcelor France which is situated outside India and Arcelor India receives consideration in convertible foreign exchange. The service provided by Arcelor India is, therefore, delivered outside India and used outside India as is the requirement under the 2005 Export Rules prior to 01.03.2007 and Arcelor India provides services from India which are used outside India as is the requirement after 01.03.2007. It cannot, therefore, be doubted that Arcelor India provides export of service‟ as contemplated under rule 3 of the 2005 Export Rules; and (ii) Arcelor France is an agent of the foreign steel mills and Arcelor India is its sub-agent. Arcelor India provides the necessary details of the customers in India to the foreign steel mills and, thereafter, the foreign steel mills and the Indian customers execute a contract for supply of the goods. The goods are directly supplied by the foreign steel mills to the Indian customers. Arcelor India also satisfies condition (b) of rule 3(2) as payments for such service have been received in convertible foreign exchange.
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Central Excise
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2023 (8) TMI 121
Refund claim - payment of amount equivalent to the CENVATE credit attributable to inputs and input services used in relation to the manufacture of exempted clearance of petroleum product namely Liquefied Petroleum Gas (LPG) - refund sanctioning authority took the view that the amount was rightly paid and the refund was not liable to be granted - HELD THAT:- In the case of THE PRINCIPAL COMMISSIONER, CENTRAL GST AND CENTRAL EXCISE VERSUS M/S. RELIANCE INDUSTRIES LTD. [ 2022 (5) TMI 650 - GUJARAT HIGH COURT ], the Division Bench of this court held that the question whether the LPG is by-product or not, has come an academic issue in view of the decisions of the supreme court in COMMISSIONER OF CENTRAL EXCISE, MUMBAI VERSUS M/S NATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED [ 2008 (11) TMI 6 - SUPREME COURT] and SWADESHI POLYTEX LTD. VERSUS COLLECTOR OF C. EX. [ 1989 (11) TMI 131 - SUPREME COURT] . Learned advocate for the appellant when confronted with the decision of the Division Bench of this court in M/S. RELIANCE INDUSTRIES LTD. involving the same issue and questions, was entirely at his receiving end and was not in a position to dispute the position of law emerging from the said decision, which holds the field. Thus, no question of law much less any substantial question of law can be said to be arising. The proposed substantial questions of law are already considered, decided and answered - appeal dismissed.
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2023 (8) TMI 120
Sanction of Refund claim allowed by one authority and denied by other - whether once the Commissioner (Appeals) upheld the order passed by original authority, he could have set aside the same? - HELD THAT:- The Commissioner (Appeals) instead of hearing both appeals together has heard the appeals separately which has resulted in passing conflicting orders. The order passed by Commissioner (Appeals) in the appeal filed by the appellant is prior to the order passed in the department s appeal. When an order has already been passed upholding the sanction of part of the refund claim, the same authority cannot pass another order setting aside the sanction of entire claim. Such order is ab initio void and non-est. Further the department has not preferred any appeal against the order dated 08.10.2013 and the same has attained finality. Moreover, in the present case, it is seen that the Show Cause Notice is issued proposing to restrict the refund claim to Rs. 4,27,062/- and not proposing to reject the entire claim. For this reason also the impugned order passed so as to reject the entire refund claim is not justified. There are no hesitation to conclude that the impugned order is not sustainable and requires to be set aside - appeal allowed.
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2023 (8) TMI 119
CENVAT Credit - input - Helmet lock, supplied along with the Motorcycles - essential accessory of the Excisable goods or not - merits classification under heading no. 87.14 of Central Excise Tariff Act or not - CBEC vide Circular No. 24/90-CX-4 dated 11/07/1990 - HELD THAT:- The CBEC Circular classifies the helmet locks under heading no. 87.14 of CETA, i.e as part of Motorcycles - it is found that the definition of input during the relevant period includes accessories of the final products; as long as an input is an accessory to the Excisable goods manufactured and cleared, credit cannot be denied. Moreover, contrary to the contention of the learned Authorized Representative, the definition does not prescribe the part/component to be an essential accessory. As long as the input in question is an accessory, it qualifies to be an input as per Section 2(k) of Central Excise Act, 1944. It is not Revenue s case that the Helmet lock is not an accessory. Such a conclusion runs contrary to the classification approved by CBEC. As there is no change in the legal provisions for the subsequent period, credit is admissible in the previous period which is impugned in this case. Therefore, the impugned order is not legally sustainable and therefore, liable to be set aside. Appeal allowed.
