Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
September 10, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Effective date of clarificatory circular under GST - The Circular dated 06.07.2022 is clarificatory in nature whereby paragraph 3.2 of the Circular dated 31.03.2020 has been substituted as supra. Being clarificatory, Circular dated 06.07.2022 inserting the above clarification would have the effect from the date when Circular dated 31.03.2020 came into effect - If this be the position, then the claim of the petitioner is liable to be re-considered on the basis of the Circular dated 31.03.2020 as clarified by the Circular dated 06.07.2022. - HC
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Scope of Advance Ruling application - Whether the "Case" was pending before filing of application - it is evident that notice was issued to the petitioner by DGGI on 15.12.2021 much after filing of the application for advance ruling. In our considered opinion, the same cannot be a bar under the first proviso to sub-section (2) of Section 98 of the CGST Act and the question of petitioner informing the Authority that it was being enquired into did not arise because the application was filed much prior in point of time. - HC
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Exemption from GST - works contract services provided by way of construction of non-commercial establishments by Elegant Infra Developers to the Construction & Design Services Division of the Uttar Pradesh Jal Nigam - As the UPJN does not qualify as a 'local authority' and it qualifies as a governmental authority, tax rate of 18% is applicable on the works contract services - AAR
Income Tax
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Validity of order of assessment passed u/s 143(3) r.w.s 144B - Two working days were in effect available with the assessee to formulate and submit its structured reply to the show cause notice and the draft assessment order. It is in this view of the matter, that we have observed supra, that the assessee need not be compelled to prefer appeal as a ritualistic formality. - HC
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Penalty u/s.271(1)(c) - unexplained cash deposit - the assessee has requested the Assessing Officer to treat the incurred cash deposit as his total sales receipts of trading activities of chalk lumps and offered profit at 8% of 9% of total turnover. Once the assessee has offered the same cash deposits, the AO cannot observe that the same is inaccurate particulars of income or concealment of particulars of income. - AT
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Levy of penalty u/s 271(1)(c) - deduction claimed u/s 80IA - there being no factual basis for establishing that the expenses needed to be allocated and the expenses so allocated being only estimated, the assesses claim of not allocating such expenses to the eligible units cannot be said to have been proved to be not bonafide. The assessee cannot therefore, in such circumstances be charged with having concealed/furnished any inaccurate particulars of income so as to attract levy of penalty u/s 271(1)(c) of the Act. - AT
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Exemption u/s 11 - reasonableness of payment rent to school buildings and also computer hirings rents to the trustees - The rental agreements clearly mention that besides building other amenities like furniture, electrical fittings, parking and open ground was also used by the trust. AO is not correct in making comparison with the municipal valuation and the assessee has made excessive payment to the trustees. - AT
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Disallowance of investment written off - assessee has made investment in the HTM category as per the guidelines laid down by the RBI and claimed amortization of premium till the period maturity - the loss suffered by the assessee as a result of the amount in question having become irrecoverable is incidental to the assessee’s business and the same is allowable as deduction. - AT
Customs
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Levy of Anti Dumping Duty - the tribunal pointed that macro-comparison of the available stock of polypropylene from known ADD jurisdiction vis-à-vis DTA clearance during 2009-10 and 2010-11 by the adjudicating authority also suffers from infirmities and had agreed with the respondent that DTA clearance of finished goods prior to 30th July, 2009, the date of imposition of anti dumping duty could not have been considered and the stock of polypropylene as on the date of introduction of anti dumping duty could not have been ignored in such macro comparison. - HC
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Absolute Confiscation - import of certain refrigerant gases in cylinders - The order of confiscation / demand is one aspect, but before that, it is for the Adjudicating Authority to establish first that the goods in question were prohibited and hence, the order of absolute confiscation also lacks merit - AT
Corporate Law
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Appointment of Chief Financial Officer - In the absence of any specific mention regarding eligibility and the method of selection of the CFO in the AoA, it would be logical to take recourse to section 203 of the Companies Act, 2013 in the selection and appointment of CFO, and also keep in view sections 184 and 189 in adjudging the eligibility of the KMP. - AT
Indian Laws
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Dishonor of Cheque - enhancement of fine amount equivalent to twice the cheque amount - There are no justifiable grounds to enhance the compensation amount, since the award of compensation by way of restitution in regard to the loss on account of dishonour of cheque should be practical and realistic. - HC
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Dishonor of Cheque - liability of retired partner from the partnership firm - Retirement from the partnership firm subsequent to presentation of cheque will not exonerate the accused persons who had given the cheque when they were at the helm of affairs of the company on the date of presentation of cheque. - HC
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Dishonor of Cheque - raising of presumption available u/s 139 of the Negotiable Instruments Act - If according to the accused, the complainant had no capacity to lend money, he must introduce a specific defence to that effect. Unless such a defence is introduced, the court is not expected to give a finding regarding financial capacity. - HC
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Dishonor of Cheque - a person, who has been held guilty u/s 138 of the Act of 1881 can be punished with imprisonment for a term which may extend up to two years, or with fine which may extend to twice the amount of the cheque or with both. Thus, there is a discretion left with the Criminal Court either to sentence the accused with imprisonment or to punish the accused with the sentence of fine upon considering the facts and circumstances of the case. Imposition of jail sentence is not mandatory for offence u/s 138 of the Act of 1881. - HC
IBC
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Initiation of CIRP - Operational Creditors - pre-existence of dispute - The NCLT, exercising powers under Section 7 or Section 9 of IBC, is not a debt collection forum. The IBC tackles and/or deals with insolvency and bankruptcy. It is not the object of the IBC that CIRP should be initiated to penalize solvent companies for non-payment of disputed dues claimed by an operational creditor. - SC
Service Tax
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Levy of service tax - Nature of activity - it cannot be stated that Respondents are providing port services under the Way Leave Agreement. Respondents are also not doing any activity which amounts to value addition. - Where a private party itself is constructing and maintaining a facility on land belonging to port authority the mere grant of permission by the port authority to use its land for the construction and maintainance of the facility does not amount to rendering any port service and therefore would not attract service tax - HC
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Refund of Service Tax - amount was paid under protest or not - The fact that the appellant claimed refund itself shows that the remittance which was subsequently claimed as refund was not paid in accordance with law and hence, the same would partake the character of an amount being paid under protest or the same being paid by mistake, which aspect has been considered in the above ruling of the Hon’ble jurisdictional High Court. - AT
Central Excise
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Refund of Cenvat credit remained to be utilized on account of exports of excisable goods under bond - time limitation - in respect of refund under Rule 5 wherein it is provided to file a refund claim for each quarter, the period of limitation shall be reckoned from the end of the quarter - AT
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Process amounting to manufacture - marketability - process to obtain Crumb Rubber Powder - The Commissioner (Appeals) has relied solely on Circular of CBEC explaining the definition of manufacture. It is found that when the issue regarding the exact identical process has been settled by Tribunal, not once but three times, still the Commissioner has totally ignored the same. - AT
VAT
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Meaning and scope of capital goods as per the notification - Based on the provisions of the Goa Act and the Central Act, therefore, there was nothing wrong with the Respondents referring to the definition of capital goods in Section 2(f) of the Goa Value Added Tax Act, 2005, given explicit provision in Section 2(B) of the Entry Tax Act, 2000. - HC
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Validity of demand and assessment notice - Liability of Directors - it is settled law that liability for duty of the company cannot be fastened upon the Directors of the company unless there is statutory provision to that effect. - HC
Case Laws:
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GST
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2022 (9) TMI 421
Seeking permission to travel to Hong Kong, Dubai and Thailand for business purposes from 10.09.2022 to 15.10.2022 - HELD THAT:- The petitioner is permitted to travel abroad to Hong Kong, Dubai and Thailand for business purposes from 10.09.2022 to 15.10.2022 on furnishing a FDR in the sum of Rs.10.00 Lacs with an undertaking he shall report back to the learned Trial Court on 18.10.2022, failing which the said FDR amount shall stands forfeited without giving any further notice in this regard. The petitioner shall also adhere to other conditions as mentioned. The passport of petitioner be also released to him, in accordance with rules, in case it is lying with the learned Trial Court. Application disposed off.
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2022 (9) TMI 420
Effective date of clarificatory circular - Rejection of refund of accumulated unutilized tax credit - inverted tax structure in terms of Section 54 of CGST Act, 2017 read with appropriate CGST Rules, 2017 - HELD THAT:- Refund of accumulated input tax credit on account of inverted structure would be allowed in cases where accumulation of input tax credit is on account of rate of tax on output supply being less than the rate of tax on inputs (same goods) at the same point of time as per some concessional notification issued by the Government providing for lower rate of tax for some specified supplies subject to fulfilment of other conditions. The Circular dated 06.07.2022 is clarificatory in nature whereby paragraph 3.2 of the Circular dated 31.03.2020 has been substituted as supra. Being clarificatory, Circular dated 06.07.2022 inserting the above clarification would have the effect from the date when Circular dated 31.03.2020 came into effect - If this be the position, then the claim of the petitioner is liable to be re-considered on the basis of the Circular dated 31.03.2020 as clarified by the Circular dated 06.07.2022. The matter is remanded back to respondent No.6 for re-consideration in terms of the Circular dated 06.07.2022 - Petition allowed by way of remand.
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2022 (9) TMI 419
Cancellation of Registration of petitioner - order has been issued in the show cause notice itself without affording any opportunity to Petitioner of being heard - principles of natural justice - HELD THAT:- A registered person whose registration has been suspended cannot make any taxable supply during the period of suspension and shall not be granted any refund during the period of suspension. Therefore, Petitioner is challenging the omission of the words after affording the said person a reasonable opportunity of being heard in Sub-Rule (2) of Rule 21A of the CGST Rules, 2017. Registry to issue notice - Petition to be listed on 10/10/2022.
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2022 (9) TMI 418
Scope of Advance Ruling application - Whether the Case was pending before filing of application - Seeking a direction to respondent No.1 to consider its application for advance ruling under Section 98 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The Authority shall not admit an application for advance ruling where the question raised in the application is already pending or decided in any proceedings in the case of an applicant under any of the provisions of the CGST Act. Though the word proceedings has neither been defined in Chapter XVII nor in the definition clause i.e., in Section 2 of the CGST Act, if the said word is understood in the context in which it is being applied, namely, any proceedings pending or decided in the case of an applicant under the provisions of the CGST Act, it would mean proceedings where the question raised in the application for advance ruling has already been decided or is pending decision. Therefore, inquiry or investigation would not come within the ambit of the word proceedings . In so far the present case is concerned, there is no dispute to the fact that the petitioner had filed the application for advance ruling on 11.05.2019. From the order dated 03.06.2022, it is evident that notice was issued to the petitioner by DGGI on 15.12.2021 much after filing of the application for advance ruling. In our considered opinion, the same cannot be a bar under the first proviso to sub-section (2) of Section 98 of the CGST Act and the question of petitioner informing the Authority that it was being enquired into did not arise because the application was filed much prior in point of time. The respondent No.1 i.e., Telangana State Authority for Advance Ruling was not justified in rejecting the application of the petitioner vide the order dated 03.06.2022. Accordingly the said order dated 03.06.2022 is set aside and quashed. Petition allowed.
