Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 8, 2022
Case Laws in this Newsletter:
GST
Income Tax
Service Tax
CST, VAT & Sales Tax
Articles
News
Notifications
GST - States
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G.O.Ms.No.557 - dated
28-7-2022
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Andhra Pradesh SGST
Amendment to GO. Ms.No.256, Revenue (CT-II) Department, dated 29.06.2017 and GO.Ms.No.53, Revenue (CT-II) Department, dated 17.02.2020
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G.O.MS.No.545 - dated
25-7-2022
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Andhra Pradesh SGST
Amendment to Go.Ms.No.582, Revenue (CT-II) Department, dated 12.12.2017
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08/2022-State Tax - dated
2-8-2022
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Delhi SGST
Seeks to provide waiver of interest for specified electronic commerce operators for specified tax periods
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G.O. Ms. No.104 - dated
8-7-2022
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Tamil Nadu SGST
Amendment in Notification No. II(2)/CTR/1041(d-2)/2017 dated 29th December, 2017
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G.O. Ms. No. 105 - dated
8-7-2022
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Tamil Nadu SGST
Seeks to extend dates of specified compliances in exercise of powers under section 168A of Tamil Nadu Goods and Services Tax Act, 2017
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G.O. Ms. No. 103 - dated
8-7-2022
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Tamil Nadu SGST
Amendment in Notification No. II(2)/CTR/301(f-2)/2019 dated 23rd April, 2019
Income Tax
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93/2022 - dated
5-8-2022
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IT
Specified person in respect of the investment made by it in India u/s 10(23FE) - Central Government specifies the sovereign wealth fund, namely, Qatar Holding LLC.
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92/2022 - dated
5-8-2022
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IT
Amount received from the employer or any other person of the deceased on Death due to COVID-19 - Addition u/s 56(2)(x).
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91/2022 - dated
5-8-2022
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IT
Amount received for any expenditure actually incurred by an individual for his medical treatment or treatment of any member of his family, for any illness related to COVID-19 - Specified conditions u/s 56(2)(x) for individual to keep record of documents.
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90/2022 - dated
5-8-2022
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IT
Covid 19 - Salary, perquisite and profits in lieu of salary defined U/s 17(2) - Employee shall submit COVID-19 positive report of the employee or family member,all necessary documents of medical diagnosis or treatment and expenditure incurred on the treatment of COVID-19 or illness related to COVID-19 of the employee or of any member of his family.
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Profiteering - purchase of flat in Migsun Wynn - allegation of benefit of Input Tax Credit has not be passed on - The Respondent has benefited from the additional ITC to the extent or 4.25% of the turnover during the period from July 2017 to December 2019 and hence the provisions of Section 171 of the CGST Act, 2017 have been contravened by the Respondent as he has not passed on the benefit of such additional ITC to his customers. - NAPA
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Profiteering - supply of construction service - it has been revealed from the DGAP's Report that the ITC as a percentage of the turnover that was available to the Respondent during the pre-GST period (April, 2016 to June, 2017) was 1.43% and during the post-GST period (July, 2017 to September, 2019), it was 5.69% in Project “Silver Oak”. This clearly confirms that post-GST, the Respondent has benefited from additional input tax credit to the tune of 4.26% [5.69% (-) 1.43%] of the turnover and the same was required to be passed on to the customers/flat buyers/recipients. - NAPA
Income Tax
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Reopening of assessment u/s 147 - Assessing Officer has considered the material by applying his mind to the information collected from the Central Excise Department preferring to the return of income furnished by the assessee, wherein it was not possible to ascertain as to whether the assessee has taken the transaction which is disclosed during the course of search of M/s. Wonder Packaging Industries Limited or not, and therefore, has rightly come to the opinion that he has reason to believe that income chargeable to tax has escaped assessment. - Reopening sustained - HC
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Validity of faceless assessment u/s 144B - denial of natural justice - As per the provisions of section 144B(7) in case of variation prejudicial to the assessee as proposed in the draft assessment order, the assessee is entitled to request for personal hearing and upon such request, the personal hearing may be provided by the authority, if the case of the assessee is covered by circumstances provided therein in exercise of powers under sub-clause (h) of clause (xii) of section 144B(7) of the Act, 1961. - HC
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Rectification of mistake u/s 154 - Though there is a remedy to revise the return but if the assessee could not revised its return of income within the period prescribed, it does not mean that there is no remedy for such a mistake leading to incorrect assessment. Even otherwise, if assessee has offered an income to tax by mistake or due to technical mal functioning of computer system, the appellate authority has the jurisdiction to rectify such mistake and particularly to avoid the assessment of the income which is not the real income of the assessee. - AT
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Addition u/s 68 - Estimation of commission on accommodation entries - Though, it can be accepted that in case of accommodation entry provider only commission can be considered as the taxable income, however, the rate of commission considered justifiable in other cases cannot be readily accepted in the present case, particularly when the assessee neither could prove the identity of the person from where the cash has been received nor could provide whereabouts of the beneficiaries to whom the money was transferred through cheque/RTGS. - AT
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Late Fee under section 234E - On careful perusal of the decision of Hon'ble Jurisdictional High Court in Rajesh Kourani [2017 (7) TMI 458 - GUJARAT HIGH COURT] we find that that jurisdiction high court in para-20 of the decision has clearly dissented with the decision of Hon'ble Karnataka High Court in Fatheraj Singhvi [2016 (9) TMI 964 - KARNATAKA HIGH COURT] and held that even in absence of section 200A with introduction of section 234E, it was always open for the revenue to demand and collect the fee for late filing of the statements - AT
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Addition u/s 68 - Unexplained cash credits - The assessee has not submitted any explanation/ evidences to satisfy the mandate of Section 68 - Even, statement of fact has not been filed before the tribunal, although it is stated to have been filed in Form No. 36. Thus, in these circumstances, adverse view is to be taken as despite several stages of litigation, and despite being given adequate and sufficient opportunities by authorities including us, the assessee failed to satisfy the mandate of Section 68 with respect to fresh deposits - Additions confirmed - AT
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TDS u/s 195 - taxability of the receipts of University of Texas, USA - there was neither any patent/copyright used by the assessee against which the royalty was paid nor there was any technical know-how which was made available to the assessee. Thus in such facts and circumstances there is no liability on the assessee to deduct the TDS in pursuance to the Article 12 of India-USA DTAA. - AT
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Reopening of assessment u/s 147 - When the income is foundation on which he based his belief of escapement of income is absent, so AO's usurpation of jurisdiction to reopen of assessment is legally untenable & so, null in the eyes of law. So, we quash the reassessment made by the Ld. AO without jurisdiction. - AT
Service Tax
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Deemed sale or not - right to use the software - Antivirus Software license key/code supplied by the respondent along with CD/DVD replicated with Quick Heal Brand Antivirus Software through dealers/distributors to the EndCustomers is liable to Service Tax or not - The artificial segregation of the transaction, as in the case on hand, into two parts is not tenable in law. It is, in substance, one transaction of sale of software and once it is accepted that the software put in the CD is “goods”, then there cannot be any separate service element in the transaction. It is so because even otherwise the user is put in possession and full control of the software. It amounts to “deemed sale” which would not attract service tax. - SC
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Valuation - non-inclusion of the value of goods/material supplied under the supply work orders in valuing the taxable service - The valuation framework as contained in Section 67 of the Finance Act does not seek to include within its ambit, any amount charged for sale/supply of goods and we are in complete agreement with the Appellant that higher or lower profit margin with respect to sale of goods cannot be a ground for questioning the value of a taxable service - AT
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Classification of services - to be classified under GTA services or under mining services? - deployment of loaders, excavators, dozers for removal of overburden, waste ash, spillage, etc. and also loading of raw coal, clean coal, secondary coal, rejects and ash, etc. - when it has not been disputed by the Appellant Revenue that the transport activities have been performed within the mining area of TSL, then confirmation of demand on such activity by treating the same as mining service cannot be sustained. - The transport charges cannot be included in the valuation for mining services - AT
VAT
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Taxability - Sales of cut / sized Silver Oak grown as shade trees in the Tea Estates - It is not the case of the Revenue that the growth of Silver Oak is wild or spontaneous, rather it is the case of the petitioner, which remains uncontroverted, these require human effort/labour and attention and thus, would constitute “agricultural produce”. - it is clear that the cut/ sized shade trees would constitute "agricultural produce" and therefore, fall outside the purview of sales tax / VAT - HC
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Valuation - includability or otherwise of the value of the free-of- cost components - Normally, the cost price of a product would take into account the purchase cost of inputs, direct and indirect costs of manufacture and the profit margin. Unless the petitioner supplies the break-up of the sale consideration, the officer would not be in a position to determine the pricing methodology and it is for the petitioner to satisfy the officer that the ultimate price fixed by it does not take into account the value of the free-of-cost components. - HC
Case Laws:
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GST
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2022 (8) TMI 278
Refund of the unutilized CENVAT Credit - Revision of ER-1 returns for their factory unit, in order to avail the CENVAT Credit - permission to petitioner to file their revised GST TRAN-1, based on their revised ER-1 returns - time limit prescribed under Rule 117 of CGST Rules is ultra vires the provision of Section 140 and Section 174 of the CGST Act or not - HELD THAT:- If the petitioner avails the facility of filing the concerned forms through the common portal within the stipulated period in terms of the aforesaid order of the Supreme Court, appropriate action in accordance with law will be taken. The statement is accepted. The writ petition stands disposed of without examining the rival claims on merits.
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2022 (8) TMI 277
Cancellation of Registration Certificate of petitioner - Non-payment of interest, late fee, penalty and in-eligible credit of Input Tax Credit - HELD THAT:- This Court is of the opinion that the Opposite Parties are required to facilitate the Petitioner to file GST return(s) by opening the Portal. In exercise of powers under Section 30 of the CGST Act, 2017 read with Rule 23 of the Central Goods and Services Tax (CGST) Rules, 2017 the Proper Officer shall revoke the order of cancellation of Registration Certificate. Subject to verification of payments made as asserted in the writ petition by the Proper Officer, the authority concerned is required to pass necessary orders revoking the cancellation of Registration Certificate and allow the Petitioner to file returns within a period of two weeks from the date of production of certified copy of this Order. The writ petition is disposed of.