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2023 (8) TMI 118
Valuation - non-inclusion of value of certain bought out items in the assessable value of the service equipment system manufactured and cleared by the appellant - demand alongwith interest and penalty - HELD THAT:- Neither the show-cause notice nor the impugned order brings forth anything to contradict the statement - it is found that the impugned order, other than alleging that the appellants have manufactured systems of the service stations, did not go to verify the actual product manufactured; no Panchnama has been drawn to show whether the bought-out items are fitted with the items manufactured by the appellants and cleared; the classification of the excisable goods manufactured by the appellants is also not mentioned. In the absence of this cogent evidence, it cannot be established that the equipment manufactured by the appellant is incomplete and cannot work independently without the bought-out items in question. The show-cause notice or the impugned order do not make it clear as to why only 4 out of 103 bought-out items were considered for inclusion in the assessable value of the systems said to have been manufactured by the appellant; the only reason cited was that the systems as well as the bought-out items were cleared under the same invoice; it is not clear as to how, in such circumstances, other items, than the 4 discussed, are not considered for inclusion. Therefore, there are no evidence has been brought out to prove that the parts supplied as bought-out items by the appellants are integral parts of the equipment manufactured by them. In the instant case, the Department could not prove conclusively that the bought-out items in dispute are integral part of the equipment manufactured; Department did not even prove that the same are fitted into the system, manufactured by the appellants, at least by the use of screwdriver technology. From the statements, of the experts in the field, recorded by the Department, it is clear that the said items are sold together for ease of convenience of the customers rather than the necessity of the functioning of articles manufactured. Therefore, the appellant s arguments is strong and the demand of Rs.11,78,980/- disputed by the appellants requires to be set aside. The impugned order is modified to the extent of limiting the duty confirmed to Rs.23,50,637/- which stands paid by the appellant along with interest and 25% of the penalty. Hence, the appeal is partly allowed.
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2023 (8) TMI 117
Availment and utilisation of CENVAT credit on input services and capital goods at Daman unit - respondent was a manufacturer or not - input services and capital goods have a nexus qua the process of manufacture or not - HELD THAT:- In view of Rule 3 of CCR, the credit of either excise duty paid on input /capital goods or service tax paid on the input services have been termed as Cenvat credit and the said Cenvat credit is allowed to be availed by the manufacturer and service provider and utilised either for payment of excise duty or for payment of service tax. In the said provisions, there is no explicit condition that for manufacture and services provider separate account has to be maintained for availment of Cenvat credit and utilization of Cenvat credit. Therefore in the absence of any such restriction or prohibition, the assessee is free to maintain a consolidated Cenvat account and discharge the excise duty as well as the service tax. The CENVAT credit is kind of common kitty into which credit of duty paid on inputs and capital goods and credit of service tax paid on input services can be taken. Since the respondent is both a manufacturer and provider of output services from their Daman factory during the disputed period they are eligible for availment of Cenvat credit on input, capital goods and input services used for providing output services from the centralized service tax registration at the Daman factory and used for manufactured goods and for providing their output services. Further Cenvat being a beneficial piece of legislation, which was enacted for removing the cascading effect, the denial of credit citing procedural irregularities is unsustainable. It is a settled position that for availing the Cenvat credit the location from where the output service provided is not relevant. As long the service is provided by the service provider for which any input service is received and used for providing output service, the Cenvat credit on such input services shall be available and also for utilizing the said Cenvat credit for payment of service tax on the output service. Therefore, the location from where the service is provided and received is immaterial for availing the Cenvat credit on input services as well as for payment of service tax on the output services. Apex Court in the case of COMMISSIONER OF C. EX., AHMEDABAD VERSUS RAMESH FOOD PRODUCTS [ 2004 (11) TMI 103 - SUPREME COURT ] held that there is no requirement of one-to-one co-relation in availment of Cenvat. The impugned order is correct and legal which does not require any interference - impugned order upheld - appeal of Revenue dismissed.