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2022 (9) TMI 417
Exemption from GST - Works contract services - executed as a main contractor as well as sub-contractor - Karnataka Slum Development Board under the Prime Minister Awaz Yojana - Belagavi Smart City Limited projects to Belgaum Smart City Corporation Limited - Karnataka Housing Board, Bangalore with respect to construction of police station at Govindarajanagar, Bangalore - Governmental Authority - N/N. 20/2017-Central Tax (Rate) dated 22nd August 2017 - HELD THAT:- The Karnataka Housing Board (referred as KHB) is established under Karnataka Housing Board Act 1962 and carries out function entrusted by the State Government. Hence the same may be considered as Government Entity as per the definition. Since the applicant is into construction of Magadi road police station, the services provided by the applicant are covered under entry 3(xii) of Notification No.11/2017 - Central Tax (Rate), dated 28.06.2017 further amended vide Notification No.03/2022-Central Tax (Rate) dated: 13.07.2022 and is taxable at 18% GST. The company is a Special Purpose Vehicle created for implementation of smart city project in the city of Belagavi. Hence Belagavi Smart City Limited is neither a Governmental Authority nor a Government Entity as per the explanation mentioned in para 13 supra. In view of the same, the services provided by the applicant to BSCL is liable to CGST at 9% as per the entry 3 (xii) of Notification No.11/2017 - Central Tax (Rate), dated 28.06.2017 further amended vide Notification No.03/2022-Central Tax (Rate) dated: 13.07.2022 and is taxable at 18%. The Composite supply of works contract provided by a sub-contractor to the main contractor who provides services specified in item 3(iii) or item 3(vi) to the Central Government, State Government, Union territory or a local authority are liable to tax at 12% GST. Since the services provided by the applicant are not covered under entry 3(iii) or item 3(vi), the same are liable to tax at 18% GST even though the services are executed as a subcontractor.
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2022 (9) TMI 416
Exemption from GST - Government authority - works contract services provided by way of construction of non-commercial establishments by Elegant Infra Developers to the Construction Design Services Division of the Uttar Pradesh Jal Nigam - serial number 3 of the Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 - local authority or Governmental Authority - HELD THAT:- In order to qualify as a governmental authority, such authority must be set up by an act of Parliament/State Legislature, should have 90% or more stake of government, and should carry out any function entrusted to a Municipality under article 243 W of the Constitution of India - the UPJN is a body corporate formed by the State legislature under UPWSS Act enacted by the UP State Legislature. As such, the first requirement of a governmental authority stands fulfilled in the present case. Further, as per Section 3 of the UPWSS Act, UPJN is a body corporate established by the Government of U.P., as such, the second requirement of governmental authority has also been fulfilled in the present case. Moreover, the UPJN is constituted for the development and regulation of water supply and sewerage services in the State of U.P. Under the Section 14 of UPWSS Act, UPJN is inter alia entrusted with the function to operate, run, and maintain any waterworks and sewerage system. The requirement that the authority must be established to carry out any function entrusted to a Municipality under article 243 W of the Constitution has also been fulfilled in the present case. Thus, the UPJN is a governmental authority. By way of N/N. 15/2021-Central Tax (Rate) dated November 18, 2021, the lower rate of tax of 12% provided by Entry 3(iii) of Notification No.11/2017- Central Tax (Rate) dated June 28, 2017, was restricted to works contract supplied to Central Government, State Government, Union territory and a local authority only. As the UPJN does not qualify as a local authority and it qualifies as a governmental authority, tax rate of 18% is applicable on the works contract services provided to UPJN by way of Entry 3 (xii) of Notification No. 11/2017- Central Tax (Rate) dated June 28, 2017.
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Income Tax
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2022 (9) TMI 415
Valid notice u/s 143(2) - assessment on fringe benefits - whether notice issued for the purpose of assessment on fringe benefits? - whether the notice on which much reliance has been placed by the learned Standing Counsel for the Income Tax Department can be construed to be a notice under Section 143(2) of the Act? - HELD THAT:- Section 115WE of the Act deals with assessment. As per sub- section (1) thereof, where a return has been made under Section 115WD of the Act, such return shall be processed in the manner provided thereunder. Sub- section (2) of Section 115WE of the Act provides that where a return has been furnished under Section 115WD, the assessing officer shall, if he considers it necessary or expedient to ensure that the assessee has not understated the value of fringe benefits or has not underpaid the tax in any manner, serve on the assessee a notice requiring him to attend his office or to produce any evidence relied upon by the assessee on specified date. As per the proviso, no notice under sub-section (2) shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished. From a reading of the above notice in conjunction with Section 143(2) and Section 115WE(2) of the Act, there can be no manner of doubt that the above notice was issued in the context of the return filed for fringe benefits by the respondent. In Hotel Blue Moon's case [ 2010 (2) TMI 1 - SUPREME COURT] the question before the Supreme Court was whether issuance of notice under Section 143(2) of the Act within the prescribed time limit is mandatory or not. On due consideration, Supreme Court took the view that such a notice is not a mere procedural requirement, but a mandatory provision. Though the above question was examined in the light of Section 158BC dealing with block assessment following search and seizure, nonetheless Supreme Court upheld the views expressed that Section 143(2) of the Act is mandatory and violation thereof cannot be construed to be a procedural irregularity. Tribunal as followed the aforesaid decision which decision may not be strictly applicable to the facts of the case, nonetheless, we are of the view that the notice dated 17.09.2009 cannot be construed to be a notice under Section 143(2) of the Act for the purpose of assessment under Section 143 - It was a notice issued for the purpose of assessment on fringe benefits. Insofar this issue is concerned, we are of the view that it goes to the root of the matter and therefore, Tribunal was justified in entertaining the petition filed by the respondent raising the additional ground, which is nothing but a pure question of law going to the root of jurisdiction. WA dismissed.
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2022 (9) TMI 414
Validity of order of assessment passed u/s 143(3) r.w.s 144B - grievance of the petitioner-assessee is that the assessment order is passed in breach of the principles of natural justice - preliminary objection of Respondent is that the assessee has alternate remedy - assessee was given two working days to file its response to the show cause notice and the draft assessment order - HELD THAT:- It is true that the order impugned is appealable. However, since, for reasons spelt out hereinafter, we find that the submission premised on the breach of the principles of natural justice is substantiated by the material on record, we are not inclined to compel the assessee to prefer the statutory appeal. The assessee could not file its response within the narrow window of two working days and sought further time, particularly since due to the Covid-19 pandemic the educational institutions were closed and the staff handling accounts was not readily available for collecting the data and formulating the structured response. However, respondent 1 proceeded to pass the impugned order on 20-4-2021. The principles of natural justice are egregiously violated. Two working days were in effect available with the assessee to formulate and submit its structured reply to the show cause notice and the draft assessment order. It is in this view of the matter, that we have observed supra, that the assessee need not be compelled to prefer appeal as a ritualistic formality. We have no hesitation in setting aside the order of assessment impugned and all consequential orders. We request respondent 1 to grant personal hearing to the assessee after giving the assessee seven clear days notice since the portal will have to be opened to facilitate the personal hearing. We further permit the assessee to file all the relevant documents, and if need be, the separate portal shall be opened to unable the assessee to do the needful.
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2022 (9) TMI 413
Denial of exemption u/s 10(25)(ii) - Disallowance by CPC u/s 143(1) - CPC not grant exemption u/s 10(25) to the assessee as it was not claimed by the assessee in the return of income - filling of return in the abbreviated name - Addition of interest income solely on the ground of not filing return in the complete name of the assessee i.e. Indo Euro Chemical Services Limited Employees Provident Fund covered under FPS rather filed the return in the abbreviated name as IECS Ltd. Employees P.F. Covered under FPS - HELD THAT:- As decided in own case [ 2021 (12) TMI 639 - ITAT DELHI] Adjustment made by the Revenue Department by denying the exemption claimed by the assessee u/s 10(25)(ii) of the Act cannot be and shall not be subject matter of section 143(1) of the Act. This can only be done u/s 143(3) of the Act. Because u/s 143(1) returned filed by the assessee should be accepted. So, we are of the considered view that when undisputedly assessee has been accorded registration under Rule 3(1) Part A of the Fourth Schedule of the Act there is no scope for the Revenue to deny the exemption claimed u/s 10(25)(ii) of the Act on hyper technical grounds. CIT (A) has erred in dismissing the rectification application filed by the assessee u/s 154 of the Act by denying a relief otherwise available to the assessee u/s 10(25)(ii) of the Act. So, we direct the AO to allow relief to the assessee by allowing exemption u/s 10(25)(ii) of the Act after due verification qua the abbreviated name mentioned by the assessee in its return in the light of the order for according exemption to the assessee. - Decided in favour of assessee.
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2022 (9) TMI 412
Long term capital gain from sale of Non-agriculture land - nature of land - CIT(A) dismissed the assessee s appeal on the ground that admittedly the land was converted into non-agricultural land for residential purposes on 04-02-2013 and the same was subsequently sold on 22-04-2013, therefore, at the time of sale the land sold was not agricultural land - HELD THAT:- Honourable Supreme Court in the case of Smt.SarifabibiMohd. Ibrahim [ 1993 (9) TMI 10 - SUPREME COURT] has held that when the land was not an agricultural land at the time of sale, then the income arising from its sale would not be exempt from capital gains tax. Further, the assessee has not filed any evidences in respect of land being agricultural land and being used as such during the relevant period. Since at the time of transfer, the land was not an agricultural land and the same was transferred for the purpose of residential project, the assessee is not entitled for claiming that the land is agricultural land so as to get out of the purview of provision of capital gains tax. In the present facts of the case, we observe that the land was converted into non-agricultural for the purpose of sale and therefore at the time of sale, the land was non-agricultural land. In view of the decision of the honourable Supreme Court referred to above in the case of Smt. Sarifabibi Mohd. Ibrahim and also the decision in the case of Shaileshbhai [ 2022 (4) TMI 674 - ITAT AHMEDABAD] we are of the considered view that the Ld. CIT(Appeals) has not erred in facts and in law in disallowing the assessee s claim of capital gains tax exemption on sale of the above land. Allowability of the cost of acquisition - Ahmedabad ITAT in the case of Shaileshbhai [ 2022 (4) TMI 674 - ITAT AHMEDABAD] held that the assessee is entitled deduction of cost of acquisition of the capital asset against the full value of consideration from the transfer of capital asset. The cost of acquisition cannot be treated as Nil merely on the reason that the assessee has not furnished any details for the same. Thus we are restoring the file to the Ld. CIT(Appeals) to adjudicate on the limited point of determining the cost of acquisition, keeping in view the evidence that the assessee may file in support of determining the cost of acquisition. Addition considering agricultural income as income from other sources - We are restoring this issue before the Ld. CIT(Appeals) so as to enable the assessee to furnish any supporting documents in support of claim that it was engaged in sale of agricultural produce, duly supported by evidence showing receipt of income from sale of agricultural produce and details of expenses incurred for purpose of earning agricultural income.
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2022 (9) TMI 411
Penalty u/s.271(1)(c) - allegation of defective notice - non specification of clear charge - unexplained cash deposit - whether it is concealment particulars of income or furnishing of inaccurate particulars of income? - HELD THAT:- Revenue is not specifying any limb and simply imposed penalty u/s.271(1)(c) of the Act without staking any default on the part of the assessee at the time of assessment proceedings related to information of income of the assessee. In the original assessment order, the addition was made in respect of peak credit balance and addition of bank interest. From the perusal of the records, it can be seen that the assessee has requested the Assessing Officer to treat the incurred cash deposit as his total sales receipts of trading activities of chalk lumps and offered profit at 8% of 9% of total turnover. Once the assessee has offered the same cash deposits, the AO cannot observe that the same is inaccurate particulars of income or concealment of particulars of income. See SSA s Emarld Meadows [ 2016 (8) TMI 1145 - SC ORDER] and MANJUNATHA COTTON AND GINNING FACTORY [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] As the assessee at no point of time has furnished inaccurate particulars of income or concealed any particulars of income. Hence, the Assessing Officer as well as CIT(A) was not right in imposing the penalty. Appeal of assessee allowed.
