Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
September 15, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Securities / SEBI
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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Rejection of appeal - time limitation - as to whether in the facts and circumstances of the case, a conclusive finding could be rendered that the appeal of the petitioner was time-barred, was required to be decided as per law - the Appellate Authority was not justified in recording findings on merits after having come to a conclusion that the appeal was not filed in time and was not maintainable. - Matter restored back for fresh adjudication - HC
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Rejection of Refund of IGST - Export of services - intermediary or not - distinct person - Although, it is mentioned that the petitioner is an intermediary but there is no ground whatsoever for holding the said view. The terms of the Agreement are unambiguous. The petitioner has provided services on principal-to-principal basis. - Refund allowed - HC
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Validity of Criminal proceedings - Allegation of Abetting mis-utilisation of Input Tax Credit for the wrong figures / amount by two of the Dealers - the basis of filing of the FIR has already been quashed by the Division Bench of this court along with the other cases and the matter has been remitted back to the concerned authority to pass a fresh order - Continuing criminal proceedings against the petition will amount to an abuse of the process of law - Prodeedings quashed - HC
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Maintainability of petition - alternative remedy not availed - approaching directly to High Court - The petitioner by his own failure has not availed the appellate remedy and in that circumstance, there can be no invocation of the extraordinary jurisdiction under Article 226 of the Constitution of India - HC
Income Tax
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Capital gain - transfer u/s 2(47) - unregistered JD agreement - appellant had not received any consideration - since an unregistered agreement involving the transfer of possession of an immovable property would not qualify as a contract of the nature referred to u/s 53A of the TP Act, no transfer could be presumed based upon an unregistered agreement. - In order to qualify as a transfer of a capital asset under Section 2(47)(v) of the IT Act, there must be a contract that could be enforced in law under Section 53A of the TP Act. - HC
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Assessment u/s 68 - unexplained cash credit - Tribunal, as a matter of fact, did not inquire into the financials of investor companies and, therefore, according to us, the test of creditworthiness was also not met in this case. Therefore, in our view, for the reasons given above, the transaction in issue failed to meet the test of creditworthiness and genuineness even if one were to accept that it fulfilled the test of identity. - Order of ITAT reversed - Additions confirmed - HC
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Claim of Depreciation on the brands used by assessee - intangible assets - A careful perusal of clause (b) of Explanation 3 extracted hereinabove shows that the definition of assets, as explained in the Explanation, includes commercial rights of similar nature. Brand names certainly invest in the owner commercial rights, and therefore, will fall within the scope of intangible assets, which are amenable to depreciation u/s 32(1)(ii) - HC
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Allowable revenue expenditure - treatment to the travelling expenses of the Director's wives as well as fees paid for professional service - Allowed as revenue expenditure - HC
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Penalty levied u/s 271B - not getting the audit u/s 44AB - appellant is a Charitable Trust - the addition made by the Ld AO u/s 37(1) was accepted by the appellant, thus, also accepted the fact that the assessee has income from business and profession. Moreover, to fit into the definition of ‘Charitable purpose’ as per section 2(15) of the Act, the appellant was required to fulfill certain prescribed conditions. - Levy of penalty confirmed - AT
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Valuation of closing stock - There is no any purchase by the assessee during the year, and the sale made by the assessee is out of opening stock only. In the closing stock, only the opening stock items were there, hence assessing officer has rightly caught the mistake of the assessee for under valuation of closing stock. - AT
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Refund of excess Dividend Distribution Tax (“DDT”) paid by the assessee - wherever the Contracting States to a tax treaty intend to extend the treaty protection to the domestic company paying dividend distribution tax, only then, the domestic company can claim benefit of the DTAA, if any. - Claim denied - AT
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Addition u/s 68 - Proof of receipt of Cash Component against sale of property / loan agreement - AO does not determine in which year such cash was paid and if so, whether the entire receipt becomes income in that particular year etc. Addition was made not on any concrete finding basing on any corroborative evidence. We find it difficult to sustain the same - AT
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Disallowances of working Director’s commission on profits - Whether eligible as deduction u/s 36(1)(ii)? - the payment of commission to the Director could not have been paid to him as profit or dividend. Hence, the provision of section 36(1)(ii) of the Act are not applicable at all. - AT
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Penalty u/s. 271B - failure to get his books of accounts audited - if for some reason the assessee had not maintained books of account, then the appropriate provision under which penalty proceedings could be initiated was section 271A - penalty set aside - AT
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Correct head of income - investing activity done by the assessee - the contentions raised by the assessee cannot be brushed aside and he cannot be taxed on the receipt which is the maturity amount of the fixed deposit receipt with the bank and reimbursement of the expenditure received. - Matter restored back for re-adjudication- AT
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Income taxable in India - Existence of Permanent establishment (PE) - royalty/fee for technical services (FTS) - India-Germany DTAA - income from supervision services for inspection/optimization/erection/commissioning repair in India to other parties - AO/DRP is not justified in holding that assessee has used the premises of its associate company in India for rendering services to its clients. - AT
Customs
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Provisional release of goods - imported goods (black pepper) are prohibited goods or not - There is no mandate that the goods shall be absolutely confiscated and vested with the Government. They can be released provisionally under Section 110-A of the Act pending adjudication - Provisional release of black pepper ordered subject to conditions - HC
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Loss of reputation / Defamation - Allegation of Smuggling - the ingredients of the offence of cheating are prima facie made out on a reading of the complaint along with other materials. - In the instant case, none of the ingredients under Section 499 of the IPC is satisfied. The loss of reputation of the respondents, by itself, will not constitute an offence of defamation. - HC
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Entitlement for interest on refund - finalizing the assessment after delay of 8 years - The appellant is entitled to interest if the refund is payable after the expiry of 3 months from the date of final assessment as per Section 18 (4) of the Customs Act whereas in the present case the refund was granted within 3 months as prescribed under Section 18 (4) of the Act. Therefore the appellant is not entitled to any interest in view of the statutory provisions - AT
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Valuation of goods (spare parts) - related party transaction or not - post importation expenses - Since the Department were dealing with legal issues which involved costing of the goods among other issues, it may have helped to have done a cost audit so that the matter could have been examined with reference to the Cost Accounting Standards applicable to the case. - Demand set aside - AT
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Project Import - demand of differential duty - levy of penalty - undervalued goods - The finalization has happened after 15 years of provisional assessment which is extremely inordinate delay, and also against the instructions issued by CBIC as to finalization of Project Import Assessments The department has not been able to put forward cogent evidence to reject the transaction value - Demand set aside - AT
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Attempt to export unfinished leather in the guise of finished leather - Prohibited goods or not - After taking note of the fact that the goods have been provisionally released, re-processed and exported, it is opined that the confiscation of the goods is not warranted and justified. Accordingly, the redemption fine imposed is also to be set aside. The department has not been able to show any mens rea on the part of the appellant. - Penalty also set aside- AT
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Calculation of duty at the time of finalization of final assessment - import of HSD and SKO - to be paid on the basis of invoice value and the quantity indicated on the bills of lading or the quantity received by the importer/ appellants in their warehouse/ shore tanks? - actual oil quantity physically received into the shore tank should be taken as the basis for payment of duty at the time of ex-bond bills of entry. - AT
Indian Laws
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Dishonour of Cheque - Scope of term "Shall" - Condition imposed is mandatory of not - requirement of depositing 20% of the amount of compensation - In these cases, both the Sessions Courts and the High Court have proceeded on the erroneous premise that deposit of minimum 20% amount is an absolute rule which does not accommodate any exception - Appellate Court can grant relief in exceptional case - SC
SEBI
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Violation of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 - Related party transactions - We find that the appellants had committed violations of various provisions of the LODR Regulations. The said violations are however not that serious warranting imposition of high penalties. - AT
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Levy of penalty- Fraudulent issuance of GDRs by the Company - the imposition of penalty upon the appellant after 12 years from date of resigning is excessive. In a large number of cases we have reduced the penalty to Rs. 10 lakh. - While affirming the order of the AO for the violations committed by the Company we reduce the penalty from Rs. 1 crore to Rs. 10 lacs. - AT
Service Tax
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Rebate claim rejected - export of services - While dealing with the rebate claim under the said notification, there is no scope for raising any other issues than the issue related to the said two conditions and if the said two conditions are satisfied, then the rebate claim needs to be sanctioned - AT
Central Excise
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Refund of unutilized CENVAT Credit - The Department has not raised any objection at the time of availing and utilizing the credit - when no objection was raised at the time of availing and utilizing the credit, the objection regarding the eligibility of credit cannot be raised at the time of filing of the refund claim, to deny the refund claim. - AT
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Clandestine removal - reliance on statement of the workers/ employees - Any statement recorded under Section 14 of the Central Excise Act could be admitted in evidence only after the process of examination and cross examination is completed under Section 9D. For undertaking this exercise, it is not necessary that a person should have retracted from his statement. If the argument of the Adjudicating Authority is accepted, then the provisions of Section 9D would become otiose. This cannot be the intention of the legislature. - AT
Case Laws:
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GST
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2023 (9) TMI 632
Rejection of appeal - time limitation - appeal filed after the expiry of four months as prescribed - Violation of principles of natural justice - Cancellation of GST registration of petitioner on the ground of noncompliance of provisions of the GST Act and the Rules - HELD THAT:- In considering the issue of limitation by the Appellate Authority, the law would require several factors to be considered like receipt/service of the impugned order by the petitioner as assailed before the Appellate Authority - it is found that an appropriate consideration on such issue is lacking. Thus, as to whether in the facts and circumstances of the case, a conclusive finding could be rendered that the appeal of the petitioner was time-barred, was required to be decided as per law - the Appellate Authority was not justified in recording findings on merits after having come to a conclusion that the appeal was not filed in time and was not maintainable. The impugned order deserves to be set aside and the proceedings be remanded to the Appellate Authority for consideration of the appeal afresh on all counts including on limitation, so that on appropriate consideration the appeal of the petitioner can be decided - Petitioner s appeal is restored to the file of the Additional Commissioner (Appeals)-II, Mumbai.
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2023 (9) TMI 631
Entitlement of budgetary support under the Budgetary Support Scheme - whether the grant of fresh UID and registration number disentitle the units from availing the budgetary support as the Budgetary Support Scheme seeks to provide budgetary support to eligible units and not to the owners thereof or not? - HELD THAT:- A composite reading of the Budgetary Support Scheme along with the exemption notification no.20/2007-CE makes it clear that Government of India had decided to provide budgetary support to the existing manufacturing unit operating in Sikkim under different Industrial Promotional Schemes of the Government of India, for the residual period for which each of the unit is eligible . Quite evidently, it was a support given to the existing manufacturing units operating in Sikkim since the said units had not been able to enjoy the full benefit of exemption notification no.20/2007-CE for the entire period. Reading the definition of person under section 2(84) and the requirement of registration under section 22 of such persons makes it clear that Zydus Nutritions Limited (later Zydus Wellness Products Limited) and Alkem Laboratories Limited were required to be registered under section 22 after the change in ownership. Accordingly and admittedly, Zydus Nutritions Limited was registered under Rule 10(1) on 26.03.2019 and Alkem Laboratories Limited on 3.10.2019. Consequently, both the petitioners who were separate and distinct legal entities from the previous persons , i.e., Zydus Wellness-Sikkim and Cachet Pharmaceuticals Private Limited, who were eligible under exemption notification 20/2007-CE could not have filed the application for budgetary support under paragraph 7 of the Budgetary Support Scheme. The petitioners, as rightly contended by the respondents, were not eligible units as defined under paragraph 4.1 of the budgetary scheme. The exemption under exemption notification no. 20/2007-CE was to those manufacturers who have made investments in the State of Sikkim. The untimely withdrawal of exemption notifications before the manufacturers could enjoy its benefits for its full term as the new GST regime came in, persuaded the Government of India to provide budgetary support to those eligible units and not to those who have not made any investment to be able to enjoy the benefit of the exemption notification no. 20/2007-CE for the residual period . Neither Zydus Wellness Products Limited nor Alkem Laboratories Limited could legally claim that they were entitled to the exemption under the exemption Notification No. 20/2007-CE as they did not exists then. Both the writ petitions preferred by Zydus Wellness Products Limited and Alkem Laboratories Limited are accordingly dismissed.
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2023 (9) TMI 630
Rejection of Refund of IGST - rejection on the ground that the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8 of IGST Act - non-application of mind while passing impugned order - violation of principles of natural justice - HELD THAT:- The impugned order has been passed without application of mind and in disregard of the provisions of law. The relevant circular was brought to the notice of the respondents by the petitioner. But respondent no.1 completely ignored the same and proceeded to pass the order mechanically. Although, it is mentioned that the petitioner is an intermediary but there is no ground whatsoever for holding the said view. The terms of the Agreement are unambiguous. The petitioner has provided services on principal-to-principal basis. The services provided by the petitioner are on its own count and not facilitated by provision of services from any third-party services provider - the petitioner is a registered EOU for the services as exported by it. The respondents are directed to forthwith process the petitioner s claim for refund along with interest - petition allowed.
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2023 (9) TMI 629
Validity of Criminal proceedings - Allegation of Abetting mis-utilisation of Input Tax Credit for the wrong figures / amount by two of the Dealers - HELD THAT:- The court finds that the basis of filing of the FIR has already been quashed by the Division Bench of this court along with the other cases and the matter has been remitted back to the concerned authority to pass a fresh order, as such, the basis of filing of the FIR has already been quashed, to allow to continue the proceeding will amount to an abuse of the process of law. The entire criminal proceedings, in connection with Bokaro Steel City P.S. Case No. 121 of 2018 corresponding to G.R. No. 663 of 2018, registered for the offence under Sections 409, 420 and 120-B of the Indian Penal Code read with Sections 73, 74, 132(1)(e), 132(1)(f), 132(1)(i) and 132(1)(iv) of the Goods and Services Tax Act, 2017, pending in the court of learned Chief Judicial Magistrate, Bokaro, are hereby, quashed. Petition allowed.
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2023 (9) TMI 628
Maintainability of petition - alternative remedy not availed on approaching High Court - challenge to assessment order - determination of the taxable turnover and the tax payable - HELD THAT:- Having not availed the statutory remedies available, the petitioner cannot seek to approach this Court under Article 226 of the Constitution of India to challenge an assessment order especially with respect to the computation of the turn over and the determination of the taxable turnover and the tax payable, as arrived at by the Assessing Officer. In the BGST Act, an appellate remedy is provided under Section 107, which has to be availed within a period of three months or with a delay within a further period of one month. It is trite law that when there is a specific period for delay condonation provided, there cannot be any extension of the said period by the Appellate Authority or by this Court under Article 226 of the Constitution. The petitioner by his own failure has not availed the appellate remedy and in that circumstance, there can be no invocation of the extraordinary jurisdiction under Article 226 of the Constitution of India - there is no jurisdictional error, violation of principles of natural justice or abuse of process of Court averred or argued by the petitioner in the above writ petition - gross delay also stands against the petitioner. Petition dismissed.
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2023 (9) TMI 627
Maintainability of petition - alternative remedy not availed - approaching directly to High Court - challenge to assessment order - determination of the taxable turnover and the tax payable - HELD THAT:- Having not availed the statutory remedies available, the petitioner cannot seek to approach this Court under Article 226 of the Constitution of India to challenge an assessment order especially with respect to the computation of the turn over and the determination of the taxable turnover and the tax payable, as arrived at by the Assessing Officer. In the BGST Act, an appellate remedy is provided under Section 107, which has to be availed within a period of three months or with a delay within a further period of one month. It is trite law that when there is a specific period for delay condonation provided, there cannot be any extension of the said period by the Appellate Authority or by this Court under Article 226 of the Constitution. The petitioner by his own failure has not availed the appellate remedy and in that circumstance, there can be no invocation of the extraordinary jurisdiction under Article 226 of the Constitution of India - there is no jurisdictional error, violation of principles of natural justice or abuse of process of Court averred or argued by the petitioner in the above writ petition - gross delay also stands against the petitioner. Petition dismissed.