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CST, VAT & Sales Tax
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2023 (8) TMI 116
Nature of transaction - sale or service - Levy of sales tax on the turnover of sale - tankers given on hire - deemed sale or transfer of the right to use any goods for any purpose - HELD THAT:- The deemed sale of transfer of right to use any goods for any purpose came up for consideration before the Apex Court in the case of BHARAT SANCHAR NIGAM LTD. (BSNL) VERSUS UNION OF INDIA [ 2006 (3) TMI 1 - SUPREME COURT] . In the said judgment, the Apex Court has considered the judgment of STATE OF ANDHRA PRADESH AND ANOTHER VERSUS RASHTRIYA ISPAT NIGAM LTD. [ 2002 (3) TMI 705 - SUPREME COURT] . The Apex Court in the said case held that to constitute a transaction for the transfer of the right to use the goods, it is necessary that there must be a consensus ad idem as to the identity of the goods, the transferee should have a legal right to use the goods and consequently all legal consequences of such use including any permissions or licences required therefor should be available to the transferee and for the period during which the transferee has such legal right, it has to be to the exclusion of the transferor. The Apex Court held that this is the necessary concomitant of the plain language of the statute, viz., a transfer of the right to use and not merely a licence to use the goods. Another condition was that having transferred the right to use the goods during the period for which it is to be transferred, the owner cannot again transfer the same rights to others. Thus, it could be seen that unless all these ingredients are available, the transaction will not come within the meaning of transfer of the rights to use any goods . The Gauhati High Court in the case of INDIAN OIL CORPORATION LTD. VERSUS COMMISSIONER OF TAXES, ASSAM AND OTHERS [ 2009 (2) TMI 749 - GAUHATI HIGH COURT] considered a similar provision under the Assam General Sales Tax Act. In the said case, petitioner IOCL, which was engaged in the business of sale and supply of petroleum products inside as well as outside the State of Assam, had hired trucks for delivery of petroleum to its dealers and in the course of its business entered into agreement with contractors as regards hiring of trucks/tankers - After taking into consideration the various clauses of contract entered between the assessee and the owners of the vehicles, the Division Bench held that there was no transfer of right to use to make it taxable under the Act. The Court, therefore, found that show cause notice issued was without jurisdiction and as such, allowed the petition, setting aside the show cause notice. In the present case, the clauses in the agreement reveal that oil company is in exclusive possession and use of the tankers to transport its petroleum products and have full control over the tankers and crew for transportation and delivery of petroleum products to customers/other locations. The agreement in clear terms provides for transfer of right to use the trucks for transportation of petroleum products of oil company - the effective control and possession was always with AHS. What was being provided to HPCL was only a transportation service on hire. The Tribunal instead of applying the law as laid down by the judgments in the case of Bharat Sanchar Nigam Ltd., Indian Oil Corporation Ltd., has read the agreement in bits and pieces and referred to only certain clauses which were in place to ensure commitment for uninterrupted efficient transportation service. The Tribunal has referred to the clauses which provides that the tankers are not under agreement with any other party, AHS not to assign right in the tankers or the tankers should not be used for products other than oil of HPCL, HPCL has right to change the loading location etc. The Tribunal has failed to appreciate that these clauses referred to and provided for in the agreement with HPCL were only to ensure uninterrupted transportation services by AHS to HPCL. The right to use of tankers does not get transferred because of these clauses - Merely because of the fact that certain clauses were provided in the agreement in view of the nature of the cargo to be carried and to ensure that the transportation of their products do not get disrupted, it did not necessarily mean that the right to use the tankers stood transferred in favour of HPCL by AHS, more so, when the agreement provided for substitution of the vehicles. The judgments relied upon by Mr. Sonpal (respondent) are of no assistance to him in as much as, as held in STATE OF ANDHRA PRADESH AND ANOTHER VERSUS RASHTRIYA ISPAT NIGAM LTD. [ 2002 (3) TMI 705 - SUPREME COURT] the effective control was with AHS. In BRAHMAPUTRA VALLEY CONSTRUCTION AND SUPPLIERS VERSUS OIL AND NATURAL GAS CORPN. LTD. AND OTHERS [ 2014 (9) TMI 371 - GAUHATI HIGH COURT] also the Gauhati High Court has held that it is the features of the contract which are material and to be looked into - As regards WALTOR BUTHELLO OF MUMBAI VERSUS THE COMMISSIONER OF SALES TAX AND HARROLD BUTHELLO VERSUS THE COMMISSIONER OF SALES TAX [ 2017 (5) TMI 769 - BOMBAY HIGH COURT] , the facts were entirely different in as much as in that case the buses were handed over by the contractor to PMT and the buses, which were handed over to PMT, were registered with the RTO, Pune in the name of PMT as a lessee. In that case, even the conductor of the bus was provided by PMT and not the owner of the bus. It was the conductor of PMT who was to collect the fare from the passengers. The contractor was also permitted to employ other surplus drivers employed with PMT where the post of drivers has become surplus on PMT s establishment. Those were the factors which weighed in the mind of the Court which is not the case in the appeal at hand. Thus, by no stretch of imagination, it can be held that there was any transfer of right to use goods - The Tribunal was not justified in holding that the transportation job with the use of tank trucks (tankers) as per the agreement with HPCL dated 26th June 2006 amounted to transfer of right to use goods and hence, covered by definition of sale under the MVAT Act. Appeal allowed.