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2022 (9) TMI 410
Levy of late fees u/s 234E - belated submission of tax deducted at source statement - Intimation u/s 200A - Retrospective operation of provisions of section 234E - HELD THAT:- It is only w.e.f. 01.06.2015 an amendment was made u/s 200A of the Act providing that fee u/s 234E could be computed at the time of processing of the return of income and intimation could be issued specifying the same payable by the dedutor as fee u/s 234E of the Act. The Hon ble Karnataka High Court in the case of Fatheraj Singhvi vs. Union of India[ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] held that the provisions of section 234E of the Act are substantive in nature and the mechanism for computing the late fee was provided by the Parliament only w.e.f. 01.06.2015. Therefore, late fees u/s 234E of the Act can be levied only prospectively w.e.f. 01.06.2015.- Appeal of assessee allowed.
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2022 (9) TMI 409
Valid intimation u/s 245 - Determination of interest u/s 244A - Adjustment of refund and interest determined u/s. 244A against outstanding demand - whether assessee has been informed by the Assessing Officer while granting refund u/s. 245, the break-up of the details of the refund and interest determined u/s. 244A of the Act and how the same have been adjusted against the outstanding demand in assessee s case? - HELD THAT:- It is seen on record that the AO has not intimated what is the interest determined u/s. 244A of the Act relevant to the Assessment Year 2001-02. Similarly for the AY 2002-03 only during the assessment proceedings for the Assessment Year 2008-09 this break up was shown to the assessee by way of a show cause notice so the same cannot be treated as a proper disclosure by the Assessing Officer as required u/s. 245 - When the assessee have bonafidely has shown this interest income and offered in the Assessment year 2011-12 for taxation the same cannot be ignored. The Bombay High Court judgment [ 2009 (11) TMI 491 - BOMBAY HIGH COURT] referred by the Ld. CIT(A) is in the context of chargeability of interest u/s. 234B of the Act, the same is in no way relevant to the issue in hand before us. Therefore the addition made by the assessing officer without properly issuing intimating u/s. 245 is liable to be deleted. Thus, the grounds of appeals raised by the assessee is hereby allowed.
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2022 (9) TMI 408
TDS on settlement amount paid by the Appellant - demand u/s 201 and u/s 201 (1A) - difference between the words paid and payable - amount was received by the Payees as per Settlement Agreement for relinquishment of right of equity in the appellant company - as per assessee amount is not paid but made only a provision - Whether the assessee has claimed the said amount as deduction while computing the income of the assessee? - HELD THAT:- If the assessee claimed it as deduction while computing income of the assessee for AY 2013-14, then the assessee is liable to deduct the TDS on the said amount. The amount paid to the said persons which is Profit in lieu of salary and which being a part of total salary and the same is paid based on settlement agreement, thought the sum is over and above the salary, par takes the character of salary, therefore, the sum is liable for deduction of TDS in the hands of the assessee. The plea of the counsel for the assessee is that the said amount is not paid but made only a provision, therefore, provisions of Section 201(1) and 201(1A) cannot be invoked. This plea of the assessee is devoid of merit. Supreme Court in the case of Shri Choudhary Transport Company [ 2020 (8) TMI 23 - SUPREME COURT] held descriptive of the payments which attract the liability for deducting tax at source and has not been used in the provision in question to specify any particular class of default on the basis of whether or not payment has been made. The semantical suggestion that this expression payable be read in contradistinction to the expression Paid is not sustainable. By reading the above judgment it is clear that there is no difference between the words paid and payable . Settlement amount paid by the assessee to liable to deduct the TDS at the time of payment. The assessee vide written submission dated 12/02/2018 submitted before the CIT(A) that during FY 2012-13, the amount was not actual paid by the assessee but only provision was made in the books of accounts. The assessee further contended before the CIT(A) that as there was no actual payment during the FY 2012-13, therefore, the CIT(A) held that the assessee was not liable to deduct TDS on the said amount during the year under consideration. CIT(A) gave liberty to the Assessing Officer to examine the issue of non deduction of TDS in the year in which this amount is actually paid. We do not find any error or infirmity in the approach of the Ld. CIT(A). We deem it fit to remand the matter to the file of the A.O with a direction to the assessee to provide the material to prove that the recipients have actually paid the tax. If such materials are produced by the assessee, the Ld. A.O is directed to verify the same and decide the issue in accordance with law. A.O is also at liberty to examine the issue of non deduction of TDS in the year in winch the said amount is actually paid. Accordingly, the Ground No. 1 to 2(i) to (viii) and the Ground No. 3 are dismissed and Ground No. 2 ((ix) is allowed for statistical purpose.
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2022 (9) TMI 407
Penalty levied u/s. 271(1)(c) or u/s. 271F - assessee company failed to file Return of Income - assessee has not participated in the hearings anytime - None appeared on behalf of the assessee in today s hearing as well as in previous hearing date - CIT(A) in his order held that the assessing officer ought to have invoked penalty provisions u/s. 271F for non filing of return of income and case does not cover under 271(1)(c) either concealment of income or furnishing inaccurate particulars of the income - HELD THAT:- The above observation of the Ld. CIT(A) is found to be not correct for the reason that in Para 5 of the penalty order, the A.O. has clearly mentioned that penalty proceedings for concealment of income initiated by way of issue of notice 274 r.w.s. 271(1)(c) - Similarly, in the penalty order, the assessing officer held that the assessee has willfully and deliberately concealed income by not filing the Return of Income. Therefore the assessee is liable for penalty u/s. 271(1)(c) read with Explanation 1 of the Act. As in the assessment order, the assessing officer also initiated penalty proceedings under 271F of the Act as well as u/s. 271B of the Act for not getting the books audited. The conclusion arrived by the Ld. CIT(A) is legally not correct and the same is hereby set aside and the penalty order passed u/s. 271(1)(c) by the Assessing Officer is hereby restored. This view of ours is further supported by producing the penalty order passed u/s. 271F by the Assessing Officer wherein he has levied a penalty of Rs. 5,000/- for not filing the Return of Income as per the Section 139(1) of the Act. The Assessing officer also hereby dropped penalty initiated u/s. 271B of the Act by order dated 24.08.2015. Appeal field by the Revenue is allowed.
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2022 (9) TMI 406
Levy of penalty u/s 271(1)(c) - concealing/furnishing inaccurate particulars of income - excess deduction claimed u/s 80IA of non allocation of R D expenses of the same amount to its unit in Silvassa eligible to such deduction - quantum of deduction so claimed had been reduced by allocation of R D expenses to the said units in the assessment framed for the impugned year u/s 143(3) - HELD THAT:- Allocation is not based on any such nexus being directly and clearly established but merely on the basis of admission of a technical person of the assessee that too to the effect that 10% of the R D expenses can be said to have been incurred for the formulation activity. Of course the assessee has since then accepted allocation of R D expenses to this extent. But despite all the above it cannot still be said that the assesses claim was found to be totally unfounded. Mere statement of a technical person is not sufficient to hold the claim of the assessee as being totally incorrect in law. The same has to be established from the facts of the case whether the R D expenses actually had nexus with the manufacturing activity of the units. For the same reason the acceptance by the assessee of the allocation in preceding years does not establish that its claim was totally unfounded. Further even the said technical personnel has only stated that 10% expenses are in relation to formulation activity. The assessee therefore having furnished all particulars of the R D expenses , the allocation of such expenses to units eligible to deduction u/s 80IA of the Act by the Revenue not having been done on the parameters laid down by judicial decisions , there being no factual basis for establishing that the expenses needed to be allocated and the expenses so allocated being only estimated, the assesses claim of not allocating such expenses to the eligible units cannot be said to have been proved to be not bonafide. The assessee cannot therefore, in such circumstances be charged with having concealed/furnished any inaccurate particulars of income so as to attract levy of penalty u/s 271(1)(c) of the Act. It is simply a case where all particulars of income have been truly disclosed and it is only the assesses claim which has been denied ,which cannot be the basis for levying penalty u/s 271(1)(c) of the Act as laid down by the Hon ble apex court in the case of CIT vs Reliance Petro Products [ 2010 (3) TMI 80 - SUPREME COURT] The penalty so levied is directed to be deleted. - Decided in favour of assessee.
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2022 (9) TMI 405
Rejection of books of accounts - Estimation of income - application of gross profit of 10.5% by the Ld. CIT(A) as against 9.8% disclosed by the assessee in his audited books of account - assessee has breeding centre for growing chicks and deals in poultry products - HELD THAT:- While rejecting the books of account, conditions stipulated u/s. 145(3) had not been referred to by the Ld. CIT(A). The basis for disturbing the gross profit adopted by the ld. CIT(A) is in reference to the decision of Co-ordinate Bench of ITAT, Bangalore [ 2015 (11) TMI 1750 - ITAT BANGALORE] wherefrom he himself had noted that the G.P. ratio ranges between 9 and 12% in the business of hatchery and poultry. We note that Ld. CIT(A) without giving any finding that account books are unreliable, incorrect or incomplete, has rejected the audited books of account. Books of account of the assessee have not been rejected in compliance to the provisions of section 145(3) and assessment having not been framed u/s. 144 - Action of Ld. CIT(A), in such a situation, is erroneous in resorting to an estimation of income and the exercise undertaken by him of adopting the G. P. rate of 10.5% without any basis, is not sustainable. We find force from the decision of CIT Vs. Anil Kumar Co. [ 2016 (3) TMI 184 - KARNATAKA HIGH COURT] wherein it has been held that when the books of accounts are maintained by the assessee in accordance with the system of accounting, in the regular course of his business, same would form the basis for computation of income. It was also held that section 145(3) of the Act lays down that the AO can proceed to make assessment to the best of his judgment u/s. 144 only in the event of not being satisfied with the correctness of the account produced by the assessee. We are inclined to accept the contention made to restore the GP ratio @ 9.8% as claimed by the assessee and direct the Ld. AO to delete the addition made by the Ld. CIT(A) by adopting the rate of 10.5% - Decided in favour of assessee.
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2022 (9) TMI 404
TDS u/s 194A - liability to pay has been crystallized or not - Amount towards finance cost as interest accrued against Compulsory Convertible Debentures [CCDs] on which tax was not deducted - Default u/s. 201(1) 201(1A) - assessee submitted before the AO that provision for interest is reversed at the beginning of the following year before the due date for remittance of TDS and there was no liability to be discharged before the due date of payment of TDS - CIT(Appeals) rejected the submissions of the assessee and proceeded to confirm the order of the AO - HELD THAT:- The coordinate Bench of the Tribunal in the case of Biocon Ltd. [ 2022 (4) TMI 795 - ITAT BANGALORE] has considered a scenario where no payment is required to be made and the entire amount of provision is reversed in the subsequent year and the applicability of TDS liability on the same. If the liability has not crystallized and no payment is required to be made against the provision, then there will be no liability to deduct tax at source against the provision made. We notice that the waiver letter that is submitted before us dated 9.10.2014 does not contain the details as to the period from when the interest cost is not chargeable and interest is kept in abeyance until when. We also see merit in the contention of the DR that the status of reversal and provision of interest in the subsequent financial year has to be substantiated factually. We remit this issue back to the AO with a direction to verify the reversal of the provision made as on 31.03.2012 and the status of liability to pay interest on the CCDs in subsequent periods and decide the allowability in the light of the decision in the case of Biocon Ltd. (supra). Appeal by the assessee is allowed for statistical purposes.