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Income Tax
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2023 (9) TMI 626
Reopening of assessment u/s 147 - Reason to believe - capital gains as regards the property and application of Section 50(C) - Government Notification determining the market value of the said property - HELD THAT:- Respondent wanted to make submissions on the provisions of the Indian Stamp Act, (A.P. Amendment) Act, 1971 etc., but in our view none of that is relevant because under Section 148 of the Act as the proposed reopening was beyond four years the only point which we need to consider is whether there was failure to truly and fully disclose material facts. When petitioner filed its return of income on 29th November 2006 and revised return of income on 15th February 2008 and during the assessment proceedings, the Notification of Andhra Pradesh Government was already published on 20th April 2007 which has been made available during the assessment proceedings to the A.O. Therefore, there is no failure to truly and fully disclose material facts. Moreover, the A.O. having accepted, and rightly so, the Government Notification determining the market value of the said property and pass the Assessment Order, the question of reopening the assessment for reasons as recorded would not arise. Amendment in Section 50(C), inserted by the Finance Act, 2016, with effect from 1st April 2017, which provided that where the date of the agreement fixing the amount of consideration and the date of registration for the transfer of the capital asset are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purpose of computing full value of consideration for such transfer. Though not raised initially, later in view of the amendment to Section 50(C) appellant had challenged even this determination of capital gains on the grounds that the capital gains should be worked out on the basis of the date of the agreement fixing the amount of consideration and not the date of registration for the transfer of the capital asset and therefore capital gains should be determined on the basis of consideration - The appellate authority accepted petitioners submissions that this amendment should be read to have been introduced with retrospective effect. CIT[A] has given its decision accepting petitioner s contentions and directing the Assessing Officer to take the date of agreement for stamp duty value consideration.Therefore, in our view nothing would survive in the impugned notice itself.
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2023 (9) TMI 625
Reopening of assessment - reason to believe - awarding the Petitioner compensation of ₹300/- per square metre - HELD THAT:- Neither the notice nor the reasons disclose what was suppressed by the Petitioner and how such suppression offers the AO reason to believe that the income had escaped assessment. The justification belatedly offered in the impugned order by which the Petitioner's objections were disposed of cannot be regarded as a valid defence of the impugned notice. The reasons cannot be given for the first time at the stage of disposal of objections filed by the Petitioner objecting to reopen an assessment. The reasons must exist and be recorded at the time of issuing notice u/s 147/148 - The validity or otherwise of the notice u/s 147/148 is required to be determined based on such reasons existing and recorded at the time of issuance of notice. As has been repeatedly held, such reasons cannot be supplemented or substituted belatedly either by affidavits or while disposing of objections of the Petitioner. Thus, it is clear that the crucial jurisdictional parameters prescribed in the proviso to Section 147 of the IT Act i.e. assessee's failure to disclose fully and truly all material facts necessary for assessment, was not fulfilled. The impugned notice, therefore, warrants interference. We are not too sure whether the ratio of SL Lumax Ltd. [ 2021 (9) TMI 249 - MADRAS HIGH COURT] would apply to the facts of the present case when there is no dispute that the Petitioner had furnished reference Court's award determining the market rate at ₹300/- per square metre. The record discloses that at the time of original assessment proceedings, the Petitioner had filed hardly five documents, out of which one was a copy of the judgment and award of the District Court enhancing base rate for compensation to ₹300/- per square metre. Since the impugned notice warrants interference based upon non-satisfaction with the crucial jurisdictional parameters prescribed in the proviso to Section 147 we do not propose to examine Mr Rao's contention based upon a change of opinion.
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2023 (9) TMI 624
Capital gain - transfer u/s 2(47) - unregistered JD agreement - appellant had not received any consideration under the two Joint Development Agreements - Whether in light of S. 17 (I)-A r/w S.49 of the Registration Act, 1908 the unregistered agreement can be construed as a document effecting transfer of the subject properties in terms of S. 2(47) of Income Tax Act? - HELD THAT:- Admittedly, the Joint Development Agreements dated 31.12.2008 were not registered, though they were required to be compulsorily registered under Section 17 (I-A) of the Registration Act post the introduction of this provision by the Registration and Other Related Laws (Amendment) Act, 2001. The Amendment Act of 2001 made simultaneous amendments in Section 53(A) of the Transfer of Property Act and Sections 17 and 49 of the Registration Act. By these amendments, the words the contract, though required to be registered, has not been registered, or in Section 53(A) of the IT Act have been omitted. Simultaneously, Sections 17 and 49 of the Registration Act were also amended, clarifying that unless the document containing the contract to transfer for consideration any immovable property (for the purpose of Section 53A of the TP Act) is registered, it shall not have any effect in law, other than being received as evidence of a contract in a suit for specific performance or as evidence of any collateral transaction not required to be effected by a registered instrument. The impact of the amendments to the Registration Act and the TP Act on the provisions of Section 2(47) of the IT Act was explained by the Hon'ble Supreme Court in Balbir Singh Maini [ 2017 (10) TMI 323 - SUPREME COURT] held Section 2(47) of the IT Act makes it clear that any transaction involving the allowing of the possession of any immovable property to be taken or retained in part-performance of a contract of the nature referred to in Section 53A of the TP Act will amount to a transfer in relation to a capital asset. The Court reasoned that since an unregistered agreement involving the transfer of possession of an immovable property would not qualify as a contract of the nature referred to under Section 53A of the TP Act, no transfer could be presumed based upon an unregistered agreement. The Court held that in order to qualify as a transfer of a capital asset under Section 2(47)(v) of the IT Act, there must be a contract that could be enforced in law under Section 53A of the TP Act. This reasoning would squarely apply to the facts of the present case. Substantial question of law in favour of the appellant and against the Revenue.
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2023 (9) TMI 623
Estimation of income - bogus purchases -Tribunal estimating the addition in respect of bogus purchases @ 6% - assessee is an individual engaged in the business of trading activity of diamonds - HELD THAT:- As decided in [ 2023 (3) TMI 1402 - GUJARAT HIGH COURT] the view taken and the conclusion arrived at by the appellant Tribunal are based on material before it and after analysing the facts and figure available before it. When the Tribunal has thought it fit to reduce the disallowance at 6% Tribunal had before it the facts which were duly analysed by it. No interference is called for in the said conclusion and findings of the Tribunal in the present appeal by this court. No substantial question of law.
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2023 (9) TMI 622
Validity of Revision u/s 263 - consequential order of assessment u/s 143 r.w. Section 263 once Revision proceedings u/s 263 was set aside - HELD THAT:- As decided in [ 2023 (9) TMI 511 - GUJARAT HIGH COURT] - Pendency of an appeal against the revisional proceedings would not be a ground for this appeal to be kept pending. Though the assessee had brought it to the notice of the Assessing Officer to keep the proceedings in abeyance, the AO proceeded to finalize the assessment. The Revenue, did not, before the ITAT also make a request to keep the appeal pending or in abeyance on the ground that this Court was seized of an appeal against the revision proceedings. In absence of this, the Tribunal could not be faulted in holding that once the Section 263 proceedings were set aside by itself, the consequent assessment order giving effect to the revision order is void ab initio. If the Revenue were to succeed in the pending appeal before this Court, the Assessing Officer will have to undertake a fresh exercise in light of the directions therein. On this ground too, no useful purpose can be served to entertain this appeal on the count of the other appeal pending - Appeals being devoid of merits are accordingly dismissed.
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2023 (9) TMI 621
Criminal Original Petition filed to call for the records relating to file of the Additional Chief Metropolitan Magistrate, (Economic Offences) Egmore, Chennai - petitioner requested this Court to dispense with the presence of the petitioner - HELD THAT:- Taking into consideration, the facts and circumstances of the case, the presence of the petitioner is dispensed with and he shall appear before the Court below as and when required by the Court below and during all the other times, he shall be permitted to be represented by the counsel. The petitioner shall be present before the Court below at the time of questioning under Section 313 of the Code of Criminal Procedure and at the time of final judgement. Accordingly, this Criminal Original Petition is disposed of with a direction to the Court below to complete the proceedings in EOC.No.621 of 2017 within a period of three months from the date of receipt of a copy of this order. The trial shall be conducted on a day to day basis in accordance with the guidelines given by Hon'ble Supreme Court reported in Vinod Kumar Vs State of Punjab [ 2015 (1) TMI 1357 - SUPREME COURT] - If the petitioner adopts any dilatory tactics, it is open to the trial Court to insist upon the presence of the petitioner and remand him to custody as per the judgment of STATE OF UTTAR PRADESH VS. SHAMBHU NATH SINGH [ 2001 (3) TMI 1046 - SUPREME COURT] . Consequently, connected miscellaneous petitions are also closed.
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2023 (9) TMI 620
Delay in filing return qua assessment year - authority rejected the ground of genuine hardship shown by petitioner and thus declined to extend the benefit of Section 119(2)(b) of IT Act r/w CBDT Instruction No.9 of 2015 dated 09.06.2015 - HELD THAT:- From the impugned order Annexure P/9, it does not appear that the competent authority has applied its mind to the Affidavit filed by the Chartered Accountant. The said Affidavit discloses certain compelling reasons beyond the control of petitioner and the Chartered Accountant which prevented petitioner and her Chartered Accountant to file return within the extended period of time. The possibility that if mind had been apply to the said Affidavit Annexure P/1 of the Chartered Accountant, then the result may have been different. What comes out loud and clear is that the impugned order dated 06.12.2022 passed by PCIT Jabalpur-1 (Annexure P/9) suffers from non-application of mind and; therefore, needs to be interfered with extending liberty to Revenue to apply its mind again in accordance with law. Thus the impugned order passed by Principal Commissioner of Income Tax, Jabalpur-1 (Annexure P/9) stands quashed - The competent authority i.e. Principal Commissioner of Income Tax, Jabalpur-1 is directed to reconsider the application preferred by petitioner u/s 119(2)(b) of IT Act after considering the Affidavit of Chartered Accountant and all other material on record and thereafter record his findings as regards existence or otherwise of genuine hardship .
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2023 (9) TMI 619
Assessment u/s 68 - unexplained cash credit - assessee having received funds in the form of share capital and share premium, in turn invested in the share capital and share premium - CIT(A) concluded that the identity of the investors was established he was not persuaded to hold that the transaction was genuine and, accordingly, sustained the addition made by the AO - HELD THAT:- Tribunal held assessee proved the nature and source of the investment made in its share capital and towards share premium, was founded, if not fully, substantially, on the submission made on behalf of the respondent/assessee that information sought via notices issued u/s 133(6) had been furnished and that although in response to the summons issued under Section 131 the concerned persons had appeared before the AO, their statements were not recorded. As is evident from paragraph 6 of the impugned order, Tribunal went on to record that not only the respondent/assessee had furnished copies of the replies filed by the investor companies in response to the queries raised by the AO, but had also placed before him the relevant documentary evidence. These submissions seem to have been taken by the Tribunal on their face value. Nothing has been shown to us which would demonstrate, firstly, that the directors of the investor companies had, in fact, appeared before the AO. Secondly, that replies had been furnished by the investor companies in response to the queries raised by the AO. As indicated right at the beginning of our narration, out of Rs. 45 crores invested in the respondent/assessee, Rs. 25,52,50,000/- was reinvested by the respondent/assessee in three (3) out of the five companies, i.e., in Shuklamber Exports Ltd., Sukaram Marketing Ltd. and Sheetal Exports Ltd.,i.e., nearly the entire amount was repaid. Tribunal somehow did not deem it fit to inquire as to why more than 50% of the amount raised by the respondent/assessee was invested by it in the three companies referred to hereinabove. Tribunal, as a matter of fact, did not inquire into the financials of investor companies and, therefore, according to us, the test of creditworthiness was also not met in this case. Therefore, in our view, for the reasons given above, the transaction in issue failed to meet the test of creditworthiness and genuineness even if one were to accept that it fulfilled the test of identity. Thus, for the foregoing reasons, we are of the view that the finding returned by the Tribunal that the respondent/assessee had discharged its onus is perverse. Decided in favour of the appellant/revenue and against the respondent/assessee.
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2023 (9) TMI 618
Reopening of assessment u/s 147 - Notice issued u/s 148A(b) - principal allegation leveled against the petitioner was that it had purchased foreign currency and made outward foreign remittance -petitioner had failed to provide the SPA executed between itself and F1 Info - stand taken was, the petitioner was, both, the remitter and the beneficiary - AO held that, although, the petitioner had given some explanation with regard to the repatriation, independent verification had not been carried out by reaching out to IDFC Ltd. - HELD THAT:- In our view, before passing the impugned order AO could have called upon the petitioner to submit not only the SPA, but also perhaps a letter of confirmation from IDFC. These were the simple steps that could have been taken before passing an order u/s 148A(d) of the Act. We have put this aspect to Mr Rai. Mr Rai says that an inquiry can be made with regard to the issues which have been highlighted by the AO in the impugned order. Therefore, in our opinion, the best way forward would be to set aside the impugned order, with liberty to the AO to pass a fresh order after he has called upon the petitioner to submit the requisite documents in support of its defence with regard to commencement of reassessment proceedings. The impugned order passed u/s 148A(d) of the Act is set aside. Resultantly, the notice of even date, i.e., issued u/s 148 of the Act will also collapse. AO will issue notice to the petitioner which would indicate the documents that he wishes the petitioner, as noted hereinabove, to place before him. AO will also furnish to the petitioner any material/information which is in his possession and may not have been furnished to the petitioner up until now, in support of his conclusion arrived at in the impugned order that income had escaped assessment.
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2023 (9) TMI 617
Delay of 968 days in approaching the Tribunal - Disallowance of hiring charges - Tax Deducted at Source (TDS) had not been deducted by the appellant/assessee while paying the charges for hiring equipment and machinery - AO noticed that although summons were issued u/s 133(6) to the sundry creditors, none of them responded to the same - HELD THAT:- Having regard to the overall sense that the AO had, which was that this was not a genuine transaction, in our view, if the appellant/assessee was aggrieved by the conclusions reached in the matter, it should have acted with alacrity, and not slept over its right. As noted above, there was a failure on the part of the appellant/assessee to institute an appeal even after it discovered the order passed by the CIT(A) in the second round, i.e., the order dated 01.012.2015. It took nearly three (3) months to approach the Tribunal. We are of the opinion that no interference is called for with the order of the Tribunal.
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2023 (9) TMI 616
Claim of Depreciation on the brands used by assessee - intangible assets or not? - Whether the claim for depreciation on the brands used by assessee, concerning its paper manufacturing business, were intangible assets within the meaning of Section 32(1)(ii) and hence, amenable to the claim of depreciation? - HELD THAT:- A careful perusal of Section 32(1)(ii) of the Act, read with clause (b) of Explanation 3 would show that trademarks are covered under the said provision. Brand names are a specie of the trademark. This is evident upon reading the definition of trademark and mark provided in the allied statute i.e., Trademarks Act, 1999 [in short, TM Act ]. A perusal of the definition would show that the trademark means a mark which is capable of being represented graphically, and is capable of distinguishing the goods or services of one person from those of others, and may include the shape of goods, their packaging, and combination of colours. The expression mark which is defined in Section 2(m) of the TM Act, includes, among others, a brand - a conjoint reading of these Sections would clearly point in the direction that the expression trademark under Section 32(1)(ii) and in the appended Explanation i.e., Explanation 3(b) would clearly include brand names. A careful perusal of clause (b) of Explanation 3 extracted hereinabove shows that the definition of assets, as explained in the Explanation, includes commercial rights of similar nature. Brand names certainly invest in the owner commercial rights, and therefore, will fall within the scope of intangible assets, which are amenable to depreciation u/s 32(1)(ii) - No substantial question of law.
