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TMI Tax Updates - e-Newsletter
September 21, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Taxpayer's liberty to raise submissions on IGST refund before appellate authority upheld.
The High Court dismissed the petition, holding that it would not be appropriate to interfere in the matter during the pendency of the appeal before the appellate authority. The petitioner was granted the liberty to raise all submissions before the appellate authority, which would undoubtedly consider and pass appropriate orders. The Division Bench had protected the petitioner from recovery proceedings on the ground that the entire IGST amount had already been paid. According to Section 77 of the GST Act, if a registered person has paid Central or State Tax and is subsequently held liable for Inter-State GST, the wrongly deposited amount would be refunded, allowing payment as per the authorities' determination. This aspect can be duly verified by the first appellate authority.
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Father's nil returns for 2017-18 led to GST tax demand on purchases assuming sales within 18 months. Court set aside order, remanded for reconsideration.
Petitioner challenged assessment order u/s 74 of GST enactments. Father had filed nil returns for outward supply in 2017-18. Show cause notice treated total purchase value as suppressed sales. Impugned order assumed processed turmeric must be sold within 18 months, deeming sale in February 2019 to compute tax liability. No discernible basis for such assumptions in impugned order. Impugned order set aside, matter remanded for reconsideration. Petitioner permitted to place additional documents within four weeks. Petition disposed of.
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Firm lost case for late bond&tax payment for seized goods; buyer non-existent. Court declined writ over factual disputes.
Writ petition dismissed due to petitioner-Firm's failure to avail interim order for release of confiscated goods by furnishing bond and taxes within reasonable time. Disputed questions of fact regarding purchase and sale of goods, and finding of statutory authority about recipient being non-existent firm. High Court exercised discretionary powers under Article 226, considering all relevant facts, and declined to entertain writ petition in furtherance of public good. Serious disputed factual issues precluded High Court from exercising writ jurisdiction.
Income Tax
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Company not liable for TDS on managerial services to subsidiaries under IP license agreement.
The assessee provided managerial services to its subsidiaries, ancillary to the enjoyment of intellectual property as per the license agreement. The CIT(A) rightly held that such services did not constitute 'technical services', and the assessee was not liable to deduct TDS for managerial services rendered during the assessment years 2010-11 to 2015-16. Regarding short credit of TDS, the Tribunal remanded the issue to the Assessing Officer for verification and granting TDS credit in accordance with law, subject to the assessee complying with the proceedings and furnishing supporting documents.
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Expenses lacked link to income; subcontractors' payments disallowed for lack of details.
Expenditure claimed by assessee lacked nexus with income, unable to prove sub-contractors' expenses debited represented contract receipts or work-in-progress. CIT(A) deleted addition without examining details like sub-contractors' identities or services rendered, granting relief based on comparative financial performance. ITAT found CIT(A)'s order cryptic and unsustainable, failing to address glaring irregularities. Nature of services not examined threadbare. Assessing Officer's commendable job upheld, disallowing sub-contracting charges. Revenue's ground allowed, overturning CIT(A)'s order.
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Disputed Tax Liability - Court Upholds Relief Under Vivad Se Vishwas Act.
The High Court held that the respondents took an excessively narrow view by refusing relief to the petitioner under the Direct Tax Vivad Se Vishwas Act, 2020 (VSV Act). The VSV Act aims to resolve disputes pending at various appellate stages on the prescribed date, concerning challenges instituted by the assessee against adverse findings or decisions in the original assessment order. The statute defines "disputed tax liability" and "tax arrears," indicating that the settlement should be confined to the contested part of the assessment. Imposing a liability exceeding the disputed matter would be unjust. Once the Assessing Officer granted carry forward and set off of losses and unabsorbed depreciation, denying the same to the declarant would be improper. The Designated Authority erred by not rectifying the mistake in Form 3, which would deprive the petitioner of asserting the claim. The High Court quashed the impugned order, allowing the writ petition.
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Valuation under tax law: Estimation vs Actual - High Court upholds ITAT's view, remits case for fresh valuation.
Validity of valuation u/s 56(2)(viib) was questioned. The Assessing Officer rejected the assessee's valuation report and framed the order based on actual figures, which was criticized by the CIT(A) and ITAT. The High Court observed that an estimation would be based on approximate evaluation and should not be questioned based on actual facts or figures. The correctness of an estimation should be tested on legitimate and valid assessment. While upholding the ITAT's view, the High Court remitted the matter to the Assessing Officer to undertake valuation afresh considering Section 56(2)(viib), adhering to the DCF Method. If the assessee's data warrants examination, the Assessing Officer can enlist an appropriate valuer's services.
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Reimbursements to foreign principals not taxable if not for technical services.
The High Court examined whether the nature of functions performed by foreign principals in favor of the assessee would constitute "fees for technical services" u/s 9(1)(vii), thereby requiring tax deduction at source (TDS) u/s 195 and leading to disallowance u/s 40(a)(i) for non-deduction. The Court held that the obligation to deduct TDS u/s 195 arises only if the reimbursement of remittances falls within the scope of Section 9, which introduces legal fictions for income accrued in India. The Court found that the appellants failed to establish that the remitted amounts fell within the ambit of technical, managerial, or consultative services rendered. Consequently, no substantial question of law arose, and the addition u/s 40(a)(i) was not sustainable.
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Foreign companies face tax uncertainty as court strikes down 4% withholding rate for income attribution.
Writ petitions challenged the 4% withholding tax rate u/s 195 on receipts asserted as business income u/s 9(1)(i), despite the petitioner having withheld tax at 1.5%. The Court noted the profit attribution rate of 26% was not disputed and that a 1.04% withholding rate would correspond to this rate. As the withholding rate exceeding 1.04% was not seriously questioned, the Court found itself unable to sustain the 4% rate. The withholding tax rate for other years would be decided independently. Since the orders were limited to adjudication u/s 197, all rights and contentions on merits are kept open for regular assessment proceedings.
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Quashed Income Tax Demand Without Notice/Order; Inquiry Ordered on Erring Officer.
The High Court quashed and set aside the demand raised u/s 154 for the Assessment Year 2013-2014 appearing on the petitioner's portal and the computation sheet dated 31st March 2021. The respondent's counsel informed the Court that the demand was uploaded by the erstwhile Deputy Commissioner of Income Tax on the portal, but the Department does not have any file or document to show that any notice was issued u/s 154 or an order was passed. The Court directed the respondents to remove the pending demand from the Income Tax Portal pertaining to the petitioner within two weeks. Additionally, the Principal Chief Commissioner of Income Tax, Mumbai was directed to conduct an inquiry by an officer not below the rank of Additional Commissioner to ascertain how such a demand was uploaded and take necessary action against any erring officer if negligence or lapse is found.
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Trust denied tax exemption due to questionable fund transfers, charitable purpose doubted.
The appellant Trust's application for registration u/s 12A was rejected by the Commissioner of Income Tax (Exemptions) on the grounds that its activities were not aligned with the objects mentioned in its Memorandum of Association, and the genuineness of its activities could not be conclusively proven. The Trust was directed to provide desired details to establish the charitable nature of its objectives and the genuineness of its activities as per the Memorandum of Association. The Commissioner of Income Tax (Exemptions) observed that the Trust's source of funds involved a transfer entry on the same day, which was transferred back in the same manner to the same party, raising concerns about the genuineness of its activities for charitable purposes. In the interest of natural justice, the Income Tax Appellate Tribunal set aside the Commissioner of Income Tax (Exemptions)'s order and remanded the matter back, directing the Commissioner to pass a de novo order after providing a reasonable opportunity to the assessee to prove its claim. The appeal was allowed for statistical purposes.
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Royalty income of foreign entity taxable at 10% rate; amount quantified via APA with CBDT, no PE in India.
The assessee did not have a Permanent Establishment (PE) in India, and the royalty income received during the year was taxable at 10% plus applicable surcharge and cess on a gross basis u/s 9(1)(vi). The matter regarding the quantification of royalty was restored to the Assessing Officer with directions to adopt the royalty amount as per the Advance Pricing Agreement (APA) pending execution between GIA India Lab and the Central Board of Direct Taxes (CBDT). Regarding the levy of interest u/s 234A, the Assessing Officer was directed to verify the due date extension for filing the return and allow relief accordingly. The Appellate Tribunal's order in the immediately preceding year was followed for holding that the assessee did not have a PE in India.
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Software co. faces AMP expenses & marketing reimbursement adjustments; Tribunal rules on transfer pricing benchmarking methods.
This summary discusses various transfer pricing and tax issues. It analyzes whether Advertisement, Marketing and Promotion (AMP) expenses incurred by the assessee were for the sole benefit of its associated enterprise, thus constituting an international transaction u/s 92B. The Tribunal held that separate AMP adjustment is not required when the distribution business is already benchmarked. Regarding benchmarking of reimbursement of marketing expenses, the Tribunal directed a 20% markup adjustment to resolve the long-pending issue. It also covers the deselection of certain companies for benchmarking the software division's arm's length price, depreciation on the Dharuhera unit, dividend distribution tax u/s 115-O, and depreciation on software license fees. The Tribunal remitted the software license fee issue to the Assessing Officer for verification and recomputation as per the Income Tax Rules.
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TP: Forex gains/losses treated as non-operative for assessee & comparables due to risk mitigation by associated enterprises.
Foreign exchange gain/loss treated as non-operative for assessee and comparables due to risk mitigation by associated enterprises. Safe Harbor Rules not applicable as assessee not determined eligible. Inconsistent approach by TPO in treating forex gain/loss as operating for comparables rejected. Case laws distinguishable due to risk borne by assessee. Zenith Computers excluded as persistent loss-making company. Whirlpool and Penguin excluded as functionally dissimilar from mobile phone manufacturing. For CSD segment, Infobeans Technologies, Persistent Systems, L&T Infotech, and Mindtree excluded due to functional dissimilarity or lack of segmental data. Dividend distribution tax payable at rate u/s 115O, not DTAA rate, unless DTAA expressly extends benefit to domestic company. Appeal partly allowed.
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Granite firm's stock valuation, dispatch discrepancies resolved; damaged stock allowed 40% deduction.
Undervaluation of closing stock at Karimnagar unit vis-`a-vis TADA premises rejected by CIT(A) based on quality differences. Variation in dispatched and invoiced quantum of raw blocks from Karimnagar accepted by CIT(A) as natural in business. AO directed to recompute addition allowing 40% as damaged/unsaleable granite after examining books. CIT(A) empowered to admit additional evidence during appeal by giving AO opportunity. No violation of natural justice as AO considered assessee's submissions filed before CIT(A). Revenue's appeal against CIT(A)'s order dismissed by ITAT.
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Reassessment not prejudicial to Revenue's interest as queries addressed in original assessment.