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2022 (9) TMI 403
Unexplained stock - difference in stock found at the time of physical verification on the date of search - HELD THAT:- CIT(A) has duly considered the entirety of facts and circumstances of the case and has rightly worked out the profits, applying the gross profit rate as declared by the assessee, on the stock which after proper reconciliation has been found excess in the books of accounts as compared to physical stock and thereby lending credence to the finding that the said stock has been sold outside the books of accounts. Nothing has been brought on record to rebut the said findings of the CIT(A) and therefore, we do not see any justifiable basis to interfere with the finding of the CIT(A) and the same is hereby confirmed and the ground of appeal taken by the assessee is dismissed. Addition u/s. 36(1)(iii) - disallowance was restricted to 12% of the cash found short after updating the books of account - HELD THAT:- CIT(A) has accepted the working of cash shortage as submitted by the assessee. The explanation of the assessee that the cash has been handed over to the staff members remain uncorroborated and therefore, as a necessary corollary, we agree with the finding of the AO that the cash so found short has been utilized for non-business purposes. Further, where the taxing authorities have applied average rate of 12% on such funds being utilized for non-business purposes, we do not find any infirmity in the said finding of the CIT(A) and the same is hereby confirmed and the ground of appeal taken by the assessee is dismissed. Addition u/s. 40(a)(ia) - whether Shri Shah Nawaz who besides being an employee of the assessee company has worked as a contractor and got paid for such services or not? - HELD THAT:- Basis the said statement, the AO has held that no tax has been deducted at source on amount of Rs. 30 lacs paid by the assessee company during the year to Shri Shah Nawaz, accordingly, 30% of the amount was disallowed invoking provisions of section 40(a)(ia) - The assessee is challenging the said statement of Shri Shaw Nawaz and has raised various contentions before the lower authorities and which have again been reiterated before us. The contentions so advanced are however not backed by any corroborative evidence to dislodge the statement so recorded during the course of search. Passing of entries in the books of accounts which is well within the control of the assessee and not even supported by any receipts signed by the individual workers confirming the receipt of money directly from the assessee company is not sufficient enough to dislodge the findings of the AO that the payment has been made directly to Shri Shah Nawaz who in turn distributes to the workers. There are no statements of any of the workers employed at the assessee's premises which contradict the statement of Shri Shah Nawaz and support the version of the assessee that they were hired directly by the assessee and also paid directly by the assessee. Taking into consideration the entirety of facts and circumstances of the case, we do not find any infirmity in the finding of the CIT(A) and the same is hereby confirmed and the ground of appeal taken by the assessee is dismissed.
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2022 (9) TMI 402
Allowance of loss on account of share of loss of the assessee in the partnership firm while computing book profit u/s. 115JB - HELD THAT:- As decided in own case [ 2018 (2) TMI 868 - ITAT KOLKATA] Merely because share of profit from partnership firm is exempt u/s. 10(2A) of the Act and is excluded from the computation of book profit if credited in the P L Account as per clause (a) of explanation u/s. 115JB of the Act then, for this reason alone, it cannot be held that share of loss from the partnership firm when debited to the P L Account is to be added for calculating the book profit - since none of the clauses of the explanation to sec. 115JB permitted the AO to make adjustment to the net profit on account of share of loss from partnership firm debited to the P L Account, the AO was not justified in making the addition which was not specifically provide for by the legislature by way of any specific clause in the said explanation to section 115JB of the Act. We note that the Co-ordinate bench thus held that the addition made by the AO in respect of share of loss allocated by the partnership firm, was legally unsustainable. CIT(A) following the decision of the coordinate bench of ITAT, Kolkata in assessee s own case [ 2018 (2) TMI 868 - ITAT KOLKATA] deleted the addition in the present case on account of share of loss from the partnership firm while computing the book profit u/s. 115JB of the Act. Since there is no change in the facts and law in the present case before us, we respectfully following the decision of the Co-ordinate bench of ITAT, Kolkata in assessee s own case find no reason to interfere with the finding given by the Ld. CIT(A) in deleting the addition made by the Ld. AO. Thus, no interference is called for in the relief granted by the ld. CIT(A). These grounds of appeal are thus dismissed. Ingenuine sale of shares by the assessee through off market trade - Carry forward of long term capital loss on off market sale of shares of eleven listed companies - Revenue contends that assessee by effecting off market sale of the said shares has perpetuated a mischief and the transaction is a colorable device - case of the assessee is that it has sold the shares of listed companies on the price range on Bombay Stock Exchange prevailing on the relevant dates which were sold off market on which no STT was paid and, therefore, it is not governed by section 10(38) - HELD THAT:- Genuineness or otherwise of any transaction can be tested on the touch-stone of several other factors which are not exhaustive. What essentially boils down to is whether the shares were sold at a correct price or at the price which was artificially arrived at to inflate the loss. In this respect, we note that facts on record do not suggest that sale prices of shares were artificially arrived at. It is an accepted fact that shares were sold in the price range which prevailed on the Bombay Stock Exchange on the date of sale of the shares under consideration. Nothing has been brought on record to establish that the impugned transaction of off-market sale is a sham and bogus transaction. We note that ld. CIT(A) has given a finding that no material is available on record to show that either the prices were manipulated or the transactions did not take place at all. Ld. CIT(A) also gave his finding that no claim of set off was made either in the year on in the subsequent year so as to justify AO s claim that loss was artificially generated to gain unfair tax advantage. We thus hold that no interference is called for on these factual findings by the ld. CIT(A). Thus we hold that no interference is called for in the observations and findings given by the ld. CIT(A) on the issue relating to carry forward and set off of long term capital loss in subsequent years as claimed by the assessee. Accordingly, in terms of our above observations and findings, the ground of appeal is dismissed.
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2022 (9) TMI 401
Exemption u/s 11 - violation of sections 13[1][C] and 13[3] - assessee trust passed on the benefits to the trustees or the relatives of the trustees in the form of excessive payment rent to school buildings and also computer hirings rents, which is violation of sections 13[1][C] and 13[3] - HELD THAT:- AO failed to note any payment to the persons specified under section 13[3] of the Act does not ipso facto attracts the provisions of section 13[1][C], but whereas such payment is unreasonable or excessive, it can be said that any benefit is derived by such specified person. The specified persons can be said to have derived the benefits mainly when something is passed on to them, over and above the reasonable and adequate consideration which is at arm s length. Thus there is no bar in transactions with the entity claiming exemption under section 11 on one side and persons specified u/s 13[3] on the other side and only when the consideration is found to be unreasonable or excessive, then the question of withdrawal of exemption under section 11 will arises. Whether the consideration is reasonable or excessive is to be judged from the fair market value of such consideration between two unrelated parties in arm s-length situation. Whether the consideration paid by the assessee Trust to the specified persons is reasonable or not? - AO had compared the rent with municipal valuation to content that the rent paid by the assessee trust was excessive. This findings of the ld AO is not legal, proper and has no logic for the reason that municipal valuation does not reflect the fair market value and this position is accepted under the Income Tax and as in the calculation of Income from house property, higher of municipal valuation or fair rent is taken into account - The rental agreements clearly mention that besides building other amenities like furniture, electrical fittings, parking and open ground was also used by the trust. AO is not correct in making comparison with the municipal valuation and the assessee has made excessive payment to the trustees. The assessee Trust also shown factual data as comparable to justify reasonable rates of building rent in the form of few comparable instances by obtaining the details from CPWD and PWD - Rents paid by the assessee trust to its trustees are very reasonable and not excessive rent. Respectfully following case of Shree Kamdar Education Trust [ 2016 (9) TMI 18 - GUJARAT HIGH COURT ] mere payment of lease rent, without there being any element of such payments being excessive or unreasonable compared to normal rates prevailing, would not fall within the mischief of section 13[1][c] of the Act. Thus the assessing officer is not correct in denying the benefit of section 11 to the assessee trust. Computer rent paid by the assessee trust to Gyanganga Computers - CIT[A] has held perusal of the annual accounts of M/s. Gyanganga Computers, the major part of its income is by way of computer rent from the appellant Trust and other Trust under same management and still its net profit ratio is 2.93 % only, this indicates that a reasonable margin is here and on cost which cannot be termed as excessive. Further it is observed M/s. Gyanganga Computers charged Rs.60 per month to outsiders in case of one-time payment and Rs.70 per month in case of instalment payment, whereas the assessee trust was being charged at Rs. 37.3 per month per student which is reasonable and also concessional. Therefore it is not a case of undue benefits having been passed to the specified person in the form of computer rent. Therefore the denial of exemption under section 11 is not sustainable in law. Thus we uphold the order passed by the ld CIT [Appeals] and reject the grounds of appeals filed by the revenue.
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2022 (9) TMI 400
Disallowance on account of amortization of premium - addition deleted by CIT(A) - HELD THAT:- As the issue involved in the year under consideration as well as all the material facts relevant thereto are similar to that of AYs 2013-14 [ 2019 (10) TMI 1068 - ITAT AHMEDABAD] and 2014-15 [ 2019 (6) TMI 1425 - ITAT AHMEDABAD] instructions clearly provide for amortization of premium paid on securities when the same are acquired at the rate higher than the face value. Such amortization would have to be for the remaining period of maturity. In view of the above stated facts and legal finding, we do not find any infirmity in the decision of the Learned CIT(A) - we respectfully follow the orders of the Co-ordinate Bench of this Tribunal and uphold the impugned order of the learned CIT(A) deleting the disallowance made by the Assessing Officer on account of amortization of premium. Ground No.1 of the Revenue s appeal is accordingly dismissed. Disallowance of deposits written off with Madhavpura Mercantile Co-op. Bank - addition deleted by CIT(A) - HELD THAT:-CIT(A) thus allowed relief to the assessee on this issue by relying on the order of his learned predecessor passed in assessee s own case for AY 2013-14 [ 2019 (10) TMI 1068 - ITAT AHMEDABAD] - As agreed by the learned representatives of both the sides, this issue is thus squarely covered in favour of the assessee by the order of the Co-ordinate Bench of this Tribunal passed in assessee s own case for AY 2013-14 and respectfully following the same, we uphold the impugned order of the learned CIT(A) deleting the addition made by the Assessing Officer on account of deposits written off with Madhavpura Mercantile Co-op. Bank . Ground No.2 of the Revenue s appeal is accordingly dismissed. Disallowance of Impact Fee - CIT-A deleted the addition - HELD THAT:- CIT(A) thus allowed relief to the assessee on this issue by relying on the decision of Yadunandan Corporation Surat [ 2011 (11) TMI 868 - ITAT AHMEDABAD] , Keerthi Estates P. (Ltd) [ 2017 (8) TMI 1672 - ITAT HYDERABAD] and Sanjay Bharatkumar Shah [ 2021 (12) TMI 814 - ITAT AHMEDABAD] wherein held that compounding fees paid to municipal corporation for regularizing a building plan is not in nature of offence nor prohibited by law therefore allowable as deduction. Ground No.3 of the Revenue s appeal is accordingly dismissed. Disallowance of investment written off - CIT-A deleted the addition - Assessee has submitted that even though a Civil Suit was filed by the assessee before the Civil Judge at Surat for recovery of the amount in question, name of the concerned company having been struck off from the record of Registrar of Companies and the concerned individuals not being traceable, the amount has become irrecoverable - HELD THAT:- If the facts of the present case are considered in the light of the decision of Hon ble jurisdictional High Court in the case of Rao Construction (P) Ltd [ 2013 (8) TMI 240 - GUJARAT HIGH COURT] cited by the learned Counsel for the assessee, we find ourselves in agreement with learned CIT(A) that the loss suffered by the assessee as a result of the amount in question having become irrecoverable from M/s. Home Trade Ltd is incidental to the assessee s business and the same is allowable as deduction. Even the learned DR has not been able to raise any material contention to dispute this position. We, therefore, uphold the impugned order of the learned CIT(A) giving relief to the assessee on this issue and dismiss Ground 4 of the Revenue s appeal.