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2023 (9) TMI 615
Waiver of the interest demanded u/s 158BFA - demand of interest u/s 245D(6A) - interest being leviable for delayed payment of taxes determined as payable by the Settlement Commission - HELD THAT:- Reasons cited in the order of the CBDT rejecting his claim for waiver of the interest demanded under Section 158BFA of the Act, we find that while it may be a fact that the CBDT in the impugned order had cited an erroneous reason, that by itself does not persuade us to take a different view in the matter since we find that the return filed by the appellant in response to the Section 158BC notice was only on 01.05.2000, well beyond the time prescribed under the Act for filing the said return. As already noticed, the levy of interest under the said provision is automatic and the power to waive the said interest while lies with the CBDT u/s 119 (2)(a) of the Act, the said power can be exercised only in relation to a class of cases and not to individual cases. Thus, even if we were persuaded to remit the matter to the CBDT for a fresh consideration, taking note of the erroneous reason furnished by them in the impugned order, we are of the view that it would be an exercise of futility for the appellant does not fall under any class of cases in respect of which alone the CBDT can exercise its discretion to grant waiver of the interest demanded. Demand of interest u/s 245D(6A), we find that the said interest is levied for the delayed payment of the tax determined as payable by the Settlement Commission, which was a forum chose by the appellant himself for settlement of the dispute with the Income Tax Department. The provision being part of the Code under Chapter XIX-A of the Act, the interest levied thereunder cannot be waived since it has to be seen as forming an integral part of the Settlement that resulted pursuant to the appellant approaching the Settlement Commission of his own volition. Thus in any view of the matter, we see no reason to interfere with the judgment of the learned Judge.
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2023 (9) TMI 614
Allowable revenue expenditure - treatment to the travelling expenses of the Director's wives as well as fees paid for professional service - HELD THAT:- The agreement dated 10.11.1995 would fall under Section 37 of the Act, thus, the service rendered relate to the re-arrangment of manufacturing and sale activities. Further Section 35B provides that where the assessee has paid any lump sum consideration for acquiring any know how for use for the purpose of his business, deduction is allowable to the assessee at rate of 1/6 in six consecutive years. This expenditure is to be treated as revenue expenditure. The judgment of Delhi High Court in a case of Indo Rama Synthetics India Ltd [ 2009 (9) TMI 635 - DELHI HIGH COURT] is directly applicable to the facts of the present case. Also relying on Honda Siel Cars India Ltd [ 2017 (6) TMI 524 - SUPREME COURT] the appeals are allowed and impugned orders are set aside. The appellant (s) company shall be entitled to treat the travelling expenses of the Director's wives as well as fees paid to M/s Kinsey and Co Ltd for professional service for the relevant assessment year as revenue expenditure.
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2023 (9) TMI 613
Reopening of assessment - difference between purchases as recorded in the audited accounts and as the payment made to Indian Oil Corporation Limited (IOCL) - AO on the ground that the true value of the gross profit shown by the assessee was not verifiable, rejected the books of accounts of the assessee and estimated the income of the assessee at 4% - HELD THAT:- A perusal of the assessment order shows that the assessee has successfully reconciled the difference in the purchase figure. This has resulted into no addition being even proposed by the AO much less made. As the ground on which the reopening has been done itself no more survives and no addition has resulted from the reasons on which the reopening has been done, obviously the reasons of the reopening itself has failed and, therefore, the reopening proceedings itself has failed and assessment proceeding is quashed. The arguments raised by the ld.Sr. DR that the Explanation 3 to Section 147 of the Act protects the assessment even though no addition has been made, does not stand to reason insofar as the wordings used in the said section is that, the AO may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section (2) of section 148. Thus, the reasons on which the reopening as done must first survive and only when such reason survive then in the course of such assessment, the AO finds other issues which have come to his notice, liberty is granted to the AO to make addition on this additional issues also . When the primary issue fails, the reopening fails along with that. In the present case the reopening has been done because there was allegation of understatement in respect of the purchases. When no addition has been made on that count and that issue has already been reconciled by the assessee and accepted by the AO, the reopening itself failed. Consequential assessment will also fail. AO having rejected the books of accounts has not given any comparable case for the purpose of estimating the income of the assessee at 4%. Admittedly, the above method for estimation would be the assessee s own declaration for the earlier and subsequent assessments. Even that has not been attempted by the AO. In absence of a verifiable and authenticable comparable case, the assessment as has been done by the AO remains unsubstantiated and the same stands deleted. Even on this ground also the addition as made by the AO on merits, is hereby deleted. Appeal of assessee allowed.
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2023 (9) TMI 612
Exparte order u/s 201(1A) - non deduction of Tax under the provisions of section 194IA - CIT(A) confirming the order of penalty u/s 201(1A) and 234E - HELD THAT:- As additional information in the form of bifurcation of amount of consideration paid by each joint buyer is demonstrated with the support of copies of bank statement thus the same could be relied upon but still the assessee is lacking in not submitting the document pertaining loan from HDFC, that the same is equally extended by the bank to all the joint buyers. The blatant statement of the assessee that the amount of loan is divided equally between the three co-owners does not inspire our confidence under the circumstance when the assessee was non-compliant before the Ld AO on 22.10.2020, 07.01.2021 and 28.01.2021, again before the Ld CIT(A) assessee had submitted that the payment of consideration was equally made by each co-owner and now with a shifting contentions, some deferent figures of share in consideration were projected and furnished before us. We are also not oblivious of the fact that the observation of CIT(A) that total payments were made by the appellant assessee only is not the correct fact, when the registered sale deed itself shows that the payments were made by different purchasers. We find it fit to set aside orders of the revenue authorities and to restore the issue back to the files of Ld AO, so as to verify with supporting evidence, the actual status of the payment of consideration by each co-owner towards each flat/ property and adjudicate the issue afresh in terms of provisions of section 194IA. Assessee shall be provided with reasonable opportunity of being heard. In case assessee fails to comply with during the set aside assessment proceedings, Ld AO would be at liberty to pass an order in accordance with law. In the result ground no 1-4 of the appeal of the assessee are partly allowed for statistical purposes.
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2023 (9) TMI 611
Penalty levied u/s 271B - not getting the audit u/s 44AB - appellant is a Charitable Trust - HELD THAT:- During the hearing before us when it was queried whether the assessee which has receipt of more than Rs. 12.00 crores whether the assessee has got its accounts audited under the provisions of income tax act applicable on charitable organization and report in form 10B was furnished, Ld AR answered that the assessee was not having 12AA for the relevant year thus such audit was not conducted. We agree with the observations of Ld CIT(A) that the addition made by the Ld AO u/s 37(1) was accepted by the appellant, thus, also accepted the fact that the assessee has income from business and profession. Moreover, to fit into the definition of Charitable purpose as per section 2(15) of the Act, the appellant was required to fulfill certain prescribed conditions. The appellant was failed in establishing during the penalty proceedings before AO, as well as before the Ld CIT(A). We therefore are of the considered opinion that Ld CIT(A) had correctly appreciated the facts of the case in confirming the penalty imposed by the Ld AO u/s 44AB. We uphold the order of Ld CIT(A), in terms of our observations herein above. Thus, ground of the assessee on the sole issue pertaining to levy of penalty u/s 271B are dismissed.
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2023 (9) TMI 610
Penalty u/s. 271(1)(b) - period of limitation - failure on his part to comply with the notice issued u/s. 148 - time period contemplated in clause (a) of subsection (1) to Section 275 - HELD THAT:- As the limitation for imposing penalty u/s 271(1)(b) as per the time period contemplated in clause (a) of subsection (1) to Section 275, i.e six months from the end of the month in which appellate order was received ITAT order dated 17,12,2014, expired on 31.07.2015, therefore, the order dated 27.07.2015 imposing the aforesaid penalty was well within the limitation period. We, thus, in terms of our aforesaid observations are unable to concur with the solitary contention advanced by the Ld. AR, i.e the penalty imposed by the A.O under Section 271(1)(b) was barred by limitation, and uphold the view taken by the lower authorities. Thus, the grounds of appeal raised by the assessee are dismissed.
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2023 (9) TMI 609
Valuation of closing stock - Re-estimating addition to the value of closing stock particularly when the AO had not rejected books - HELD THAT:- We note that it was not necessary to reject the books of accounts of the assessee. Hence assessing officer was right in not rejecting the books of accounts. AO noticed that some details were not filed or annexed with tax audit report, as noted by CIT(A), therefore AO made addition. On appeal by the assessee, we note that CIT(A) has provided enough relief to the assessee based on the audited books of accounts of the assessee. CIT(A) after taking into account correct valuation methodology and policy as per accounting standards, ICDS and prevailing accounting customs, has deleted almost 50% addition made by the assessing officer. We note that there is no any purchase by the assessee during the year, and the sale made by the assessee is out of opening stock only. In the closing stock, only the opening stock items were there, hence assessing officer has rightly caught the mistake of the assessee for under valuation of closing stock. We note that CIT(A) made the computation of closing stock by adopting average rate per carat, which is a superior approach as compared to the approach adopted by assessing officer. We accept the above approach adopted by CIT(A). However, we do not find any further superior approach, than the approach so adopted by CIT(A), because CIT(A), by following accounting standards, ICDS and accounting principles, granted the partial relief to the assessee. Thus, in our opinion, the assessee does not deserve further relief on the basis of the plea that assessing officer ought to have rejected books of accounts to make addition on account of under valuation of closing stock. On a careful reading of the order of CIT(A) the findings thereon, we do not find any valid reason to interfere with the decision and findings of the CIT(A), hence we dismiss the appeal of the assessee. Assessee not applicable on the facts of present case. Rejection of entire books of account was not warranted, when the AO find fault in the valuation of stock only. Appeal filed by the assessee is dismissed
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2023 (9) TMI 608
Revision u/s 263 - case was selected for complete scrutiny and A.O. allowed the claim of depreciation for addition to different block of assets without verification - HELD THAT:- PCIT was found to be primafacie satisfied with the submission of the assessee supported with evidence, documents and bills but was keen have it further verified. Ld PCID was of the opinion that the order of Ld AO was erroneous since certain issues which should have been looked into by the Ld AO were not examined by him during the original assessment proceedings u/s 143(3), however the two conditions which were mandatory to be established could not be satisfied by bringing on any finding or recording that could establish that the order of the AO was erroneous as well as prejudicial to the interest of the revenue. Under such circumstances the order of Ld PCIT has been found to be failed on the test as laid down by Hon ble Apex court while assuming jurisdiction u/s 263 in the case of Malabar Industrial Company Ltd [ 2000 (2) TMI 10 - SUPREME COURT] We therefore respectfully following the binding principle of law as laid down by Hon ble SC in the Malabar Industrial Company Ltd.(supra) are inclined to hold that the order of Ld PCIT was lacking in complying with the twin compulsory conditions as mandated u/s 263, consequently the same is bad in law and liable to be quashed and we direct to do so. Appeal of the assessee is allowed.
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2023 (9) TMI 607
Revision u/s 263 - no enquiry v/s inadequate enquiry - nature and source of cash deposits nor any explanation has been furnished by the assessee; that source of investment towards purchase of property has not been correctly examined; that short term capital gain arising on sale of property has not been examined; that documentary evidence to examine the genuineness of bank charges interest expenses - HELD THAT:- AO recorded a finding that cash deposit in saving bank account has been verified and found in order after examining the books of account of the assessee and reconciliation of cash deposit with reference to cash book and statement of account obtained from the bank by issue of notice u/s 133(6) of the Act. We also observe that the Ld. AO accepted the calculation of short-term capital gain declared by the assessee after due verification. We are, therefore, of the view that it is not a case of no enquiry. Rather there is lot of evidence on record to indicate that there was full application of mind by the AO on the twin issue of impugned cash deposit and purchase and sale transaction/capital gain declared by the assessee. The decisions relied upon by the assessee fully support the view canvassed by the assessee before us. In a recent decision in PCIT (Central) vs. Kanin (India) [ 2022 (5) TMI 1414 - PUNJAB AND HARYANA HIGH COURT] that if the Ld. PCIT did not point out what enquiries or verification should have been made but had not been made by the Ld. AO, the order passed by the Ld. PCIT under section 263 of the Act is not sustainable. As regards expenses claimed under the head bank charges and interest and loan from three parties, the assessee submitted before the Ld. PCIT that detailed list of expenses was filed during reassessment proceedings which were verified by the Ld. AO from the ledger account and thereafter he allowed them. From certain other expenses, the Ld. AO disallowed 20% being unverifiable for the purposes of business. It was further submitted that list of unsecured loan was filed before the Ld. AO and confirmation of the parties were also filed in response to the query made by the Ld. AO. On the face of these facts on record, we are unable to subscribe to the view of the Ld. PCIT that genuineness of bank charges were not examined and that enquiry was not made in respect of loans obtained during the year from three parties. As now well established that where the Ld. AO has examined the issues on the basis of which the case is re-opened during re-assessment proceedings by issuing various notices under section 142(1) of the Act with questionnaire and claim of the assessee is accepted by the Ld. AO, the mere fact that he has not elaborated the issues in the reassessment order will not entitle the Ld. PCIT to exercise justification under section 263 of the Act. Placing on record by the Ld. CIT(DR) the fresh assessment order framed by the Ld. AO consequent to order u/s 263 of the Act before us is of no value in so far as the present appeal is concerned. We have reached the conclusion that the impugned order of the Ld. PCIT passed under section 263 of the Act is not sustainable which we hereby quash. Decided in favour of assessee.
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2023 (9) TMI 606
TP Adjustment - Selection of MAM - CUP method followed by the assessee was rejected by the TPO and instead TNMM was selected as Most Appropriate Method - HELD THAT:- We find that the DRP has already allowed the CUP as MAM in the A.Y. 2011-12, A.Y. 2013-14 and A.Y. 2014-15 and the TPO sought to undertake the comparison invoice by invoice with the third party located in the same geographical location while rejecting the CUP undertaken by the assessee however, these facts are of no relevance as long as the amount/rate charges for hours incurred by an individual for a project is uniform and the services were provided to its AE as well as to third party by same employee located in India. Reliance is being placed on the judgment of Hon ble Supreme Court in the case of CIT, Delhi-II Vs. Cargill Foods India Ltd. [ 2016 (11) TMI 1567 - SUPREME COURT] - Since, the appeal of the assessee is decided in favour of the assessee, the Stay Application of the assessee is infructuous and hence dismissed.
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2023 (9) TMI 605
TP Adjustment - comparable selection - HELD THAT:- Cybercom Datamatics Information Solutions Ltd. -M/s Cybercom Datamatics as a right comparable to M/s Steria India Ltd. for software development services and the facts of the instant case are identical to the facts of the Steria India Ltd.[ 2020 (10) TMI 24 - ITAT DELHI] - Since the primary conditions are met with, we hold that Cybercom Datamatics Information Solutions Ltd. can be considered as a right comparable. Mindtree Ltd. - At heading quantitative details it is clearly mentioned that the assessee is involved in software development services only and accordingly no other segment is applicable in the case of the assesee. Thus the assessee contention about no segmental information is not tenable. Further, with regard to the intangible of Rs. 6.7 crore comes to 0.2% of turnover of Rs. 3031.6 crore. However, the assessee also owns intangible of Rs. 6.03 crore including goodwill, which is 13.85% of turnover of Rs. 43.53 crore. Thus this contention of assesssee is without any basis and thus based on the above analysis, the assessee company is functionally similar comparable to M/s Mindtree Ltd. Persistent Systems Ltd. - We find that the turnover is within the acceptable range, the FAR matching, the segmental information is not required as there is single common segment of revenue and in the absence of financial implication on the occurrence of extraordinary events and having found intangibles being 1.35% as negligible and same with the R D activities which is 0.3% of the turnover and hence, we hold that Persistent Systems Ltd. can be considered as a right comparable. Tata Elxsi Ltd. - The case was selected by the assessee itself in the A.Y. 2012-13. The turnover of the company s 20 times that of the company which is within the acceptable range and the FAR has been similar, hence, we hold that it can be considered as a right comparable. Comviva Technologies Ltd. - By claiming that the company is not functionally comparable to the assessee company and also it has high turnover. At the outset, it is seen from the records and the assessee written contentions that this company was in the list of assessee's own comparables and both at the stage of TPO as well as DRP. Since, this comparable has nor be examined by the authorities below, in the fitness of things, the matter is referred to the file of the TPO/DRP to examine the issue afresh.