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2022 (8) TMI 276
Application for rectification being made under Section 116 of Odisha Goods Services Tax Act, 2017 (OGST Act, 2017) - HELD THAT:- Considering the fact that as yet to challenge the first appeal order, the Tribunal contemplated under Section 109 of the OGST Act, 2017 has not been constituted, it is directed that subject to the Petitioner depositing 20% of the tax amount as determined by the Appellate Authority vide order dated 12th May, 2021, no coercive action shall be taken against the Petitioner till the next date. It is, further, directed that there shall be stay of further proceeding pursuant to the notice dated 13th September, 2021 issued under Section 73 of the OGST Act, 2017 till the next date. Application disposed off.
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2022 (8) TMI 275
Wrong availment and utilization of ITC - bogus bills - wilful mis-statement and suppression of fact - Presumption of innocence - Sections 406, 420, 467, 468, 471 and 120-B of the Indian Penal Code, 1860 - HELD THAT:- There is no compelling circumstance as would call for continued custodial detention of an accused in a Magisterial trial when they have already undergone 1 years of actual sentence and the trial is still at the nascent stage and is likely to take long to conclude. Magnitude of a crime and it social impact are even though essential aspects to be kept in mind while constituting a bail petition, however, the same can not remain the sole ground for prolonging detention for indefinite period of time. Court needs to strike a fine balance while considering an application of bail since the adopted criminal jurisprudence in the country hinges on presumption of innocence. The power to grant bail is not to be deployed as a mechanism for imposing sentence even before a guilt is yet to be proved and established. The present petitions are allowed and the petitioners are admitted to regular bail subject to their furnishing heavy bail bonds/surety bonds to the satisfaction of Trial Court/Duty Magistrate, concerned - It is made clear that the petitioners shall not extend any threat and shall not influence any prosecution witnesses in any manner directly or indirectly.
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2022 (8) TMI 274
Seeking grant of Anticipatory Bail - Fraudulent availment of ITC - floating bogus companies - no movement of goods - HELD THAT:- In consideration of the facts of the case and the amount of the ITC, fraudulently availed by the applicant through the bogus entities, without there being movement of goods, pre-arrest protection cannot be granted to the applicant. Application allowed.
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2022 (8) TMI 273
Profiteering - purchase of Flat - allegation is that the Respondent had not passed on commensurate benefit of Input Tax Credit (ITC) to him - contravention of provisions of Section 171 of the CGST Act, 2017 - interest - penalty - HELD THAT:- It is clear from a plain reading of Section 171 (1) that it deals with two situations one relating to the passing on the benefit of reduction in the rate of tax and the second pertaining to the passing on the benefit of the ITC. On the issue of reduction in the tax rate, it is apparent from the DGAP's Report that there has been no reduction in the rate of tax in the post GST period; hence the only issue to be examined is as to whether there was any net benefit of ITC with the introduction of GST. On this issue it has been revealed from the DGAP's Report that the ITC as a percentage of the turnover that was available to the Respondent during the pre-GST period (April-2016 to June-2017) was 1.17% and during the post-GST period (July-2017 to April-2024 It was 13.52% for the project Axis Vedam''. This confirms that. post-GST. the Respondent has been benefited from additional ITC to the tune of 12.36% [13.52% (-) 1.17%] of his turnover for the said project and the same was required to be passed on to the customers/flat buyers/recipients, The DGAP has calculated the amount of ITC benefit to be passed on to the customers/flat buyers/recipients as Rs. 40,94,480/- for the project 'Axis Vedam . the details of which are mentioned in Table- B - the profiteering amount of Rs. 40.94,480/- is with respect to 21 customers/flat buyers/recipients amongst all the customers as on 30.04.2020 in the project 'Axis Vedam . The list of 21 customers/flat buyers/recipients has been attached as Annexure 'A' with this Order, containing the details of the amount of benefit of ITC to be passed on in respect of the project Axis Vedam of the Respondent. Interest - HELD THAT:- The Respondent is liable to pay interest as applicable on the entire amount profiteered, i.e. Rs. 40,94,480/- for the project Axis Vedam . Hence the Respondent is directed to also pass on interest @18% to the customers/ flat buyers/ recipients on the entire amount profiteered. starting from the date from which the amount was profiteered till the date of passing on/payment, as per the provisions of Rule 133 (3) (b) of the CGST Rules, 2017. Penalty - HELD THAT:- The Respondent has denied benefit of ITC to the customers/flat buyers/recipients in his Project Axis Vedam in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has committed an offence under Section 171 (3A) of the above Act. That Section 171 (3A) of the CGST Act, 2017 has been inserted in the CGST Act, 2017 vide Section 112 of the Finance Act, 2019, and the same became operational w.e.f. 01,01.2020. As the period of investigation was 01.07.2017 to 30 04.2020, therefore, he is liable for imposition of penalty under the provisions of the above Section for the amount profiteered from 1.01.2020 onwards. This Order having been passed today falls within the limitation prescribed under Rule 133(1) of the CGST Rules, 2017.
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2022 (8) TMI 272
Profiteering - construction service - Respondent had not passed on the benefit of ITC to him by way of commensurate reduction in the price - contravention of Section 171 of the CGST Act, 2017 - penalty - HELD THAT:- The Authority finds that the Respondent has gained the benefit of ITC on the supply of Construction Services after the implementation of GST w.e.f. 01.07.2017 and the Respondent was required to pass on such benefit of ITC to the homebuyers/customers by way of commensurate reduction in prices in terms of Section 171 of the CGST Act, 2017. However, it is observed that the benefit was not commensurately passed on by the Respondent to his recipients, taking into account the aforesaid Input Tax Credit availability post GST and the details of the amount collected from the home buyers during the period 01.07.2017 to 30.11.2019. the amount of benefit of ITC not passed on to the recipients or in other words, the profiteered amount comes to Rs 74,80,399/- which includes GST (including Rs 74.713/- of the Applicant No. 1). The Respondent has claimed that he had already passed on a substantial amount of GST ITC per the requirements of Section 171 of the CGST Act. 2017 to the homebuyers. The Respondent had submitted that he had passed on the benefit of Rs. 87,75,787/- to 114 homebuyers/customers The Respondent has also claimed that he has passed on excess ITC benefit of Rs. 17,25,108/- to 83 buyers/customers. The DGAP has responded to such claims as tabulated at Table D above and found that Respondent has not passed commensurate benefit to all homebuyers/customers. The Authority determines that the Respondent has profiteered an amount of Rs. 74,60,399/-. Therefore, given the above facts, the Authority under Rule 133(3)(a) of the CGST Rules orders that the Respondent shall reduce the prices to be realized from the buyers of the flats/customers commensurate with the benefit of ITC received by him. The details of the recipients and benefit which is required to be passed on to each recipient/homebuyer (including Applicant No. 1) along with the details of the unit are contained in the Annexure A to this order The Authority directs that the profiteered amount as determined shall be passed on/returned by the Respondent to the recipients of supply along with interest @18%. as prescribed under Rule 133(3)(b) of the CGST Rules, 2017, from the date such amount was profiteered by the Respondent up till the date such amount is passed on/returned to the respective recipient of supply (if not already passed on) within a period of three months from the date at this order. Penalty - HELD THAT:- The Authority hold that the Respondent has committed an offence by violating the provisions of Section 171 (1) during the period from 01.07,2017 to 30.11.2019, and therefore, he is liable for imposition of penalty under the provisions of Section 171 (3A) of the above Ad However, perusal of the provisions of the said Section 171 (3A) shows that it has been inserted in the CGST Act, 2017 w.e.f. 01.01.2020 vide Section 112 of the Finance Act, 2019 and it was not in operation during the period from 01.07.2017 to 30.11.2019 when the Respondent had committed the above violation. Hence, the said penalty under Section 171 (3A) cannot be imposed on the Respondent retrospectively. This Order having been passed today fails within the limitation prescribed under Rule 133(1) of the CGST Rules, 2017.
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2022 (8) TMI 271
Profiteering - purchase of flat in Migsun Wynn - allegation of benefit of Input Tax Credit has not be passed on to the recipient by way of commensurate reduction in prices - contravention of section 171 of GST Act - interest and penalty - HELD THAT:- The Respondent has benefited from the additional ITC to the extent or 4.25% of the turnover during the period from July 2017 to December 2019 and hence the provisions of Section 171 of the CGST Act, 2017 have been contravened by the Respondent as he has not passed on the benefit of such additional ITC to his customers. Thus this Authority determines the profiteered amount as Rs.6,87,58,686/- (inclusive of GST@ 12% or 8% as applicable) in terms of Rule 133 (1) of the CGST Rules, 2017 [This amount is inclusive of profiteered amount, if any, in respect of the Applicant nos 1 to 12]. The above amount that has been profiteered by the Respondent from his home buyers shall be refunded/returned/passed on by him, if not already passed on, along with interest @18% thereon, from the date when the above amount was profiteered by him till the date of such payment, in accordance with the provisions of Rule 133 (3) (b) of the CGST Rules 2017. Interest - HELD THAT:- The Respondent is also liable to pay interest as applicable on the entire amount profiteered. i.e. Rs.6,87,58.685/-. Hence the Respondent is directed to also pass on interest to the homebuyers/customers/recipients on the entire amount profiteered, starting from the data from which the above amount was profiteered till the date of passing on/ payment, as per the provisions of Rule 133 (3) (b) of the CGST Rules 2017. Penalty - HELD THAT:- The Respondent denied benefit of ITC to the homebuyers/customers of the units being constructed by him in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has committed an offence under Section 171 (3A) of the above Act. Section 171 (3A) Of the CGST Act, 2017 has been inserted in the CGST Act, 2017 vide Section 112 of the Finance Act. 2019, w.e.f. 01.01.2020 and hence, was not in force during the period of investigation i.e, from 01.07.2017 to 31.12.2019, when the Respondent had committed the above violation and hence, the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent retrospectively. This Order having been passed today falls within the limitation prescribed under Rule 133(1) of the CGST Rules, 2017.