Issue of reassessment u/s 263, where the Commissioner of Income Tax (CIT) upheld the reassessment as erroneous and prejudicial to the Revenue's interest for verification of transactions related to NSEL commodities and provision for bad debt claimed by the assessee. The Tribunal relied on the Bombay High Court's decisions in Marico Ltd. and GKN Sinter Metals Ltd., which held that if a query was raised by the Assessing Officer (AO) during the assessment proceedings and the assessee responded, it implies the AO accepted the assessee's submission. If the assessment order does not reflect consideration of the issue, it means no opinion was formed by the AO. In this case, the issues of NSEL transactions and bad debt provision were considered by the AO during the original and reassessment proceedings. The AO verified the complete facts and framed the assessment u/s 147 read with Section 144B after examining the details provided by the assessee. The Tribunal found no error in the reassessment order prejudicial to the Revenue's interest and quashed the CIT's revision order, allowing the assessee's appeal.
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Should management service fees paid to Singapore company be taxable in India?
The Income Tax Appellate Tribunal (ITAT) examined the taxability of income in India regarding management service fees. For quality development and training services, the assessee offered the income to tax, conceding transfer of know-how and technology. Regarding information technology services, the CIT(Appeals) concluded that the fee was not taxable in India as the 'make available' criteria under the India-Singapore tax treaty was not satisfied. For other services like planning analysis/corporate development, human resources, and finance, the CIT(Appeals) upheld the addition solely on the ground that the assessee did not furnish complete details to determine the exact nature of services. The assessee contended that relevant documents were furnished but not examined. The ITAT restored this issue to the CIT(Appeals) to re-examine the documents furnished by the assessee and pass a speaking order regarding the taxability of planning & analysis/corporate development services, human resources & finance services, in accordance with law.
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Tax exemption for pre-1961 charitable trust upheld, matter remanded for re-examination.
The trust was denied registration u/s 12A/12AB by the Commissioner of Income Tax (Exemptions) on the ground that it was established for the benefit of a particular community and not the general public, invoking Section 13(1)(b). The Appellate Tribunal held that Section 13(1)(b) is not applicable to charitable trusts created before the Income Tax Act, 1961 came into force. Since the assessee trust existed prior to the Act, the bar u/s 13(1)(b) does not apply, and its entire income is eligible for exemption u/s 11. The matter was remanded to the CIT(E) to reconsider the application on merits after examining the trust's activities and granting a reasonable opportunity of hearing to the assessee. The assessee was directed to be vigilant and comply with CIT(E)'s requirements.
IBC
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Lease cancellation by NOIDA: Corporate Debtor not a "tenant holding over", plot rightly excluded from CIRP.
Cancellation of lease deed by NOIDA did not confer the Corporate Debtor the status of a tenant holding over within Section 116 of the Transfer of Property Act, 1882. NOIDA never assented to the Corporate Debtor's continued possession after cancellation. The Supreme Court's judgment in Nand Ram case clarified that after lease expiry, the lessee's status is a tenant at sufferance, not a tenant holding over, unless the landlord assents to continued possession, creating a new tenancy. NOIDA's mere acceptance of the Corporate Debtor's request for lease restoration did not revive the terminated lease or confer any rights u/s 116. The plot was rightly excluded from the Corporate Insolvency Resolution Process. As a development authority, NOIDA is obligated to monitor project implementation, take proactive steps, and protect homebuyers' interests as unsecured financial creditors under statutory provisions. NOIDA can cancel leases, resume sites, and forfeit payments for breaches by lessees. The NCLAT upheld the adjudicating authority's order excluding the plot from CIRP and rejected the resolution plan approval application.
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IRP's biased conduct favoring unsecured creditor over operational creditor faces probe, cost imposed.
The Appellate Tribunal upheld the Adjudicating Authority's order and dismissed the appeal filed by the Resolution Professional (RP) against the Operational Creditor. The key points are: The RP acted in a biased manner by rejecting the Operational Creditor's claims and accepting an Unsecured Financial Creditor's claim of a paltry sum, making the latter the sole member of the Committee of Creditors (CoC). The Adjudicating Authority rightly observed that the RP's conduct needs thorough investigation. The IBBI is directed to investigate the RP's role and take necessary action. The RP is imposed a cost of Rs. 10 lakhs. The Unsecured Financial Creditor's claim of Rs. 1,05,877/- was filed after CIRP initiation, raising suspicions of backdating and unstamped documents. The Operational Creditor's claims were crystallized and admitted during CIRP initiation, and their rejection by the RP is questionable.
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Manpower supply dues can't trigger IBC if pre-existing dispute, bonafide objection over services existed.
Maintainability of application u/s 9 of IBC, 2016 for non-payment of dues arising from supply of manpower services hinges on existence of pre-existing dispute between parties. Emails prior to demand notice evidenced Corporate Debtor's concerns regarding adequacy of services, manpower shortages and security lapses, constituting pre-existing dispute. As per Mobilox case, if notice of dispute received by Operational Creditor or record of dispute exists, application must be rejected u/s 9(5)(2)(d). Corporate Debtor raised plausible contention of pre-existing dispute, not a feeble legal argument. Given bonafide dispute's existence, Adjudicating Authority correctly rejected Section 9 application. Appeal against impugned order dismissed.
PMLA
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Crypto Crime Proceeds Transfer: Court Grants Bail to Accused due to Lack of Prima Facie Evidence.
The case pertains to the grant of regular bail to an Indian national accused of committing an offence under foreign law, which is a scheduled offence under the Prevention of Money Laundering Act (PMLA). The key points are: The Enforcement Directorate (ED) initiated proceedings based on a Mutual Legal Assistance (MLA) request from U.S. authorities, alleging that the accused stole cryptocurrencies and transferred the proceeds to India. The court examined the applicability of PMLA in cases where the predicate offence occurred outside India but the proceeds were transferred to India. The court held that for offences under the first category defined in Section 2(1)(ra)(i) of PMLA, where the predicate offence occurred outside India but the proceeds were transferred to India, the corresponding foreign law needs to be proved as a question of fact during the trial by examining experts. Judicial notice cannot be taken of the corresponding foreign law at this stage. The court found that the foundational facts, i.e., the alleged crime committed in the U.S. being a scheduled offence and the amount received by the accused being proceeds of crime, have not been established even prima facie. Therefore, the burden of proof u/s 45 of PMLA does not shift to the accused. The court observed that the delay in commencing the trial, the custody period exceeding.
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Bail granted in money laundering case tied to excise policy scam.
The court granted regular bail to the applicant in a money laundering case related to the alleged excise policy scam. The predicate offence was a CBI case registered under the Prevention of Corruption Act, where the applicant was named but not arrested. The applicant, an experienced professional with social work credentials, was held to satisfy the triple test for bail - no risk of tampering evidence, influencing witnesses, or fleeing. Stringent conditions were imposed, including a personal bond and sureties. The court noted the voluminous evidence, multiple accused already on bail, and the applicant's prolonged custody. The bail application was allowed, subject to fulfilment of conditions.
Service Tax
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Petitioner prevails as tax authority's order quashed for lack of due process and improper jurisdiction.
Writ petition challenging impugned order dated 25.11.2022 for violation of principles of natural justice and lack of territorial jurisdiction. Court held that service of show cause notice was defective as it was not sent to petitioner's proper address, violating Section 37C(1)(a) of the Act. Resorting to Section 37C(1)(b)&(c) without complying with (a) is impermissible. Impugned order passed without affording due opportunity, violating Article 14 and 21. On territorial jurisdiction, petitioner not registered under Finance Act 1994, and registration under CGST Act 2017 irrelevant. Jurisdictional issue to be decided by respondent if fresh show cause notice issued at proper address. Impugned order quashed for violation of natural justice. Petition disposed of.
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Rebate allowed for service tax paid on services utilized for export despite document deficiencies.
Claim of rebate for service tax paid on specified services used for export of goods from July 2012 to December 2013. The rebate claims were rejected on grounds of violation of conditions in certain notifications and non-production of documents like invoices, self-certification, and FIRC/BRC copies. The Tribunal held that the appellant fulfilled the conditions stipulated in Notification 41/2012 for availing rebate, as the specified services were utilized in connection with the export of goods. The rejection based on non-fulfillment of conditions of other notifications was legally unsustainable. Regarding non-production of documents, the matter was remanded to the Adjudicating Authority for verification. On the issue of time limitation, the Tribunal held that the rebate claim was originally filed within the prescribed period of one year from the date of export, and the re-submission date should not be considered as the filing date. Therefore, the claim was not hit by the limitation period.
Central Excise
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Duty Exemption for Specialty Vehicles Upheld by Court.
Classification dispute regarding drilling rigs mounted on truck chassis/crawler - whether under tariff heading 84.30 or 87.05 during 1986-1988. Supreme Court settled classification under 87.05 in appellant's own case. Once classification settled, appellant became eligible for exemption under Notification 242/86-CE applicable to Chapter 87.05 goods, even though initially not claimed. Tribunal followed precedent allowing exemption claim at later stage. Condition of notification requiring duty payment on chassis/equipment used deemed complied as all market goods presumed duty paid. Chassis and equipment for special purpose vehicles considered deemed duty paid. Impugned order set aside, appeal allowed.
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Taxi operator entitled to duty refund despite delayed PLA credit, as substantive vehicle usage condition was met.
The appellant complied with the conditions of Notification No. 12/2012-CE dated 17.03.2012, except for taking credit in PLA after six months from duty payment. The vehicles had passenger capacity below 13 and were registered as taxis. The procedural lapse of delayed PLA credit cannot enable rejection of refund claims when the substantive condition of vehicle use as taxi was fulfilled. The refund claims from 01.07.2017 to 27.12.2017 for clearances from January 2017 to June 2017 were filed within six months as required. The show cause notice did not allege untimely filing. The Commissioner's finding on time-bar was incorrect and legally unsustainable. The Tribunal allowed the appeal, holding the refund claims were not time-barred and the appellant was entitled to the duty refund under the notification.
Case Laws:
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GST
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2024 (9) TMI 1163
Maintainability of appeal - appeal preferred by the petitioner without depositing 10% of the disputed amount - HELD THAT:- Only the interim relief application of the petitioner has been rejected while the appeal is still pending before the appellate authority - this Court is of the considered view that during the pendency of the appeal before the appellate authority, it would not be appropriate to interfere in the said matter. It is open for the petitioner to raise all the submissions before the appellate authority, which undoubtedly will take into consideration and pass appropriate orders thereon. Considering the fact that the Division Bench had already protected the petitioner from recovery proceedings on the ground that the entire amount of IGST has already been paid by the petitioner and also considering the fact that as per provisions of Section 77 of the GST Act any registered person, which has paid Central or State Tax and subsequently it is held that he is liable to pay tax on the event which is subjected to Inter-State GST, the said amount wrongly deposited by him would be refunded so that he can pay tax as per the determination of the authorities and accordingly, this aspect of this fact can be duly verified by the first appellate authority. Petition disposed off.
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2024 (9) TMI 1162
Attachment of cash credit account of the petitioner in Canara Bank - petitioner submits that after filing of petition, by a communication dated 08.04.2024, the attachment of bank account has been vacated and intimation has been sent to the concerned bank - HELD THAT:- Copy of the communication dated 08.04.2024 is produced in Court. The same is taken on record. The petition is disposed of directing Canara Bank to comply with the directions issued by Principal Additional Director General dated 08.04.2024.