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2022 (9) TMI 376
Disallowance u/s 14A - ITAT justification in deleting the addition being 10% of the exempt income - whether assessee has failed to prove that no expenditure has been incurred to earn the exempt income disclosed during the year under consideration? - HELD THAT:- Tribunal considering the facts of the case arrived at a finding that the direction given by the CIT (Appeals) to apply Rule 8D is not proper and there being the surplus funds invested by the assessee, no interest and administrative expenses can be disallowed under section 14A. In view of the decisions of this Court in case of Sintex Industries Ltd [ 2017 (5) TMI 1160 - GUJARAT HIGH COURT] and India Gelatine Chemicals Ltd [ 2015 (11) TMI 392 - GUJARAT HIGH COURT] there is no illegal infirmity in the impugned order passed by the Tribunal while deleting the dis-allowance under section 14A - no question of law much less any substantial question of law proposed or otherwise arises from the impugned order of the Tribunal. The Appeal accordingly stands dismissed.
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2022 (9) TMI 375
Addition u/s 68 - addition of unsecured loans - assessee failed to verify the genuineness and creditworthiness of the lenders - Case selected for scrutiny and notice us 143(2) and 142(1) issued - CIT-A deleted the addition - HELD THAT:- The assessee has received the unsecured loans from 9 parties who are having the opening balance of unsecured loans with the assessee in the F.Y.2011-12. AR demonstrated the confirmations - We are of the view that the CIT(A) has considered the submissions and evidences and granted the relief. Further the provisions of section 68 of the Act cannot be invoked on the opening balance of unsecured loan. The Ld.AR has demonstrated the Assessment order passed U/sec 143(3) for A.Y.2011-12 of the assessee , where the return of income was accepted. Unsecured loan disclosed in the Balance sheet received by the assessee in the earlier years in full and final settlement with the partnership firm - AR has demonstrated the submissions made before the A.O by letter filed on 27-03-2015 explaining the facts and circumstances of receipt of money in the financial year 2007-08. AR has highlighted the transactions with the details of payments made to the assessee and supporting bank statements of M/s Time Star Ltd which cannot be over looked - DR could not controvert the findings of the CIT(A) with any new evidence or information to take a different view. We find that the CIT(A) relied on the judicial decisions and also the facts, additional evidence, remand report and provisions of Sec. 68 of the Act has passed a reasoned order. Accordingly, we are not inclined to interfere with the order of the CIT(A) and upheld the same and dismiss the grounds of appeal of the revenue
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Customs
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2022 (9) TMI 399
Levy of Anti Dumping Duty - assessee himself opted for the condition Sl. No.2 of the Notification No.23/2003-CE dated 31.03.2003 - benefit of exemption notification to the assessee even in absence of any conclusive proof/evidence as to the goods for sale in DTA were manufactured wholly out of indigenous raw material - total DTA sales were undertaken by the Respondent on the raw materials by not paying anti dumping duty - Respondent s claim of maintenance of separate account of imported and indigenous material was an afterthought? HELD THAT:- The tribunal took into consideration the factual position and noted that the respondent had maintained separate register. Further, the tribunal on examining the facts, found that the difference cited between the table (as mentioned in the order-in-original)and the issue register for ADD material submitted by the respondent with respect to Issues to Production and closing stock was only on account of difference in methodology adopted for reflection of closing stock in the table vis- -vis the register and the same was duly reconciled and certified in terms of the chartered accountants certificate which was furnished before the tribunal. Further, the tribunal pointed that macro-comparison of the available stock of polypropylene from known ADD jurisdiction vis- -vis DTA clearance during 2009-10 and 2010-11 by the adjudicating authority also suffers from infirmities and had agreed with the respondent that DTA clearance of finished goods prior to 30th July, 2009, the date of imposition of anti dumping duty could not have been considered and the stock of polypropylene as on the date of introduction of anti dumping duty could not have been ignored in such macro comparison. As in the case of COMMR. OF C. EX., LUDHIANA VERSUS MALWA COTTON SPINNING MILLS LTD. [ 2010 (2) TMI 260 - PUNJAB HARYANA HIGH COURT] , the respondent had maintained separate accounts for the goods which was examined by the tribunal and relief has been granted. Thus, there is no question of law much less substantial question of law arising for consideration in this appeal. Appeal dismissed - decided against Revenue.
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2022 (9) TMI 398
Seeking sanction of benefits under the Merchandise Export from India Scheme (MEIS) in terms of Chapter 3 of the Foreign Trade Policy 2015-2020 - time limitation - HELD THAT:- The respective High Courts have consistently held that the benefit which otherwise a person is entitled to once the substantive conditions are satisfied cannot be denied due to a technical error or lacunae in the electronic system. In the case on hand also, a clear intention was revealed in the shipping bill submitted by the petitioner they then intend to claim the benefits/incentive under Merchandise Export from India Scheme (MEIS) and further, the petitioner having got the inadvertent mistake made in the shipping bill, amended by an order dated 31.07.2019 passed by the Deputy Commissioner, Office of the Principal Commissioner of Customs, the respondents ought to have processed the petitioner's shipping bill and ought to have granted the benefits to the petitioner under Merchandise Export from India Scheme (MEIS). This Court is of the considered view that the petitioner cannot be deprived of its rights to avail the benefits under Merchandise Export from India Scheme only on the ground that subsequent amendment ratifying the earlier inadvertent mistake was done manually and not electronically - this Court directs the respondents to consider the petitioner's representation dated 17.08.2019 seeking to get the benefit under the Merchandise Export from India Scheme (MEIS) for the subject shipping bill - Petition disposed off.
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2022 (9) TMI 397
Absolute Confiscation - import of certain refrigerant gases in cylinders as well as empty cans used for packing such gases for re-filling purpose - prohibited goods or not - Imported goods are covered under the Gas Cylinders Rules or not - validity of confiscation for want of licence - HELD THAT:- The appellant, as could be seen from its reply to the Show Cause Notice as well as the arguments extracted in the orders of lower authorities, had taken technical contentions to plead that R134a gas stands excluded from the definition of compressed gas , which has not at all been considered by any of the lower authorities. When such technical arguments are being advanced, the concerned authority should examine the issue in the light of such technical arguments, but the same having not been done, both the orders of the lower authorities become non-speaking orders. Further, to add to the agony of the appellant, both the appellant as well as the Revenue had approached the authority under the Petroleum and Explosives Safety Organization (PESO) seeking clarification, but surprisingly, the said authority has issued an incomplete communication, to refer to Rule 2(xxiii) of the Rules ibid., and much worse is the communication issued by the Public Information Officer/Assistant Commissioner of the Customs House, Chennai. Both the authority under PESO as well as the Public Information Officer/Assistant Commissioner of Customs have replied to the application under the RTI Act in a slipshod manner, which is not in accordance with the requirement of the RTI Act. The order of confiscation / demand is one aspect, but before that, it is for the Adjudicating Authority to establish first that the goods in question were prohibited and hence, the order of absolute confiscation also lacks merit - matter remanded back to the file of the Adjudicating Authority, who shall pass a de novo Adjudication Order after hearing the appellant, after meeting the arguments of the appellant and after affording reasonable opportunities to the appellant. Appeal allowed by way of remand.
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Corporate Laws
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2022 (9) TMI 396
Appointment of Chief Financial Officer - Whether Article 140 of AoA is the only provision which is applicable with regard to appointment of CFO in R-2 Company and no reference to and compliance of any provision of the Companies Act, 2013, particularly sections 203, 184 and 189 therein is necessary? - If reference to section 203 is found to be necessary for looking at eligibility of a suggested nomination, whether R-1 s suggestions of the names of Mr. Devendra Mehta and Mr. Venkataraman Subramanian as first and second nominations complies with the requirement of article 140 of the AoA for appointment of CFO? HELD THAT:- A reading of the section on KMP in the AoA, under which Article 140 is included, indicates that the CFO is considered a KMP, and Rose Investments (R-1) has the right to nominate a person for the position of CFO, and in the event the JV Partners/Appellants reject the appointment of such nominee to the position of CFO, Rose Investments shall have the right to nominate another person, and if nomination of the second person is also rejected or at least 45 days has lapsed since the position of CFO is vacant (whichever is earlier), Rose Investments shall have the right to nominate any person and the JV Partners shall support the appointment of such person as CFO. The position of CFO is included as a KMP in sub-section 51 of section 2 of the Act. Section 6 of the Companies Act provides that the provisions of this Act shall override anything to the contrary contained in the memorandum or articles of association of the company - the provisions under sections 184, 169 and 203 of the Act provide rational and reasonable norms and standards regarding eligibility of a KMP (CFO in the present case) and which are quite relevant and useful in conducting the affairs of the company in a transparent, independent and unbiased manner keeping the interest of the company foremost. Section 203 of the Act lays down that the CFO is a whole-time KMP and is prohibited from holding office in more than one company except in its subsidiary company at the same time. There are other elements of conduct that are provided in the Act as being relevant to the functioning of a KMP. A perusal of Article 140 of AoA makes it clear that in case JV Partners/appellants reject appointment of two suggested candidates, it has to accept the nomination of the third candidate - In the absence of any specific mention regarding eligibility and the method of selection of the CFO in the AoA, it would be logical to take recourse to section 203 of the Companies Act, 2013 in the selection and appointment of CFO, and also keep in view sections 184 and 189 in adjudging the eligibility of the KMP. Only article 140 of the AoA were to be relevant and applicable in the appointment of CFO, and there is no need to look at the ineligibility of the suggested names, we could have a situation where all the three suggested names are ineligible, or at least unsuitable, and not fit to carry out the duties of CFO properly and professionally, and the Appellant would be bound to accept the third nomination even though he may also be unfit or unsuitable to hold office as CFO of the Company. Such a situation could only exacerbate the situation of mismanagement in the company that is already beset with issues of mismanagement of its operations. Such a situation could prove to be detrimental for the company s management and should not be allowed to happen - The suggested candidates should be eligible as per the provision of section 203 of the Companies Act, while applying article 140 of the AoA. The Impugned Order is, therefore, set aside and the parties are directed to take necessary action for appointment of CFO of the R-2 company as per article 140 of the AoA, after making valid nominations keeping in view section 203 of the Companies Act, 2013 and completing the appointment of CFO within a period of sixty days from the date of this order. Application disposed off.