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2022 (8) TMI 270
Profiteering - supply of construction service - it is alleged that the Respondent had not passed on the benefit of Input Tax Credit (ITC) to him by way of commensurate reduction in the price - Contravention of of Section 171 of the CGST Act, 2017 - interest - penalty - HELD THAT:- It is clear from the plain reading of Section 171 (1), that it deals with two situations: one relating to the passing on the benefit of reduction in the rate of tax and the second pertaining to the passing on the benefit of the ITC. On the issue of reduction in the tax rate, it is apparent from the DGAP's Report that there has been no reduction in the rate of tax in the post GST period; hence the only issue to be examined is as to whether there was any net benefit of ITC with the introduction of GST. On this issue it has been revealed from the DGAP's Report that the ITC as a percentage of the turnover that was available to the Respondent during the pre-GST period (April, 2016 to June, 2017) was 1.43% and during the post-GST period (July, 2017 to September, 2019), it was 5.69% in Project Silver Oak . This clearly confirms that post-GST, the Respondent has benefited from additional input tax credit to the tune of 4.26% [5.69% (-) 1.43%] of the turnover and the same was required to be passed on to the customers/flat buyers/recipients. The DGAP has calculated the amount of ITC benefit to be passed on to all the flat buyers as Rs. 3,45,28,279/- for the project 'Silver Oak' which was availed by the Respondent. Interest - HELD THAT:- The Respondent is liable to pay interest as applicable on the entire amount profiteered, i.e. Rs. 3,45,28,279/- for the project 'Silver Oak'. Hence the Respondent is directed to also pass on interest @18% to the customers/ flat buyers/ recipients on the entire amount profiteered, starting from the date from which the above amount was profiteered till the date of passing on/ payment, as per provisions of Rule 133 (3) (b) of the CGST Rules 2017. Penalty - HELD THAT:- The Respondent has denied benefit of IT to the buyers of the flats being constructed by him in his project 'Silver Oak' in contravention of the provisions of Section 171 {1) of the CGST Act, 2017 and has committed an offence under Section 171 (3A) of the above Act, However, perusal or the provisions of Section 171 (3A) under which penalty has been prescribed for the above violation shows that it has been inserted in the CGST Act, 2017 w.e.f. 01.01.2020 vide Section 112 of the Finance Act, 2019 and it was not in operation during the period from 01.07.2017 to 30.09.2019 when the Respondent had committed the above violation and hence, the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent retrospectively. This Order having been passed today falls within the limitation prescribed under Rule 133 (1) of the CGST Rules, 2017.
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Income Tax
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2022 (8) TMI 297
Addition u/s 68 - Unexplained cash credits - third round of litigation - HELD THAT:- As in second round of litigation being differential between deposit being advance for land from members as is reflected in the Balance Sheet and the statement of deposits raised by assessee from members filed by the assessee during assessment proceedings stood deleted by CIT(A) in second round of litigation and hence this has attained finality. So far as fresh deposits being advance for land from members raised by assessee from members during the year under consideration, are in the form of cash credits which are recorded in assessee s books of accounts, and the onus is on the assessee to explain identity and creditworthiness of the creditor and genuineness of the transaction. The assessee has not not submitted any evidences/ explanation to discharge its onus u/s 68 even before us. The assessee did not entered appearance before CIT(A) in third round of litigation and also chose not to appear before us when this appeal was fixed for hearing on 12th July, 2022 as well on 22nd July, 2022 nor adjournment application was filed. The assessee has not submitted any explanation/ evidences to satisfy the mandate of Section 68 - Even, statement of fact has not been filed before the tribunal, although it is stated to have been filed in Form No. 36. - The onus u/s 68 was on the assessee as the said sum stood credited in its books of accounts, which the assessee failed to discharge. Thus, we find no merit in the appeal filed by the assessee, which stand dismissed
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2022 (8) TMI 296
TDS u/s 195 - taxability of the receipts of University of Texas, USA, under India-USA DTAA - 10% TDS on gross payments made to University of Texas at Austin, USA (Non-Residents) - whether the services rendered by non-resident University of Texas at Austin, USA to carry out research programme for development of suitable chemical Enhanced Oil Recovery (EOR) formulations in collaboration with the assessee is covered under royalties/fees for technical services or not? - HELD THAT:- The recipient after receiving of technology may use or may not use the technology. It has no bearing on the taxability aspect is concerned. When the technical service is provided, that technical service is to be made use of by the recipient of the service in further conduct of his business. Merely because his business is dependent on the technical service which he receives from the service provider, it does not follow that he is making use of the technology which the service provider utilizes for rendering technical services. The crux of the matter is after rendering of such technical services by the service provider, whether the recipient is enabled to use the technology which the service provider had used - unless the service provider makes available his technical knowledge, experience, skill, know-how or process to the recipient of the technical service, in view of the clauses in the DTAA, the liability to tax is not attracted. It is clear that test is whether the recipient of the service is equipped to carry on his business without reference to the service provider. If he is able to carry on his business in future without the technical service of the service provider in respect of services rendered then, it would be said that technical knowledge is made available. We have referred the agreement between the assessee and University of Texas at Austin, USA, defining the scope of work and note that there was neither any patent/copyright used by the assessee against which the royalty was paid nor there was any technical know-how which was made available to the assessee. Thus in such facts and circumstances there is no liability on the assessee to deduct the TDS in pursuance to the Article 12 of India-USA DTAA. There remains no ambiguity to the fact that there was any royalty payment made by the assessee or any technical know-how was received by the assessee. Accordingly, we set aside the finding of the Ld. CIT-A and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed.
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2022 (8) TMI 295
Addition u/s. 80IB(10) - project which was not completed on or before 31-03-2008 - HELD THAT:- We hold that the assessee is not entitled to claim deduction u/s. 80IB(10) of the Act for the project construction which was not completed before the stipulated period as prescribed u/s. 80IB(10)(a)(i) of the Act. Thus, the order of CIT(A) is justified and grounds raised by the assessee are dismissed.
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2022 (8) TMI 294
Delayed Employees' contribution to PF and ESI - Scope of amendment - HELD THAT:- Hon ble jurisdictional High Court in case of Essae Taroka (P.) Ltd. [ 2014 (3) TMI 386 - KARNATAKA HIGH COURT] and Spectrum Consultants India (P.) Ltd. [ 2013 (7) TMI 414 - KARNATAKA HIGH COURT] has affirmed the view that assessee would have been entitled to deduction of employees' contribution of PF and ESI if the payment was made prior to due date of filing of the return of income u/s 139(1). In view of the judicial pronouncements cited supra, we hold that the amendment to section 36(1)(va) and 43B of the I.T. Act will not have application for the relevant assessment year, namely assessment year 2018-19. Accordingly, we direct the A.O. to grant deduction in respect of employees' contribution to PF and ESI since the assessee has made the payment before the due date of filing of return u/s 139(1) - Decided in favour of assessee.
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2022 (8) TMI 293
Non-granting of exemption u/s 10(23C)(iiiad) - processing return of income u/s 143(1) - HELD THAT:- AO is entitled to carry out only prima facie adjustment as provided u/s 143(1). He cannot deal in issues, which are debatable in nature. The issue taken up by the AO while processing u/s 143(1) is debatable on this count also, he cannot disallow the claim of the assessee claimed u/s 10(23C)(iiiad) while processing return of income u/s 143(1) - In view of this, we allow the ground taken up by the assessee in these appeals and accordingly, both the appeals are allowed.
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2022 (8) TMI 292
Deduction u/s.80P(2)(a)(i) - whether the Assessee can be said to be a co-operative Bank? - HELD THAT:- Section 80P being a benevolent provision must be read liberally and reasonably and in case of any ambiguity it must be interpreted in favour of the assessee. Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd.. [ 2021 (1) TMI 488 - SUPREME COURT ] observed that section 80P(2)(a)(i) which covers a co-operative society engaged in the business of banking or providing credit facilities to its members does not require that the assessee has to be a primary agricultural credit society. The Hon'ble Supreme Court noted that section 80P(2)(a)(i) does not require that the society has to give agricultural credit only. It further observed that once the co-operative society provides credit facility to its members, the fact that it also provides credit facility to non-members does not disentitle the society from availing of deduction. Supreme Court observed that the object of section 80P(4) was to exclude co-operative banks that function at par with other commercial banks and noted that as primary agricultural credit societies are not entitled for obtaining a banking license would not be hit by this provision. Assessee is entitled to deduction u/s.80P(2)(a)(i) of the Act as claimed and the same is directed to be allowed. Non deduction of tax at source on payment to pigmy agents - disallowance of those payments as expenses were made by the AO u/s.40(a)(ia) - plea of the Assessee before the Tribunal, that the said disallowance will only go to increase the income of the Assessee that is eligible for deduction u/s.80P(2)(a)(i) of the Act and deduction on the said enhanced income should be allowed - HELD THAT:- As revenue authorities erred in not allowing deduction u/s.80-P(2)(a)(i) of the Act on the income derived by the Assessee from providing credit facilities to its members as enhanced by the sum disallowed u/s.40(a)(ia) of the Act. The claim of the assessee in this regard is accepted and the AO is directed the give necessary relief to the assessee in this regard. Whether the rent income received by the Assessee from letting of Godowns is entitled to deduction u/s.80P(2)(e) of the Act ? - HELD THAT:- AO/CIT(A) did not consider the plea of the Assessee in the light of the provisions of Sec.80P(2)(e) of the Act which provides that income derived by co-operative society from letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities, is eligible for deduction but examined the said claim as one made u/s.80P(2)(a) of the Act. We therefore deem it fit and proper to direct the AO to examine this issue afresh and for this purpose the issue is set aside to the AO.