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2024 (9) TMI 1161
Condonation of delay in filing the revocation application - compliance with all the requirements of paying the taxes, interest, late fee, penalty etc. due, the 3B Return Form filed by the Petitioner - HELD THAT:- The delay in Petitioner s invoking the proviso to Rule 23 of the Odisha Goods and Services Tax Rules (OGST Rules) is condoned and it is directed that subject to the Petitioner depositing all the taxes, interest, late fee, penalty etc. due and complying with other formalities, the Petitioner s application for revocation will be considered in accordance with law. Petition disposed off.
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2024 (9) TMI 1160
Condonation of delay in filing the revocation application - compliance with all the requirements of paying the taxes, interest, late fee, penalty etc. due, the 3B Return Form filed by the Petitioner - HELD THAT:- The delay in Petitioner s invoking the proviso to Rule 23 of the Odisha Goods and Services Tax Rules (OGST Rules) is condoned and it is directed that subject to the Petitioner depositing all the taxes, interest, late fee, penalty etc. due and complying with other formalities, the Petitioner s application for revocation will be considered in accordance with law. Petition disposed off.
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2024 (9) TMI 1159
Challenge to assessment order - petitioner did not have a reasonable opportunity to contest the tax demand on merits - violation of principles of natural justice - HELD THAT:- On examining the documents on record, it is evident that the petitioner did not participate in proceedings leading to the impugned order. In the affidavit, it is asserted that all the notices and orders were uploaded on the view additional notices and orders tab of the GST portal. In these circumstances, the interest of justice warrants that an opportunity be provided to the petitioner albeit by putting the petitioner on terms. The order dated 14.08.2023 is set aside on condition that the petitioner remits 10% of the disputed tax demand within fifteen days from the date of receipt of a copy of this order. With in the aforesaid period, the petitioner is permitted to submit a reply to the show cause notice - petition disposed off.
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2024 (9) TMI 1158
Challenge to assessment order - impugned order is vitiated by the failure of the respondents to provide audit observations pursuant to the audit - petitioner was deprived of the opportunity to respond to the audit observations before the audit report was prepared. HELD THAT:- On perusal of the documents on record, it is evident that the petitioner was put on notice before the audit and submitted various documents in response to such notice. The petitioner also responded to the audit report and to the show cause notice. The impugned order discloses that a personal hearing was provided to the petitioner on 20.10.2023. In these circumstances, it is clear that principles of natural justice were complied with in substance. It is further evident from the impugned order that six issues were taken up for consideration. Out of the six issues, upon consideration of the petitioner's reply, the tax proposal in respect of four issues were dropped. As regards the remaining issues, upon appraisal of evidence, the tax proposals were confirmed. As pointed out by learned senior standing counsel, the petitioner has an appellate remedy against this order. It is not required to exercise discretionary jurisdiction. However, it should be noticed that this writ petition was filed on 29.02.2024, which was within the original period of limitation. As of today, the petitioner is with in the condonable period. Petition is disposed of by permitting the petitioner to present a statutory appeal before the appellate authority.
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2024 (9) TMI 1157
Seeking relief by way of direction upon the respondents authority concerned to bear the additional tax liability for execution of subsisting Government contracts either awarded in the pre-GST regime or in the post-GST regime without updating the Schedule of Rates (SOR) incorporating the applicable GST while preparing Bill of Quantities (BOQ) for inviting the bids. HELD THAT:- This writ petition is disposed of by giving liberty to the petitioners to file appropriate representation in the aforesaid regard as referred in preceding paragraph of this order, before the Additional Chief Secretary, Finance Department, Government of West Bengal with in four weeks from date. On receipt of such representations the Additional Chief Secretary, Finance Department shall take a final decision within four months from the date of receipt of such representation after consulting with all other relevant departments concerned. Petition disposed off.
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2024 (9) TMI 1156
Seeking quashing of seizure order dated 6th March 2020 issued u/s 102 of the Code of Criminal Procedure by the police - freezing of petitioner's bank accounts - HELD THAT:- In view of the statement made by Mr. Konde Deshmukh, learned Addl. P.P, on the instructions of API Mr. Sanjay Sadigle, who is present in Court, nothing survives for further consideration in the petitions. Rule stands discharged in both the petitions and the petitions are disposed of accordingly.
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2024 (9) TMI 1155
Challenge to SCN on the ground that the same is without jurisdiction and is in violation of Instruction No.05/2023-GST dated 13th December, 2023, issued by the CBIT and customs - HELD THAT:- The writ court is very reluctant to interfere with any show- cause notice, but since petitioner has challenged the legality of the impugned show-cause notice, on the ground of jurisdiction of the issuing authority, this writ petition is disposed off with limited direction that petitioner shall file reply to the impugned show-cause notice by taking all the points raised in this writ petition including the point of jurisdiction with in two weeks from date and the respondent adjudicating authority concerned while disposing such reply to be filed shall first decide the issue of jurisdiction by passing a reasoned and speaking order after giving opportunity of hearing to the petitioner or its authorized representatives, with in two weeks from the date of receipt of such reply to be filed by the petitioner and shall not take any coercive action till the disposal of such reply to be filed. Petition disposed off.
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2024 (9) TMI 1154
Violation of principles of natural justice - petitioner did not have a reasonable opportunity to contest the tax demand - petitioner asserts that she was unaware of proceedings initiated by issuing notice in Form GST ASMT 10 and show cause notice in Form GST DRC-01 - challenge to assessment order - HELD THAT:- The admitted position is that the petitioner was not heard before the impugned order was issued. It is also clear that this situation was a consequence of the petitioner's failure to respond to the notice in Form ASMT 10 and the show cause notice. The petitioner submits that the petitioner is willing to remit 10% of the disputed tax demand as a condition for remand. The petitioner was not heard before the impugned order was issued, the order calls for interference by putting the petitioner on terms - the impugned order dated 28.08.2023 is set aside and the matter is remanded for reconsideration subject to the condition that the petitioner remits 10% of the disputed tax demand as agreed to with in a period of 15 days from the date of receipt of a copy of this order - Petition disposed off by way of remand.
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2024 (9) TMI 1153
Violation of principles of natural justice - petitioner was not provided a personal hearing - challenge to assessment order - HELD THAT:- The petitioner has placed on record the reply dated 06.12.2023. By such reply, the petitioner has responded to all four defects mentioned in the show cause notice. On perusal of the petitioner's reply, it appears that the petitioner did not annex supporting documents. Undoubtedly, the petitioner's failure to annex relevant documents resulted in the rejection of the defence raised by the petitioner to the four defects. However, the failure of the respondent to provide a personal hearing in spite of an express request for a personal hearing vitiates the impugned order. The impugned order calls for interference on account of breach of the statutory prescription in sub-section (4) of Section 75 of the Tamil Nadu Goods and Services Tax Act, 2017. The order impugned herein is quashed and the matter is remanded for reconsideration - Petition disposed off by way of remand.
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2024 (9) TMI 1152
Demand on the ground of alleged default in tax payment for secondment of foreign employees (extracts) from its associated parent company - HELD THAT:- The two Writ Petitions pending before this Court are listed on 16.04.2024. Accordingly, issue notice. Notice is accepted by learned counsel appearing for the respondents who prays for time to take instructions - At request, list on 16.04.2024. In the meantime, no coercive action shall be taken against the petitioner pursuant to the impugned order dated 29.12.2023 till the next date of hearing.
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2024 (9) TMI 1151
Challenge to assessment order - Section 74 of applicable GST enactments - petitioner's father had filed nil returns with regard to outward supply for 2017-18 - reasonable basis to proceed on suppression of sales or not - HELD THAT:- The show cause notice proceeds on the basis that the purchase value in 2017-18 was Rs.1,13,86,912/-. After noticing that nil returns were filed as regards outward supplies in the assessment period, the total value of purchases was treated as suppressed sales and the petitioner's father was called upon to show cause as to why tax should not be imposed on that basis. On the contrary, the impugned order proceeds on the assumption that processed turmeric is required to be sold within a maximum period of 18 months. By deeming that the sale took place in February 2019, the tax liability was computed. No basis is discernible from the impugned order as to why such assumptions were made. The impugned order dated 30.12.2023 is set aside and the matter is remanded to the respondent for reconsideration. The petitioner is permitted to place additional documents before the respondent within four weeks from the date of receipt of a copy of this order - Petition disposed off.
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2024 (9) TMI 1150
Seeking release of the confiscated goods and the conveyance - section 130 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- This writ petition is dismissed on the ground that the petitioner-Firm did not avail of the interim order dated 9th February 2024. There is no application for extension of time or modification in the order 9 the February 2024 to the extent that the petitioner-Firm may be permitted to furnish bond for Rs. 27,02,560/- and other taxes and penalty instead of bank guarantee. This is also relevant to indicate that the petitioner-Firm was required to avail the opportunity for release of confiscated goods by depositing the amount of tax, penalty, fine etc. within a reasonable time but even on expiry of about one and a half month it did not avail of the said opportunity. This is well settled that the writ Court exercises its powers under Article 226 of the Constitution in furtherance of public good. The powers under Article 226 of the Constitution though is plenary in nature but its exercise is discretionary. Therefore, the writ Court is duty bound to take all relevant facts into consideration to satisfy its judicial conscience whether relief can be granted to the aggrieved party. Now in a situation like the present one which discloses serious disputed questions of fact as to nature of purchase and sale of the confiscated goods, and the finding of the statutory authority that the recipient is the non-existent Firm, the writ Court shall not exercise its discretionary powers to entertain this writ petition which is accordingly dismissed. Petition dismissed.
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2024 (9) TMI 1149
Violation of principles of natural justice - SCN issued without serving notice under Rule 99 in form GST ASMT-10 - HELD THAT:- A reading of Rule 99 of CGST Rules, 2017, makes it clear that the issuance of notice to the petitioner in form GST ASMT-10, prior to issuance of a show cause notice, is mandatory. Therefore, there shall be stay of all further proceedings pursuant to Annexures P-1 P-2. List on 12th June, 2024.
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2024 (9) TMI 1148
Challenge to assessment order - petitioner did not have a reasonable opportunity to contest the tax demand - discrepancies between the petitioner's GSTR 3B returns and the auto populated GSTR 2A - violation of principles of natural justice - HELD THAT:- The petitioner asserts that the discrepancy occurred on account of the petitioner specifying the amount under the row relating to all other ITC instead of the row relating to import of goods . In paragraph 3 of the affidavit, the petitioner has set out details of amounts appropriated either from the attached bank account or from the electronic credit ledger. The relevant page from the electronic credit ledger has also been placed on record. When the above facts and circumstances are taken into account, it is just and necessary that the petitioner be provided an opportunity to contest the tax demand on merits. The impugned order is set a side and the matter is remanded for re-consideration. The petitioner is permitted to submit a reply to the show cause notice with in fifteen days from the date of receipt of a copy of this order - Petition disposed off.