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Insolvency & Bankruptcy
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2022 (9) TMI 395
Initiation of CIRP - debt due of which default was committed by the Corporate Debtor entitling the Financial Creditor to file an Application under Section 7 of the I B Code, 2016 or not - petitions made under Section 241 242 of the Companies Act, 2013 , can be equated with Application filed under Section 7 of the I B Code, 2016? - reference of Application proceedings under Section 7 of I B Code, 2016 for mediation under Section 442 of the Companies Act, 2013 . Whether there was a debt due of which default was committed by the Corporate Debtor entitling the Financial Creditor to file an Application under Section 7 of the I B Code, 2016? - HELD THAT:- The Financial Creditor alleged that no payment was made by the Corporate Debtor and therefore the Financial Creditor filed petition under Section 7 of the I B Code, 2016 and Rule 4 of the I B Code, 2016 (Application to Adjudicating Authority Rules, 2016). In the said application, total outstanding default amount on the date of filing the application was shown as Rs. 274,26,60,573.71/- and documents evidencing financial debts were annexed in the said application and relevant date of default was also indicated. The Financial Creditor further mentioned that audited financial statements of the Corporate Debtor including FY ending 31.03.2019 consistently acknowledge liability of amount payable. The financial arrangement made between the Financial Creditor and the Corporate Debtor clearly falls in definition of Debt, Financial Debt and Default. Therefore, the Financial Creditor had right to move an Application filed under Section 7 of the I B Code, 2016. As a result of the Respondent company defaulting in the payment of these coupons (interest) to the Appellant, the Appellant instituted CIRP against the Respondent under Section 7 of the I B Code, 2016. It is settled law that role of the Adjudicating Authority has been clearly elaborated under I B Code, 2016. The Adjudicating Authority is required to admit the Petition under Section 7(5)(a) of the I B Code, 2016 where the Debt is due and was not paid. Alternatively, the Adjudicating Authority under Section 7(5)(b) can reject the Petition if there was no Debt. This is to be done within 14 days from the receipt of Petition under Section 7 based on records made available. There was Debt of more than 1 crore which was admittedly not paid resulting into Default and thereby meeting the requirement of Section 7 of I B Code, 2016. The Adjudicating Authority should have taken into consideration and taken decision on admissibility or otherwise of Petition filed before the Adjudicating Authority in petition, as per law rather than referring for Mediation to IAMCH was done in Section 241 Application. The Adjudicating Authority had referred to Application filed under Section 422 of the Companies Act, 2013. Whether, petitions made under Section 241 of the Companies Act, 2013 can be equated with Application filed under Section 7 of the I B Code, 2016? - HELD THAT:- It is clear that Section 241 of the Companies Act, 2013 is entirely for different purpose which entitles aggrieved party due to oppression and mismanagement to file Application before the Tribunal and the Tribunal power are prescribed under Section 242 of the Companies Act, 2013. Whereas, Section 7 of the I B Code, 2016 is purely regarding initiation of CIRP for default of debt of more than Rs. 1 crore by the Corporate Debtor and the power to the Tribunal (Adjudicating Authority) has been defined in Section 7(5) - The purpose of Section 241 of the Companies Act, 2013 cannot be equated with Section 7 of the I B Code, 2016. Similarly, the powers of the Tribunal under Section 242 of the Companies Act, 2013 w.r.t oppression and mismanagement are quite comprehensive in comparison to Section 7 which grants limited powers to the Adjudicating Authority of either acceptance or rejection of the claims made by the Financial Creditor based on details of claims along with evidence produced by him. The Adjudicating Authority erred in tagging the Application filed under Section 7 of I B Code, 2016 with Application filed under Section 241 of the Companies Act, 2013 and referring for mediation to IAMCH. The act of Adjudicating Authority to refer the Application under Section 7 of I B Code, 2016 for mediation was beyond jurisdiction of Adjudicating Authority as granted under I B Code, 2016. Whether, Adjudicating Authority can refer Application proceedings under Section 7 of I B Code, 2016 for mediation under Section 442 of the Companies Act, 2013? - HELD THAT:- The Adjudicating Authority had referred the Parties in Section 7 Application of I B Code, 2016 proceedings, for Mediation under Section 442 of the Companies Act, 2013. As a matter of fact, this Tribunal had already noted that power of the Adjudicating Authority, (National Company Law Tribunal), under Section 442 of the Companies Act, 2013 is limited to the proceedings under the Companies Act, 2013, but not in the matter related to I B Code, 2016. Hence, this Tribunal, without any hesitation, holds that the impugned order dated 13.05.2022, in petition, passed by the Adjudicating Authority, (National Company Law Tribunal, Hyderabad Bench), is not inconformity with the I B Code, 2016, and the same is clearly unsustainable in Law, and sets aside the same in furtherance of substantial cause of justice. Appeal allowed.
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2022 (9) TMI 394
Seeking execution of order dated 27.02.2017 against Respondent No. 2 3, in terms of Clause (3) of Section 424 of the Companies Act - non-extension of cooperation to the 2nd Respondent/Chairperson and to the Auditor appointed by this Tribunal - failure to take the relevant records under his custody and make available those records to the Applicant - copies of the record as requested by the Applicant were not provided - HELD THAT:- Admittedly, the order of this Tribunal dated 27.02.2017 being a consent order, both sides shall ensure compliance of the terms without any deviation what so ever. While it is the case of the Applicant that the Respondents 2 3 viz. the Chairman appointed by this Tribunal for the 1st Respondent Company and the 3rd Respondent who is the promoter/Director of the 1st Respondent have breached the directions (iv), (v), (viii), (ix) and (x) of the consent order dated 27.02.2017, given under clauses, the Respondents 2 3 strongly refuted the same and further contended that earlier applicants claiming similar reliefs and alleging contempt of the order of this Tribunal dated 27.02.2017, besides non-cooperation were filed under CA 51, 52 53 of 2018 and the said IAs after enquiry were dismissed by this Tribunal vide order dated 22.04.2019. However, the appeals preferred against the said order before Hon'ble NCLAT are pending. The Tribunal passed order dated 27.02.2017 giving various directions in the interest of 1st Respondent, which is now under the management of the Chairperson appointed by this Tribunal. Therefore, it is imperative that the directions supra, shall invariably be followed/complied with by the parties in the interest of the 1st Respondent, lest the affairs and the management of the 1st Respondent will be in jeopardy. The Petitioner as well as Respondents No. 2 3 are directed to extend full co-operation to the Chairperson of the 1st Respondent and to the Auditor enabling them to discharge their duties/functions - Application disposed off.
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2022 (9) TMI 377
Initiation of CIRP - Operational Creditors - whether there was existence of any dispute between the parties or the record of pendency of a suit or arbitration proceedings filed before the receipt of demand notice in relation to such dispute? HELD THAT:- This Court finds that there was a pre-existing dispute with regard to the alleged claim of the appellant against HPCL or its subsidiary HBL. The NCLAT rightly allowed the appeal filed on behalf of HBL. It is not for this Court to adjudicate the disputes between the parties and determine whether, in fact, any amount was due from the appellant to the HPCL/HBL or vice-versa. The question is, whether the application of the Operational Creditor under Section 9 of the IBC, should have been admitted by the Adjudicating Authority. The answer to the aforesaid question has to be in the negative. The Adjudicating Authority (NCLT) clearly fell in error in admitting the application. The NCLT, exercising powers under Section 7 or Section 9 of IBC, is not a debt collection forum. The IBC tackles and/or deals with insolvency and bankruptcy. It is not the object of the IBC that CIRP should be initiated to penalize solvent companies for non-payment of disputed dues claimed by an operational creditor. There are noticeable differences in the IBC between the procedure of initiation of CIRP by a financial creditor and initiation of CIRP by an operational creditor. On a reading of Sections 8 and 9 of the IBC, it is patently clear that an Operational Creditor can only trigger the CIRP process, when there is an undisputed debt and a default in payment thereof. If the claim of an operational creditor is undisputed and the operational debt remains unpaid, CIRP must commence, for IBC does not countenance dishonesty or deliberate failure to repay the dues of an Operational Creditor. However, if the debt is disputed, the application of the Operational Creditor for initiation of CIRP must be dismissed. Appeal dismissed.
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Service Tax
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2022 (9) TMI 393
Levy of service tax - Port service or not - amount collected under the Way Leave Agreements entered with Petitioners - nature of the Way Leave Agreements - permissions of Respondents to laydown/construct and maintain four oil pipe lines and a steam pipe line at Wadala Estate and Elphinstone Estate at Petitioners own costs - payment of lincence fees would construe a port service or not? - HELD THAT:- The Way Leave Agreements are agreements that essentially provide permission to Petitioners to construct and maintain at its own cost oil and steam pipe lines subject to payment of licence fee. The arrangement is clear that Mumbai Port Trust is not constructing or maintaining the pipe lines but is only giving a licence or permission to Petitioners to construct and maintain the pipe lines. The opening page of the Way Leave Agreement says Way Leave Agreement for laying and maintaining four oil pipe lines and a steam pipe line at Wadi Bunder on the Elphinstone Estate . Admittedly as provided in the agreement, Respondents have been charging only an annual fixed fee from the time the agreement was entered into as late as upto 2001. Copies of the bills annexed to the Petition also indicate that these are fixed charges irrespective of whether any oil cargo passes through the pipe lines and irrespective of the quantity of the oil cargo that passes. The agreement also clearly indicates that pipe line laid was to be used for only Petitioners cargo and not for any third party - the Respondents were only charging a licence fee for giving permissions to Petitioners to carry out construction/laying down of pipe line work on the port land and nothing else. Elaboration was particularly necessary since the Way Leave Agreements provide for laying of pipe lines at the cost of Petitioners and maintenance by Petitioners of the pipelines. Even annual compensation payable was called licence fees. Further, the services provided for under Section 42 of the Major Port Trusts Act, 1963, Respondents levy and collect charges based on the Port-Scale of Rates, that later came to be approved by Tariff Authority for Major Ports (TAMP). The License Fees paid by Petitioners was not as per the Port Scale of Rates. Therefore, the nature of the Way Leave Agreements cannot be stated to be for Port Services under Section 42 of the Major Port Trusts Act, 1963. Whether the fee payable to Respondents under the Way Leave Agreements for granting permission to Petitioners to lay/construct and maintain its own pipe lines was for a port service defined under the Finance Act, 2001? - HELD THAT:- The Hon ble Apex Court in ALL INDIA FEDERATION OF TAX PRACTITIONERS ORS VERSUS UNION OF INDIA ORS [ 2007 (8) TMI 1 - SUPREME COURT] held service tax is a value added tax. For Respondents to be entitled to levy service tax or become liable to pay any service tax to the Government of India, Respondents must render a service and to render a service it must do some activity which amounts to value addition. In our view, merely granting a licence/permission to a person to carry out construction of pipe lines or maintain its own pipe lines on land belonging to Respondents would not amount to a service or port service. In the case at hand, it is Petitioners who have laid the pipe lines and have been maintaining the pipe lines. The pipe lines also do not belong to Respondents because the agreement itself provides that on termination of the Way Leave Agreements Petitioners are bound to remove the pipe lines and restore the land at its own cost. Therefore, it cannot be stated that Respondents are providing port services under the Way Leave Agreement. Respondents are also not doing any activity which amounts to value addition. Where a private party itself is constructing and maintaining a facility on land belonging to port authority the mere grant of permission by the port authority to use its land for the construction and maintainance of the facility does not amount to rendering any port service and therefore would not attract service tax - the Way Leave Agreements cannot be said to fall under any other category of service that was taxable at the relevant time, i.e., the period between 16th July 2001 and 1st March 2002. Petition disposed off.