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2023 (9) TMI 604
Depreciation claimed on goodwill, distribution network, and customer relations - AO concluded what was transferred pursuant to the amalgamation was net assets, which consist of existing tangible assets as well as other existing intangible assets - both the AO as well as the learned CIT(A) rejected the claim of the assessee as these intangible assets were not shown in the books of accounts of the transferor company and mere accounting treatment by the assessee does not entitle the assessee to claim depreciation in its books - HELD THAT:- It is pertinent to note that the scheme of amalgamation was approved by the Hon'ble High Court with the appointed date being 01/04/2015, therefore it is necessary to see how this aspect was examined in the first year itself, which is the assessment year 2016-17. During the hearing, it was submitted that the assessee claimed depreciation on the aforesaid intangible assets in the first year after the amalgamation. However, its appeal against the assessment order for the assessment year 2016-17 is currently pending before the learned CIT(A). Therefore, in view of the above, we are of the considered opinion that it becomes relevant to examine whether any intangible asset arises in the hands of the assessee pursuant to the amalgamation and whether on that intangible asset depreciation is allowable under section 32 of the Act. Since the appeal of the assessee against the disallowance of depreciation on aforesaid alleged intangible assets in the first year itself is currently pending before the learned CIT(A), we deem it appropriate to restore this issue to the file of learned CIT(A) for de novo adjudication - Grounds raised in assessee s appeal are allowed for statistical purposes. Refund of excess Dividend Distribution Tax ( DDT ) paid by the assessee - assessee raised this issue by way of additional ground and submitted that the beneficial rate on dividends as provided in Double Taxation Avoidance Agreement ( DTAA ) is to be applied for the purpose of DDT, as the DTAA override the provisions of the Act - HELD THAT:- During the hearing, the learned Representative appearing for the parties fairly agreed that this issue is now covered in favour of the Revenue by the decision of DCIT v/s Total Oil India Private Ltd. [ 2023 (4) TMI 988 - ITAT MUMBAI (SB) ] Accordingly, respectfully following the aforesaid decision of the Special Bench of the Tribunal, ground no.6 raised in assessee s appeal is dismissed.
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2023 (9) TMI 603
TDS liability u/s 194A - Nature of amount paid as per the scheme - Non-Availing Compensation (NAC) - In the nature of Interest or not? - it was alleged that the scheme has been disguised as a time share scheme, and it is actually a borrowing activity. Thus, in the reasons for re-opening the assessment, it was concluded that the assessee has booked NAC in the form of repayment of unsecured loan/deposits, and interest paid, is not allowable under section 40(a)(ia) of the Act due to non deduction of TDS. HELD THAT:- We find that a similar issue came up for consideration in the case of sister concern in M/s. Royal Twinkle Star Club Pvt. Ltd [ 2023 (5) TMI 786 - ITAT MUMBAI] held that approach of the Revenue, on one hand treating the NAC paid by the assessee to its members as interest and on the other hand treating the amount received from the members as the income of the assessee is self-contradictory since only when the deposits are considered as a loan, which was one of the allegations in the reasons recorded while reopening the assessment, the interest can be charged on it. Thus, when the assessee s business was considered to be in the nature of CIS, all the consequences in relation thereto must follow. It is trite law that entries in the books of account are not decisive or determinative of the true nature of the entries. Therefore, the amount received by the assessee from its members, to the extent the same is treated as income in its books of account, is directed to be reduced while calculating the total income of the assessee, since the same is in the nature of capital receipt. We find that in the present case, the NAC paid to the members also includes the repayment of membership amount collected from the members and the same has been claimed as a deduction by the assessee. Since the said repayment has already been claimed as a deduction, therefore the said amount need not be again reduced while calculating the total income of the assessee for the year under consideration. Decided in favour of assessee. Considering 30% of NAC for the purpose of disallowance under section 40(a)(ia) of the Act instead of the entire amount - HELD THAT:- CBDT, while explaining the provisions of the Finance (No.2) Act, 2014, vide Circular No.1 of 2015, dated 21/01/2015, clarified that the amendment by the Finance (No.2) Act, 2014 to the provisions of section 40(a)(ia) of the Act takes effect from 1st April 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years. We further find that in Shree Choudhary Transport Company [ 2020 (8) TMI 23 - SUPREME COURT] held that the amendment by the Finance (No.2) Act, 2014 is with effect from 01/04/2015, and shall be applicable from the assessment year 2015-16. Since it is settled that the amendment to section 40(a)(ia) of the Act by the Finance (No.2) Act, 2014 is with effect from the assessment year 2015-16, the AO is directed to apply the said amended provision while computing disallowance under section 40(a)(ia) of the Act. As a result, ground no.1.f, raised in assessee s appeal is allowed. Disallowance u/s 14A r/w rule 8D - HELD THAT:- As in the present case, the assessee has not earned any dividend income, therefore, disallowance of expenditure under section 14A read with Rule 8D is not sustainable. Scope of amendment - We find that while dealing with the issue of whether the aforesaid amendment by the Finance Act, 2022 is prospective or retrospective in operation, as in PCIT vs M/s Era infrastructure (India) Ltd, [ 2022 (7) TMI 1093 - DELHI HIGH COURT] held that the amendment by Finance Act, 2022, in section 14A is prospective and will apply in relation to the assessment year 2022-23 and subsequent assessment years. Thus, even in view of the aforesaid amendment also, the disallowance under section 14A r/w rule 8D is not permissible in the present case.
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2023 (9) TMI 602
Addition on Cash Deposit made in bank account - As submitted appellant has received freight charges and made withdrawal from bank and the cash on hand has been deposited in to the bank account - HELD THAT:- We observe that the assessee has been able to reasonably explain that the source of deposits made in the bank account were out of the cash withdrawals made by the assessee from the bank account from time to time and also from the cash in hand held by the assessee. It is also notable that in the Remand Report, the Assessing Officer has not made any specific adverse inference against the assessee. Looking into the facts of the instant case, wherein the assessee has given a detailed explanation that the source of cash deposits was out of cash withdrawals from the bank account and the cash in hand generated from the business of transportation, and nothing specific has been placed on record by the revenue authorities to controvert the assertion made by the assessee, then the source of such cash deposits can be said to be explained by the assessee. It is a well-settled principle of law that once there are substantial cash withdrawals which have been made by the assessee from his bank account, then the source of cash deposits in the same bank account can be presumed to have been made from the earlier cash deposits, unless certain specific facts are brought on record to establish that the assessee has spent or invested the aforesaid amount so that such cash is not available with the assessee for redeposit. Accordingly, we are of the considered view that the additions are liable to be deleted. Appeal of the assessee is allowed.
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2023 (9) TMI 601
Disallowances of exempted income and unsecured loan respectively - assessee is a non-resident individual and holds tax residency certificate of UAE as claimed to be engaged in the business of general trading through a partnership firm, namely Baba Tex General Trading LLC, in which he is partner of 49% for the share of profit - HELD THAT:- There is no dispute that the assessee has shown the exempted income in the income tax return and therefore the onus lies upon the assessee to justify based on the documentary evidence. The assessee has furnished the necessary supporting evidence by raising his contentions during the appellate proceedings which have nowhere been denied by the revenue based on cogent material suggesting that the exempted income shown by the assessee represents the undisclosed income of the assessee taxable in India as per the provision of section 5(2) of the Act. In our considered view, the income of the assessee cannot be decided based on a mere piece of paper. As such, it should be corroborated by the material available on record. However, in the case before us, the AO has not brought any material on record to disprove the contention of the assessee. To classify any item based on paper as income, it is necessary for the party alleging so to pinpoint the specific instances and corroborative material. However, in the case before us no material has been brought on record by the AO. Merely the amount shown by the assessee under the head of exempted income cannot represent the undisclosed income of the assessee in the absence of corroborative material suggesting that the income earned by the assessee is taxable in India. Credit in the bank account of the assessee on account of foreign remittance - We note that the money was remitted from the foreign bank account of the assessee which can be verified from the details available - Such entry in the bank account of the assessee was not reflecting any business transactions in India and therefore the same cannot be treated as income of the assessee. It is also pertinent to note that the assessee being non-resident Indians has remitted the money in his bank account in India which cannot be termed as loan to the assessee or income of the assessee. It is for the reason that the status of the assessee being individual cannot be treated differently and therefore any receipt to the and NRE account of the assessee cannot be classified as income of the assessee. The relevant provisions of section, in this regard, have already been elaborated in the preceding paragraph. Thus the amount of remittance from the UAE does not represent an income of the assessee and therefore we decline to interfere in the finding of the learned CIT(A). Hence the ground of appeal of the revenue is hereby dismissed.
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2023 (9) TMI 600
Disallowances of working Director s commission on profits - Whether eligible as deduction u/s 36(1)(ii)? - HELD THAT:- We find that the provisions of section 36(1)(ii) of the Act per se could not be made applicable. Provision of section 36(1)(ii) of the Act states whether any sum paid to an employee as bonus or commission for services rendered, whether such sum would not have been payable to him as profits or dividend if it had not been paid as bonus or commission. If the said commission payment is not made, then the very same sum would be available for distribution to him as profits or dividend. In the instant case, as stated earlier, Mr. Feroz is only holding 5% shares in the assessee company and remaining 95% held by Mr. Mohit. Hence, the decision to declare dividend should be taken with the consent of Mr. Mohit and it is not left to the prerogative of the assessee alone who happens to be minority share holder in the assessee company. Hence, in the facts and circumstances of the instant case, the payment of commission to the Director could not have been paid to him as profit or dividend. Hence, the provision of section 36(1)(ii) of the Act are not applicable at all. Further, we also find Hon ble Jurisdictional High Court in the case of Control Switchgear Contractor Ltd [ 2014 (6) TMI 46 - DELHI HIGH COURT] had held commission paid to Directors is eligible in the hands of the assessee company and they would not be hit by the provision of section 36(1)(ii) of the Act. Thus we direct the ld AO to delete the disallowance of commission made in the instant case. Accordingly, ground No. 1 raised by the assessee is allowed. Seeking appropriate credit for pre paid taxes and adjustment of refund that are due to the assessee - HELD THAT:- This requires factual verification and hence, AO is directed to decide the same in accordance with law. Accordingly, ground No. 2 of the assessee is allowed for statistical purposes.
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2023 (9) TMI 599
Assessment u/s 153A - incriminating seized document suggesting that share capital/share application money were non-genuine found or not? - HELD THAT:- As in this case, there is no seized incriminating material. List of shareholders by no stretch of imagination can be said to be incriminating material. Hence, jurisdiction assumed is not as per law. The fact that no incriminating material for the year was seized has not been disputed by the Revenue. Hence, we allow the ground raised.
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2023 (9) TMI 598
Disallowance u/s 14A r.w.r. 8D - income exempted under section 10 of the Act - Assessee submitted that since the exempt income earning securities are held by it as stock in trade, therefore, disallowance of expenditure u/s 14A cannot be made - HELD THAT:- As per the assessee, the securities are held by it in the ordinary course of its business and the profits and gains on sale/transfer of such securities are offered to tax while computing the income under the head profits and gains from business or profession , therefore such securities constitute stock in trade of assessee s business. No dispute has been raised by the Revenue as regards the aforesaid submission. We find that while deciding a similar issue in PCIT v/s Punjab National Bank [ 2022 (6) TMI 85 - DELHI HIGH COURT] wherein dismissed the appeal filed by the Revenue and upheld the findings of the Tribunal in deleting the disallowance made under section 14A read with Rule 8D direct the AO to delete the disallowance made under section 14A read with Rule 8D. Decided in favour of assessee.
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2023 (9) TMI 597
Penalty u/s. 271B - failure to get his books of accounts audited as per the mandate of Section 44AB - A.O while framing the assessment had, inter alia, initiated penalty proceedings u/s. 271A i.e. for failure on the part of the assessee to maintain books of account and other documents as required u/s. 44AA - HELD THAT:- Now when the assessee had been penalized u/s. 271A of the Act, i.e. for not maintaining his books of accounts and other documents as required u/s. 44AA of the Act, then, he could not have further been saddled with failure of getting such books of account which were admittedly not maintained audited. Our aforesaid observation is duly fortified by the judgment of the Hon ble High Court of Allahabad in the case of CIT Vs. S.K Gupta Co [ 2009 (9) TMI 231 - ALLAHABAD HIGH COURT] . As the requirement of getting the books of account audited could arise only where the books of account are maintained. It was further observed that if for some reason the assessee had not maintained books of account, then the appropriate provision under which penalty proceedings could be initiated was section 271A of the Act. On the basis of the aforesaid observations, penalty that was imposed by the A.O on the assessee firm was quashed. Penalty imposed by the A.O u/s. 271B of the Act is quashed. Appeal of assessee allowed.
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2023 (9) TMI 596
TP Adjustment - determination of the arm s-length price with respect to royalty paid by the assessee on carcass trade carbon black - HELD THAT:- We are of the view that for benchmarking the royalty transaction the database of royalty source is correctly used by the assessee but the comparables are not shown before us. While adopting the most appropriate method in case of such transaction, the factors such as the nature of the relevant intangibles, difficulty of identifying comparable uncontrolled transaction and intangibles and further difficulty of applying certain transfer pricing methods should be of paramount importance. Assessee has used Royalty sources database that is required to be used or it may use any other royalty database, the assessee should make a search of the comparable royalty agreements with respect to the timing, tenure, geographical location of the parties, relevant terms and conditions of the agreement, justification for increasing it by 2% and consequent increase in the functional liability of the recipient party etc. and submit before the learned transfer pricing officer for examining the arm s-length price. The first onus lies on the assessee to submit that the international transactions of the payment of royalty at the rate of 5% on carcass grade carbon black is arm s-length. Accordingly, we set-aside all the grounds of appeal of the assessee with respect to the benchmarking of international transaction back to the file of the learned assessing officer where the assessee would be benchmarking the transaction by adopting the cup method as held above. The learned AO/TPO may examine the benchmarking and decide the issue afresh. In the result, ground number 1 7 of the appeal for assessment year 2006 07 are allowed with above directions. TP Adjustment - holding that the arm s-length price of the royalty incurred is Rs nil - As for the similar reasons, with respect to the carcass grade carbon black royalty paid at the rate of 5%, we have set-aside the issue back to the file of the learned TPO/AO with direction to the assessee to benchmarked the above transaction by adopting the most appropriate method as CUP for establishing that those transactions are at arm s-length price for AY 2006-07 and 2007-08, with similar direction, for this year also, for Royalty payments for both grades of carbon black, where the learned TPO has challenged also with respect to the absence of any new technology for increase in the royalty rates, we set-aside this issue to the TPO, directing assessee to establish by the contemporaneous documents that the international transaction is at arm s-length of royalty payment. Ld TPO may examine the same and determine the arm s-length price. Accordingly ground number 5, 6 and 7 of the appeal are allowed with above direction. Unutilized cenvat credit against addition u/s 145A - It is the claim of the assessee that this issue is covered in favour of the assessee by the order of the coordinate bench in assessee s own case for assessment year 2001 02, 2002 03 and also confirmed by the honourable Bombay High Court for assessment year 2002-03 [ 2009 (10) TMI 656 - BOMBAY HIGH COURT ] - HELD THAT:- We direct the learned assessing officer to delete the addition made by invoking provisions of section 145A. Allowance of brought forward losses from earlier years - HELD THAT:- After hearing the parties, we set-aside the issue back to the file of the learned assessing officer with a direction to assessee to submit before the learned assessing officer the chart of allowability of carry forward of depreciation and business losses, AO may examine the same and if it is found in accordance with the law, grant same. Accordingly ground number 8 and additional ground of appeal are allowed with above direction. Claim of depreciation on fixed assets viz that the assessee company has reduced from different block of assets - DRP following the decision of the honourable jurisdictional Bombay High Court in case of Sonic Biochem And Extractions Private Limited [ 2015 (12) TMI 112 - BOMBAY HIGH COURT ] allowed the claim of the assessee - HELD THAT:- We find that the learned dispute resolution panel has followed the decision of the honourable Bombay High Court. The learned departmental representative could not show us any reason that why the decision of the honourable Bombay High Court is not applicable in the facts of the case. In view of this, we do not find any infirmity in the direction of the learned dispute resolution panel and dismiss the solitary ground of appeal.