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2024 (9) TMI 1147
Willful disobedience of the judgment - HELD THAT:- This Court notes that on the last date of hearing, i.e., 26th February, 2024, learned counsel for the respondents had submitted that the GST registration of the petitioner had been restored. Since, none had appeared for the petitioner on the last date of hearing, the matter was kept for hearing today. The learned counsel appearing for the petitioner confirms the fact that GST registration of the petitioner has been restored by the respondents. The present petition is disposed of, as having been satisfied.
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2024 (9) TMI 1146
Input tax credit - utilization of input tax credit for payment of CGST and SGST - HELD THAT:- Liberty granted to the learned advocate appearing for the appellant to serve full set of papers in this appeal petition including the affidavit-in-opposition filed by the State of West Bengal in the office of the learned Additional Advocate General for the State of Telengana so as to enable the State of Telengana to enter appearance in this proceeding. Leave is granted to the respondent no.2 viz. the private party to file its affidavit well before the next hearing date - List this matter on 30th April, 2024.
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2024 (9) TMI 1145
Challenge to assessment order - violation of principles of natural justice - tax demand was confirmed because the petitioner failed to respond to either the intimation or the show cause notice - HELD THAT:- On examining the orders impugned herein, it is clear that the petitioner failed to respond either to the intimation or to the show cause notice. A change in management does not justify the failure to respond to the show cause notice. On examining the impugned order, it is evident that discrepancies between the GSTR 3B, GSTR 1 and GSTR 9 returns was the basis for confirming the tax demand. The impugned order contains no reasons in support of the tax demand except the failure of the petitioner to reply to the show cause notice. In these circumstances, albeit by putting the petitioner on terms, it is just and appropriate to provide the petitioner an opportunity to contest the tax demand on merits. The orders impugned herein are quashed subject to the condition that the petitioner remits 10% of the disputed tax demand as agreed to under order dated 19.12.2023. Such remittance shall be made with in a maximum period of two weeks from the date of receipt of a copy of this order - Petition disposed off.
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2024 (9) TMI 1144
Demand u/s 73 of the Central Goods and Service Tax Act, 2017 with interest and penalty - petitioner never received any show cause notice as the show cause notice was not uploaded on the GST portal under the heading Notices but appears to have been uploaded under the heading of Additional Notices - violation of principles of natural justice - HELD THAT:- Perusal of the impugned order shows that the order does not specifically deal with any of the averments in the notice and appears to be an order passed in default on account of the petitioner neither filing a reply nor appearing for personal hearing. In view of the above and in view of the request of the petitioner that an opportunity be given to the petitioner to file a response to the show cause notice, the impugned order dated 15.12.2023 is set aside. Petition disposed off.
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2024 (9) TMI 1143
Violation of principles of natural justice - Impugned order does not take into consideration the reply submitted by the Petitioner and is a cryptic order - demand u/s 73 of the Central Goods and Services Tax Act, 2017 with penalty - HELD THAT:- The observation in the impugned order dated 30.12.2023 is not sustainable for the reasons that the reply dated 20.10.2023 filed by the Petitioner is a detailed reply. Proper Officer had to at least consider the reply on merits and then form an opinion. He merely held that the reply is not satisfactory which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the Petitioner - Further, if the Proper Officer was of the view that if any further details were required, the same could have been specifically sought from the Petitioner. However, the record does not reflect that any such opportunity was given to the Petitioner to clarify its reply or furnish further documents/details. The order cannot be sustained, and the matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned order dated 30.12.2023 is set aside. The matter is remitted to the Proper Officer for re-adjudication - Petition disposed off by way of remand.
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2024 (9) TMI 1142
Discrepancies between the GSTR 3B return of the petitioner and the GSTR 1 statement - discrepancies arising out of alleged RCM supplies - HELD THAT:- Since the finding was recorded by conflating a reply in respect of the credit notes with the RCM issue, the order calls for interference. Even otherwise, the petitioner has also placed on record a subsequent communication from the supplier to the effect that the error committed while making entries in the said supplier's GSTR 1 was subsequently rectified. In these facts and circumstances, the impugned order is not sustainable. The impugned order dated 26.12.2023 is set aside and the matter is remanded for reconsideration. The petitioner is permitted to file a reply to the RCM issue with in two weeks from the date of receipt of a copy of this order - Petition disposed off.
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2024 (9) TMI 1141
Cancellation of registration of petitioner due to delay of 138 days in filing the appeal - HELD THAT:- Section 107 of the Bihar Goods and Services Tax Act, 2017 permits an appeal to be filed with in three months and also apply for delay condonation with satisfactory reasons with in a further period of one month. An appeal was to be filed on or before 29.05.2022 as permitted by the Hon ble Supreme Court and if necessary with a delay condonation application within one month thereafter. The appeal is said to have been filed only on 06.02.2023, after about seven months from the date on which even the extended limitation period expired. In the above circumstances, there are no reason to invoke the extraordinary jurisdiction under Article 226, especially since it is not a measure to be employed where there are alternate remedies available and the assessee has not been diligent in availing such alternate remedies within the stipulated time. The law favours the diligent and not the indolent. The petitioner does not have any case that the show- cause notice was not received by him. Further, it is also pertinent that in the show-cause notice for cancellation of registration it is noticed that the petitioner has not filed reply to the show cause notice. The writ petition would stand dismissed.
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2024 (9) TMI 1140
Cancellation of registration of petitioner - non-filing of returns for six months - time limitation - HELD THAT:- Admittedly, there is an appellate remedy which the petitioner availed with gross delay. Section 107 of the Bihar Goods and Services Tax Act, 2017 (BGST Act) permits an appeal to be filed within three months and also apply for delay condonation with satisfactory reasons within a further period of one month. Here, the order impugned in the appeal was dated 05.07.2022. An appeal was to be filed on or before 03.10.2022 and if necessary with a delay condonation application within one month there after. The appeal is said to have been filed only on 06.12.2023, after the limitation period having expired long prior. There are no reason to invoke the extraordinary jurisdiction under Article 226, especially since it is not a measure to be employed where there are alternate remedies available and the assessee has not been diligent in availing such alternate remedies within the stipulated time. The law favours the diligent and not the indolent. Petition dismissed.
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2024 (9) TMI 1139
Violation of principles of natural justice - Challenge to SCN - lack of personal hearing - discrepancy between the petitioner's GSTR 1 and GSTR 3B returns - HELD THAT:- Sub-section (4) of Section 75 of the Tamil Nadu Goods and Services Tax Act, 2017 imposes the obligation of providing a personal hearing either when requested for or when an order adverse to the tax payer is proposed to be issued. In this case, in the reply dated 25.11.2023, the petitioner expressly requested for a personal hearing. Although the petitioner was unable to check the box pertaining to personal hearing while uploading such reply on the GST portal, the statutory obligation would not stand waived on that account. Therefore, the impugned order calls for interference. The order dated 29.12.2023 is quashed and the matter is remanded for re-consideration. The petitioner is permitted to submit all relevant documents with in fifteen days from the date of receipt of a copy of this order - Petition disposed off by way of remand.
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Income Tax
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2024 (9) TMI 1138
Validity of Reopening of assessment - determination of income chargeable to tax - distinction between consideration of sale and income chargeable to tax - whether income shown in the impugned order and notice to have escaped assessment, is income chargeable to tax or not? As decided by HC [ 2023 (8) TMI 1027 - MADHYA PRADESH HIGH COURT] there is nothing in Section 148, 148A or Section 149 which may prevent assessee from taking advantage of said provisions merely because of his failure to file return. Neither the notice under Section 148A(b) nor order u/s 148 A(d), nor the consequential notice under section 148A give any indication that amount alleged to be income escaping assessment, includes land/buildings/shares/equities/ loans/ advances etc. as contended by the Revenue. When petitioner/assessee filed a reply to the notice u/s 148(A)(b) it was clearly revealed that the said amount is the gross receipt of sale consideration of 16 scooters. Meaning thereby that the said amount was the total sale consideration receipt of the transaction in question, and not income chargeable to tax which would obviously be less than the said amount.Revenue has failed to understand the fundamental difference between sale consideration on one hand and income chargeable to tax on the other. The Revenue despite being assisted by thousands of experts in the field of finance and taxation, has committed such elementary mistake leading to harassment to the assessee who has been compelled to file the present avoidable piece of litigation HELD THAT:- We are not inclined to interfere with the impugned orders and, hence, the special leave petitions are dismissed. Pending application(s), if any, shall stand disposed of.
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2024 (9) TMI 1137
Block Assessment - prosecution with regard to undisclosed income for block assessment - Offence Committed under Section 276C(1), Section 277 read with Section 278B - Applicability of Section 158BF and its implications on penalties and prosecution - As decided by HC [ 2023 (3) TMI 1057 - GUJARAT HIGH COURT] there being no provision existing at the relevant point of time whereby the Income Tax Department could launch a prosecution as regards income disclosed in block assessment for the period between 1.7.1995 to 1.1.1997, automatically and as a direct consequence, quashing of prosecution is the only necessary corollary. There was no requirement for the learned Coordinate Bench to have discussed with regard to applicability of Section 278E and whereas in the considered opinion of this Court, therefore, the submission of the learned Advocate for the Income Tax Department cannot be accepted - HELD THAT:- We are not inclined to interfere with the impugned judgment and order of the High Court. Accordingly, the Special Leave Petition is dismissed.
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2024 (9) TMI 1136
Capitalisation of interest on FDRs earned during the period of construction - utilizing the ECB funds the assessee did not follow the RBI guidelines - delay filling in SLP - Whether ITAT has erred in allowing the capitalisation of interest on FDRs earned during the period of construction without appreciating the fact that while utilizing the ECB funds the assessee did not follow the RBI guidelines also failed to consider the various decisions of the Apex Court? As decided by HC [ 2022 (6) TMI 190 - DELHI HIGH COURT] funds infused in the assessee by the joint venture partner were inextricably linked with the setting up of the plant, the interest earned by the assessee could not be treated as income from other sources. In the result we answer the question as framed in favour of the assessee and no substantial question of law arises for consideration - HELD THAT:- There is a delay of 699 days in filing the present special leave petition. We are not inclined to condone the long delay. In view of the aforesaid, the application for condonation of delay is dismissed. Consequently, the special leave petition will be treated as dismissed
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2024 (9) TMI 1135
Nature of receipt - additions to the income of the trustees by way of excess consideration received for the sale of the rubber plantation - amounts received by the assessees as consideration for relinquishment of their trusteeship - Assessing Authority and the First Appellate Authority had found that the excess sale consideration received by the said assessees was in fact amounts towards consideration paid by the Believers Church for their relinquishment of their trusteeship in the Carmel Educational Trust and was liable to be assessed in their hands, the Tribunal, in the order impugned in these appeals, found otherwise. resignation/relinquishment by the assessees of their position as trustees As decided by HC [ 2024 (4) TMI 458 - KERALA HIGH COURT] the resignation/relinquishment by the assessees, of their position as trustees of the Carmel Educational Trust, that too for a consideration, cannot get the imprimatur of this Court. The consideration received by them for such relinquishment cannot be treated as a capital receipt for the purposes of assessing the same under the head of capital gains. The consideration will have to be treated as the individual income of the assessees and assessed accordingly under the appropriate head. We therefore set aside the said findings in the impugned order of the appellate tribunal and remand the matter back to the tribunal to pass a fresh order on this issue in the light of our findings above - HELD THAT:- In the interest of justice, we are not inclined to interfere with the impugned judgment and, hence, the special leave petitions are dismissed. Pending application(s), if any, shall stand disposed of.