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2022 (9) TMI 392
Refund of Service Tax - amount claimed to have been paid as pre-deposit - amount was paid under protest or not - appellant had passed on the duty element to the ultimate service recipients or not - principles of unjust enrichment - Section 11B of the Central Excise Act, 1944 - HELD THAT:- Higher courts have held that no tax shall be collected without the authority of law and, as a necessary corollary, the amount collected as tax without the authority of law shall be refunded. The liability to tax is determined after adjudication proceedings and the same is not an empty formality. So also, when a bona fide taxpayer remits tax, it is incumbent upon the Revenue to retain the tax as per law and if such remittance is found to be excessive, then that excess being collected without the authority of law, shall have to be refunded. Strangely, the Adjudicating Authority having referred to the certificate issued by the Chartered Accountant, has not at all discussed anything about it and has proceeded to hold that the appellant had passed on the duty element to the ultimate service recipients and hence, there was unjust enrichment, which, according to me, is not in accordance with the requirement of law - The fact that the appellant claimed refund itself shows that the remittance which was subsequently claimed as refund was not paid in accordance with law and hence, the same would partake the character of an amount being paid under protest or the same being paid by mistake, which aspect has been considered in the above ruling of the Hon ble jurisdictional High Court. The rejection orders of the lower authorities are not in accordance with law, which cannot therefore be sustained - Appeal allowed.
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2022 (9) TMI 391
Seeking admission to file additional grounds before this Tribunal for the purposes of final hearing of the appeal - Refund of service tax - place of removal for export of excisable goods and utilization of taxable services beyond the place of removal - proviso (a) and Explanation (A)(i) of Notification No.41/2012-ST dated 29.06.2012 - HELD THAT:- The said issue in no more resintegra and the same is a settled proposition of law. The refund in respect of services availed by them at the port of export is available to the exporter. Notification No.41/2012-ST (supra) has been given retrospective effect by amendment Notification No.01/2016-ST dated 3rd February, 2016. Rebate claim - appellant had shown that the total export value was of US$ 66,060.00, whereas BRC was submitted for US$ 9950.00 only - HELD THAT:- When the present matter came before the Ld.Commissioner (Appeals), he had no occasion to verify the BRC, which was received by the assesse as the impugned order was passed ex-parte. In view of the overall facts and circumstances of the case and in view of the subsequent amendments, which have been given the retrospective effect and the details as submitted by the appellant, which entitled the appellant for the rebate, the order in hand is hereby set aside and the appeal is allowed by way of remand to the Ld.Commissioner (Appeals), who could decide both the issues - Appeal is allowed by way of remand.
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2022 (9) TMI 390
Classification of services - Works Contract Service or Commercial or Industrial Construction Service - demand of service tax on works contract till June 2007 was payable or otherwise? - inclusion of value of material supply free of cost by the service recipient - extended period of limitation - HELD THAT:- As regard the issue that whether the free supply material needs to be included in the services of Commercial or Industrial Construction Service , the issue is no longer res- integra as held by the Hon ble Supreme court in the case of COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [ 2018 (2) TMI 1325 - SUPREME COURT] that the value of free supply material need not to be included in the gross value service in order to avail the benefit of abatement. Therefore, as per the fact since the appellant has provided the service along with material their services are clearly classified as works contract service. The appellant subsequently started paying service tax on works contract service which is not disputed by the department. The Works contract service was not taxable prior to 01.06.2007 in the light of the Hon ble Supreme Court judgment in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] therefore, the demand prior to 01.06.2007 is clearly unsustainable as held by the Apex Court. Demand under Commercial or Industrial Construction Service post 01.06.2207 - HELD THAT:- The SCN as well as the adjudication order was passed classifying the service under Commercial or Industrial Construction Service whereas the service of the appellant is classified under works contract service. On this fact the demand raised under Commercial or Industrial Construction Service will not sustain being proposed and confirmed under the wrong classification whereas the services are correctly classifiable under works contract service - when no demand was raised under Works Contract Service post 01.06.2007, the demand raised under CICS/CCS will not be sustained. Since the issue is decided on merit of this case, other issues raised by the appellant such as abatement valuation, limitation etc. are not addressed. Appeal allowed - decided in favor of appellant.
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Central Excise
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2022 (9) TMI 389
Refund of Cenvat credit remained to be utilized on account of exports of excisable goods under bond - time limitation - refund is time barred for the period from 01.04.2012 to 05.06.2012 or not - Section 11B of Central Excise Act, 1944 - HELD THAT:- In terms of Rule 5 read with Notification No. 27/2012- CE (NT) dated 18.06.2012, an assessee is required to file one claim for each quarter that is at the end of the quarter. The time limit prescribed under Section 11B is clearly applicable in respect of the refund governed under Rule 5 of Cenvat credit Rules, 2004 read with Notification No. 27/2012-CE. However, the condition provided for filing the refund is an asseessee has to file one refund claim at the end of the quarter for which refund is sought for. In the present case for the period April, 2012 to June, 2007, the refund claim has to be filed after completion of the quarter i.e in the month of July, 2012 - In this case admittedly the refund claim was filed on 05.06.2013. It is clearly established that the refund claim was filed within 1 year from the due date even if it is taken as 1st July, 2012. It can be seen that a consistent view has been taken by various benches that in respect of refund under Rule 5 wherein it is provided to file a refund claim for each quarter, the period of limitation shall be reckoned from the end of the quarter - In the present case the quarter ends on 30 June, 2012 from which the limitation prescribed under Section 11B expires on 30 June, 2013, whereas admittedly the refund claim for the quarter April, 2012 to June, 2012 was filed on 05.06.2013, which is well within the stipulated time limit of 1 year. Therefore, the refund in the instant case is clearly not time bar. Both the Lower Authorities have erred in holding that the refund claim of the appellant is time bar. Appeal allowed - decided in favor of appellant.
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2022 (9) TMI 388
Process amounting to manufacture - marketability - process to obtain Crumb Rubber Powder - demand for the period May 2008 to August 2009 raised through two SCN are time barred as issued beyond normal period or not - HELD THAT:- The root of the entire dispute is settled by the Tribunal in appellant s own case GUJARAT RECLAIM RUBBER PRODUCTS LTD., ANKLESHWAR VERSUS COLLECTOR OF CENTRAL EXCISE CUSTOMS, BOMBAY [ 1983 (9) TMI 284 - CEGAT NEW DELHI] where it was held that A simple act of crushing and powdering like this one should not in our opinion be taken to be synonymous with creation of a new product. It is true that crushing does change the physical form as, for instances, the specific surfaces increase considerably thereby allowing intimate mixture etc. etc. but except in very rare instances, the substance remains what it was. The product keeps its original character, molecular structure, chemical identity etc. etc. We are therefore, not satisfied that the demand for duty was sustainable. The matter was again disputed by Department for a subsequent period and Tribunal in it order in appellant s own case CCE. C., SURAT-I VERSUS GUJARAT RECLAIM RUBBER PRODUCTS LTD. [ 2005 (11) TMI 114 - CESTAT, MUMBAI] has held in favour of the appellant holding that the said process does not amount to manufacture. The Commissioner (Appeals) has relied solely on Circular of CBEC explaining the definition of manufacture. It is found that when the issue regarding the exact identical process has been settled by Tribunal, not once but three times, still the Commissioner has totally ignored the same. Appeal allowed.
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CST, VAT & Sales Tax
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2022 (9) TMI 387
Conclusion of proceedings consequent to the impugned order - time limitation - HELD THAT:- As the Special Commissioner has finally concluded the proceedings consequent to the impugned order, this special leave petition is not interfered, with liberty to the petitioner to raise all contentions, including the factum of action being barred by limitation in appropriate proceedings. SLP disposed off.
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2022 (9) TMI 386
Interpretation of the exemption notification - Meaning and scope of capital goods as per the notification - levy of Entry tax at reduced rates - interplay between exemption notification dated 19.05.2003 and clause 5.1 of the EPCG scheme - Rejection of tax concession for imported goods under item 9 of exemption notification No.5/11/2002 dated 19.05.2003 issued under Section 25(1) of the Goa Tax on Entry of Goods Act, 2000 - competence of State and its authorities to levy entry tax on imported goods - seeking refund of entry tax paid by them under protest regarding imported goods under item 9 of the notification dated 19.05.2003. HELD THAT:- Item 9 in the notification dated 19.05.2003 refers to the capital goods brought or caused to be brought or delivered into a local area by (to) units covered under EPCG Scheme - Item 9 of the notification dated 19.05.2003 significantly does not refer to all the goods or all the capital goods mentioned in clause 5.1 of the EPCG scheme. Item 9 refers to capital goods brought or caused to be brought or delivered into a local area by or (to) units covered under Export Promotion Capital Goods Scheme. Therefore, it would not be appropriate to read into item 9 any coverage to all the goods or capital goods referred to or mentioned in clause 5.1 of the EPCG scheme. The expression capital goods referred to in item 9 of the notification dated 19.05.2003 has neither been defined under the said notification nor the Entry Tax Act, 2000. However, Section 2(B) of the Entry Tax Act, before its amendment in 2013, provides that the words and expressions used in the said Act but not defined shall have the meaning as assigned to in the Goa Sales Tax Act, 1963. After that, in the year 2013, for the expression Goa Sales Tax Act, 1964 (Act 4 of 1964), the expression the Goa Value Added Tax Act, 2005 (Goa Act 9 of 2005) was substituted. Based on the provisions of the Goa Act and the Central Act, therefore, there was nothing wrong with the Respondents referring to the definition of capital goods in Section 2(f) of the Goa Value Added Tax Act, 2005, given explicit provision in Section 2(B) of the Entry Tax Act, 2000. Moreover, such reference was justified because authorities interpreted the notification dated 19.05.2003, which was issued under Section 25(1) of the Entry Tax Act, 2000. Now if the definition of capital goods under Section 2(f) of the Goa Value Added Tax Act, 2005 is perused, then it is quite clear that the same will not include imported cars for which the Petitioners seek to pay reduced tax. There is no illegality in the impugned orders dated 11.08.2005 and 05.01.2006 by which the Petitioners were denied the benefit of the exemption notification. Mr Usgaonkar's contention about discrimination and consequent violation of Article 14 of the Constitution is quite misconceived. In terms of Section 25 of the Entry Tax Act, it is for the State Government to determine any specified class or persons or class of dealers or any goods or class of goods that can be exempted from payment of entry tax or qualify to pay reduced entry tax. Section 25 of the Entry Tax Act is only an enabling provision - there is no mandate to provide for an exemption or to reduce tax. Thus, if the State Government believed that it was necessary in the public interest to grant exemption or decrease the rate of entry tax only to capital goods brought or caused to be brought or delivered into a local area by or to units covered under the EPCG scheme, there is no question of any unreasonable classification or discrimination involved. Therefore, this is not a case of Respondents attempting to frustrate the provisions of the Central EPCG scheme. The Petitioners have already obtained the benefit of the EPCG scheme by importing cars against payment of only 5% customs duty. The exemption notification dated 19.05.2003 nowhere commits to reduced entry tax rates for all goods referred to in the EPCG scheme. Petition dismissed.