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2022 (8) TMI 291
Exemption u/s 11 - rejecting the registration u/s. 12AA - whether the activities of the trust were charitable in nature and in consonance to the objects of the trust? - As disputed that the assessee trust has carried out coaching activities during the financial year under consideration, but the complete details were lacking - HELD THAT:- As the main objects of the Trust are providing coaching and training to the students as an intermediatory between the IMPACT and the students and thus, the PCIT observed that the applicant is simply involved in collecting fees from the students and passing it, to IMPACT for coaching. Thus, there was no activity per se being carried out by the appellant and that even if one of the objects turns out to be non-charitable, case for the registration does not exist. AR argued that the appellant Institute is providing entire infrastructure including water, electricity, security and other services like sports grounds etc. and that the coaching and training is provided to the students by way of taking the services of a specialized group of teachers called IMPACT - Counsel has objected to the order of the CIT exemption that he has nowhere pointed out that society has been working for profit and engaged in doing any business instead of charity by ignoring the facts narrated in the submissions APB. The contention of the Ld. AR that the action of Ld. CIT in rejecting the registration under section 12AA(1)(b)(ii) is bad in law and against the facts and circumstances of the case and is contrary to the principles of natural justice as the impugned order has been passed without granting adequate opportunity of hearing, and ignoring the submissions filed by the assessee by recording incorrect facts and findings - we are of the opinion that the assessee trust may be given one more opportunity to produce all the documentary evidences in support of genuineness of the activities being carried out for charitable purpose in consonance to the objects of the trust. CIT(DR) also has no objection in restoring of the matter to the CIT(E) for afresh examination of the application of the assessee for grant of registration. Considering the AR contention that the assessee was prevented in making submission before the lad CIT(Exemption) in absence of sufficient opportunity of being heard to produce the necessary documents as per principles of natural justice as above, we find it deem fit to restore the matter back to the file of the CIT(Exemption) to examine the issue of grant of registration u/s. 12AA of the act, afresh after taking into consideration the material evidence after affording sufficient opportunity of being heard to the assessee trust, as per principles of natural justice. Thus case is restored to the CIT, for afresh consideration and examination of the application of assessee under section 12A(a).
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2022 (8) TMI 290
Exemption u/s 11 - assessee is registered u/s. 12A as per the order of the CIT as assessee was designated for this work for providing services to the citizens as per the direction of Government of Punjab - HELD THAT:- Assessee-trust is giving service for benefit of the people as per the scheduled activities directed by the State Government. The assessee-trust cannot be solely in business purpose. The observation of income and expenditure account the assessee-trust is maintaining accounts as per provision of section 11 - The objective is the benefit to the people in their social activity which the assessee-trust is served through its activities. The larger people of society have been benefitted through the activities. The income expenditure account of the assessee-trust is maintained as per the provisions of section 11 - Here, we are not inclining to the order of Revenue Authorities. The assessee is eligible for deduction u/s. 11 as per the Act. Accordingly, the addition of the assessee is deleted.
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2022 (8) TMI 289
Reopening of assessment u/s 147 - information received from the department of Commissioner of customs Preventive, New Delhi, for cheating of Govt., exchequer by misusing duty entitlement pass book scheme/draw back and focus product scheme - HELD THAT:- The assessment was done u/s. 144 and reasons was recorded and the basis of information from the department of customs. During the proceedings u/s. 148, AO did not verified the sanctity of transaction related to assessee. Even the document showing with the proper record was not with the Revenue Authorities. The reasons record and nature of additions are totally different. In the order ld. AO himself not confirmed able to determine his own recorded reasons. Accordingly the addition made to be deleted. Appeal of assessee allowed.
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2022 (8) TMI 288
Reopening of assessment u/s 147 - purchase of property - PAN of the firm was fake, so the entire deposit in the bank account of the firm is added back as per the profit-sharing ratio of the partners and added back in the partner's hand - HELD THAT:- AO made gross violation of natural justice in this case. Without the assessment of the firm how the amount deposited in account of the firm was added back in the partner's hand. Further, the Ld. AO fully deviated from reason recorded the addition made in assessment. The Ld. CIT(A) had not adjudicated the issue in his order. AO recorded the reason which warranted him to hold the belief that the income chargeable to tax has escaped assessment thereafter the Ld. AO usurped the jurisdiction to reopen the assessment. When the income is foundation on which he based his belief of escapement of income is absent, so AO's usurpation of jurisdiction to reopen of assessment is legally untenable so, null in the eyes of law. So, we quash the reassessment made by the Ld. AO without jurisdiction. The addition to amount be deleted accordingly. - Decided in favour of assessee.
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2022 (8) TMI 287
Revision u/s 263 - As per CIT amount was invested to the nominal member and in the Schedule Bank not in the Cooperative Bank and disallowed the deduction of 80P(2) and return back the order to AO for reassessment - HELD THAT:- As respectful observation of the case Mavilayi Service Coop Bank Ltd. [ 2021 (1) TMI 488 - SUPREME COURT] limited object of section 80P(4) is to exclude co-operative banks that function at par with other commercial banks i.e. which lend money to members of the public. Thus, if the Banking Regulation Act, 1949 is now to be seen, what is clear from section 3 read with section 56 is that a primary cooperative bank cannot be a primary agricultural credit society, as such co-operative bank must be engaged in the business of banking as defined by section 5(b) of the Banking Regulation Act, 1949, which means the accepting, for the purpose of lending or investment, of deposits of money from the public. A number of judgments have held that a proviso cannot be used to cut down the language of the main enactment where such language is clear, or to exclude by implication what the main enactment clearly states - the ratio decidendi of Citizen Cooperative Society Ltd. [ 2017 (8) TMI 536 - SUPREME COURT] must be given effect to. Section 80P of the IT Act, being a benevolent provision enacted by Parliament to encourage and promote the credit of the co-operative sector in general must be read liberally and reasonably, and if there is ambiguity, in favour of the assessee. The observation of the order of the assessing authority, it is clear that the particular issue related investment in cooperative bank nationalised bank was not discussed in the order shift even the Ld. assessing officer did not apply his mind to differentiate the nature of investment of the assessee. The earning of interest from this investment will be in question for attraction of tax or allowable deduction under section 80(P) of the Act for treating this income as business. Incorrect assumption of fact incorrect application of law will separately the requirement of order being erroneous. In the case of Malabar Industrial Company Ltd. [ 2000 (2) TMI 10 - SUPREME COURT] The assessment order is itself erroneous prejudicial to the interest of revenue. PCIT was justified in revising the order of assessment. Accordingly, the impugned order pass by PCIT is upheld. Appeal of assessee dismissed.
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2022 (8) TMI 286
Reopening of assessment u/s 147 - addition u/s 69 - difference in the value of purchase consideration and the cash available with the assessee in his bank account at the time of purchase of land - HELD THAT:- The explanation of the assessee was found acceptable by the AO taking note of the agricultural land sold. There is no dispute on the quantity of the land sold or the price for which it was sold. However, the AO questioned the investment in agricultural land made by the assessee which included the purchase price of the land plus the stamp duty taxes thereon. The explanation to the extent of Rs. 10,53,000/- was found to be wanting. Considering explanation offered by the assessee before the CIT(A) by way of fresh evidences which have been confronted to the AO, reasons for discarding the explanation of the assessee set out cannot be upheld As in the peculiar facts of the present case in the face of the assessee's pleading that Smt. Gurdial Kaur was mother of Shri Jasveer Singh which remains unrebutted on record and the fact that late Shri Jasveer Singh also had interest in the land being purchased and hence was paid. This fact also remains unrebutted on record, the availability of funds doubted by the AO stands explained by way of cheque payments made by the assessee from another bank account No. 55110180046 of SBOP, Jakhwali branch which initially had remained unnoticed. This fact also remains unrebutted on record. We find that in the peculiar facts and circumstances, the sustaining of the addition or the further enhancement of the addition is unwarranted on facts. Considering the record and the explanations, the addition made is directed to be deleted and the enhancement challenged vide ground No. 6 also set aside. Accordingly, the appeal of the assessee is allowed. Said order was pronounced in the Open Court at the time of hearing itself.
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2022 (8) TMI 285
Reopening of assessment u/s 147 - amount u/s 35D on account of preliminary expenses in Schedule 12D - HELD THAT:- Assessee has not disallowed this expenditure in the computation of income and accordingly the income has escaped due to failure on the part of the assessee to disclose truly and fully all material facts. We note from the reasons recorded that all the information were duly disclosed in the books of account, audited financial statement and return of income filed by the assessee and it cannot be construed to mean that it is something in respect of which the assessee has not truly and fully disclosed all the material facts leading to escapement of income. In fact, the assessee has disclosed all the material facts in respect of increase in the authorised capital in the balance sheet and claimed on account of 1/5th preliminary expenses u/s 35D of the Act. Under these facts and circumstances, we find force in the contentions of the A.R. that the reopening was made in violation to provisions as contained in first proviso to section 147 of the Act which stipulates that reopening cannot be made where the assessment was framed u/s 143(3) of the Act after a period of four years from the end of relevant assessment year if the escapement of income has occurred due to non-disclosure of material facts by the assessee which ultimately led to the escapement of the income. But this is not the case before us. CIT(A) has quashed the re-opening of assessment u/s 147 of the Act and also assessment order by passing a speaking and reasoned order. In our considered opinion there is not failure of the kind on the part of the assessee and therefore, the reopening of the assessment has been made incorrectly and in violation to 1st proviso to section 147 of the Act and cannot be sustained as has been held by ld CIT(A). The Hon ble Bombay High Court in the case of Tao Publishing (P) Ltd[ 2015 (1) TMI 1162 - BOMBAY HIGH COURT] , Sound Casting Pvt. Ltd. [ 2012 (4) TMI 248 - BOMBAY HIGH COURT] , Hon ble Delhi High Court in the case of CIT vs. Orient Craft Ltd. [ 2013 (1) TMI 177 - DELHI HIGH COURT] and in the case of Haryana Acrylic Manufacturing Co. [ 2008 (11) TMI 2 - DELHI HIGH COURT] have held the reopening made beyond four years has to be in accordance with the first proviso to section 147 of the Act failing which the reopening as well as reassessment order are bad in law. We, therefore respectfully following the above legal position, uphold the order passed by the ld CIT(A) by dismissing the ground no. 1 raised by the revenue.