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2024 (9) TMI 1134
Validity of reopening of assessment - reasons to believe - required approval of the Commissioner of Income Tax - HELD THAT:- AO had recorded reasons for believing that there was income escaping assessment which reasons, were also appended to the request for approval made to the Commissioner. The Commissioner had obviously read the reasons and made a written order that he was satisfied on the basis of reasons recorded, that this was a fit case for notice issued under Section 148. Section 151 requires the Principal Commissioner to be satisfied of the reasons recorded by the AO that it was a fit case for issuance of such notice, where the notice was issued beyond expiry of 4 years. There is no requirement for the Commissioner to record his own reasons and it would suffice that he records the satisfaction regarding the reasons recorded by the Assessing Officer. We find absolutely no reason to interfere with the notice issued under Section 148, on the grounds raised in the writ petition.
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2024 (9) TMI 1133
Rectification of the Form 3 issued under the Direct Tax Vivad Se Vishwas Act, 2020 [VSV Act] - a set off/carry forward of losses and unabsorbed depreciation had not been claimed in Schedule D of the application which had been made by the petitioner for settlement under the VSV Act - part of the assessment cannot be viewed or construed to be disputed - HELD THAT:- The respondents have not only taken an extremely narrow and pedantic view while refusing to accord relief to the petitioner, their action goes against the fundamental grain of the legislation itself. The VSV Act enables an assessee to seek resolution of disputes pending at various stages of the appellate and review tiers created under the Act on the prescribed date. Those proceedings would undoubtedly be concerned with challenges which an assessee may have instituted to an original order of assessment and would be logically confined to parts which would have been adverse to it. Those appeals and challenges would necessarily be in respect of either adverse findings or decisions made by the AO and which would have constrained the asssessee to adopt remedial measures. This is further fortified by the manner in which the VSV Act defines and introduces the concept of a disputed tax liability and tax arrears. The statute is fundamentally aimed at settling matters and issues on which the assessee and the Revenue may have been litigating on the relevant date as opposed to those on which parties may have been ad idem and which may have never formed part of the ongoing litigation. It was the existing dispute which was sought to be laid to rest under the VSV Act. The statute was never envisaged to be concerned with issues on which there existed no debate or disagreement on the relevant date. Petitioner, thus appears to be correct in her submission that the VSV Act cannot foist a liability upon a declarant which exceeds that which formed the subject matter of contestation on the relevant date. The provisions of the VSV Act cannot be accorded an interpretation which may lead to an applicant being saddled with a liability far greater than what was determined in the course of assessment and which stood impugned in appeal or revision. In our considered opinion, it would be wholly unjust to construe the provisions of the VSV Act as contemplating the settlement amount exceeding the tax liability as computed in assessment or denying the declarant relief which already stood extended. This since the order of assessment to that extent would not even have formed subject matter of disputation. The definition of disputed tax liability and tax arrears clearly lends credence to the submission that the settlement would have to necessarily be confined to that part of the assessment which was adverse to the assessee and which may have formed subject matter of ongoing proceedings. Once the AO itself had accorded the facility of carry forward and set off of unabsorbed depreciation and business losses, the same could not have been denied to the declarant. The failure of the writ petitioner to make the requisite disclosures in Schedule D would neither detract from the relief which had been accorded by the AO nor change the factum of carry forward and set off as forming part of the assessment order. The grant of that facility appears to have been noticed by the Designated Authority and it was perhaps this aspect which convinced it to record that it would be open to the petitioner to seek relief in that respect accordance with law. Designated Authority clearly appears to have lost sight of the fact that unless Form 3 were duly amended and rectified, the spectre of finality which stands statutorily conferred on that determination would have deprived the petitioner of asserting any claim in respect of carry forward and set off. Once it was conceded that those reliefs stood granted in the original order of assessment itself, the Designated Authority would have been justified in rectifying the mistake which was apparent from the record. We, accordingly, allow the writ petition and quash the impugned order.
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2024 (9) TMI 1132
Failure on the part of the respondents to examine petition for stay pending disposal of its appeal before CIT(A) - HELD THAT:- PCIT has clearly failed to formally pass an order on the application dated 02 September 2023. Though needless to state, we may only observe that a mere noting on the order sheet is not an order which can possibly be countenanced in law. We, consequently, and at this stage, dispose of the writ petition requiring the PCIT to formally take up the application dated 02 September 2023 and dispose of the same within a period of one week from today. PCIT, while considering the said application, shall also bear in mind the principles which have been enunciated by us in National Association Of Software And Services Companies (NASSCOM) [ 2024 (3) TMI 773 - DELHI HIGH COURT] All other rights and contentions of respective parties on merits are kept open.
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2024 (9) TMI 1131
Validity of impugned order u/s 144B as legal and justified - say of the petitioner that while passing the re- assessment order, the effective opportunity of hearing was not given during the course of argument - HELD THAT:- It is the duty cast upon the authorities in faceless assessment, if there is a demand for personal hearing, the same deserve to be granted. Keeping in mind the mandatory provision, if the facts of the present case is considered, indisputably, the request made by the petitioner for personal hearing through video conferencing at that stage was acceded to, however, intimation thereof was sent after the time of hearing was scheduled. Admittedly, on the second time, the request of the petitioner for granting personal hearing through video conferencing, intimation there of was to be given one day advance, was not either acceded to or taken care of by the revenue authorities and straightway, the impugned order was passed. Thus, in our considered opinion, while passing the impugned order, the provision of Section 144B was not complied with by the revenue authorities and there by, the order passed cannot be sustained in eye of law. Without going further into merits of the case, it would be in the fitness of thing that the petition is allowed solely on the ground of violation of principle of natural justice, without adverting to anything on merits.
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2024 (9) TMI 1130
Validity of the valuation u/s 56(2)(viib) - AO while rejecting the valuation report which had been submitted by assessee had proceeded to frame the order on the basis of actual figures which had obtained - HELD THAT:- It was the aforesaid procedure adopted which fell for adverse comment of the CIT(A) as well as ITAT. It becomes pertinent to observe that an estimation would to some extent be based on an approximate evaluation. That estimation would not be liable to be questioned on the basis of actual facts or figures. Ultimately, the correctness of an estimation would have to be tested on the basis of a legitimate and valid assessment. 3. In our considered opinion, while the ITAT was therefore justified in upholding the view taken by the CIT(A), it would have been appropriate for it to have remitted the matter to the AO for the purposes of examining the issue afresh and in light of Section 56(2)(viib). We set aside the impugned order of the ITAT [ 2022 (12) TMI 1508 - ITAT DELHI] and remit the matter to the desk of the AO who shall proceed to undertake a valuation afresh bearing in mind the provisions made in Section 56(2)(viib) and ensuring that while the DCF Method is adhered to, if in case the data which has been provided by the respondent assessee is found to warrant further examination, it would be open to the AO to enlist the services of an appropriate valuer.
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2024 (9) TMI 1129
TDS u/s 195 - Addition u/s 40(a)(i) - reimbursement of expenses to the non-resident association enterprises - whether nature of functions which have been performed by the foreign principals in favour of assessee would clearly amount to and fall with in the ambit of Section 9(1)(vii) and thus constitute fee for technical services ? - HELD THAT:- Undisputedly, the additions came to be made pursuant to the provisions made in Section 40(a)(i). The appellants in that respect had tried to source the obligation of the respondent/ assessee to deduct tax at source by virtue of Section 195. The obligation to deduct tax in terms of that provision would arise provided it were established that the reimbursement of remittances made would fall within the scope of Section 9 and to the extent that it introduces legal fictions in respect of income which could be said to have accrued in India. It was, therefore, incumbent upon the appellants to establish that the fee or amounts which were remitted would fall within the ambit of any technical, managerial or consultative service that had been rendered. Having perused the relevant clauses of the Agreement, we find ourselves unable to sustain that submission. No substantial question of law arises.
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2024 (9) TMI 1128
TDS u/s 195 - PE in India - holding tax rate of 4% in respect of the receipts received from various customers and asserted to be taxable as business income u/s 9(1)(i) - HELD THAT:- Petitioner has received remittances with a withholding tax at the rate of 1.5%. By the time these writ petitions were taken up for hearing, it was evident that they had essentially been rendered infructous consequent to the FYs themselves having come to an end. As in case the petition were to fail, the balance amount calculated at a differential rate of 2.5% would be deposited. It was on the aforesaid basis that the writ petitioners prayed for the matters being heard and disposed of finally on merits and notwithstanding the FY having come to an end. In our considered opinion, para 18 of our interim order clearly requires a finding on merits being rendered irrespective of the FY having come to an end since the liability of the petitioner for the period in question would have to be adjudged lest it be put to prejudice and be compelled to pay the differential tax @ 2.5%. One of the primary grounds of challenge which was noticed by the Court while entertaining the writ petition was of the respondents having accepted the profit attribution rate to be 26%. It was in the aforesaid backdrop that the petitioners appear to have contended that the withholding rate of tax would not exceed 1.04%. However, and since they had been adhering to a withholding tax rate of 1.5%, and which was the rate that was admittedly followed for the period spanning FYs‟ 2018-19 to 2020-21, the Court had in the interim stipulated that the withholding tax rate would be 1.5%. We note that the profit attribution rate of 26% does not appear to be disputed. Notwithstanding the authority having noticed the profit attribution rate, it proceeded to frame a with holding tax rate of 4%. Since the factum of the with holding tax rate not exceeding 1.04%, when computed alongside the profit attribution rate of 26%, was not seriously questioned, we find ourselves unable to sustain the order impugned. The withholding tax rate question for any other year which may be pending would have to be decided independently. Since the orders impugned before us stood restricted to an adjudication under Section 197 of the Act alone, all rights and contentions of respective parties on merits are kept open to be addressed in regular assessment proceedings.
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2024 (9) TMI 1127
Miscellaneous Application u/s 254(2) for condonation of delay - HELD THAT:- As in S. B. Singersingh and Sons [ 1969 (8) TMI 14 - ALLAHABAD HIGH COURT] where the Court held, even its express power to review its orders is not conferred by a statute, a Court or a Tribunal has inherent jurisdiction to rectify a wrong committed by itself when that wrong causes prejudice to a party for what that party is not responsible . Again this would not be applicable into the facts of this case because the ITAT has not committed any wrong in rejecting the Miscellaneous Application on the basis that it has no power to condone the delay. There is no provision in Section 254 or any other section which provides for condonation of delay beyond six months. In the circumstances, for reasons recorded by us no sufficient cause is shown for the delay. We have observed Petitioner was not only negligent but also lacked bonafides. Writ Petition dismissed. No order as to costs.