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2023 (9) TMI 595
Validity of order passed u/s . 143(3) r.w.s. 92CA(3) - DRP directions passed u/s . 144C(5) - international transactions entered into by the assessee with its AE - limitation and assumption of jurisdiction by the A.O in passing assessment order giving effect to the order of DRP - DRP rejected the objections of the assessee and uphold the adjustment proposed by TPO u/s . 92CA (5) - whether the assessment order passed u/s . 143(3) r.w.s 92CA(3) is set aside by the Tribunal or it is not set aside? - HELD THAT:- We are of the view that before tribunal there was issue relating to determination of ALP, which was remitted back to the file of DRP and assessee s appeal is partly allowed for statistical purposes, means that the matter is restored back to the file of A.O. Once, the assessment is partly allowed for statistical purposes means the matter is restored back to the file of A.O, who will follow procedure laid down u/s . 144C of the Act. The assessee s appeal before the Tribunal in first round [ 2016 (7) TMI 1682 - ITAT CHENNAI ] the issue was the assessment order passed by A.o u/s . 143(3) rw.s 92CA(3) r.w.s 144C(12) of the Act. Tribunal has set aside the assessment which was before it and the AO failed to understand the order of the Tribunal. We noticed from the observations made by DRP that the Tribunal cannot remit back directly the issue to the DRP and we also agree that before the Tribunal under challenge is the final assessment order passed u/s 143(3) r.w.s.92CA(3) r.w.s. 144C(5) of the Act and tribunal has not set aside the solitary action of the DRP and that also in vacum. Even by going through the findings of tribunal, we noted that the tribunal has not remitted the issue for verification of facts rather it is noted by Tribunal that the order of DRP is a non-speaking order even though, the assessee filed voluminous submissions before the DRP against the draft assessment order. Tribunal also noted that even though DRP accepted that it has to consider every point of dispute and pass a speaking order but contrary to this, the order passed by DRP is cryptic and addresses no issues raised therein and not properly adjudicated. The essence of the order of Tribunal is that it has set aside the assessment and the A.O has to restart the entire assessment process afresh in term of Section 144C of the Act. Hence, as per our understanding of this order of Tribunal and the provisions of the Act, the Tribunal in first round has set aside the assessment proceedings. Validity of the fresh directions issued by the DRP u/s . 144C(5) - As considering directions issued by the DRP u/s . 144C(5) and in consequent to the same, the order passed by A.O giving effect to the order of DRP dated 28.12.2017, the order is passed without understanding the interpretation of Tribunal s order and hence, the same is a curable defect. Accordingly, the matter has to go back to the file of A.O for fresh adjudication denovo. We set aside the DRP directions passed u/s . 144C(5) in pursuant to order of the ITAT and consequently, the order giving effect to the order of DRP passed by the A.O is also set aside and matter remanded to the file of the A.O to re-decide the adjustment to ALP in regard to international transactions entered into by the assessee with its AE. The A.O will adopt the procedure afresh as prescribed u/s . 144C of the Act. Appeal of the assessee is allowed for statistical purposes.
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2023 (9) TMI 594
Penalty u/s. 271(1)(c) - assessee could not explain the investment to the satisfaction of the CIT(A) - CIT(A) concluded that the assessee has sufficient sources of income for the purpose of investment in the properties as undisclosed - as explained by the assessee did not maintain any books of account during the impugned assessment year as there was no business carried on by the assessee. HELD THAT:- Since the addition is made on estimate basis, various judicial pronouncements have held that penalty cannot be levied when the addition is estimated. We therefore find that the levy of penalty based on the addition made by an estimate cannot be a valid ground and hence it should be deleted. Appeal filed by the assessee is allowed.
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2023 (9) TMI 593
Unexplained cash credit u/s 68 - assessee has raised money from two investor one is individual and second is group corporate - HELD THAT:- Decisions in the case of Crystal Networks Pvt. Ltd. [ 2010 (7) TMI 841 - KOLKATA HIGH COURT] wherein it has held that where all the evidences were filed by the assessee proving the identity and creditworthiness of the loan transactions, the fact that summon issued were returned un-served or no body complied with them is of little significance to prove the genuineness of the transactions and identity and creditworthiness of the creditors. Similar ratio as in the case of CIT Vs Orchid Industries (P) Ltd [ 2017 (7) TMI 613 - BOMBAY HIGH COURT] by holding that provisions of section 68 can not be invoked for the reasons that the person has not appeared before the AO where the assessee had produced on records documents to establish genuineness of the party such as PAN, financial and bank statements showing share application money. Assessee has furnished all the evidences proving identity and creditworthiness of the investors and genuineness of the transactions but AO has not commented on these evidences filed by the assessee. Besides the investors have also furnished complete details/evidences before the AO which proved the identity, creditworthiness of investors and genuineness of the transactions - we are inclined to set aside the order of Ld. CIT(A) by allowing the appeal of the assessee.
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2023 (9) TMI 592
Deduction u/s 80P - assessee is a credit cooperative society and claim to have engaged in the providing credit facilities to the members of the society - assessee claimed deduction u/s 80P on the entire income of the assessee including interest income - AO denied this claim u/s 80P for want of any explanation - HELD THAT:- As per the provisions of section 80P the business income of the Co-operative Society is eligible for deduction u/s 80P - In case of credit Cooperative Society engaged in providing credit facilities to its members the interest income from the credit facility provided to the members would be a regular business income of the society eligible for deduction u/s 80P. As per the section 80P(2)(d) the interest received on the deposit with other cooperative society is also eligible for deduction u/s 80P of the Act. If the deposit is made with a Cooperative Bank then the said bank would be considered as a Cooperative Society for the purpose of section 80P(2)(d) so far as the income is eligible for deduction u/s 80P(1) of the Act. AO has made the addition of the entire interest income has shown in profit and loss account without even considering the facts as to how much interest income received by the assessee from its members. The dispute may be regarding eligibility of deduction u/s 80P in respect of the interest income earned from the deposit made in the Schedule Banks or other than members. Therefore, the interest income received from the members against the credit facility provided by the assessee society is eligible for deduction u/s 80P(2)(a)(i). As the interest received from its investment from other cooperative society is also eligible for deduction under section 80P(2)(d) - Since neither the AO nor the CIT(A) has examined the relevant facts regarding the amount of interest received from the members for providing credit facility being a regular business income of the assessee as well as the interest income received from other then members of the assessee society. Therefore we set aside the impugned order of CIT(A) and matter is remanded to the record of the AO for deciding the same afresh - Appeal of assessee is allowed for statistical purposes.
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2023 (9) TMI 591
Revision u/s 263 - sale consideration of immovable property sold within the scope of section 50C - assessee having sold immovable property for total consideration as recorded in the sale deed, less than the value fixed by the stamp duty authorities in terms of section 50C - HELD THAT:- Admittedly, it is not any one s case that value registered in the sale deed at Rs. 80 lakhs against each of the transactions or immovable property is accepted by the Sub-Registrar and registration charges as well as stamp duty charges are paid based on the value determined Sub-Registrar at Rs. 80 lakhs. The assessee has computed stamp duty and paid Rs. 5,60,000/- on the basis of each of the documents. There is no computation of deficit stamp duty and this is accepted by Sub-Registrar. In a situation, the value so adopted or assessed shall for the purpose of section 50C of the Act, to be deemed to be full value of consideration or accruing, as result of such transfer. Here, under this provision there is no scope for ambiguity that once, stamp valuation authority adopts value that has to be taken as final for the purpose of computation of long term capital gain and for taking fair market value as on date of sale as assessed by stamp valuation authority. In the present case before us, the stamp valuation authority has assessed and registered the sale deed for proper consideration at Rs. 80 lakhs each (for four properties) considering value at Rs. 3.20 crores and not Rs. 6.40 crores as alleged by the Revenue. This fact is clear from the evidences placed before us. As in the case of CIT Vs. Smt. Padmavathi [ 2020 (10) TMI 425 - MADRAS HIGH COURT ] has considered this issue and held that guideline value is only an indicator and the same is fixed by the State Government for the purposes of calculating stamp duty for registering conveyance deed and merely because, the guideline was higher than the sale consideration shown in the deed of conveyance, cannot be sole reason for holding that the assessment as erroneous and prejudicial to the interest of revenue. Hence, revision order passed by the PCIT is bad in law. In the present case before us, facts are much better. There is no excess or deficit stamp duty paid by the assessee or higher value is estimated by the stamp valuation authority for registering documents. Hence, we are of the view that revision order passed by the PCIT is bad in law and hence, quashed. Appeal of the assessee is allowed.
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2023 (9) TMI 590
Addition u/s 68, 69, 69A and 69C r.w.s. 115BBE - Proof of receipt of Cash Component against sale of property / loan agreement - DR said amount received under the banking channels was received in the accounts of the assessee leaving the cash component un-accounted for - HELD THAT:- Though there was an attempt to enter into a particular transaction under this document, such a transaction was not taken to its logical conclusion - transaction of loan was abundant and another transaction of advancing the amounts towards sale consideration of the flat was taken up and the amounts paid through the banking channels were adjusted accordingly by making relevant entries in the books. Merely because Shri Uttam Kumar Reddy happens to be a partner of the assessee firm, it cannot readily be concluded that whatever he does even in individual capacity can be attributed to the assessee. Though the stamp paper was purchased on the name of the assessee, when there is no clinching evidence to show that the transaction under loan agreement was taken to its logical conclusion, it cannot be presumed that cash component was received by the assessee. In the event of the loan agreement, reaching its logical conclusion, even then, the assessee cannot be fastened with any liability, because as the document reads as it is, such transaction does not pertain to the assessee at all. It, therefore, appears that because the assessee appropriated Rs. 80 lakhs in its books of accounts, the transaction entered by the Shri Uttam Kumar Reddy is taken to have been continued. As rightly contended by the counsel for the assessee, it does not mean that the loan agreement continued into the purchase of flat. We do not know the basis for the AO to conclude that such cash component under the agreement of loan had become income of Shri Uttam Kumar Reddy during the financial year 2017-18. In such an event it destroys the case of the Revenue that the same amount had become the income of the assessee for the financial year 2016-17. AO does not determine in which year such cash was paid and if so, whether the entire receipt becomes income in that particular year etc. Addition was made not on any concrete finding basing on any corroborative evidence. We find it difficult to sustain the same. Addition is accordingly liable to be deleted. Appeal of assessee is allowed.
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2023 (9) TMI 589
Deduction u/s. 80IB(10) - proportionate deduction - assessee is carrying on slum rehabilitation project - assessee has claimed deduction which includes three flats which was allotted to one single person - HELD THAT:- We observe from the record that on similar facts on record the Coordinate Bench [ 2018 (1) TMI 1646 - ITAT MUMBAI] has considered the similar facts on record and adjudicated that assessee should be given proportionate basis of deduction on the other eligible business. We are inclined to grant relief to the assessee in this assessment year which is being the second year of claim of deduction by the assessee. Accordingly, we direct the AO to allow proportionate claim of the assessee u/s. 80IB(10) of the Act eliminating the three (3) flats allotted to Mr. Dwarkanath Tewari.
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2023 (9) TMI 588
Correct head of income - investing activity done by the assessee - business receipts or Capital Gains - contention of the assessee that the gain that he has received from the investing activity is the capital receipt/gain and shall be chargeable to tax as capital gain only - HELD THAT:- Based on this instruction issued by the CBDT vide its No. 6/2016 [ F.No.225/12/2016-ITA-III dated 29.02.2016 we observed that even the CBDT is instructing their officer that once the stand taken by the assessee shall not be disturbed by the assessing officer and here in this case the assessee has already taken a stand to offer the income under the head capital gain the same cannot be rejected without taking any reason to the assessee and the ld. AO cannot the dispute the income that has already been offered by the assessee under the head capital gain. Based on these observations the ground no. 1 taken by the assessee is allowed. Travel, stay and food expenditure reimbursed, FD maturity receipts and transferred from own other bank account were added as income in assessment order - Whether these receipts should not be included in the income? - HELD THAT:- DR not contended to these averments on facts but at the same time ld. SR. DR submitted that so far these contentions were not raised or submitted before the lower authorities, needs verification on the part of the ld. AO. She further submitted that let these receipt be verified by the ld. AO and if found in accordance with the law AO may grant the relief to the assessee after verification of evidence based on these evidences contending that the receipt is not taxable. The bench noted that the contentions raised by the assessee cannot be brushed aside and he cannot be taxed on the receipt which is the maturity amount of the fixed deposit receipt with the bank and reimbursement of the expenditure received. But since the assessee has not raised this issue before the ld. AO we admit these additional evidences and direct the ld. AO to verify the contentions of the assessee and as agreed by AO will complete the assessment after verifying the required information from the assessee and grant the relief in accordance with the law with in certain time frame. Based on these observations the ground no. 2 raised by the assessee is allowed for statistical purpose.
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2023 (9) TMI 587
Income taxable in India - royalty/fee for technical services (FTS) - India-Germany DTAA - income from supervision services for inspection/optimization/erection/commissioning repair in India to other parties - assessee has submitted before the DRP that there was no permanent establishment (PE) of the company in India - DRP was of the view that the assessee and its subsidiary Gebr Pfeiffer India P. Ltd. were operating in the same segment of industry and stated that it was possible for both the assessee and its associate enterprise to work with same clients - HELD THAT:- As perused the separate supervision contract executed by the assessee company with Emami Cement Ltd. on 09.06.2016 and also separate supervision contracts with Jaypee Cement Corporation on 03.05.2016 wherein the terms and conditions and scope of the work etc, were mentioned. The assessee has also furnished the detail of engineers visited India to carry out contractual objection with copies of the minutes of the meeting etc. We find that DRP/AO has not controverted the genuineness of the different contracts executed by the assessee company with the different clients to whom it had rendered services pertaining to core components for manufacturing of cement. It is also noticed that the DRP/AO has not brought on record any other material to demonstrate that assessee has not acted directly for providing services to the clients in India and it has also not been established that how the assessee used the premises and services of its associate enterprise (subsidiary company namely (GIPL) in India. Therefore, we consider that AO/DRP is not justified in holding that assessee has used the premises of its associate company in India for rendering services to its clients. Assessee appeal allowed.
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2023 (9) TMI 586
Disallowance of NPA Provision - Addition made on account of fresh provision for NPA out of realization of the preceding years' NPA - CIT(A) HELD THAT:- The coordinate Bench [ 2012 (3) TMI 716 - ITAT DELHI] for A.Y. 2006-07 as section 43D was brought in the statute book to override all other provisions of the Act so that in the case of public financial institutions or a scheduled bank or a state financial corporation or a state industrial investment corporation, the income by way of interest in relation to such categories of bad and doubtful debts as may be prescribed by the Reserve Bank of India in relation to such debts, may be taxed in the previous year in which it is credited to profit and loss account or in which it is actually received, whichever is earlier. The said provision is also in accord with the Accounting Standard-9 (Revenue Recognition) issued by the Institute of Chartered Accountants of India. The banks and FIs account for interest on standard assets on accrual basis, while interest on non- performing assets is recorded on realisation. Thus, they follow hybrid system of accounting as per RBI's prudential norms, which is definitely contrary to the provision of section 145 of the Act, which deals with method of accounting for computation of business income and income from other sources. Section 145 permits assessee to follow either cash system or mercantile system of accounting with effect from 1.4.1997. No infirmity in the findings of the CIT(A) appeal filed by the revenue is dismissed.