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2023 (8) TMI 115
Composition Scheme - Interpretation of statute - Condition No. 3 of N/N. VAT 1510/CR-65/Taxation-1 dated 09.07.2010 - restriction on set-off only in respect of purchases of those goods involved in the execution of a works contract the property in respect of which (goods) are transferred in the execution of such works contract - non-restriction on set-off in respect of purchases of goods involved in the execution of a works contract the property in respect of which (goods) are not transferred in the execution of such works contract. HELD THAT:- Pursuant to the powers vested in it by virtue of the provisions of Section 42(3A) of the MVAT Act, the State Government has notified the Composition Scheme vide the said Notification dated 9th July 2010. As held by this Court in the case of Maharashtra Chamber of Housing Industry and Others (Supra), a dealer has the option as to whether to opt for such a Composition Scheme or not and there is no compulsion or obligation upon a dealer to opt for such a scheme. As per the Composition Scheme notified by the said Notification dated 9th July 2010, the composition amount is one percent of the agreement amount specified in the agreement or the value specified for the purpose of stamp duty in respect of the said agreement under Bombay Stamp Act, 1958, whichever is higher - the Scheme provides for tax at a flat rate of one percent on the aforesaid amount. However, Condition No. 3 provides that a dealer who opts to pay composition under the said Scheme shall not be eligible to claim set-off of taxes paid in respect of the purchases. In the present case, the Appellant s claim of set-off pertains to administrative expenses as well as expenses towards the lease of construction equipment which were used for the purpose of undertaking construction activity. The Appellant could not have executed the contract without the said expenses - On a plain reading of Condition No. 3 of the said Scheme, it is clear that the said condition prohibits a dealer opting for the Scheme from claiming set-off of taxes paid in respect of purchases. There is no merit in the argument of the Appellant that, just because Condition No. 3 refers to the purchases , it applies only in respect of certain kind of purchases and does not apply in respect of certain other purchases. If Condition No. 3 wanted to make an exception in respect of certain kind of purchases, then it would have expressly stated so. In the absence of any such exception made by Condition No. 3, in our view, on the plain language of Condition No. 3, it applies to all purchases. Further, the whole purpose of such a Composition Scheme is to provide for a convenient, hassle-free and simple method of assessment. By opting for the Composition Scheme, the contractor saves himself the bother of book keeping, assessment, appeals and other such things - this being the purpose and object of such a Composition Scheme, this very purpose and object would be totally and completely defeated if the argument of the Appellant is accepted and the AO has to make an enquiry as to what goods have been transferred and in respect of what purchases set-off can be claimed. Thus, no substantial question of law arises in the present Appeal. The Appeal is dismissed.
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2023 (8) TMI 114
Maintainability of appeal - limitation under Section 51 of the Tamil Nadu Value Added Tax (TNVAT) Act, 2006 - HELD THAT:- It is noticed that the petitioner's tax amount of Rs. 3,32,800/- has already been recovered towards duty that was confirmed in the Assessment Order dated 20.01.2022 for the Assessment Year 2014-2015. The petitioner has not paid the tax that was determined vide impugned order dated 25.07.2022 for the Assessment Year 2015-2016 amounting to Rs. 5,83,125/- - To balance the interests of the petitioner and the revenue, this Court is inclined to dispose these two writ petitions by directing the petitioner to file a statutory appeal before the Appellate Commissioner under Section 51 of the TNVAT Act within a period of 30 days from the date of receipt of a copy of this order together with a pre-deposit of 50% of the disputed tax. Subject to such compliance, the appeal for the Assessment Year 2015-2016 shall be numbered. As far as the Assessment Year 2014-2015 is concerned, since the entire amount has been recovered, the appeal shall be numbered, if such appeal is filed within a period of 30 days from the date of receipt of a copy of this order. Writ Petitions are disposed of.