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2024 (9) TMI 1126
Demand raised u/s 154 - petitioner s case that no order has been served on petitioner, no show cause notice was ever issued to petitioner and at no stage was petitioner even intimated about any action being taken by the Department suo motu u/s 154 - HELD THAT:- Mr. Gupta appearing for respondents informed the Court that he has instructions from respondent no.1 Mr. Basant Kumar Arya that the demand has been uploaded by the erstwhile Deputy Commissioner of Income Tax on the portal but the Department does not have any file relating to that matter. Mr. Gupta states that his instructions are to inform the Court that respondent no.1 or the Department has no document to show that any notice was issued u/s 154 or even an order was passed under Section 154. Mr. Gupta also states that if the Court directs respondents, they shall remove the pending demand from the Income Tax Portal pertaining to petitioner. In view of the statement made by Mr. Gupta as recorded above, we have to quash and set a side the demand for Assessment Year 2013-2014 as appearing on petitioner s portal and the computation sheet under Section 154 dated 31st March 2021, which we here by do. The demand appearing on the portal shall also be removed. This has to be completed with in two weeks of this order being uploaded. We would direct the Principal Chief Commissioner of Income Tax, Mumbai (PCCIT) to have an enquiry conducted by a person not below the rank of Additional Commissioner of Income Tax to ascertain how such a demand came to be uploaded in the portal pertaining to petitioner and if there has been any negligence or lapse on the part of any officer, to take such action as the PCCIT will feel necessary against the said officer.
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2024 (9) TMI 1125
Maintainability of appeal against disputed questions of fact - Re-assessment proceedings - Unexplained remittances in the bank account of the petitioner - as argued business account (current account) was opened in the petitioner's name in the third respondent bank without the knowledge of the petitioner - HELD THAT:- From the averments in the affidavit in support of the writ petition, it is evident that the petitioner had filed W.P. earlier. The said writ petition was dismissed. After the assessment order was issued, the present writ petition has been filed. The petitioner contends that a bank account was opened in his name without his knowledge and that transactions in such account resulted in the assessment order. These are disputed questions of fact which cannot be conveniently addressed in proceedings under Article 226 of the Constitution of India. As against the assessment order, a statutory appeal is available to the petitioner. Consequently, no case is made out for interference under Article 226. WP dismissed by leaving it open to the petitioner to avail of the statutory remedy.
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2024 (9) TMI 1124
Rejection of Application for registration u/s 12A - charitable activity or not? - CIT(E) objection was that the activities of the appellant Trust were not found as per the objects of the MoA and do not conclusively prove the genuineness of the activities of the Society - HELD THAT:- The appellant is required to produce the desired details as show caused by the Ld. CIT(E) to arrive at the necessary satisfaction on charitable objectives viz~a~viz genuineness of activities as per the MoA. The argument of the Ld. AR that the evidences have not been doubted at all, is not appropriate because the CIT(E) has discussed the issue of source of fund for the purpose of the activity by way of Transfer entry on the same day and transferred back in the same manner to the same one party and thus, CIT (E) s observation cannot be said to given only in a casual manner regarding the activities are not being for charitable activities. \In view of natural justice, we consider it deem fit that appellant may be allowed one more opportunity to prove its claim before the PCIT(E). Accordingly, we set aside the impugned order of learned CIT(E) and direct the learned CIT(E) to pass a de novo order in accordance with law after providing reasonable opportunity to the assessee - Thus, the matter is remanded back to the Ld. CIT(E). Appeal filed by the assessee is allowed for statistical purposes.
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2024 (9) TMI 1123
Accrual of income in India - PE and business connection in India - HELD THAT:- As relying on assessee own case [ 2023 (8) TMI 1537 - ITAT MUMBAI] AY 2020-21 we allow these grounds in favour of the assessee after holding that the assessee did not have a PE in India. Attribution and estimation of gross profit - This ground is treated as academic and hence infructuous as it has already been held hereinbefore that the assessee does not have a PE in India.
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2024 (9) TMI 1122
Accrual of income in India - assessee has PE and business connection in India - HELD THAT:- This issue is covered by the order of the coordinate bench in immediately preceding year i.e. AY 2020-21 [ 2023 (8) TMI 1537 - ITAT MUMBAI] we allow these grounds in favour of the assessee and hold that the assessee did not have a PE in India. Royalties received during the year u/s 44DA - AR submitted that he has offered royalty income to tax at 10% plus applicable surcharge and cess on gross basis. If it is held that the assessee does not have a PE in India, there can be no question of the royalty being attributable to the PE in India and it would be taxable at 10% plus applicable surcharge and cess on gross basis on terms of section 9(1)(vi) - HELD THAT:- During the course of hearing the assessee was directed to place on record the current status of APA proposed to be entered by the GIA India Lab. It has been submitted by the Ld. AR that the negotiations are currently in progress and the agreement is yet to be signed finally. We, accordingly, restore this matter to the file of the AO with the directions to adopt the royalty ultimately quantified in the APA which is pending to be executed between GIA India lab and the CBDT. Accordingly, these grounds are allowed for statistical purposes. Levy interest u/s 234A - AR has submitted that the return filed on 10.03.2022 was within the due date as due date had been extended till 15.03.2022 vide circular No. 01/2022 dated 11.01.2022 issued by the CBDT. The AO is directed to verify this fact and allow relief admissible in this regard.
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2024 (9) TMI 1121
Nature of technical services - managerial services rendered by the assessee to its subsidiaries ancillary and subsidiary to the enjoyment of intellectual property as per the license agreement - HELD THAT:- We do not find any infirmity in the order of the CIT(A) in holding that the managerial service provided by the assessee is not in the nature of technical services . We do not find any justification for taking any other view. For the above reason, we deem it fit to dismiss the grounds raised by the Revenue. Addition u/s 40(a)(i) - Assessee is not liable to deduct TDS for the services which are managerial in nature and not technical services for A.Ys. 2010- 11 to 2015-16. Short credit of TDS - As the issue of non deduction of TDS for the payment made for managerial services received by the assessee from Lloyds Register of Shipping has already been decided by the Tribunal for this year and earlier years in favour of the assessee, the only issue that has been raised by the assessee in these appeals pertains to non grant of TDS credit by the lower authorities. The assessee has also submitted that it had filed rectification application u/s. 154 of the Act before the ld. A.O. which is pending for disposal. In the present situation, we deem it fit to remand these issues back to the file of the ld. AO for verification and thereby direct the ld. A.O. to grant the TDS credit subject to verification and in accordance with law. The assessee is also directed to comply with the proceeding and to furnish all documents in support of its claim.
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2024 (9) TMI 1120
TP Adjustment - Addition on account of reimbursement of alleged excessive AMP expenses incurred by the Appellant - whether AMP expenses incurred by the Appellant in the normal course of its business were not for the sole benefit of its associated enterprise and thus did not fall within the purview of an international transaction pertaining to rendition of service, as defined in section 92B ? - HELD THAT:- TPO has bench marked the distribution activities by adopting TNM method and found that it is within the ALP, hence accepted the same as proper, however proceeded to bench mark the declared reimbursement of marketing expenses from its AE and drifted to bench mark the AMP expenses by adopting BLT and ended up disallowing the whole AMP expenses. Since the facts in this AY are exactly similar to AY 2007-08, we are inclined to follow the above decision wherein it was clearly held that in the case of distribution business, when there is no ALP adjustment made by the TPO/AO, separate AMP adjustment is uncalled for. In assessee s own case, coordinate bench has considered the similar issue and remitted the issue back to file of AO/TPO to verify the reimbursement of Marketing expenses after verification of AMP expenses afresh. When the above decision passed by the coordinate bench, the issue under consideration was not settled. In our view, now the decision of Hon ble High Court decision in Maruti Suzuki [ 2015 (12) TMI 634 - DELHI HIGH COURT] is before us, therefore, we need to follow the same. DR has made submissions that recent decision of coordinate bench has to be followed and remit this issue back to file of AO/TPO to bench the mark the AMP separately. We are not inclined to agree with the submissions made by DR and inclined to follow the decision of higher wisdom. Further observed that the issue raised in the subsequent AYs are sub-judice before Hon ble High Court, we refrain from commenting on the issue raised by the assessee before Hon ble high court. In our view, coordinate bench has not commented anything on merit on the issue of AMP vis-a-vis BLT and remitted the issue back to AO/TPO. Since the facts in the present appeal and facts in the AY 2007-08 are exactly similar where the assessee has carried on the similar nature of business and there is no deviation observed from the submissions made by the parties, we are inclined allow the grounds raised by the assessee that separate AMP adjustment is uncalled for when the distribution business of the assessee are already bench marked separately. Bench marking of reimbursement of marketing expenses - We observe that the TPO has proceeded to make the bench marking based on the disclosure made by the assessee as a International transaction, he proceeded to make bench marking of the AMP expenses based on the BLT, however, the same is not the proper way. However, we observed that coordinate bench has not given any finding on this issue but remitted the issue back to the file of AO/TPO to verify the AMP expenses. We cannot refer this issue to special bench as suggested by the DR since the issue is not adjudicated by the coordinate bench in subsequent AY 2009-10. After careful consideration, in our view, the issue has to be addressed such a way that the parties to come to terms to resolve the issue rather than keeping it alive infinitely. In our view, after decision of Hon ble High Court, what remains is the bench marking of reimbursement of marketing expenses. TPO proceeded to bench mark the AMP, at that point of time, BLT was considered as proper method, failed to address the real issue of bench marking of international transaction entered by the assessee relating to reimbursement of marketing expenses. In our view, we are dealing with the issue relating to AY 2010-11, considerable time has already elapsed. TPO should have bench marked only the international transaction involving reimbursement of marketing expenses. Since he failed to do so, in our considered view, there may be certain adjustment or verification has to be done, it is unfair to remit this issue back to AO/TPO as considerable time has already passed and also to the assessee at this stage, in our endeavor to resolve the issue under consideration and also cost involved to both the sides, the issue under consideration is only to bench mark the reimbursement cost, to our considered view, to meet the ends of justice, we would like to add 20% of the reimbursement of expenses towards ALP adjustments to resolve the long pending issue. Accordingly, we direct AO/TPO to add 20% of the reimbursement of expenses and complete the bench marking of the international transaction. Accordingly, the ground raised by the assessee is partly allowed. Bench marking the ALP relating to software division of the assessee - Deselection of companies as companies functionally dissimilar with that assessee. Depreciation on Dharuhera Unit - This Court is of the opinion that the reliance placed upon Allied Electronics [ 2007 (2) TMI 213 - DELHI HIGH COURT] cannot be of assistance to the Revenue. That did not take into account the changes brought about through the amendment and appears to have been on an appreciation of Maharashtra Minerals Corporation Ltd. [ 1992 (11) TMI 5 - BOMBAY HIGH COURT] That decision was in the context of law prevailing in 1972-73 obviously before the amendments were made to the Act prior to the introduction of the concept of block assets. Dividend as declared, distributed or paid by a domestic company to a non-resident shareholder(s), which attracts Additional Income Tax (Tax on Distributed Profits) referred to in Sec.115-O - As Special Bench in the case of Total Oil India Pvt Ltd [ 2023 (4) TMI 988 - ITAT MUMBAI (SB)] we are conscious of the sovereign s prerogative to extend the treaty protection to domestic companies paying dividend distribution tax through the mechanism of DTAAs. Thus, 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. Depreciation on license fees paid by the assessee for various software licenses, which are grouped under the head Computers including computer softwares - The issue raised by the AO is whether the assessee is eligible to claim the depreciation as per the category of computers @ 60% or it should be treated as intangible assets and eligible to claim the depreciation @ 25%. The same issue was considered by the DRP in its order and they have remitted the issue back to AO to verify and recompute the depreciation on computer software as per Item no. III(5) of part A of new appendix I of the Income Tax Rules, 1962.