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2022 (8) TMI 284
Unexplained money u/s 69A - assessee made deposit in Bank account which was stated to be funded out of lease rent advance and withdrawals from bank account / remittances from abroad - HELD THAT:- Upon careful consideration, we find that the assessee is employed in Dubai and occasionally visit India to meet elderly parents. The assessee does not have any source of income in India. Therefore, the explanation that some cash was saved by the parents and it was deposited in the bank account could be considered as valid explanation of the source. This amount could not be considered as unexplained income of the assessee considering the fact that he is a non-resident. Therefore, by deleting the addition we allow the appeal of assessee.
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2022 (8) TMI 269
Reopening of assessment u/s 147 - correctness of exercise of power by the assessing officer under Section 147/148 of the Act and reopening the assessment which was completed - Tribunal justification in law in quashing the order passed u/s 147 - HELD THAT:- Three issues which were raised by the assessing officer and one such issue pertains to the basis of realizable market value for claim of deduction under Section 80IA of the Act. In response to the said notices the assessee had submitted a reply on 13th March, 2003 and on 21st March, 2003. In the reply dated 21st March, 2003 the assessee has extracted the question posed to the assessee by the AO regarding the claim of deduction under Section 80IA - We find that there were six questions which were asked to the assessee and the assessee has submitted a detailed reply. If that be the position whether the assessment could have been reopened. In our considered view, the Tribunal rightly granted relief to the assessee after noting the factual position, by pointing out that relevant material was placed on record by the assessee when they made the claim for deduction u/s 80IA of the Act and query was raised and the case was discussed and the assessee had placed material before the assessing officer and it is only thereafter the realisable market value of the power as adopted by the assessee was initially accepted by the assessing officer. Therefore, the Tribunal, in our considered view, rightly stated that the reassessment proceedings were clearly a case of change of opinion. As in INDIAN AND EASTERN NEWSPAPER SOCIETY [ 1979 (8) TMI 1 - SUPREME COURT] and the legal position was explained by stating that the proposition in Kalyanji Mavji Co. to the effect that a case where income had escaped assessment due to oversight, inadvertence or mistake of the ITO must fall within S.34(1)(b) of the 1922 Act, is stated too widely and travels further than the statute warrants in so far as it can be said to lay down that if, on reappraising the material considered by him during the original assessment, the ITO discovers that he has committed an error in consequence of which income has escaped assessment, it is open to him to reopen the assessment. An error discovered on a reconsideration of the same material does not give him that power. Decided against revenue,
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2022 (8) TMI 268
Assessment u/s 153A - Whether no incriminating material was found during the course of search? - HELD THAT:- No other material found during search pertaining to M/s KGN Industries Ltd. has been placed on record. Revenue has not placed on record any incriminating material which was found as a result of the search conducted on the assessee herein. It is also the contention of the assessee that there was no surrender by him unlike Sh. Madho Gopal Agarwal and he, therefore, specifically disputed that any notice u/s 153A of the Act could have been initiated against him. The said facts are not disputed by the counsel for the Revenue. On the date of search, admittedly, the assessment with respect to the AY under consideration 2011-12 admittedly stood completed. Since no assessment was pending for the relevant AY 2011-12 on the date of search and no incriminating material was found during the course of search, the issue is covered in favour of the assessee by the judgment of this Court in the case of Commissioner of Income Tax v. Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] and Principal CIT vs. Meeta Gutgutia [ 2017 (5) TMI 1224 - DELHI HIGH COURT] .- Decided in favour of assessee.
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2022 (8) TMI 267
Stay the recovery proceedings u/s 220(6) - HELD THAT:- This intra-court appeal arises from the order of the learned Judge passed in the writ petition, which was filed by the appellant challenging the order of assessment passed by the second respondent. By the order impugned herein, the learned Judge has observed that the assessment order was passed based on the records that were available and furnished to the Income Tax Department to the assessee and hence, there was no merit to entertain the writ petition. Holding so, the learned Judge has directed the appellant to work out the remedy before the appellate authority by filing statutory appeal along with miscellaneous application to stay the recovery proceedings under section 220(6) of the Income Tax Act, 1961. This court is of the view that the subject matter in issue involves factual matrix and the same cannot be decided by the writ court. Therefore, the learned Judge has rightly dismissed the writ petition and directed the appellant to file statutory appeal before the appellate authority, which does not require any interference. This court, without going into the merits of the case, issues the following directions, in the light of the aforesaid decision of the Hon'ble Supreme Court in in Indus Towers Ltd. [ 2022 (5) TMI 122 - SUPREME COURT] (i) The appellant / assessee is directed to pay 10% of the total demand within a period of eight weeks from the date of receipt of a copy of this judgment, failing which, it is open to the authority concerned to proceed further, in the manner known to law. (ii) The time limit for filing a statutory appeal by the appellant / assessee, if not filed earlier, is 30 days from the date of receipt of a copy of this judgment. (iii) On filing of such appeal and complying with the condition of payment, the appellate authority shall dispose of the appeal on merits and in accordance with law, after providing sufficient opportunity to the appellant / assessee enabling them to place their supportive materials as well as all the contentions, within a period of eight weeks, therefrom.
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2022 (8) TMI 266
Reopening of assessment u/s 147 - Whether the Tribunal was justified in law in holding that reopening of assessment under section 148 of the Act is valid and complies with all the mandatory conditions for reopening on the facts and circumstance of the case? - HELD THAT:- As in the facts of the case, there was no regular assessment conducted under the provisions of Sub-section (3) of Section 143 of the Act, 1961 after scrutiny but the returned income was accepted under the provision of Section 143(1) -The assessee neither raised any objection to the notice issued under Section 148 at the relevant point of time nor raised such issue or objection even during the course of assessment and participated in the assessment proceedings by filing reply. Even before the CIT (Appeals), no ground is raised with regard to the reopening of the assessment. The assessee for the first time challenged the reopening before the Tribunal by raising the ground which the Tribunal decided after considering the material on record. As in the decision in case of G G Pharma India Ltd [ 2015 (10) TMI 754 - DELHI HIGH COURT] there was a scrutiny assessment under Section 143(3) of the Act, 1961 and after relying upon the decision in case of ACIT Versus Dhariya Construction Company [ 2010 (2) TMI 612 - SC ORDER] t held that the the issue of accommodation entry was processed under Section 143(3) of the Act, 1961 and without forming a prima-facie opinion on the basis of the material and without application of mind to the information, if any collected, it was not possible for the Assessing Officer to have concluded that the assessing company introduced its own unaccounted money in its Bank by way of accommodation entries. Whereas, in the facts of the case, the Assessing Officer has considered the material by applying his mind to the information collected from the Central Excise Department preferring to the return of income furnished by the assessee, wherein it was not possible to ascertain as to whether the assessee has taken the transaction which is disclosed during the course of search of M/s. Wonder Packaging Industries Limited or not, and therefore, has rightly come to the opinion that he has reason to believe that income chargeable to tax has escaped assessment. No substantial question of law.
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2022 (8) TMI 265
Validity of faceless assessment u/s 144B - denial of natural justice - as submitted no draft assessment along with show cause notice as required under section 144B(1) and section 144B(7) is given to the petitioner - HELD THAT:- Section 144B(1)(xii) provides that on receipt of show cause notice, assessee may furnish his response to the National Faceless Assessment Centre and as per clause (xiv), assessment unit shall make a revised draft assessment order after considering the response of the assessee and send it to the National Faceless Assessment Centre. As per the provisions of section 144B(7) in case of variation prejudicial to the assessee as proposed in the draft assessment order, the assessee is entitled to request for personal hearing and upon such request, the personal hearing may be provided by the authority, if the case of the assessee is covered by circumstances provided therein in exercise of powers under sub-clause (h) of clause (xii) of section 144B(7) of the Act, 1961. It can be safely be said that the impugned order was passed by the respondent in violation of principles of natural justice without affording an opportunity of personal hearing by not following the prescribed procedure laid down as per the provisions of section 144B of the Act, 1961 for Faceless assessment. This petition succeeds and is accordingly allowed. The impugned order of assessment passed by the respondent under section 143(3) read with section 254 read with section 144B dated 20.09.2021 at Annexure-A and demand notice under section 156 of the even date at Annexure-B are quashed and set aside.
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2022 (8) TMI 264
Admission of additional evidence by CIT-A - Addition u/s 68 - DR argued that CIT(A) admitted the fresh evidence submitted by the assessee without considering the fact that assessee failed to furnish the said evidence before the Assessing Officer even despite sufficient opportunity been granted - HELD THAT:- Except for the two parties, who could not be verified during the remand proceedings, the Assessing Officer in the remand report did not record any adverse findings regarding genuineness of the source of credit from other share applicants. Accordingly, learned CIT(A) admitted the additional evidence filed by the assessee and restricted the disallowance under section 68 of the Act only in respect of the transaction with aforesaid two parties. From the perusal of the record, we are of the considered view that when reasonable opportunity was granted by the CIT(A) to the Assessing Officer to examine the additional evidence filed by the assessee, and complete verification of all the details was done, in the remand proceedings, by the Assessing Officer, admission of additional evidence filed by the assessee cannot be faulted by taking a pedantic approach. - Decided against revenue. Insofar as the merit is concerned, as noted above, the Assessing Officer in the remand proceedings did not record any adverse findings regarding the share applicants except the two parties, who could not be verified. Accordingly, vide impugned order, learned CIT(A) restricted the disallowance under section 68 only in respect of the transaction with the aforesaid two parties. Thus, in view of the above, we find no infirmity in the impugned order passed by the learned CIT(A) in the present case. As a result, grounds raised by the Revenue are dismissed.