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2022 (9) TMI 385
Validity of demand and assessment notice - liability of Directors / Shareholders - limited to the extent of face value of shares subscribed by each member and amount remaining unpaid on them for the time being - whether there are any specific statutory provisions to the effect that liability for duty of the company can be fastened upon the Directors of the company? - HELD THAT:- It will be seen from the provisions of Section 89 of the MGST Act, Section 18 of the CST Act and Section 44(6) of the MVAT Act that there are specific provisions that fastened upon the Directors of a company liability for duty of the company - Admittedly there exists no provision in the BST Act under which the liabilities/dues of the company recovered/fastened upon from the Directors. There is no discussion in the impugned order as to how the amounts could be recovered under the old law. Petitioner has, in his reply to the show cause notice submitted that the amounts were not even recoverable under the BST Act or CST Act but still that has not been dealt with at all in the impugned order. The impugned order simply states that the conjoint reading of Section 142(8) and Section 89 of the MGST Act leaves no doubt that if recovery cannot be made under the earlier law, i.e., the BST Act and CST Act, the same can be recovered under the MGST Act and Section 89 will squarely apply. Thus, it is settled law that liability for duty of the company cannot be fastened upon the Directors of the company unless there is statutory provision to that effect. Since the BST Act did not contain any provision to the effect making the Directors liable for the dues of the company, no amount is recoverable under the BST Act from the Directors of the company for the dues recoverable from the Company. There were no provisions in the BST analogous to Section 44(6) of the MVAT Act or Section 18 of the CST Act or Section 89 of the MGST Act - Undoubtedly Section 18 of the CST Act is a statutory provision to the effect that liability for dues of the company can be fastened upon the Directors of the company. There are total non application of mind by Respondent No.3 in as much as consequential notice issued to petitioner is issued under BST and CST, Act whereas the impugned order relies upon provisions of the MGST Act, to recover the dues of the company from petitioner - Strangely, the impugned order is accompanied with the Notice of Demand issued under Section 38 of the BST Act. The second consequential notice is, we find, not even a Notice of Demand issued under the CST Act, but rather Notice of Final Assessment in Form VIII(B), i.e., the Assessment Order itself. Respondent No.3 in consequence of the impugned order, has issued Assessment Order under the CST Act as opposed to a Notice of Demand. This indicates non application of mind. Petition disposed off.
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2022 (9) TMI 384
Liability of tax - fibre optic jumper or fibre cable assemblies or fibre optic patch cords - liable to tax at 14.5 per cent. under section 4(1)(b)(iii) of the KVAT Act or not - HELD THAT:- It would be open for the appellate authority to take a considered decision without reference to the clarification. However, in order to avoid multiplicity of litigations, it would not be out of place to point out that when the authority is considering the notification under the KVAT Act vis- a-vis entry under the Central Excise Tariff Act, it must keep in mind the explanation appended to the notification under the KVAT Act, viz., Explanations 1 to 4. The writ petition is disposed off.
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Indian Laws
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2022 (9) TMI 383
Dishonor of Cheque - enhancement of fine amount equivalent to twice the cheque amount i.e., Rs.2 crores along with interest and costs - Section 138 of the NI Act - HELD THAT:- Section 138 of the NI Act provides that where the drawer of the cheque fails to make payment, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of the Act, be punished with imprisonment for a term which may be extended to two years or with fine which may extend to twice the amount of the cheque, or with both. The learned Sessions Judge has categorically held that the complainant herein has filed criminal revision petition for enhancement of the fine amount stating that the trial court has imposed only meager amount of Rs.20,000/- towards fine apart from imprisonment for one year and after considering the facts and circumstances of the case - the learned Sessions Judge enhanced the fine amount from Rs.20,000/- to Rs.1 core, including the fine which was already imposed by the trial court and with such deposit ordered that the complainant has to receive the amount of Rs.1 crore and if the accused fails to pay the same, he has to undergo simple imprisonment for six months. There are no justifiable grounds to enhance the compensation amount, since the award of compensation by way of restitution in regard to the loss on account of dishonour of cheque should be practical and realistic. The criminal revision case is, accordingly, dismissed.
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2022 (9) TMI 382
Dishonor of Cheque - service of statutory demand notices - commission of offences under Section 138 of the Negotiable Instruments Act - HELD THAT:- A perusal of the impugned complaints indicate that the respondent/complainant had sent statutory notices of demand to the petitioner through registered post. Learned counsel for the petitioner has submitted that the petitioner got an information under Right to Information Act, according to which, the notices have not been served upon the petitioner but the same have been served upon some other person - The question whether the statutory notices of demand were actually served upon the petitioner is a triable issue and a defence available to the petitioner which could not have been gone into by the learned trial Magistrate at the time of taking cognizance of the complaint and issuance of process against the petitioner. The ground urged by learned counsel for the petitioner is, therefore, without any substance. In most of the cheque bounce complaints, the basis is invariably a commercial transaction and if submission of learned counsel for the petitioner is accepted, then the provisions contained in Section 138 of the Negotiable Instruments Act would become redundant. Even otherwise, the contention raised by the petitioner can only offer a defence to him which can be considered only after the trial of the case. The instant petition is not otherwise maintainable as through the medium of instant petition, the petitioner has challenged as many as four complaints and four separate orders directing issuance of process against him by the trial court. A joint petition in respect of different causes of action is not maintainable. On this ground also, the petition deserves to be dismissed. Petition dismissed.
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2022 (9) TMI 381
Dishonor of Cheque - insufficient funds - whether cheque was issued for security purpose? - non-impleading the AMD Housing Developer as an accused - vicarious liability u/s 141 of NI Act - HELD THAT:- It has to be noted that the petitioner had not raised the question of law that the prosecution of the petitioner as a partner without implicating the partnership firm is not maintainable, without making the firm as an accused in his affidavit. There is no dispute with regard to the legal principles of the Hon'ble Supreme Court that for maintaining a prosecution under Section 141 of Negotiable Instruments Act, arraigning of a company as an accused is imperative only within the other categories of offenders can be brought in the dragnet on the touchstone of vicarious liability as the same has been stipulated in the provision itself. In the present case, the complainant and the petitioner disputed the fact whether the petitioner borrowed the loan amount for AMD Housing Developer or for petitioner's personal capacity and also, the petitioner disputed the fact that by himself, the disputed cheque was given as a security purpose only and the same was misused by the complainant. Therefore, whether the disputed cheque was given as security or not, whether the petitioner borrowed the loan amount for his personal purpose or for the benefit of AMD Housing Developers are the question of facts, which could have been determined only by the trial Court, after recording evidences of the parties. The criminal proceedings cannot be quashed - Petition dismissed.
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2022 (9) TMI 380
Dishonor of Cheque - acquittal of the accused - liability of retired partner from the partnership firm - preponderance of probability - rebuttal of the statutory presumption under Section 139 Negotiable Instrument Act - retirement deed explicitly say that the retiring partners will have no responsibility on the existing debts. - HELD THAT:- The cheque is signed by one of them as partner. Retirement from the partnership firm subsequent to presentation of cheque will not exonerate the accused persons who had given the cheque when they were at the helm of affairs of the company on the date of presentation of cheque. The cheque was returned on the instruction of the accused to stop payment. Therefore, omission to issue statutory notice to other partners, who came to be inducted in between issuance of cheque and collection of the money, cannot be a reason for acquitting the accused, when it is specifically pleaded that they had actively participated in the transaction and issued the cheque. The statutory notice is issued to the Firm and its two partners. The two partners, who are the accused had replied saying that, they are no more partners of the firm. To the notice addressed to the Firm, no reply by the existing partners, who were administering the company. D.W-4, who is one of the existing partners had mounted the witness box but had admitted that, he have no knowledge about the partnership Firm or its partners. Therefore the Lower Appellate Court judgment acquitting the accused by reversing the well considered judgment of the Trial Court is liable to be set aside for being contrary to law and facts. The Criminal Appeal is Allowed.
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2022 (9) TMI 379
Dishonor of Cheque - insufficiency of funds - accused admitted his signatures on the cheques or not - raising of presumption available under section 139 of the Negotiable Instruments Act - HELD THAT:- The evidence on record discloses that the respondent does not dispute to have issued cheques to the appellant, and he also admits his signature on the cheques. In the complaint as also in the examination-in-chief, the appellant stated that the respondent obtained hand loan of Rs. 2,25,000/- in the month of December 2006 assuring to repay the same within two months. For discharging this loan the respondent issued two cheques as per Exs.P1 and P2 - Appellant has also admitted that he asked the respondent for giving security for regularizing his appointment, but he denied the suggestion that the respondent gave two cheques at that time by way of security. Same was the evidence given by respondent when he adduced evidence as DW1. In the light of the evidence available on record, if the findings of the courts below are examined, it may be stated that the trial court is justified in coming to conclusion that the respondent issued the cheques Exs.P1 and P2 for repaying the hand loan that he had obtained from the appellant. When the evidence of PW1 to this effect has not at all been questioned in the cross- examination, it remains unassailed. The appellant got issued legal notice before initiating action for the offence under section 138 of the Negotiable Instruments Act. Respondent admits to have received the notice, but did not reply - It is highly impossible to believe that the respondent being part of the management would give cheques by way of security to a teacher whose appointment was to be confirmed by the education department. This defence is against the practical phenomenon that usually the management demands money from the teachers for confirmation of their appointment in the private schools. In the case on hand, it is not the defence of the respondent that the appellant had no capacity to lend Rs. 2,25,000/- to him. When such a defence was not taken by the respondent, it was impermissible for the appellate court to give a finding to that effect for upsetting the judgment of the Magistrate. Indeed it is incumbent on the part of the complainant to prove that the dishonoured cheque was issued by the accused for discharging in full or part of legally enforceable debt. If according to the accused, the complainant had no capacity to lend money, he must introduce a specific defence to that effect. Unless such a defence is introduced, the court is not expected to give a finding regarding financial capacity. The judgment of the appellate court is set aside and the judgment of conviction passed by the Magistrate is restored - Appeal allowed.
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2022 (9) TMI 378
Dishonor of Cheque - insufficiency of funds - existence of legally enforceable debt or not - applicant submitted that conviction recorded and sentence awarded by both the Courts below are absolutely illegal - whether the sentence awarded is on higher side as the jail sentence is not mandatory in view of the language employed in Section 138 of the Act of 1881? - HELD THAT:- From bare perusal of Section 138 of the Act of 1881, it is crystal clear that a person, who has been held guilty under Section 138 of the Act of 1881 can be punished with imprisonment for a term which may extend up to two years, or with fine which may extend to twice the amount of the cheque or with both. Thus, there is a discretion left with the Criminal Court either to sentence the accused with imprisonment or to punish the accused with the sentence of fine upon considering the facts and circumstances of the case. Imposition of jail sentence is not mandatory for offence under Section 138 of the Act of 1881. Under revisional jurisdiction given in Section 397/401 of the CrPC, invoking revisional jurisdiction of High Court, It is deemed fit to modify the sentence part of SI of three months and fine of Rs. 10,000/- to only fine of Rs. 35,000/-. Sentence of SI for three months is hereby modified to fine of Rs. 25,000/- only, while remaining part of sentence i.e. fine of Rs. 10,000/- will remain intact. The conviction of the applicant for offence under Section 138 of the Act of 1881 is hereby maintained, whereas, the jail sentence of the applicant is modified and he is now sentenced to pay fine of Rs. 25,000/-, in place of SI for three months, as awarded by trial Court. Fine of Rs. 10,000/- imposed by trial Court shall remain intact. Fine amount of Rs. 35,000/- is payable to the non-applicant/complainant under Section 357(1)(b) of the CrPC. Any fine amount already paid by applicant shall be adjusted. The Criminal Revision is allowed in part.
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