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2024 (9) TMI 1119
TP Adjustment - treatment of Foreign exchange gain/loss as non operative in the case of the assessee and also the comparables selected were having the Forex impact - HELD THAT:- We observe that the revenue model of the assessee is that they are wholly owned subsidiary of Nokia Corporation and is primarily engaged in the business of assembling, manufacturing, distribution, buying, selling, importing, exporting and repairing of mobile phones and rendering of contract software development services related to only mobile phones. The risk factor in international transactions are considerably reduced to nil and all the exchange risks are being transferred to its holding company. Assessee does not own any risk and any exchange fluctuations in the international transactions are borne by the parent company. With the above risk factor on record, in our considered view, when the assessee gets the revenue as per the contract value and all other risks are mitigated by the AE. The exchange fluctuation account is only to monitor the exchange movement and settlement mechanism with the AE and it does not form or impact anyway in the operating revenue or operating expenditure of the assessee. The assessee will be compensated the contract price or invoice value by the AE. Therefore, it can have no place in the financial results of the assessee company. Hence, the operating income/expenses of the assessee is not impacted by the currency fluctuations. If there is upward movement, the AE will make suitable adjustment in the contract prices. It is relevant to note that the revenue/ cost model adopted by the AE by suitably taking care of the exchange risk of the subsidiary company, the relevant exchange risk is the cost/revenue to the AE, as and when they compensate the same. This can never a risk factor to the assessee leading to incurring any revenue income or loss to the assessee. This findings is based on the submissions that the transactions are only with the AE s and any other transaction not involving the AEs, may be claimed as operating expenditure, as the risk factor is mitigated only with the transactions with AE. Therefore, all the transactions are recorded by the assessee are only relating to transactions with its own AE. Hence, we are inclined to agree with the findings of tax authorities. Relying on the Safe Harbor Rules by the revenue - The assessee objected by submitting that as per Rule 10TB and 10TC, the assessee has to be a eligible assessee as well as it is applicable only to eligible international transactions. We observed that the DRP has not applied any rules to determine the assessee as eligible assessee. It just referred to the definition of operating expenses to explain the operating revenue and expenses have to have a forex fluctuation risk, otherwise, it cannot be considered as part of operating revenue or expenditure. Therefore, the relevant ground is rejected. Inconsistent approach adopted by TPO in considering exchange/loss as operating in respect of comparable companies whereas it is considered as non operative in the case of the assessee - We observe from the findings of the Ld DRP that they have analysed the comparable company wise and gave a clear and detailed findings. The contentions of the assessee are properly dealt by the Ld DRP in their findings. Therefore, the relevant contentions raised by the assessee are rejected. When the risk is not borne by the assessee as in the present case, it cannot rely on the decision where the relevant risks are borne by the respective companies/assessees. Therefore, in our considered view, the case law relied by the assessee are distinguishable to the facts in the present case. Therefore, this contention of the assessee also rejected. Accordingly, the relevant grounds raised by the assessee are dismissed. Final comparables selected by the TPO in the MPA segment - TPO has rejected the Zenith Computers Limited (ZCL) as comparable with the assessee company - TPO has applied filter to eliminate persistent loss making companies as one of the criteria and accordingly, it was observed that this company was making persistent loss in the last three years including current assessment year. The assessee has highlighted that the ZCL has incurred losses in FY 2012-13, 2013-14 and earned profit in FY 2011-12. Therefore, it does fit into the definition of persistent loss making company. On evaluation we observed that ZCL is incurring losses in FY 2012-13, 2013-14 and also 2014-15. Therefore, we have to see the pattern of the relevant health of the comparable companies before it is selected for comparison. In this case, it may be functionally comparable but this company has failed in the selection criteria of persistent loss. Therefore, we are inclined to reject the submissions of the assessee and accordingly dismissed the ground raised by the assessee. Exclusion of two comparables selected by the TPO relating to Whirlpool and Penguin Electronics - We observe that the assessee is exclusively engaged in the manufacturing, trading of mobile phones. The functions in manufacturing, pricing, branding etc are unique to the mobile phones and its accessories. It cannot be generalized with any of the home appliances or kitchen appliances. The comparables selected are Whirlpool and Penguin, which basically deals in various home as well as kitchen appliances, the products are many kind and distinct to the assessee company. These can never the proper comparables to the present assessee. Accordingly, we direct the AO/TPO to delete the above said comparables from the final comparables. Accordingly, the grounds raised by the assessee are allowed in this regard. Comparables selected for CSD segment - Infobeans Technologies - As quantum of export of the goods and export of the services cannot be ascertained and thus in view of no segmental data of export of the goods and export of the services available separately, we are of the opinion that the company cannot we selected as comparable at entity level. Persistant Systems - The said concern was engaged in both product and development of software development services and hence, needs to be excluded from the final set of comparables. Larsen and Toubro Infotech - In view of the functional dissimilarity at entity level and extraordinary event during the year, this company is directed to be excluded from the financial set of the comparables. Mindtree Ltd - In view of functional dissimilarity as well as the difference in the assets owned by the company vis- -vis the assessee, we direct the Learned AO/TPO to exclude the company from the set of the final comparables. Additional ground on refund of excess dividend distribution tax paid u/s 115O - As decided in Total Oil India Pvt. Ltd. [ 2023 (4) TMI 988 - ITAT MUMBAI (SB) ] we hold that where dividend is declared, distributed or paid by a domestic company to a non-resident shareholder (s), which attracts Additional Income Tax (Tax on Distributed Profits) referred to in Sec.115-O of the Act, such additional income tax payable by the domestic company shall beat the rate mentioned in Section115O of the Act and not at the rate of tax applicable to the non-resident shareholder(s) as specified in the relevant DTAA with reference to such dividend income. Nevertheless, we are conscious of the sovereign s prerogative to extend the treaty protection to domestic companies paying dividend distribution tax through the mechanism of DTAAs. Thus, wherever the Contracting States to at axtreaty 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. Appeal filed by the assessee is partly allowed.
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2024 (9) TMI 1118
Benefit of deduction u/s. 54F - allowing cost of acquisition - land sold belongs to the HUF of the appellant - second round of litigation - HELD THAT:- As regards the issue of allowing cost of acquisition and deduction u/s. 54F of the Act the ld. AO did not consider due to non-submission of the details by the assessee. CIT(A) has given the different finding without commenting upon the records of the assessee. Thus, the bench feels that the issue of allowability of the cost of acquisition and deduction u/s. 54F needs to be examined based on the merits of the case. Even the assessee when objected by the DR about the allowability of the claim of cost of acquisition stated that the assessee has filed the valuation report and regards the deduction u/s. 54F of the Act the investment made by the assessee the matter is required to be examined based on the provision of section 54F and therefore, we considered it deem fit that the assessee be given a fair chance to represent the merits of the case and therefore, we considered it fit to remand the matter back to the file of the ld. AO with a direction to decide the issue of allowability of cost of acquisition and allowability of deduction u/s. 54F of the in accordance with the law and at the same time considering the non-submission of the details by the assessee we considered it fit to levy the cost to the assessee for each of the year for an amount of Rs. 1000/- each to be deposited in the Prime Minister Relief fund and necessary receipt be provided to the ld. AO when the ld. AO start the set aside proceedings.
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2024 (9) TMI 1117
Estimation of income - bogus purchases - CIT(A) restricted the addition to the extent of profit element embedded in the transaction to 12.5% - HELD THAT:- When the transaction was not verifiable only income component could be taxed and not the entire transaction amount. It is also discussed that the corresponding sale proceeds of the goods was not disputed in the case of the assessee. CIT(A) has restricted the addition to the extent of profit element embedded in the alleged purchases to the extent of 12.5% as discussed above in this order. CIT(A) has also referred the decision of S.V. Jiwani [ 2022 (10) TMI 173 - BOMBAY HIGH COURT] wherein the addition to the extent of 12.5% of the bogus purchases is held as fair and reasonable. No Reason to interfere in the decision of ld. CIT(A) therefore, the appeal of the revenue is dismissed.
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2024 (9) TMI 1116
Unexplained expenditure u/s. 69C - expenses incurred towards examination/inspection charges which actually represents amount paid to PO/EO/AO of the Government agencies - HELD THAT:- We noted that there is no evidence that these amounts are paid by the assessee either to the government employees i.e., AO/EO/PO and these payments are made by assessee or expenditure is incurred by the assessee for the purpose, which is an offence or which is prohibited by law, as envisaged in the Explanation to Section 37(1) of the Act. Hence, in the given facts and circumstances and the fact that expenditure is incurred by the assessee towards travel expenses, lunch to the employees, loading and unloading of goods, clearance work paid to labour, crane operators during the customs physical examination/inspection of cargo by the AO/EO/PO and incurred in connection with examination/inspection, which is genuine business expenditure allowable u/s. 37 - Hence, we allow this expenditure and set aside the order of AO as well as that of the CIT(A) on this issue. Hence, this issue is allowed. Addition on ad hoc basis without specifying which voucher is not verifiable - Even the Revenue has accepted that these are normal business expenses but only quantification is in dispute. In the absence of bills and vouchers, the AO estimated the disallowance at 20% and confirmed by CIT(A). We feel that a reasonable disallowance of 10% will serve the interest of justice and hence, we restrict the disallowance at 10% and direct the AO to re-compute the income accordingly. In term of the above, we partly-allow the claim of assessee and this ground raised by assessee is partly-allowed. Disallowance of 40(a)(ia) - most of the deductees filed a nil deduction certificate (foreign liner) - assessee made only submission that this issue can be remitted back to the file of the AO and assessee will file CA certificate in view of second proviso to section 40(a)(ia) of the Act, where the recipient parties have included the income in their respective returns of income - HELD THAT:- After hearing both the sides and going through the facts, we remit this issue back to the file of the AO and assessee will file the relevant certificate from CA in term of second proviso to section 40(a)(ia) of the Act. Hence, this issue is restored back to the file of the AO. Disallowance of out-of-pocket expenses - We find considerable force in the plea of assessee as the Revenue could not point out what is the bifurcation of Rs. 40,00,000/-. We noted that the assessee has already declared a sum of Rs. 40,00,000/- in the disclosure including this under this head and hence, we delete this addition. Addition of expenditure was exclusively incurred for the purpose of business - HELD THAT:- We noted that this plea of the assessee that this amount tantamount to double addition seems logical as the assessee has already disclosed a sum of Rs. 1.10 crores as additional income and further, making addition of this expenditure of incidental expenses of Rs. 14,44,200/- makes no sense. Hence, we delete this addition and allow this issue of assessee s appeal. Accordingly, this appeal of the assessee is allowed. Ad hoc basis, being 15% of entire expenditure - We agree with the arguments of ld.counsel that once the vouchers and bills are impounded with the Department and lying with them and without pointing out any defect, no disallowance can be made. We delete the disallowance and allow this ground raised by assessee.