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2022 (8) TMI 263
Rectification of mistake u/s 154 - AO rejected the application on the ground that on careful consideration, it is noted that the rectification of mistake sought by the assessee does not come under the provisions of section 154 - HELD THAT:- Once the assessee has brought into notice of the AO that due to some typographical or technical mistake, the assessee has offered the income 10 times more to the actual income while filing the return of income. Then the AO is expected to verify the correctness of the total income of the assessee. Though there is a remedy to revise the return but if the assessee could not revised its return of income within the period prescribed, it does not mean that there is no remedy for such a mistake leading to incorrect assessment. Even otherwise, if assessee has offered an income to tax by mistake or due to technical mal functioning of computer system, the appellate authority has the jurisdiction to rectify such mistake and particularly to avoid the assessment of the income which is not the real income of the assessee. Accordingly, the mistake pointed out by the assessee in the applications under section 154 was required to be verified by the Assessing Officer from the bank account as well as the accounts maintained by the assessee. Prima facie it appears that for both the assessment years, the gross receipt of the assessee were not more than Rs. 32,000/- or Rs. 35,000/- and hence, the total income mentioned in the return of income and finally assess to tax at Rs. 2647740/- and Rs. 2779250/-, respectively for the assessment years 2013-14 and 2014-15 is not the real income of the assessee. Since neither the Assessing Officer nor the CIT(A) has verified the correct facts about the wrong income offered to tax by the assessee due to typographical mistake or technical mistake while filing the return of income therefore, the matter for both the assessment years are set aside to the record of the Assessing Officer for reconsideration of the same after a proper enquiry and verification of the record to find out the correct facts about the income of the assessee for these two assessment years and then assess the correct income of the assessee.
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2022 (8) TMI 262
Addition u/s 68 - Estimation of commission on accommodation entries - assessee has failed to prove the source of the cash deposits in her bank account - HELD THAT:- In the present case, the assessee could neither produce any of the beneficiaries nor could produce any confirmation letter in support of the transaction. It has not been disputed that the assessee s husband is also an accommodation entry provider. The Revenue could not bring anything on record to deny the statement of the assessee that her bank accounts were operated by her husband. Though, it can be accepted that in case of accommodation entry provider only commission can be considered as the taxable income, however, the rate of commission considered justifiable in other cases cannot be readily accepted in the present case, particularly when the assessee neither could prove the identity of the person from where the cash has been received nor could provide whereabouts of the beneficiaries to whom the money was transferred through cheque/RTGS. As noted above, in proceedings before the learned CIT(A), the assessee agreed that it has earned commission of 0.15% to 0.25%. In absence of any material in support of such claim and in view of aforesaid findings, we deem it appropriate to direct the Assessing Officer to consider 0.25% as net profit rate/commission from the alleged accommodation entry transaction and to compute the taxable income accordingly. As during the course of hearing, learned AR has also prayed that expenditure to an extent of 50% be allowed by placing reliance on the aforesaid decisions rendered by coordinate bench of the Tribunal. However, in the present case, it is evident that the assessee nowhere provided the details of expenditure incurred for earning the commission income from accommodation entry transaction. It is only now in the appellate proceedings before us, claim has been made to allow expenditure to an extent of 50%, without filing any supporting details, by placing reliance on decisions rendered in case of some other assessee. Thus, in view of the above, we do not agree with the submissions of the assessee in this regard. Thus, as a result, grounds No. 1 4 raised in assessee s appeal are partly allowed.
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2022 (8) TMI 261
Capital gain computation - Disallowance of expenses incurred for the purposes of selling the land - HELD THAT:- As admitted fact on record that the sales consideration offered by the assessee reflected 24 lakhs of expenses incurred on sales. In the computation of capital gain by the A.O., we have noted that the sales consideration has been taken which as per the A.O. himself includes 24 lakhs of the expenses claimed by the Assessee. Thus the inclusion of the assessee of expenses, as part of sales consideration is admission of the fact of having incurred such expenses out of undisclosed sources, and the sale consideration, including these expenses, being accepted by the Revenue, the fact of incurring expenses also stands accepted. The Revenue is therefore precluded from denying the claim of expenses for want of substantiation. We hold therefore that to the extent of expenses incurred which are included as part of sale consideration and which is accepted by the Revenue also assesses claim of expenses is to be allowed. Since the assessee has claimed expenses of Rs.43 lacs, the balance, i.e Rs.19 lacs is only liable to be disallowed for want of substantiation. The disallowance of expenses accordingly is directed to be restricted to the extent of Rs.19 lacs. Addition made to the sale consideration on account of deposits in the bank account of the assessee not included as part of sale consideration to this extent - onus on the legal heir post assessee death - HELD THAT:- As the assessee had expired, suspected to be murdered by his family and his daughter was his only legal heir. The daughter claimed to be totally unaware of the financial transactions of her father, the assessee, and it was only his caretaker, Ms.Ritaben, who was constantly with him and claimed to be in know of the facts of the transaction. Revenue has at no point controverted or disputed these facts. Also it was on the basis of the caretakers admissions that the sale consideration received for the sale of impugned two lands was increased from the registered value including therein all cash deposits in bank, both of the assessee and the caretaker, attributable to this transaction, gold biscuits and expenses incurred on the transaction allegedly out of this consideration. The legal heir of the assessee, i.e his daughter having fairly included all possible modes in which consideration was received, as confessed by her fathers caretaker, and she admittedly being totally unaware of this transaction, the legal heir has surely come clean with all the facts. The onus on the legal heir cannot be equated with that on the assessee so as to burden with the onus of evidencing transactions which she was totally unaware of. Moreover considering the fact that the amount sought to be added by the Revenue on account of unexplained cash deposit is too paltry a sum in comparison to the total sale consideration shown by the assessee,in our view no addition of the said unexplained cash deposit is warranted on account of non substantiation. The addition is accordingly directed to be deleted. Addition on account of money paid for settlement of dispute vis a vis the land sold - HELD THAT:- CIT(A) has noted facts to the effect that her statement in this regard was not reliable. He noted that the payment was neither made in her presence nor was she aware of the parties involved in it. Her statement that the transaction was recorded in a diary maintained by her and which diary was seized by the Police was found to be false as there was no mention of any diary in the panchnama of the Police. CIT(A) also noted that even the AO did not refer to any diary while making the addition and that in fact when the assessee asked the AO to confirm whether he had examined any such diary seized by the Police, the AO did not respond. These factual findings of the Ld.CIT(A) have not been controverted by the ld. D.R. before us. We have also noted that Mr.Adjania who was the alleged recipient of the settlement amount as per the caretaker, denied receiving any such amount though he admitted to the existence of the dispute and stated that he had only been refunded his advance of Rs.8 lacs, given to the assessee for purchasing the land. CIT(A), we hold has rightly held that except for the statement of the caretaker there was no other evidence with the AO to corroborate the payment of Rs.5 crores for settlement of dispute. And the statement being contradictory and unreliable, the addition, we hold, has been rightly held by the Ld.CIT(A) to be not sustainable. Indexation of the cost of acquisition being taken from F.Y 1981-82 as done by the assessee as opposed to from 08-09 taken by the A.O. - HELD THAT:- D.R. was unable to controvert the factual findings of the ld. CIT(A) that the assessee had acquired the land from his late brother on succession, who in turn had owned it since 1966. This fact has not been disputed by the A.O. also. We have noted that the Ld.CIT(A) has relied upon the decision of the jurisdictional High Court in the case of Rajesh Vithalbhai Patel [ 2013 (7) TMI 413 - GUJARAT HIGH COURT ] for the proposition that on succession, as per law, the cost of acquisition is to be taken as that to the previous owner and holding of the property also accordingly to be taken from the date when held by the previous owner.The Ld.DR was unable to distinguish the said decision before us nor did he point out any contrary decision of the Hon ble jurisdictional High Court or the Hon ble apex court on the issue - no reason to interfere in the order of the ld. CIT(A) allowing indexation of cost of acquisition from 1981-82. Fair market value of the land in question as computed by the D.V.O - determination of the cost of acquisition of the asset sold which the assessee had taken as per value determined by the registered valuer, while the AO relied upon valuation done by the DVO - HELD THAT:- No infirmity in the order of the L.d CIT(A). Valuation undeniably is only a fair estimation of the value of land as on a particular date. And the same is determined by various different methods, considering value at which comparable lands were sold on that date, or considering municipal rates of lands on such dates. It involves a lot of assumptions and estimations. Therefore there is bound to be difference in valuation between two different valuers, which could be for many reasons and a difference of 8% is surely immaterial to cast doubts on the veracity of any particular valuation. This difference can safely be attributed to different methodologies, assumptions and estimations resorted to and in such cases the difference can be safely ignored and it can be said that both the valuations arrive at the same cost of acquisition. We therefore uphold the order of the Ld.CIT(A) rejecting the valuation of cost of acquisition of the lands sold on the basis of valuation by the DVO.
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2022 (8) TMI 260
Late Fee under section 234E - levy of late fee in the course of intimation under section 200A - levy of late fee under section 234E in furnishing the statements of TDS was inserted vide Finance Act 2012, w.e.f 01.06.2015 - HELD THAT:- On careful perusal of the decision of Hon'ble Jurisdictional High Court in Rajesh Kourani [ 2017 (7) TMI 458 - GUJARAT HIGH COURT] we find that that jurisdiction high court in para-20 of the decision has clearly dissented with the decision of Hon'ble Karnataka High Court in Fatheraj Singhvi [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] and held that even in absence of section 200A with introduction of section 234E, it was always open for the revenue to demand and collect the fee for late filing of the statements. Without a regulatory provision being found for section 200A for computation of fee, the fee prescribed under section 234E cannot be levied is not acceptable. Any such view would amount to a charging section yielding to the machinery provision. If at all, the recasted clause (c) of sub-section (1) of section 200A would be in nature of clarificatory amendment. Even in absence of such provision, as noted, it was always open for the revenue to charge the fee in terms of section 234E. By amendment, this adjustment was brought within the fold of section 200A. This would have one direct effect. An order passed under section 200A is rectifiable under section 154 and is also appealable under section 246A. In absence of the power of authority to make such adjustment under section 200A, any calculation of the fee would not partake the character of the intimation under said provision and it could be argued that such an order would not be open to any rectification or appeal. Upon introduction of the re-casted clause (c), this situation also would be obviated. Even prior to 1- 6-2015, it was always open for the revenue to calculate fee in terms of section 234E. Section 200A is not a source of substantive power. Substantive power to levy fee can be traced to section 234E. It is settled position under legal hierarchy that decision of Hon'ble jurisdictional High Court is having binding precedent, in absence of any decision of Hon'ble Apex Court. Thus, all the submissions which is raised by Ld. AR for the assessee is not helpful to him. Therefore, respectfully following the ratio of law that section 234E is a charging provision creating a charge for levying of fee for certain default in filing statement, and the fee prescribed under this section could be levied even without a regulatory provision being found in section 200A for computation of fee. - Appeal of assessee allowed.