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Customs
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2023 (9) TMI 585
Maintainability of petition - availability of alternative remedy - imported goods (black pepper) are prohibited goods or not - seeking provisional release of goods - HELD THAT:- The petitioner has an alternate remedy by way of an Appeal before the Appellate Commissioner. However, the Appellate Commissioner as a Statutory Authority, will be guided by Board in Circular No.35/2017-Cus., dated 16.08.2017 bearing reference F.No.394/13/2016-Cus(AS) which leaves no discretion with the Appellate Commissioner. The said circular prima facie is contrary to proviso to Section 151A of the Customs Act, 1962. Therefore, no useful purpose will be served by relegting the petitioner to work out the remedy before the Appellate Commissioner, unless, the Circular is itself put to testing before this Court. Circulars of the Board are not binding on the Courts as held by the Hon'ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, BOLPUR VERSUS M/S RATAN MELTING WIRE INDUSTRIES [ 2008 (10) TMI 5 - SUPREME COURT ]. There is no mandate that the goods shall be absolutely confiscated and vested with the Government. They can be released provisionally under Section 110-A of the Act pending adjudication - the Court is inclined to order a provisional release of the imported consignment of black pepper subject to petitioner furnishing suitable securities in the form of guarantee and subject to the meeting standards prescribed by the Food Safety Authority under the provisions of the Food Safety and Standards Act, 2006. The petitioner shall also pay Customs duty provisionally at Rs. 500/- per kg. The value of Rs. 500/- per kg shall be provisional. The value may be enhanced if the imported consignment of black pepper is actually of higher value. Petition disposed off.
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2023 (9) TMI 584
Loss of reputation / Defamation - Allegation of Smuggling - 30,24,000 sticks of cigarettes - allegation of illegal import/smuggling of foreign cigarettes by concealing the same in the cargo - HELD THAT:- In the instant case, as per the allegations made in the complaint, the petitioner is said to have played deception against the respondents and induced them to process customs clearance formalities, which they would not have done, if they were not induced and as a result, the DRI found in the impugned consignment that cigarettes were being smuggled and due to that, the second respondent was also roped in as an accused, who suffered harm to body, mind and reputation. Thus, the ingredients of the offence of cheating are prima facie made out on a reading of the complaint along with other materials. In the instant case, none of the ingredients under Section 499 of the IPC is satisfied. The loss of reputation of the respondents, by itself, will not constitute an offence of defamation. Such loss of reputation is also one of the ingredients in the offence of cheating. This Criminal Original Petition is partly allowed and the cognizance taken by the Court below for the offence under Section 500 of the IPC is set aside.
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2023 (9) TMI 583
Recovery of Duty Drawback sanctioned earlier - non-speaking order - petitioner did not reply to SCN - HELD THAT:- The petitioner has furnished the details of Bank Realization Certificate, Negative Statements, Consolidated Statement of Bank Realization Certificate duly attested by the Charted Accountant. This aspect has not been considered by the respondent. The respondent has merely passed a non-speaking order as the respondent had no other documents before it, at the time of passing of the impugned order. The case is remitted back to the respondent. The petitioner is directed to furnish a copy of the aforesaid letter dated 22.02.2011 together with all the annexures to the respondent within a period of 30 days from the date of receipt of a copy of this order - impugned order set aside - petition allowed by way of remand.
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2023 (9) TMI 582
Entitlement for interest on refund - department took undue long period of more than 8 years in finalizing the assessment which has caused delay in granting of refund - HELD THAT:- In the present case, the assessment was finalized on 29.12.2021 and in pursuance to the final assessment refund was sanctioned to the appellant vide OIO dated 14.03.2022 which is within the time limit of 3 months from the date of final assessment. The original authorities rejected the request of interest and vide impugned order; the Commissioner has also rejected the appeal seeking grant of interest on delayed refund. Further, the appellant was provisionally assessed under Section 18 of the Customs Act. Reference made to the decision of COMMISSIONER OF CUSTOMS VERSUS INDIAN OIL CORPORATION [ 2012 (1) TMI 31 - DELHI HIGH COURT ] wherein it has been held by the Hon ble Delhi High Court that in the case of provisional and final assessment, the refund is payable in terms of Section 18 of the Customs Act, 1962. The appellant is entitled to interest if the refund is payable after the expiry of 3 months from the date of final assessment as per Section 18 (4) of the Customs Act whereas in the present case the refund was granted within 3 months as prescribed under Section 18 (4) of the Act. Therefore the appellant is not entitled to any interest in view of the statutory provisions - there are no infirmity in the impugned order - appeal of appellant dismissed.
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2023 (9) TMI 581
Refund of 4% Additional Duty of Customs denied - rejection on the ground that the declaration required under para 2(b) of the Notification No.102/2007-Cus. is not endorsed on the invoices - HELD THAT:- On perusal of the Order-in-Original it is seen that the appellant has furnished all the necessary documents and the only reason for rejection of refund is that para 2(b) of the notification has not been complied. The very same issue was considered by the Larger Bench of the Tribunal in the case of CHOWGULE COMPANY PVT LTD VERSUS COMMISSIONER OF CUSTOMS CENTRAL EXCISE [ 2014 (8) TMI 214 - CESTAT MUMBAI (LB)] where it was held that A trader-importer, who paid SAD on the imported .good and who discharged VAT/ST liability on subsequent sale, and who issued commercial invoices without indicating any details of the duty paid, would be entitled to the benefit of exemption under Notification 102/2007-Cus., notwithstanding the fact that he made no endorsement that credit of duty is not admissible on the commercial invoices, subject to the satisfaction of the other conditions stipulated therein - The decision was followed by the Tribunal in the case of NAGARJUNA FERTILIZERS CHEMICALS LTD. VERSUS CC (IMPORTS) CHENNAI [ 2017 (12) TMI 1606 - CESTAT CHENNAI] . Thus, the appellant being a trader, the decision rendered by the larger Bench in the case of Chowgule Company Pvt. Ltd. will squarely apply - After appreciating the facts, evidence and following the above decision, it is opined that the rejection of refund claim is unjustified - the impugned order rejecting the refund is set aside - appeal allowed.
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2023 (9) TMI 580
Valuation of goods (spare parts) imported by the appellant from their related company - Rejection of transaction value - related party transaction or not - Rejection of deduction of employee cost, rent, repairs and maintenance and office and miscellaneous expenses claimed by the appellant while computing the deductive value - loading the declared value of spares @62.5% under Rule of the CVR, 2007 - Rule 7 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 (CVR, 2007) - HELD THAT:- Valuation of the goods are to be done in terms of Rule 7 of CVR, 2007. The worksheet showing the deductive value of the impugned spare parts as prepared by the appellant has been accepted as correct and only the heads for which deduction has to be allowed from the unit sale price before arriving at the transaction value is disputed. The heads of expenses disputed are employee cost, rent, repairs and maintenance and office miscellaneous expenses are deductible as per Rule 7 of CVR, 2007. The reason that the said heads are found to be not eligible for deduction in the impugned order is that these are post importation expenses which are internal expenses of the importer and hence cannot be deducted while arriving at the transaction value using the deductive method. Since the disputed expenses viz employee cost, rent, repairs and maintenance and office miscellaneous expenses are part of general expenses relating to the direct and indirect cost of marketing the goods in question the appeal must succeed. The department is found not to have substantiated their case - It is found from 2001 to 2013 the Department accepted the transaction value of the imports as declared by the appellant. It was only in 2013 that for the first time the Department took a view that the declared value needed to be enhanced. Since the Department were dealing with legal issues which involved costing of the goods among other issues, it may have helped to have done a cost audit so that the matter could have been examined with reference to the Cost Accounting Standards applicable to the case. Thus, the impugned order has failed to legally substantiate and sustain the rejection on deduction of expenses incurred towards employee cost, rent, repair maintenance and office expenses and miscellaneous expenses from the unit sale price, by holding them as post importation expenses - impugned order set aside - appeal allowed.
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2023 (9) TMI 579
Attempt to export unfinished leather in the guise of finished leather - Prohibited goods or not - goods were already provisionally released and re-exported after reprocessing - Confiscation - redemption fine - penalty - HELD THAT:- It has to be noted that the goods were provisionally released, reprocessed and exported. Thus the goods are not available for confiscation at the time of passing the order by the adjudicating authority. In a similar situation, when the goods were exported after re-processing, in the case of VIJAYALAKSHMI LEATHERS VERSUS COMMISSIONER OF CUSTOMS, CHENNAI [ 2000 (1) TMI 90 - CEGAT, CHENNAI ] it was held that the imposition of redemption fine and penalties are required to be set aside. The facts of the said case revealed that the samples drawn and tested by CLRI, Chennai showed certain deficiencies and defects in the nature of a) absence of dyeing b) colour not distinctly different from that of crust c) thickness more than 1mm d) absence of protective coat e) absence snuffing / shaving on the grain. In the case of COMMISSIONER OF CUS. (AIR PORT) , CHENNAI VERSUS AVANTHI LEATHERS LTD. [ 2009 (7) TMI 1130 - CESTAT CHENNAI ], the issue was similar whether the department held the goods to be unfinished leather for the reason of absence of protective coating. The goods were provisionally released. The exporter reprocessed the goods and exported the same. It was held that the confiscation and imposition of penalties are not warranted. After taking note of the fact that the goods have been provisionally released, re-processed and exported, it is opined that the confiscation of the goods is not warranted and justified. Accordingly, the redemption fine imposed is also to be set aside. The department has not been able to show any mens rea on the part of the appellant. Appellants herein have taken release of the goods reprocessed the same and exported. The appellants have already incurred considerable financial loss on taking back the goods reprocessing and exporting goods - noting these facts the penalty also set aside. The impugned order is set aside. The appeals are allowed.
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2023 (9) TMI 578
Calculation of duty at the time of finalization of final assessment - to be paid on the basis of invoice value and the quantity indicated on the bills of lading or the quantity received by the importer/ appellants in their warehouse/ shore tanks? - HELD THAT:- The matter has been decided by the Hon ble Apex Court in the case of MANGALORE REFINERY AND PETROCHEMICALS LTD. VERSUS COMMISSIONER OF CUSTOMS, MANGALORE [ 2015 (9) TMI 245 - SUPREME COURT] wherein the Hon ble Supreme Court had held that the quantity of crude oil actually received into a shore tank in a port in India should be the basis for payment of customs duty. In view of the above decision of the Hon ble Apex Court, it is held that actual oil quantity physically received into the shore tank should be taken as the basis for payment of duty at the time of ex-bond bills of entry. The impugned order-in-appeal is set aside - appeal allowed.
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2023 (9) TMI 577
Rejection of request for extension of timelines for re-export (of re-imported goods), made by the appellant-assesse - HELD THAT:- The learned Commissioner (Appeals) has inter alia recorded in his order as under:- 12. I find that as per Notification No. 60/2018-Cus, dated 11.09.2018 which is amendment to Notification No. 158/95-Cus, dated 14.11.1995; the time limit of re-export of re-imported goods is extended to one year. It is also observed that the amended notification has not been taken into consideration by the authority while taking decision/ passing order in the subject matter. This is a live consignment pending with the Department and there are no justiciable reasons recorded on merits in the matter - As there is no appropriate order passed by the Department on merits, the matter remanded to the Jurisdictional Commissioner of Customs concerned with a direction that the case of the appellantassessee exporter be disposed off within 10 days from the date of receipt of the Order. Appeal allowed by way of remand.
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2023 (9) TMI 576
Project Import - demand of differential duty - levy of penalty - undervalued goods - goods procured at a higher price than that shown in the invoice - rejection of transaction value - enhancement of value - delay in passing the assessment - HELD THAT:- On perusal of Project import Contract it is seen that the amount fixed by the parties to the contract (M/s.PPN and M/s.Marubeni) is for the entire contract which includes goods which have ben sourced from vendors other than M/s.Stone Webstar. The appellant has to pay in total the contract value. It is this value that has been split into various segments. M/s.PPN has to pay only this contract value and need not pay any amount higher even if M/s.Marubeni has procured some goods at a higher price. There is no allegation that there is some hidden payments made by M/s.PPN to M/s.Marubeni. The documents of payment show that appellant has paid only the amount as per contract. The ground put forward by the department to reject the transaction value declared for some items cannot be accepted when the amount fixed is for the entire project import. In the case of AGARWAL INDUSTRIES VERSUS COMMISSIONER OF CUSTOMS, VIZAG [ 2005 (8) TMI 225 - CESTAT, BANGALORE] the Tribunal held that the transaction value arrived at purely on commercial considerations based on contracts, transaction value not to be rejected unless established with reason. Delay in passing the assessment - HELD THAT:- There is considerable delay of more than 13 years after the date of report of DRI (8/2006) till the order of finalization (27.09.2019). The department has not been able to explain this delay. The higher forums have held that in such situations, in unreasonable delay in adjudication / finalization of assessment the show cause notice itself is liable to be quashed. The finalization has happened after 15 years of provisional assessment which is extremely inordinate delay, and also against the instructions issued by CBIC as to finalization of Project Import Assessments The department has not been able to put forward cogent evidence to reject the transaction value - thus it is found that the demand of differential duty the order for confiscation of goods, imposition of Redemption Fine and penalties imposed on M/s. PPN cannot sustain and requires to be set aside. The impugned orders are set aside - Appeals are allowed.
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Securities / SEBI
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2023 (9) TMI 575
Violation of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 - Related party transactions without taking prior approval of the Audit Committee and Board as required under the LODR Regulations - two Independent Directors continued to remain as Independent Directors inspite of appointment of their relatives in the Company/ overseas subsidiary which was also violative of the LODR Regulations - penalty of Rs. 25 lakhs under Section 23E of the SCRA against the Company and Rs. 10 lakh each on the two Independent Directors and Rs. 4 lakhs on the Company Secretary - HELD THAT:- Company and the Company Secretary failed to disclose this event under Regulation 30 of the LODR Regulations. Under Regulation 6, the Compliance Officer is responsible for ensuring conformity with the regulatory provisions applicable to a listed company and, therefore, the Company Secretary failed to discharge his duties. We find that the appellants had committed violations of various provisions of the LODR Regulations. The said violations are however not that serious warranting imposition of high penalties. In the instant case, the Company has been penalized under Section 23E of the SCRA. In Suzlon Energy Ltd. Anr. vs. SEBI [ 2020 (2) TMI 1704 - ITAT MUMBAI] this Tribunal has held that Section 23E of the SCRA is not the charging provision for imposition of penalty for violation of the Listing Agreement and that the correct provision is Section 23A(a) of the SCRA. We find that penalty under Section 23A is from a minimum of Rs. 1 lakh to a maximum of Rs. 1 crore and under Section 23E of the SCRA a penalty is up to a maximum of Rs. 25 crores. Thus imposition of penalty amounting to Rs. 25 lakhs is excessive and arbitrary in the facts and circumstances of the given case. This Tribunal by an interim order dated 22.11.2022 had directed the said Company to deposit a sum of Rs. 10 lakhs which they have done. Considering the aforesaid, we are of the opinion, that for the violation committed by the Company noticee no. 1 the penalty of Rs. 25 lakhs is reduced to 10 lakhs. Two independent directors are concerned i.e. noticees no. 2 and 3 the imposition of penalty of Rs. 10 lakhs each in the given circumstances is high and excessive. We find that the relatives of the independent directors were not appointed in the Company but in an overseas subsidiary Company. Company re-designated the independent directors as non-independent directors though at a belated stage. Considering the aforesaid, in the given circumstances the penalty is reduced to Rs. 5 lakhs each. For the Company Secretary a penalty of Rs. 4 lakhs has been imposed for violation of Regulation 6(2)(a) i.e. for not disclosing the appointment of the forensic auditor. As the Company and its directors have been penalized the imposition of penalty against the Company Secretary should be the minimum penalty. We, consequently reduce the penalty of Rs. 4 lakhs to Rs. 1 lakh.