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2023 (8) TMI 113
Levy of penalty in terms of Section 47(6) of the KVAT Act - gold ornaments brought into Cochin by the petitioner were in fact taken back to Mumbai by the petitioner on the same day or not - scope of term baggage for the purposes of the Explanation I to S. 46 (3) of KVAT Act - HELD THAT:- It is not in dispute that in respect of the amount of Rs. 15 lakhs that was paid by the petitioner towards alleged tax due on the said consignment, he has disputed his tax liability by preferring an application for refund, which has not been adjudicated by the intelligence officer till date. Rather than issue a direction to the intelligence officer to adjudicate the matter at this belated stage, it is felt that on account of lapse of time this aspect can now be adjudicated by the Appellate Tribunal, which is the final fact finding authority, after calling for the refund application filed by the petitioner from the Intelligence officer concerned. The other issue raised by the petitioner, namely whether for the purposes of imposition of penalty under Section 47 of the KVAT Act, the transportation of gold ornaments as personal luggage would have any implication considering the provisions of Explanation 1 to Section 46(3) of the KVAT Act, also has to be considered by the Appellate Tribunal. The said aspect although specifically raised by the petitioner in the appeal before the Tribunal and noticed by the Tribunal at paragraph 3(2) of the order impugned herein, was not adverted to in the operative part of the order of the Tribunal. The issue requires to be considered by the Tribunal since it may have a bearing on the legality of the penalty imposed on the petitioner. Matter remanded back to the Tribunal for a fresh adjudication of the matter - appeal allowed by way of remand.
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2023 (8) TMI 112
Non-speaking order - Revision Order under Section 27 of the TNVAT Act - revision order without issuance of any notice to petitioner - violation of principles of natural justice - HELD THAT:- The impugned order has been passed after awaiting for a long period after order dated 16.06.2015 was passed in W.P.No.14652 of 2015 on 16.06.2015 the impugned order has been passed is without following the principles of natural justice. Therefore, the impugned order is unsustainable. The impugned order is therefore liable to be quashed and it is accordingly quashed. The case is remitted back to the respondent to pass a speaking order on merits in accordance with law within a period of eight (8) weeks from the date of receipt of a copy of this order. Petition allowed.
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2023 (8) TMI 111
Failure to pay appropriate tax - import of goods for trading purpose or not - petitioner was not heard before the impugned order was passed - violations of principles of natural justice - HELD THAT:- There is no admission by the petitioner in the affidavit filed in support of the present Writ Petition. Notice dated 16.06.2022 has not served on the petitioner before the impugned order dated 30.06.2022 was passed. The date 16.06.2022 in the impugned order appears to be CAG Audit defects, as is evident from the reference in the preamble to the impugned order. Copy of the said CAG Defect Memo dated 16.06.2022 of CAG Audit team also appears to have not been served to the petitioner before the impugned order was passed on 30.06.2022. The impugned order is set aside and the case is remitted back to the respondent to pass an appropriate order within 75 days from the date of receipt of a copy of this order - Petition allowed by way of remand.
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2023 (8) TMI 110
Award of tender/auction for toll collection for lorry entry - forbearing the respondents from collecting any fee/toll charges for the lorries - It is the contention of the petitioner that the first respondent has no right to collect toll from the vehicles entering into the petitioner's premises - HELD THAT:- On perusal of the Section 249 of the Coimbatore City Municipal Corporation Act, this Court is of the view that the above Section gives right to recover the expenses caused by extraordinary traffic in the Civil Court by proving the same. Except that, it does not permit to levy tax. Admittedly, there is no material whatsoever available on record so as to substantiate the submission of the first respondent to show that only because of the lorries entering into the petitioner's warehouse the roads suffered damages and to meet out that expenses recovery has to be made. In JINDAL STAINLESS LTD. AND ANOTHER VERSUS STATE OF HARYANA AND OTHERS [ 2006 (4) TMI 120 - SUPREME COURT ] the Hon'ble Apex Court has held that the compensatory tax is a charge for offering trade facilities and they are based on the principle of equivalence. Thus, as in the auction notice the amount has been fixed as Rs. 30,000/- and the same would not commensurate to the expected expenses as alleged in the counter. Such view of the matter, this Court is of the view that the action of the first respondent Corporation to collect toll only from the lorries entering the petitioner's premises is nothing but discriminatory and cannot be said to be compensatory in nature. The writ petition is allowed.