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2022 (8) TMI 259
Revision u/s 263 - Exemption u/s 11 - as per CIT AO has not applied his. mind and has passed the order routinely in perfunctory manner and that no inquires have been conducted on important issue relating to quantum of exemption allowable u/s 11(1)(a) - HELD THAT:- As firstly vide notice dated 07-09-2017, this query was raised by the AO and again by notice dated 23-11-2017, the AO enquired on this aspect. In response, the assessee had responded by letter dated 21-11-2017 and another letter dated 08-12-2017. The assessee had submitted that in all the previous years the Department has considered such grants received from the State Government as income of the society/trust which has been subject to all relevant provisions of section 11 - Therefore, this was not a case where this issue was not considered by the AO during the course of assessment proceedings. Further, the assessee has been receiving government grants in earlier years as well and the Revenue had accepted the same as income of the assessee eligible for accumulation u/s 11 of the Act. In the case of Dharmendra Kumar Bansal [ 2014 (2) TMI 1210 - ITAT JAIPUR] it was held that before taking any action Commissioner himself shall apply his mind after examining record of any proceedings and his satisfaction is must. Therefore, where satisfaction was of ITO who proposed action u/s 263 but not of Commissioner, issuance of notice u/s 263 on basis of proposal made by ITO was void ab initio. In view of the well-settled proposition as applied to the instant set of facts, we are of the considered view that in the 263 order the Principal CIT has not applied his mind, by calling for the office records, and independently taking a view that the order passed by the AO in the instant set of facts is erroneous and prejudicial to interest of revenue. Principal CIT has acted only on the proposal sent by AO to initiate 263 proceedings. In our considered view, therefore, the order passed under section 263 of the Act is liable to be set. The assessee has appended copies of the order by Income Tax Appellate Tribunal in his own case for assessment year 2012-13 and also copy of the assessment order under section 143(3) of the Act for assessment year 2013- 14, wherein no addition on the assessee has been made by the Revenue in any of the earlier years. The assessee utilises the above grants for the purpose of carrying out the fencing of the railway line to the forest. Though strictly speaking, principle of res judicata does not apply to income tax proceedings, but it is also well-settled principle of law that if there is no change in the facts of the assessee from the previous years, principle of consistency demands that settled issue should not be re-agitated. The assessee has submitted that the assessee Trust is in receipt of government grant in the earlier years as well. However, it is for the first time that this issue has been raised by the Revenue with no change in facts from the earlier years. In the earlier years, the Revenue had accepted the same as income of the assessee as being eligible for accumulation under section 11. As decided n the case of CIT v. SBJ VON Compounders (P.) Ltd [ 2012 (9) TMI 1221 - GUJARAT HIGH COURT] has held that claim of assessee in respect of valuation of stock which was accepted in preceding assessment year was to be accepted in current year also following doctrine of consistency. Appeal of assessee allowed.
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2022 (8) TMI 258
Depreciation on temporary structures - whether temporary bridges and roads constructed by the assessee for transportation of goods from port of work sites fall under temporary structures eligible for 100% depreciation or not ? - HELD THAT:- Before us the assessee furnished copies of Government approved valuers report, site clearance certificate, contractor demobilization, checklist to buttress the agreement that the assessee has erected only temporary structures and those structures were later on demolished after completion of the projects. These evidences go to show that the assessee erected temporary structures and later on demolished those structures in which case depreciation at 100% is allowable. The evidences furnished before us in the form of site clearing certificate and the contractor demobilization check list which were dated 24.07.2015 and 12.10.2015 respectively appears to have not produced before the authorities below. Therefore, since these evidences were not furnished before the AO, matter restored back before AO.
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2022 (8) TMI 257
Late deposit of employee s contribution to P.F. and E.S.I. - Addition on account of deemed income u/s 36(1)(va) r.w.s. 2(24)(x) - scope of amendment - as per revenue amendment is curative in nature and retrospective in application - HELD THAT:- On this issue jurisdictional ITAT and various coordinated benches held that the amendment made by the finance Act 2021 to sec 36(1)(va) and section 43B are prospective in nature, effective from assessment year 2022-23. See M/S CRESCENT ROADWAYS PRIVATE LIMITED [ 2021 (7) TMI 1265 - ITAT HYDERABAD] Following judgements of PNGS India Pvt Ltd [ 2022 (6) TMI 1052 - ITAT MUMBAI] AND M/s Vishal Enterprises [ 2022 (2) TMI 1272 - ITAT BANGALORE] A.O. and first appellant authority are duty bound to follow the decisions of jurisdictional high Court otherwise it makes their decision unsustainable in so far as applicability of amendment by the finance act 2021, the same is effective from assessment year 2022-23 thus in the light of above, we hold that the C.P.C and Ld. CIT (A) has erred in applying amended provisions of sec 36(1)(va) r.w.s 43B to disallow assesses claim of deduction. - Decided in favour of assessee.
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2022 (8) TMI 256
Deduction u/s 80P(2)(a)(i) - Claim denied as interest income was not received from investments with other co-operative societies - HELD THAT:- Hon'ble Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd. v. CIT ( 2021 (1) TMI 488 - SUPREME COURT] held that, when the assessee is registered as a Co-operative Society under the respective State Acts, the interest income received for providing credit facilities to its members is entitled to deduction u/s 80P(2)(a)(i). Thus we remit the issues raised in this appeal to the file of Ld.AO. The Ld.AO is directed to examine the deduction u/s 80P(2)(a)(i) of the I.T.Act in the light of the dictum laid down by the Hon'ble Supreme Court in the case of Mavilayi Service Co- operative Bank Ltd. v. CIT (supra). Deduction u/s 80P(2)(d) - We notice that an identical issue was restored to the file of the A.O. by the Coordinate Bench in the case of Thannirupantha Primary Agricultural Credit Co-operative Society Ltd. [ 2021 (8) TMI 68 - ITAT BANGALORE] - Thus following the above said decision we restore this issue to the file of the A.O. for examining it afresh. Alternative claim that the expenses incurred to earn the interest income should be allowed u/s 57(iii) of the Act, if it claim for deduction u/s 80P(2)(a)(i) or 80P(2)(d) is not allowed - Since we have already restored the issue of claim of deduction u/s 80P(2)(d) of the Act, we restore this alternative contention also to the file of the A.O., since the claim of the assessee gets support from the decision rendered in the case of Totgars Co-operative Sales Society Ltd.Vs. ITO [ 2017 (1) TMI 1100 - KARNATAKA HIGH COURT] .
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2022 (8) TMI 255
Validity of assessment u/s 153A - scope of materials found in search - HELD THAT:- As decided in the case of Pr. CIT and ors. vs. Meeta Gutgutia Prop. Ferns N Patels and Ors. ( [ 2017 (5) TMI 1224 - DELHI HIGH COURT] Hon ble Delhi High Court reiterated with approval their observations in Kabul Chawala s case ( 2015 (9) TMI 80 - DELHI HIGH COURT ) that completed assessments could be interfered with by AO while making assessment under section 153A only on basis of some incriminating material unearthed during course of search. If in relation to any assessment year, no incriminating material was found, no addition or disallowance could be made in relation to that assessment year in exercise of powers under section 153A and earlier assessment should have to be reiterated. This decision has been affirmed by the Hon ble Supreme Court by dismissing the Revenue s SLP in PCIT vs. Meeta Gutgutia [ 2018 (7) TMI 569 - SC ORDER] We hold that the assessment for AY 2013-14 was already completed prior to the date of search and having not abated, the scope of proceedings under section 153A of the Act had to be confined only to material found in the course of search. Since no material on the basis of which the impugned addition has been made was found in the course of search, the addition made by the Ld. AO in the order of the assessment could not have been subject matter of proceedings under section 153A of the Act. Consequently, impugned addition could not be made. - Decided in favour of assessee.
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2022 (8) TMI 254
Revision u/s 263 - case was selected for limited scrutiny under CASS - CIT-A power to enlarge scope of limited scrutiny assessment - AR submitted that the case of the assessee was initially selected for limited scrutiny under CASS for verification of introduction of capital during the year under consideration and during the course of assessment proceedings, the AO carried out necessary verification and has given a finding that there was no such introduction of capital during the year under consideration - HELD THAT:- It is an undisputed fact that the case of the assessee was selected for limited scrutiny to verify the introduction of capital during the year under consideration and the AO has taken due note of the same and has given a specific finding after verification of record that since there is no fresh capital introduced during the year, the issue for which the matter was selected for limited scrutiny does not exists and no adverse view can be taken, therefore, taking into consideration the submissions of the assessee, the assessment proceedings were completed. In the show cause notice issued by the ld. Pr. CIT, it is noted that he has raised issues relating to non-reporting of contract receipts and secondly, regarding discrepancy in the sundry creditors accounts as shown in the balance sheet dated 31.03.2013, the sundry creditors shown in the preceding assessment year and the purchases made during the year under consideration. Further, besides these two issues, the ld. Pr. CIT has noticed certain discrepancies/shortcomings in the assessment order, which find mention in Point No. 13 of the impugned order and basis the same, it was held that the assessment order passed by the AO is not only erroneous but also prejudicial to the interest of the Revenue. We therefore find that two issues on which show cause notice has been issued as well as the other issues as contained in Para 13 of the impugned order, are not subject matter of limited scrutiny and therefore, it is a case where these issues have been raised for the first time by the ld. Pr. CIT by enlarging the scope of the assessment. It is a consistent stand across various Benches of the Tribunal that where the case of the assessee has been selected for limited scrutiny, the ld. Pr. CIT cannot enlarge the scope of the said assessment. Thus the impugned order passed by the ld. Pr. CIT, which travel beyond the subject matter of limited scrutiny cannot be sustained in the eyes of law and the same is hereby set aside and the order passed by the AO is sustained. Appeal of assessee allowed.