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2023 (9) TMI 574
Fraudulent issuance of GDRs by the Company - Company had misled the investors in believing that the GDR issue was successful whereas there was only one subscriber - penalty of Rs. 1 crore for violation of Section 12A of SEBI on ex-managing director of the company as filled this appeal - HELD THAT:- We find that the proceeds of the GDR issue were received by the Company belatedly and was utilized for the purpose for which the GDR was issued. There is no diversion of funds and no wrongful dealings in securities other than the fact that amount was received belatedly. The AO has himself given a finding that no disproportionate gain is attributed to the appellants nor any finding that any loss was caused to the shareholders or investors. Whether the penalty imposed by the AO was harsh and excessive? - As the appellant had resigned on January 14, 2008. The money raised through GDRs has been received by the Company and has not been misappropriated. The same has been utilitised for the purpose for which the GDR was issued which fact has not been disputed. Thus, it is not a case of defalcation of the funds. Thus, the imposition of penalty upon the appellant after 12 years from date of resigning is excessive. In a large number of cases we have reduced the penalty to Rs. 10 lakh. While affirming the order of the AO for the violations committed by the Company we reduce the penalty from Rs. 1 crore to Rs. 10 lacs. The appeal is partly allowed. In the circumstances of the case, parties shall bear their own costs.
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Insolvency & Bankruptcy
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2023 (9) TMI 573
Liquidation order - it is alleged that Resolution Professional have not considered all the requisites of the IBC - HELD THAT:- The present is a case where before expiry of CIRP period or the maximum period permitted for completion of the CIRP, no Resolution Plan was received. The CoC has passed a resolution to liquidate the Corporate Debtor by vote share of 100%. The statutory scheme indicates that in the eventualities mentioned in Section 33(1) (2) initiation of liquidation proceedings can be made by the Adjudicating Authority. In the present case, extension granted by the Adjudicating Authority of 90 days by order dated 31.07.2020 was also coming to an end on 28.09.2020 on which date CoC in 11th meeting decided to liquidate the Corporate Debtor. The decision of the CoC in 11th meeting of the CoC to liquidate the Corporate Debtor was taken with 100% vote share - It is noted that timeline for CIRP even after extension of 90 days was coming to an end on 28.09.2020 - When CIRP period was coming to an end on 28.09.2020, CoC, there being no Resolution Plan in the CIRP, had rightly passed a resolution to liquidate the Corporate Debtor with 100% vote share. The submission of the Appellant that Resolution Professional did not complete the various process including obtaining the Audit Report cannot be accepted. The period of CIRP having coming to an end, CoC has no option but to take a decision of the liquidation of the Corporate Debtor. In the facts of the present case, there are no error in the decision of the Adjudicating Authority allowing the liquidation application - appeal dismissed.
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Service Tax
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2023 (9) TMI 572
Levy of equal penalty u/s 78 of FA - delay in payment of service tax - delay in filing of returns - intent to evade service tax or not - suppression of facts or not - scope of SCN - HELD THAT:- The Notice was issued to the Appellant for a demand of Rs. amount of Rs.96,80,867/-,whereas the adjudicating authority has gone beyond the Notice and confirmed an amount of Rs.1,08,13,836/- - it is observed that even if an excess amount of service tax was admitted by the Appellant, the right course of action would be to issue a Corrigendum to the demand and include the excess amount to the Notice before confirmation. Thus, the confirmation of duty in excess of the demand made in the notice is not sustainable. Accordingly, the confirmation of Service Tax of Rs.96,80,867/- as demanded in the Notice is upheld. Equal Penalty - HELD THAT:- The delay in payment was only due to financial crisis. In the show cause notice also there was no allegation of suppression of fact with intention to evade payment of service tax. Further, they stated that as they have paid the entire amount of service tax confirmed along with interest, they could have availed the SVLDRS Scheme, but could not do so due to illness and demise of one of the working partners. Accordingly, they requested for waiver of penalty under Section 80 of the Finance Act, 1994 - Notice only says that 'had the scrutiny of records not been conducted by the Audit, the nonpayment of service tax could have gone undetected'. There is no other evidence brought on record to allege suppression of fact on the part of the Appellant with an intention to evade payment of tax. Further, if the Appellant has any intention to evade payment of tax, they could not have declared more tax liability than what was demanded in the Notice, on their own volition - there is suppression of fact with an intention to evade payment of tax has been not established in this case. Accordingly, it is deemed a fit case to invoke the provisions of Section 80 of the Finance Act, 1994 and waive the penalty. The demand of service tax of Rs.96,80,867/- along with interest as demanded in the Notice upheld - Penalty imposed under Section 78 of the Finance Act, 1994 is set aside by invoking the provisions of Section 80 of the Finance Act, 1994 - appeal disposed off.
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2023 (9) TMI 571
Utilization of excess paid service tax for adjustment during the succeeding month - Rule 6(4A) of Service Tax Rules, 1994 - HELD THAT:- The said sub-rule (4A) provides for adjustment of excess paid service tax during the succeeding month or quarter - the said subrule does not require the said adjustment to be made during the immediately succeeding month and, therefore, there are no violation of the said sub-rule by the appellant in adjusting the amount excess paid for the month of September 2012 during the month of December 2012 - it is also noted that the conditions stipulated in sub-rule (4B) of Rule 6 of Service Tax Rules, 1994 though invoked by Revenue, the same are unsubstantiated in the said show cause notice. Therefore, Revenue has failed to establish that the appellant has violated any conditions specified in the said sub-rule (4B) of Rule 6 of Service Tax Rules, 1994 - the appellant was eligible for utilization of excess paid service tax of Rs.60,17,195/- during the month of December 2012, the impugned order is liable to be set aside. Appeal allowed.
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2023 (9) TMI 570
Rebate claim rejected - no correlation between the exported services and Foreign Inward Remittance Certificate (FIRC) - documentary evidence to show that the services were rendered outside India was not furnished with documentary evidence - HELD THAT:- There are only two conditions stipulated in the said Notification No. 11/2005-ST dated 19.04.2005. The said conditions are that the taxable service is required to be exported and payment of the export should be received in India in convertible foreign exchange and that the service tax and cess has to be paid on taxable services exported to be eligible to claim rebate of the said paid taxes. While dealing with the rebate claim under the said notification, there is no scope for raising any other issues than the issue related to the said two conditions and if the said two conditions are satisfied, then the rebate claim needs to be sanctioned - thus the other issues raised and deliberated in the impugned order such as admissibility of Cenvat credit or delay in amendment of registration etc. have no bearing on admissibility of rebate in the present proceedings. Whether the above two conditions are satisfied by the appellant? - HELD THAT:- It is found through the proceedings that there is no dispute on the fact that the appellant had paid service tax in respect of which the appellant had applied for claim of rebate. Therefore, now the only condition that needs to be satisfied is whether the appellant had received convertible foreign exchange in respect of the claims made by them. We understand that unless convertible foreign exchange has been received, the rebate in respect of such invoice cannot be granted to the appellant. During the hearing, appellant had produced FIRC wise list of invoices establishing that against a particular FIRC, various invoices were covered through which service tax was paid. However, this compilation was not submitted to the original authority - it is deemed fit to remand the matter to the original authority with a direction not to raise any other issue and examine receipt of convertible foreign exchange against individual invoices or set of invoices covered by the rebate claim and if such foreign exchange is received, then to that extent to allow the rebate. Appeal allowed by way of remand.
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2023 (9) TMI 569
Liability of appellant to pay service tax on agency commission received on behalf of RBI - Denial of CENVAT Credit - telephone in residence of employees - medical insurance - Corporate club Membership. Liability of appellant to pay service tax on agency commission received on behalf of RBI - HELD THAT:- The said issue has been settled by the Hon ble Apex Court in the case of CST-BANGALORE VERSUS CANARA BANK [ 2023 (5) TMI 137 - SC ORDER] , wherein the Hon ble Apex Court has held that the commission received by the scheduled bank on behalf of the RBI, is not taxable service - thus, the demand of service tax on the agency commission received on behalf of the RBI by the appellant, the appellant is not liable to pay service tax. Denial of cenvat credit on telephone in residence of employees - HELD THAT:- In this case, it is a fact that the telephone has been installed to the residence of employees for use of their business purposes in order to stay connected 24 X 7 with the employees of the Bank. In that circumstances, reliance on the decision of this Tribunal in the case of JSW ISPAT STEEL LTD VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2014 (2) TMI 776 - CESTAT MUMBAI] , wherein this Tribunal has held Undisputedly, in this case, the telephone service and air travel services have been availed by the appellants in the course of business activity as a manufacturer of excisable goods. Therefore, the issue is no more res integra - thus, cenvat credit allowed to the appellant on telephone service in question. Denial of cenvat credit on medical insurance - HELD THAT:- It is required to provide medical insurance service in terms of Indian Bank Association for all employees and it is a part and parcel of employee cost for the Bank and these employees are working strength of the Bank for providing output services. In that circumstances, by relying the decision of the Larger Bench of this Tribunal in the case of M/S. RELIANCE INDUSTRIES LTD., VADODRA VERSUS COMMISSIONER CENTRAL EXCISE SERVICE TAX (LTU) , MUMBAI [ 2022 (4) TMI 1357 - CESTAT MUMBAI (LB)] , it is held that the appellant is entitled to take the cenvat credit on medical insurance premium made by the appellant in their employees. Denial of cenvat credit on Corporate club Membership - HELD THAT:- It is a fact that the Membership has been taken by the appellant as corporate membership themselves and the same is for the purposes of business meetings with top industrialist and their clients for promotion of their business . In that circumstances, relying on the decision of this Tribunal in the case of M/S EMCO LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE-MUMBAI-III [ 2023 (5) TMI 379 - CESTAT MUMBAI] , wherein this Tribunal has held that the corporate membership of the club was utilized for business meetings and sales promotion - thus the appellant is entitled for cenvat credit on corporate club membership. Appeal allowed.
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2023 (9) TMI 568
Classification of services - site formation and clearance, excavation and earth moving and demolition service or not - Hiring of HEMM, Tippers, Drills, Dozers for removal of all types of over burden materials in all kinds of strata - levy of penalty - HELD THAT:- The service of site formation and clearance, excavation and earth moving and demolition was brought under the service tax net by the Finance Act, 2005 with effect from June 16, 2005 by inserting section 65(97a) and section 65(105)(zzza) in the Act. Subsection (97a)(i) of section 65 of the Act defines site formation and clearance, excavation and earthmoving and demolition to include drilling, boring and core extraction services for construction, geophysical, geological or similar purposes. The works undertaken by the Appellant as mentioned in Para 2 supra, clearly covered under the activities as defined in the above said definition of 'Site Formation' service - The works undertaken by the Appellant as per the work order mentioned in Para 2 supra, has been rightly classified as 'Site formation Service' as defined under Section 65(97a) of the Finance Act, 1994 and liable to service tax w.e.f.16.06.2005. Accordingly, the demand of service tax along with interest as confirmed in the impugned order is upheld. Levy of penalty - HELD THAT:- It is now well settled that penalty cannot be imposed simultaneously under section 76 and section 78 of the Finance Act, 1996. Accordingly, the penalty imposed under Section 76 of the Finance Act, 1994 is set aside. Regarding the penalty imposed under Section 78 of the Finance Act, 1994, the Appellant stated that the issue is one of law. They were legally advised that the services rendered by them did not fall under the category site formation and clearance, excavation and earthmoving and demolition service and had proceeded on that basis. There was no intent or motive to evade payment of service tax - The issue involved is of interpretation in nature. No evidence has been brought on record to substantiate the allegation of intention to evade the tax. Considering the facts and circumstances of the instant case, the penalty under Section 78 cannot be imposed in this case. The demand of service tax along with interest under 'Site Formation Service' as confirmed in the impugned order is upheld. The penalties imposed under Sections 76 and 78 are set aside - appeal allowed in part.
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Central Excise
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2023 (9) TMI 567
Classification of goods manufactured - Sensur Rubefacient and Herbyl Skin Ointment - ayurvedic medicament classifiable under 3003.30 or P P medicament (other than medicament) classifiable under 3003.39 to the first schedule to the Central Excise Tariff 1985? - appellant have used some ingredients such as Boric acid, Lanoline Anhydrous, White Soft Paraffin, Essence of Jasmine, Salicyclic Acid, and Bees wax which are not the Ayurvedic ingredients - HELD THAT:- In the present case some of the ingredients such as Boric acid, Lanoline Anhydrous, White Soft Paraffin, Essence of Jasmine, Salicyclic Acid, and Bees wax have been used were claimed by the department as other than ayurvedic ingredients. The claim of the appellant is that firstly these are not active ingredients, whereas the same are in the nature of preservatives, excipients, binding agent, career or vehicle or filler etc., therefore, even though these product are other than ayurvedic ingredients, if the active ingredient are ayurvedic still the medicament is classifiable as ayurvedic medicament. All the said ingredients whether are active ingredient or otherwise has not been examined properly. Moreover, the appellant s claim that even these ingredients are also find place in Ayurvedic, this fact is also not examined properly by the adjudicating authority. Since the entire case of the department is based on the contention that some of the ingredients which as per the appellant are non-active ingredient are other than Ayurvedic, the details of ingredients whether they are active or non-active and whether they are also covered under Ayurvedic authoritative books is very important to examine. Matter remanded to the adjudicating authority for passing a fresh order.
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2023 (9) TMI 566
Refund of unutilized CENVAT Credit - rejection on the ground that the input services against which the Respondent has filed the refund claim cannot be considered as input services for the output services rendered by them, as the said input services were not directly or indirectly related to the output services - Rule 5 of the Cenvat Credit Rules, 2004 - HELD THAT:- The Commissioner (Appeals) has examined the definition of 'input services' and given a very categorical finding regarding admissibility of the credit of 'input services' used in providing the output services by the Respondent - it is found that the Respondent has availed Cenvat credit on the input services used by them in providing the output services. The Department has not raised any objection at the time of availing and utilizing the credit - when no objection was raised at the time of availing and utilizing the credit, the objection regarding the eligibility of credit cannot be raised at the time of filing of the refund claim, to deny the refund claim. Prior to 1.4.2011 the 'input service' definition in Rule 2(l) of the Cenvat Credit Rules, 2004 was very wide as it was an inclusive definition and covered the expression activities relating to business . This covers all such 'input services' used by the Respondent in providing their output services. Accordingly, we hold that there is no infirmity in the impugned order passed by the Commissioner (Appeals) allowing the refund. The impugned order has rightly allowed the appeal filed by the Respondent - Appeal filed by appellant is rejected.