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2023 (8) TMI 109
Reopening of assessment - Time limitation - impugned order dated 22.04.2022 for the assessment year 2007-08 challenged on the premise that the same is barred by limitation - HELD THAT:- The original assessment order dated 24.10.2013 although refers to Section 22(2) of the Act, it appears that the same cannot be traced to Section 22(2) of the Act in view of the fiction contained in the proviso to Section 22(2), which provides that all assessments from the assessment year 2006-07 till 2010-11 shall be deemed to have been assessed on 30.06.2012. In view of the above deeming the assessment under Section 22(2) of the Act is deemed to have been made on 30.06.2012. Any assessment made after 30.06.2012 could be traced to Section 27 of the Act, which prescribes six years from the date of orders of assessment, viz., 30.06.2012. Thus, any assessment ought to have been made under Section 27 of the Act on or before 30.06.2018. Assuming that this assessment dated 24.10.2013 is traceable to Section 27 of the Act and the present impugned order is also traceable to Section 27 of the Act, the impugned order dated 22.04.2022 ought to be in compliance with the limitation prescribed under Section 27 of the Act, which provides that any assessment ought to be made within six years from the date of the assessment. In the present case, the original assessment is deemed to have been made in terms of Section 22(2) of the Act on 30.06.2012. This Court is of the view that the impugned proceedings being barred by limitation, the same is bad for want of jurisdiction and a nullity. In such circumstances, interference under Article 226 of the Constitution of India is warranted inasmuch as question of limitation relates to jurisdiction. An order barred by limitation is a nullity. This Court is of the opinion that the impugned proceedings is barred by limitation and thus bad for want of jurisdiction and a nullity - Petition disposed off.
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Indian Laws
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2023 (8) TMI 108
Estate Duty - Validity of waqf created by late Gulam Ahmad Khan - title to the waqf properties - as submitted it is settled law that once a waqf is created the waqif stands divested of his title to the waqf properties - Gulam Ahmad Khan died issueless and as per the terms of the amended deed, petitioner Azad Ahmad Khan, became mutwalli of the waqf who filed returns under Estate Duty Act, with regard to the properties of the waqf and claimed immunity from paying estate duty on the same. HELD THAT:- In the present case even after dedicating M/s General Engineering Works to almighty, waqif Gulam Ahmad Khan continued to show the same as his own property in income tax returns filed by him. He even sold off some of the waqf property to pay off his personal debts without seeking necessary permisssion from appropriate authority. Furthermore, there is no evidence on record to prove that Gulam Ahmad Khan ever spent Rs. 100 towards any charitable purpose. Absence of any real dedication and subsequent treatment of the property by waqif Gulam Ahmad Khan as his personal property, thus, falls into the exception to the rule, once a waqf always a waqf, carved out by their Lordships in the case of Chhedi Lal Mishra [ 2007 (2) TMI 721 - SUPREME COURT] relied upon by the counsel for the petitioners. Privy Council in the case of Mohammad Ali Mohammad Khan v. Mt. Bismillah Begam [ 1930 (7) TMI 21 - THE PRIVY COUNCIL] has held that when there is no intention to dedicate the waqf property to the almighty rather there were some ulterior motives, the deed can not be treated to be a valid waqf. Actions of the waqif Gulam Ahmad Khan shows that he has throughout treated the waqf property as his personal, therefore, it could rightly be held that there was no actual dedication of property and he had no intention to create a waqf and as such the deed can not be held to have constituted a valid waqf. Exemptions from paying estate duty - Whether petitioner s claim for exemption from paying estate duty also does not hold good as waqif Gulam Ahmad Khan had, while executing the waqf deed made provisions for maintenance of himself, his brother and the petitioner, who himself claim to have been adopted as a son by the waqif Gulam Ahmad Khan.? - As Gulam Ahmad Khan reserved to himself the right to modify the terms of the waqf-deed and he actually effected a titamma not less than a year before his demise goes to show that he had reserved life interests in the property while settling it through the waqf deed. This issue has already been decided in a reference by Central Board Direct Taxation in the case of Hamid Hussain v. Controller of Estate Duty[ 1871 (8) TMI 1 - ALLAHABAD HIGH COURT] held that the power to amend the wakf deed so as to include himself among the beneficiaries is only an instance of the wide powers reserved by the settlor to himself. As we have said the powers under clause 7(e) are expressed in the widest termst. So long as the character of the wakf is maintained, it is open to the settlor to make any changes and changes which may directly benefit him in the terms and conditions of the deed. We are of opinion that the settlor reserved an interest in the wakf property for life and therefore the case falls within the scope of section 12. Since waqif Gulam Ahmad Khan reserved to himself the absolute right to amend the waqf deed and made provisions therein for his maintenance out of the waqf property therefore it is held that petitioner cannot claim exemptions from paying estate duty.
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