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Service Tax
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2022 (8) TMI 283
Deemed sale or not - right to use the software - Antivirus Software license key/code supplied by the respondent along with CD/DVD replicated with Quick Heal Brand Antivirus Software through dealers/distributors to the EndCustomers is liable to Service Tax or not - Information Technology Service or not - transfer of goods by way of hiring, leasing, licensing or any such manner without transfer of right of use such goods - declared service under clause (1) of Section 66E of the Finance Act, 1994 or not - HELD THAT:- The Tribunal laid much emphasis on the fact that in accordance with the agreement the licensee has the right to use the software subject to the terms and the conditions laid therein. The Tribunal took notice of the fact that in accordance with the agreement the licensee is entitled to use the software/RDM service from the date of the activation of the license till the date of its expiry. The Tribunal also took into consideration the fact that the licensee is also entitled for the updates and the technical support. In view of the Tribunal, the right to use the software would amount to the deemed sale . The Tribunal rejected the contention of the revenue that the transaction would not be covered under subclause (d) of the Article 366(29A) of the Constitution. The declared services include the services of renting of immovable property, works contract, hire purchase/instalment payment system, supply of food/drink, etc. In other words, under the Constitution what is related to deemed sale is also covered under the deemed service as per the above Section. The sum and substance of the ratio of the case of BHARAT SANCHAR NIGAM LTD. (BSNL) VERSUS UNION OF INDIA [ 2006 (3) TMI 1 - SUPREME COURT] as discernible is that the contract cannot be vivisected or split into two. Once a lumpsum has been charged for the sale of CD (as in the case on hand) and sale tax has been paid thereon, the revenue thereafter cannot levy service tax on the entire sale consideration once again on the ground that the updates are being provided. The artificial segregation of the transaction, as in the case on hand, into two parts is not tenable in law. It is, in substance, one transaction of sale of software and once it is accepted that the software put in the CD is goods , then there cannot be any separate service element in the transaction. It is so because even otherwise the user is put in possession and full control of the software. It amounts to deemed sale which would not attract service tax. The impugned order of the Tribunal suffers from no jurisdictional or any other legal infirmity warranting any interference in the present appeal - Appeal dismissed.
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2022 (8) TMI 282
Valuation - Erection, Commissioning and Installation Services - non-inclusion of the value of goods/material supplied under the supply work orders in valuing the said taxable service - case of the Revenue as forthcoming from the SCN is that the separate work order for supply of goods and services have to be construed as a single EPC contract for the purposes of discharge of service tax and that there has been an artificial splitting in the value of goods and services so as to inflate the value of goods and suppress the value of services - extended period of limitation - applicability of N/N. 12/2003 - HELD THAT:- The taxable category Erection, Commissioning and Installation Services could only cover pure service contracts within its fold. It is observed that the Ld. Commissioner on one hand treats the separate work orders for sale/supply of goods and provision of Erection, Commissioning and Installation Services as an indivisible EPC yet at the same time rejected the taxability thereof under the category, Works Contract Services which is clearly unsustainable in light of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] . The composite contracts in this case were divided into supply obligation and service obligation between the parties inter se for a pre-agreed monetary consideration. Since the work order for Erection, Commissioning and Installation Services was for consideration in money, the gross amount charged for such services alone could be subjected to service tax under Section 67(1)(i) of the Finance Act. The valuation framework as contained in Section 67 of the Finance Act does not seek to include within its ambit, any amount charged for sale/supply of goods and we are in complete agreement with the Appellant that higher or lower profit margin with respect to sale of goods cannot be a ground for questioning the value of a taxable service - It is well settled that levy of tax on sale/supply of goods and provision of services are mutually exclusive and it is not in the domain to assess whether VAT/CST was correctly discharged or otherwise. Deduction with respect to sale of goods to the Appellant under N/N. 12/2003 - HELD THAT:- When the Appellant has undisputedly not availed any credit of excise duty on the goods sold to TSL . The proviso to Notification No. 12/2003 only restricts the availment of credit in the hands of the service provider as evident from Clause (b) thereof and therefore, as to whether TSL was entitled to avail Cenvat credit of excise duty on the said goods is an altogether separate question having no bearing on the instant proceedings. As the appeal are allowed on merits, the aspect of limitation, need not be entered into - appeal allowed - decided in favor of appellant.
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2022 (8) TMI 281
Classification of services - to be classified under GTA services or under mining services? - deployment of loaders, excavators, dozers for removal of overburden, waste ash, spillage, etc. and also loading of raw coal, clean coal, secondary coal, rejects and ash, etc. - deployment of tippers and coal dumpers for transportation of coal, secondary coal, rejects, tailings and ash etc - transportation of raw coal from colliery pit head to power plant and crusher plant and there from to the washeries; railway sidings, stock yard and such other destinations as specified by TSL - evacuation, loading and transportation of dolomite, within the respective areas under West Bokaro Mines, Chhattisgarh and Gomardih Dolomite Mines. HELD THAT:- From the Show Cause Notice and the Order-in-Original, it is found that it is not in dispute that the transport services have been provided within the mining area of TSL by the Respondent and the same relates to Transportation of raw coal from colliery pit head to power plant and crusher plant and there from to the washeries; railway sidings, stock yard and such other destinations as specified by TSL and transportation of dolomite, within the respective areas under West Bokaro Mines, Chhattisgarh and Gomardih Dolomite Mines - when it has not been disputed by the Appellant Revenue that the transport activities have been performed within the mining area of TSL, then confirmation of demand on such activity by treating the same as mining service cannot be sustained. The transport charges cannot be included in the valuation for mining services and thus the order of the Ld. Adjudicating authority is correct in the eyes of law - Appeal dismissed - decided against Revenue.
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CST, VAT & Sales Tax
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2022 (8) TMI 280
Taxability - Sales of cut / sized Silver Oak grown as shade trees in the Tea Estates of the petitioner admittedly in cubic metre and charged per cubic metre - would constitute agricultural produce in terms of Section 2(r) of the TNGST Act, 1959 or would constitute sales of firewood and thus exempt in terms of Entry 52 of Part B of the Third Schedule to the TNGST Act, 1959 or would constitute sales of timber liable to tax under the TNGST Act, 1959? - HELD THAT:- The sale of shade trees cut/sized would constitute firewood and the authorities below have misdirected themselves in looking to the manner of billing to decide the classification viz., whether the wood/ goods sold was timber or fire wood or agricultural produce. Whether shade trees grown in tea estate cut/sized and sold would constitute agricultural produce , may be the principal question that needs to be answered first. If the answer to the said question is in the affirmative, the need to travel beyond and examine, whether the wood sold is firewood or timber, may not even arise. This is, in view of the fact that once it is agricultural produce , then, it goes outside the purview of the turnover under the TNGST Act, 1959 - The shade trees that have been cut/sized and sold are Silver Oak. These trees have their origin in Australia, an exotic plant variety and they are used as shade trees in tea estates in southern parts of India. These shade trees viz., Silver Oak need to be attended to periodically and they have to be planted and grown at particular intervals/distance to serve its purpose as shade trees for growth of tea plants. It is not the case of the Revenue that the growth of Silver Oak is wild or spontaneous, rather it is the case of the petitioner, which remains uncontroverted, these require human effort/labour and attention and thus, would constitute agricultural produce . Thus, it is clear that the cut/ sized shade trees would constitute agricultural produce and therefore, fall outside the purview of TNGST Act, 1959 - petition allowed.
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2022 (8) TMI 279
Valuation - includability or otherwise of the value of the free-of- cost components in the cost price of the product in the context of levy of Value Added Tax (VAT) - Whether the Department was right in equating sales tax to excise duty? - HELD THAT:- Admittedly, learned counsel for the petitioner had not supplied the methodology of pricing except to furnish an illustration. Such illustration is inconclusive and inadequate for the purposes of arriving at the proper turnover and to substantiate its case that the pricing is based only upon the cost of the materials procured by the petitioner. Normally, the cost price of a product would take into account the purchase cost of inputs, direct and indirect costs of manufacture and the profit margin. Unless the petitioner supplies the break-up of the sale consideration, the officer would not be in a position to determine the pricing methodology and it is for the petitioner to satisfy the officer that the ultimate price fixed by it does not take into account the value of the free-of-cost components. While it is entitled to exclude the value of the components supplied free by Daimler, the facts in relation to pricing have to be placed before the officer to establish that the product has not been undervalued when compared with the market price of similar products. The impugned orders of assessment are set aside - Petition disposed off.
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2022 (8) TMI 253
Levy of Entry Tax - Tobacco and Tobacco products - non-inclusion of Bidi as a manufactured finished product in the schedule of the Orissa Entry Tax Act - whether the same constitutes casus omissus on the part of the legislature and for this reason the impugned second appeal order is liable to be set aside? - express language of Entry 16 in Part 1 of Orissa Entry Tax Act which dealt with Tobacco and Tobacco products which were genus and species of tobacco and not different manufactured commodity like Bidi, Gudakhu, Cigarette, Pan Masala Zarda etc. - HELD THAT:- Although learned counsel for the Petitioner sought to contend that under Entry 31 cigarette and lighter is a separate item and therefore unless there is a separate entry for bidi it would not be amenable to entry tax in terms of the OET Act, the Court is unable to agree with the above contention. The expression tobacco and tobacco products is wide enough to include bidi and therefore, the Tribunal has not committed any legal error in coming to the conclusion. The questions framed are accordingly answered in favour of the Department and against the Assessee - The revision petition is dismissed.
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