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2023 (9) TMI 565
CENVAT Credit - various items of MS steel etc., utilized in fabrication of capital goods like pollution control equipment, heating furnace, casting machine, coating machine, chimney, rolling machine, reheating machine, control panel, etc. - period December, 2005 to March, 2010 - extended period of limitation - HELD THAT:- With the introduction of Cenvat credit rules 2004, capital goods as defined in rule 2(a)(A) of CCR includes items like pollution-control equipment, storage tank which are practically immovable. Thus, the concept of movable or immovable for allowing credit have been done away with. We further find Rule 2(K) of CCR entitles a manufacturer to take credit of all items/goods received in the factory of production whether forming part of the finished product or not. Even inputs received for fabrication of capital goods are also entitled for Cenvat credit. Only condition is that such fabricated capital goods should have been used in the production of dutiable finished goods. There is no such dispute raised in the SCN that the capital goods fabricated by the Appellant out of the inputs have not been used for manufacture of dutiable finished goods. Further, the Appellant have maintained proper records in the nature of purchase vouchers for the inputs, receipt of inputs in the factory of production and the utilisation of the same in fabrication/manufacture of capital goods. Such utilisation is also supported by the certificate of the Chartered Engineer which have not been found to be untrue - further there is no allegation in the SCN that the Appellant have clandestinely removed any of the inputs received. So far as beams/joints, etc., which have been used in the preparation of stand, etc., to support Plant and machinery or as structure for support of capital goods, the same is held allowable by Hon ble Madras High Court in the case of M/S. INDIA CEMENTS LTD. VERSUS THE CUSTOM, EXCISE AND SERVICE TAX THE COMMISSIONER OF CENTRAL EXCISE, [ 2015 (3) TMI 661 - MADRAS HIGH COURT] . Extended period of limitation - HELD THAT:- There is no case of any concealment, mis-statement or fraud on the part of the Appellant/assessee - it is further found that as regards the capital goods fabricated out of the inputs, there is no allegation that such capital goods have been sourced from any other manufacturer by the Appellant/ assessee - the extended period of limitation is not invokable. Appeal allowed.
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2023 (9) TMI 564
SSI Exemption - removals were effected before granting Registration Certificate on 04.12.2006 - all the three consignments of finished goods were manufactured out of inputs on which no Cenvat Credit was taken - HELD THAT:- Appellant were availing the benefit of Notification 8/2003 dated 01.03.3003 and clearing the goods without payment of duty, as the value of clearance of goods manufactured by them in the Financial Year 2006-07was below the threshold limit of Rs 1.5 Crores. They took registration on 30.11.2006, but the Registration Certificate was received by them only on 04.12.2006. In the meantime, they started availing the credit. The present issue pertains the duty liability on 3 invoices dated 30.11.2006, 01.12.06 and 03.12.06. The Appellant cleared the goods under these three invoices without payment of duty as they were still availing the benefit of Notification 8/2003 dated 0103.2003. The Appellant was eligible for exemption of Notification 8/2003 dated 01.03.2203 as their value of clearances in the Financial year 2006-07 was much below the threshold limit of Rs 1.5 Crores. The Appellant claimed that they have taken Registration on 30.11.2006, but the Registration Certificate was received only on 04.12.2006. In the impugned order, central excise duty has been demanded on the two invoices dated 01.12.06 03.12.06, on the ground that they have started taking Cenvat credit w.e.f 01.12.2006 - It is observed that credit on stock of inputs lying in the factory as on the date of registration was admissible as per Para 5 of the Instruction contained in Ministry s F. No. 345/2/2000-TRU dated 29.08.2000. Thus, duty cannot be demanded on the goods cleared vide invoices dated 01.12.06 03.12.06 only on the ground that they have availed Cenvat credit before that clearances. The demand confirmed in the impugned order is not sustainable. Since, demand of duty is not sustainable, the question of demanding interest and imposing penalty does not arise - the impugned order set aside - appeal allowed.
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2023 (9) TMI 563
Clandestine Removal - payment of royalty to M/s KIL over and above what they have declared to the Department - shortage of 72 MT of MS Bars. The appellant has paid royalty to M/s KIL over and above what they have declared to the Department - HELD THAT:- Similar case came up before this Tribunal in the case of M/S GIRIRAJ IROSTEEL COMPANY PVT. LTD., SHRI SUNIL KUMAR AGARWAL, SHRI PURUSHOTTAM RATHI VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2019 (12) TMI 542 - CESTAT ALLAHABAD] , wherein the facts of the case held that Since Central Excise duty is on manufacture and manufacture is not established, therefore, there is no basis for demand of Central Excise duty to the tune of ₹ 5,58,89,762/- - As in this case, the demand of duty is sought to be confirmed against the appellants on the basis of documents recovered from M/s KIL wherein it has been shown that they have received royalty over and above as declared by the appellants to the Department. Admittedly, no efforts were made by the Revenue regarding production and sale of the goods, realization of sale proceeds, identification of customers and what is the production capacity of the appellants. In the absence of of those evidences, merely alleging that franchisee has received over and above as declared by the appellants, the charge of clandestine removal is not sustainable as held by this Tribunal in the case of Giriraj Irosteel Company Private Limited. The demand alleging clandestine removal on the basis of payment of royalty recorded in the books of M/s KIL, is not sustainable. Certain shortage of 72 MT of MS Bars was found on 01.04.2013 at the time of visit - HELD THAT:- The shortage found during the course of stock taking on 01.04.2013, we find that more than 32000 bundles were lying in stock and on the basis of one bundle of each size, it is taken the basis for weightment, but it is not coming out from the facts that how more than 32000 bundles were counted? These are only an eye estimation as no counting has been placed on record by the Revenue to allege the shortage of 72 MT in stock of more than 1700 MT. Therefore, as held by this Tribunal in the case of M/S SADA SHIV STEEL MILLS, M/S SADA SHIV CASTINGS LTD., M/S SADA SHIV ISPAT LTD, SHRI SUNNY GARG, SHRI KEWAL GARG, M/S RAGHAV ENTERPRISES (PROP. SURESH AGARWAL) VERSUS CCE, CHANDIGARH-I [ 2016 (10) TMI 951 - CESTAT CHANDIGARH] , wherein this Tribunal has observed Admittedly, no corroborative evidence has been produced by the Revenue in support of their claim, therefore, we hold that demand of duty on shortage of raw material/finished goods against M/s. SSCL is not sustainable. The said order was affirmed by the Hon ble High Court of Punjab Haryana in COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, CHANDIGARH-II VERSUS KEWAL GARG [ 2019 (2) TMI 1624 - PUNJAB HARYANA HIGH COURT] , wherein it has been held that on the basis of average, there is no shortage of stock found during the course of search. We hold that the Revenue has failed to establish the shortage of 72 MT on what method of weighment was adopted except weighing one bundle of each size and without recording how more than 320000 bundles were counted. Therefore, without counting the stock and on the basis of average of one bundle each size, such is a huge quantity, cannot be held any shortage. Thus, the benefit of doubt goes in favour of the appellants. Accordingly, on the basis of method adopted of shortage on 01.04.2013 of MS Bars, the allegation of shortage is not sustainable - the demand raised on account of shortage of goods is not sustainable. The whole of the demand confirmed against the appellants are set aside - As the demand of duty is not sustainable, therefore, no penalties are imposable on the appellants - Appeal allowed.
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2023 (9) TMI 562
Clandestine removal - chewing tobacco - packing machines were installed in the unregistered premised and as on 02.08.2010 two out of the four packing machines found there in running condition - validity of panchnama proceedings - Appellant contended that the Panchnama has not been drawn properly, since the Panchas were not the independent witnesses - procedure as mandated under Section 9D of the Central Excise Act, 1944, has been followed or not - evidences available on record indicate that four packing machines installed in the unregistered premises were in working condition - applicability of Rule 18(2) of the CTPM Rules. Whether the procedure as mandated under Section 9D of the Central Excise Act, 1944, has been followed in this case? If not followed, whether the statements recorded in this case can be relied upon to confirm the demands? - HELD THAT:- The Panchas only witness the search proceedings carried out by the officers. They don't write the Panchnama as alleged by the counsel of the appellant. When the officers go for a search based on some specific intelligence, they may not get panch witnesses in the early hours. So, to save time and for ensuring smooth conduct of the search proceedings, sometimes the officers take panch witnesses along with them. There is no violation of the provisions of section 100(4) of the Cr.PC in this. The Appellant has not questioned the credentials of the panch witnesses. Just because they have been taken from a distant place, the panchnama proceedings will not be vitiated. Hence, the objection raised by the Appellant in this regard is rejected. The case of the Revenue is mainly based on the statements recorded from Shri Ajay Kumar, Sri Bishnu Charan Ghadei and Shri Ratikanta Ghadei and Shri Jhasaketan Bhoi, on 02.08.2010 and subsequently. However, it is observed that all the above persons have retracted their statement by sworn affidavits on 04.08.2010, which were submitted to the department on 01.08.2011. The adjudicating authority has rejected these sworn Affidavits on the ground they were filed as an afterthought. The Appellant stated that the workers did not know English and their request for recording of the statement in Odiya was not considered by the investigation officers. They were not knowing the contents and compelled to sign the statements - the procedure set out in Section 9D has not been followed by the adjudicating authority. Their request for cross examination of the panchas and others whose statements were relied upon in the impugned order must have been considered by the adjudicating authority. The adjudicating authority has not given any proper reason for rejecting their request for cross examination. Cross examination is all the more required when the statements stand retracted. A a perusal of Section 9D of the Central Excise Act, 1944 clearly establishes that unless a person who has made the statement is examined as a witness before the Adjudicating Authority, no reliance can be placed on any statement recorded under section 14 of the Central Excise Act. Any statement recorded under Section 14 of the Central Excise Act could be admitted in evidence only after the process of examination and cross examination is completed under Section 9D. For undertaking this exercise, it is not necessary that a person should have retracted from his statement. If the argument of the Adjudicating Authority is accepted, then the provisions of Section 9D would become otiose. This cannot be the intention of the legislature. The Tribunal in the case of M/S AMBICA ORGANICS, SHRI ANIL KUMAR GUPTA, SHRI VINOD KUMAR GUPTA VERSUS COMMISSIONER, CENTRAL EXCISE CUSTOMS, SURAT-I [ 2015 (3) TMI 825 - CESTAT AHMEDABAD ], held that once it came on record that various statements recorded from the witnesses were not of voluntary in nature but were obtained under pressure, the same could not be admitted in evidence by the Adjudicating Authority. In the case of Hi Tech Abrasives, it has been held that the provisions contained in Section 9D, therefore, has to be construed strictly and held as mandatory and not mere directory. Therefore, unless the substantive provisions contained in Section 9D are complied with, the statement recorded during search and seizure operation by the Investigation Officers cannot be treated to be relevant piece of evidence. The request for cross examination of the panchas and others whose statements were relied upon in the impugned order must have been considered by the adjudicating authority. The adjudicating authority has not given any proper reason for rejecting their request for cross examination. Cross examination is all the more required when the statements stand retracted. In view of the above, the statements recorded in this case cannot be relied upon to confirm the demands as the procedure set out in Section 9D has not been followed. Whether the evidences available on record indicate that four packing machines installed in the unregistered premises were in working condition and used for manufacturing of Chewing Tobacco? - HELD THAT:- Four packing machines were found in the unregistered premises on the date of search on 02.08.2010. The contention of the Appellant is that all the four packing machines were damaged and not in operative condition. The machines were not installed. The machines were having stand and wheel for movement and they were not attached with the Earth. There was no evidence of usage of the packing machines, but the officers arranged them in such a manner as if those were being used in the manufacture and packing of Chewing Tobacco - Merely because there have been four inoperative defective machines lying in the godown of the factory, it cannot be said that they were used in the manufacture and packing of Chewing Tobacco. The photographs cannot be relied upon as a proof that the machines were in operating condition. Mere presences of the machines have been made as the basis of raising the demand for five months from April 2010 to August 2010. The investigation has not brought in any other evidence such as purchase of raw material, purchase of packing material, excess consumption of power during the period, buyers of the clandestinely cleared material, statements from transporters etc. It is observed that the unregistered premises, from where the four packing machines were found has been registered in the name of M/s Jaga Kalia Snax and Mixure. They also deal with Chewing Tobacco as traders - There is no evidence available on record to disprove the claim of the Appellant that the machines were non-operational and not used for manufacture of Chewing Tobacco. Mere statements alone are not sufficient to establish manufacture and clandestine clearance of chewing tobacco. In the absence of any other evidence other than the retracted statements, it is held that the investigation has not established that the four packing machines were in operating condition and used for clandestine manufacture and clearance of Chewing Tobacco. Whether evidences available indicate that Rule 18(2) of the CTPM Rules applicable in this case to demand duty in respect of all the 4 packing machines, from April 2010 onwards, as provided in the said Rules? - HELD THAT:- The contention of the Appellant is that some damaged raw material and finished goods seized by the officers belonged to the trading activity of M/s Jaga Kalia Snax and Mixure. In such circumstances, the investigation must have probed further to establish the manufacture and clandestine clearance by means of other evidences. Instead, the investigation has relied solely on the statement to demand duty. There is no evidence available on record to disprove the claim of the Appellant that the the other two machines were non- operational and not used for manufacture of Chewing Tobacco. Mere statement alone is not sufficient to establish manufacture and clandestine clearance of chewing tobacco. This view has been held in the case of GOYAL TOBACCO CO. PVT. LTD. SHRI RAJESH GOYAL, DIRECTOR VERSUS CCE ST, JAIPUR-I [ 2017 (3) TMI 57 - CESTAT NEW DELHI] where it was held that these evidences, the admissibility of which itself is legally not sustainable, cannot be the basis for confirmation of duty on the goods allegedly manufactured and cleared by the appellant. The investigation in the present case has been very sketchy and will not support the findings in the impugned order. Thus, the provisions of Rule 18(2) cannot be invoked in this case to demand duty for the period from April 2010 to August 2010. Accordingly, the answer is in the negative. Whether penalty under Rule 18(1) of the CTPM Rules read with Section 11 AC of the Central Excise Act, 1944, imposable in this case? - HELD THAT:- Penalty is imposable under Rule 18 read with Section 11AC of the Central Excise Act, 1944, when it is established that Chewing Tobacco was produces and clandestinely removed. In view of the above findings, it is already held that the investigation has not established manufacture and clandestine clearance of Chewing Tobacco. Hence, the penalty provisions cited above are not applicable in this case. Accordingly, the penalty imposed on the Appellant is liable to be set aside. Hence, the answer is in the negative. Thus, the demands confirmed in the impugned order are not sustainable. As the duty demand is not sustainable, the demand of interest and penalty is also not sustainable - appeal allowed.
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CST, VAT & Sales Tax
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2023 (9) TMI 561
Levy of higher rate of tax - inter-state sales to which C-forms were filed - burden to prove transfer of goods was not for sale - HELD THAT:- As per clause (1) of Section 6A, the burden is on the dealer to prove that the movement of the goods was not because of sale, but was for transfer of such goods by him to any other place of business or to his agent or principal outside the State. The burden so cast on the petitioner to prove that the transactions were effected by it are otherwise, than by way of sale has not been discharged initially at the time of filing of returns. Only when the assessing authority has taken up investigation/enquiry, the petitioner had adduced some documentary evidence. Perusal of the order passed by the Appellate Tribunal clearly reflects that the Appellate Tribunal had considered both factual and legal aspects, recorded elaborate reasons while allowing the appeal and also referred to and relied upon various judgments for its conclusion. The Appellate Tribunal had also discussed the purport of Section 6A of CST Act as well as Rule 14(3) of under CST Act (A.P.) Rules, 1957 and finally, confirmed the order of rejection of the assessing authority on the claim of concessional rate of tax in respect of C-forms. The petitioner failed to make out any case warranting interference of this Bench with the order passed by the Sales Tax Appellate Tribunal - the question of law framed by the Court, while admitting the revision, deserves to be decided in the negative.
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Indian Laws
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2023 (9) TMI 560
Dishonour of Cheque - grant of relief subject to condition of appellants depositing 20% of the amount of compensation - HELD THAT:- When an accused applies under Section 389 of the Cr.P.C. for suspension of sentence, he normally applies for grant of relief of suspension of sentence without any condition. Therefore, when a blanket order is sought by the appellants, the Court has to consider whether the case falls in exception or not. In these cases, both the Sessions Courts and the High Court have proceeded on the erroneous premise that deposit of minimum 20% amount is an absolute rule which does not accommodate any exception - The learned counsel appearing for the appellants, at this stage, states that the appellants have deposited 20% of the compensation amount. However, this is the matter to be examined by the High Court. The impugned orders of the High Court set aside - the revision petitions filed by the appellants before the High Court restored - appeal allowed.
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