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2024 (9) TMI 1115
Valuation of closing stock - undervaluation of stock - AO held the view that the assessee was required to value the closing stock of Karimnagar in parity with rates of closing stock at its TADA premises - arguments of the assessee that the Karimnagar stock was of comparatively inferior in quality as compared to TADA - CIT(A) has concluded that the value of Granites mined at Karimnagar are the distinct when compared with those procured and used for production at TADA - HELD THAT:- We find that the Ld. First appellate authority has passed a speaking order after carefully analyzing the material available on records and therefore does not require any interference at this stage. Accordingly, we confirm the order of the Ld. CIT(A) in respect of deletion of addition and dismiss the appeal filed by the Department. Variation in quantum of dispatch of raw blocks from Karimnagar unit - AO noted that the mineral assessment reports prepared by the Department of mines and geology showed quantum of output dispatched from Karimnagar unit of 5739.893 cu.m. As against this, the quantum sales admitted was only 3024 cu.m which included an inter unit transfer of 503.57 cu.m to TADA, thus there was a difference of 2715.893 cu.m - AO rejected the arguments of the assessee that the variations had arisen between the dispatches and the actual quantity invoiced - HELD THAT:- FAA proceeded to accept the contention of the assessee that the difference between the output qua payment of seignorage fees and the actual sales was natural and customary in this line of business and deleted the additions made. Whereas there can be no dispute regarding the fact that there is a strong likelihood of qualitative difference between the quantity mined and the quantity actually sold. It is also an undisputed fact of the case that the government collects its royalty or what is known as seignorage fees on gross measurement of excavated blocks. Quantify the ratio of damaged or unsaleable portion vis- -vis high quality and saleable portion of the granite - The report is silent about percentage ratios available in Andhra Pradesh where the mining was done. It is seen that the appellant has claimed about 50% damages / unsaleable proportion qua the gross measurement of excavated granites. The shodhganga study report estimates lowest marketability of excavated granites at 20% in Tamil Nadu and highest at 75% in Rajasthan. Estimate of 60% marketable granite being procured by the assessee can be made - AO is therefore directed to recompute his addition by allowing the assessee a benefit of 40% as damaged or unsaleable granite stock by examining the books of accounts of the assessee including bills and voucher concerning the impugned granite blocks of Karimnagar Unit. The assessee is directed to render all assistance and cooperation to the Ld. AO in compliance of these directions. Non-cooperation from assessee side can be adversely viewed. To the extent the grounds of appeal raised by the Appellate Revenue on this issue are partly allowed. Violation of principle of natural justice in as much as non-rendering of opportunity of being heard - CIT (Appeal) is empowered to admit additional evidence during appellate proceedings which were not or could not be produced during assessment proceedings or in the opinion of the First Appellate Authority are necessary for adjudication of pending appeal with the exception that the assessing officer would be given an opportunity to consider said evidences. AO considered evidences produced before the CIT appeal and confirmed their submission during his assessment proceedings. The impugned narrative from the AO clearly establishes that he was afforded an opportunity of considering the details etc filed by the assessee, though strictly not falling in category of additional evidence, by the Ld. First appellate authority which was duly availed. This finding of the Ld. CIT appeal has neither been controverted by the appellant Revenue by way of a ground of appeal nor has the revenue put forth any evidence in support thereof. Consequently, the ground of appeal raised by the appellant revenue is not supported by evidence on records. Accordingly, the ground of appeal raised by the revenue is dismissed.
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2024 (9) TMI 1114
Bogus payment made to sub contractors - as per AO any expenditure claimed should have a nexus with the income and assessee could not prove that the subcontractors' expenses debited are represented either by way of contract receipt or by way of Work-in-progress - CIT(A) deleted addition - HELD THAT:- Shorn of any details as to the identity of the subcontractors and nature of services rendered, relief was granted based on comparative financial performance of earlier years. The learned Departmental Representative has been quite correct in submitting that the order of the learned CIT(A) be overturned. There is no effective rebuttal to the clinching and glaring irregular facts We find that the order of the learned CIT(A) is cryptic and is unsustainable hence, the same is overturned. He failed to address the various glaring infirmities pointed out. Even the nature of service has not been examined on a thread bare basis. The commendable job of the Assessing Officer cannot be ignored flippantly. Consequently, the order of the Assessing Officer is upheld by confirming the disallowance towards subcontracting charges. Thus, the ground raised by the Revenue is allowed.
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2024 (9) TMI 1113
Revision u/s 263 - CIT upholding the reassessment as erroneous and prejudicial to the interest of Revenue for verification of transactions of NSEL commodities and provision of bad debt claimed by the assessee - HELD THAT:- The Hon ble High Court Marico Ltd. [ 2019 (8) TMI 1337 - BOMBAY HIGH COURT] has clearly pointed out once a query has been raised by the AO during the assessment proceedings and the assessee has responded to that query, it would necessarily follow that the AO has accepted the assessee s submission, so as to not deal with that issue in the assessment order. The Hon ble High Court of Bombay considering another decision of the same High Court in the case of GKN Sinter Metals Ltd. [ 2015 (1) TMI 832 - BOMBAY HIGH COURT] has categorically pointed out that an assessment order passed u/s. 143(3) of the Act does not reflect any consideration of the issue, it must follow that no opinion was formed by the AO in the regular assessment proceedings. Issues of transactions with NSEL commodities and provision for bad and doubtful debts have been considered by the AO during original assessment proceedings and subsequently in reassessment proceedings, where is error in reassessment order dated 24.03.2022 so as to make the same prejudicial to the interest of revenue, CIT-DR could not controvert the above fact situation except supporting the revision order passed by the PCIT. Complete details were examined by the AO in the reassessment proceedings and framed assessment u/s. 147 r.w.s.144B of the Act after examining these details. Even these were answered by the assessee in reply to questionnaire issued along with notice u/s. 142(1) while completing reassessment. Hence, it is a full verification case and AO has verified complete facts and after verification completed the reassessment. Hence, we find no reason to hold that the reassessment order is erroneous insofar as prejudicial to the interest of revenue on this very jurisdictional issue. Hence, we quash the revision order passed by PCIT and allow this appeal of assessee.
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2024 (9) TMI 1112
Assessment order passed against deceased person - addition of the cash found deposited in his bank account during demonetization - HELD THAT:- In the present case after the intimation of the death of the assessee to the AO, no notice whatsoever was served on the legal representative. Prior to the death of the assessee there was no reply filed to the AO. Subsequent to his death, the AO was required to seek the necessary information from his legal representative for framing assessment. No such act was done by the AO. Besides the assessment is also framed on a deceased person. The Hon ble jurisdictional High Court in the case of Chandreshbhai Jayantibhai Patel [ 2019 (1) TMI 353 - GUJARAT HIGH COURT] has categorically held that no order can be passed on a deceased assessee. Assessment order is quashed as invalid, and the appeal of the assessee is allowed for the above reason.
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2024 (9) TMI 1111
Addition u/s 69A r.w.s.115BBE - cash deposits during demonetization period - assessee contented AO should have assessed the joint holders separately instead of attributing all the transactions solely in the hands of the assessee, and made assessment U/s. 144 of the Act treating the entire cash deposits as unexplained money U/s. 69A HELD THAT:- Cash deposits were made out of the sale proceeds only. It is also an admitted fact that the assessee and the joint holder Mrs. Satya Sri Kanchumarthi have filed their returns of income separately in their individual status disclosing their respective turnovers. Source of the cash deposited was the loan of a similar account sanctioned by the same bank and branch (Karur Vysya Bank) and the said joint account was merely utilized as a conduit to transmit the loan funds and no other transactions were made in the said account - Assessee and the joint holder Mrs. Satya Sri Kanchumarthi have availed the bank loan jointly which clearly establishes at page 5 of the paper book evidencing the joint account held by the assessee and Mrs. Satya Sri Kanchumarthi. It is also an undisputed fact that the loan availed was a short term loan and the assessee and Mr. Satya Sri Kanchumarthi have repaid the loan amount after liquidating the stocks of raw cashew nuts. Therefore, assessee has properly explained the source for her cash deposits during the demonetization period as it is nothing but repayment of loan of the assessee along with the joint holder. Therefore, I am of the considered view that the Ld. AO and the Ld. CIT(A)-NFAC have not properly appreciated the facts and made the addition U/s. 69A of the Act which is not in accordance with the law. Appeal of the assessee is allowed.
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2024 (9) TMI 1110
Denial of deduction u/s 80P - treating it as a cooperative bank than a cooperative society so as to be eligible for the impugned deduction - HELD THAT:- We find no merit in the Revenue s instant sole substantive ground for the precise reason once the assessee is admittedly a cooperative society registered under such cooperative law which has been held to be a decisive factor in Mavilayi Service Co-operative Bank Ltd. [ 2021 (1) TMI 488 - SUPREME COURT] Their lordships have settled the law that it is the assessee s corresponding registration under the cooperative law which only deserves to be considered in sec. 80P deduction issue. We thus reject the Revenue s instant quantum appeal for latter assessment year in very terms. Revision u/s 263 - DR vehemently contended that case law Totagars Co-operative Sales Society Ltd. [ 2010 (2) TMI 3 - SUPREME COURT] and Katlary Kariyana Merchant Sahkari Sarafi Mandali Ltd. [ 2022 (1) TMI 1309 - GUJARAT HIGH COURT] against the assessee -HELD THAT:- We note that The Vaveru Co-operative Rural Bank Ltd., [ 2017 (4) TMI 663 - ANDHRA PRADESH HIGH COURT] has treated the interest income from nationalized banks as well as eligible for sec. 80P deduction. All these divergent judicial opinions from various hon ble non-jurisdictional high courts and absence of the issue being decided in hon ble jurisdictional high court; make it clear that the instant issue of interest income from cooperative banks as eligible for sec. 80P deduction is indeed a debatable one and therefore, AO s regular assessment dated 20.05.2021 herein could not be termed as an erroneous one causing prejudice to the interest of Revenue in light of Malabar Industrial Co. Ltd. [ 2000 (2) TMI 10 - SUPREME COURT] Once the impugned assessment herein framed as per the PCIT s sec. 263 revision directions itself stands annulled; the consequential assessment framed by the Assessing Officer forming subject matter of Revenue s appeal herein has no legs to stand going by sublato fundamento cadit opus i.e., when the foundation itself does not exist, the superstructure raised thereupon also follows the suit.
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2024 (9) TMI 1109
LTCG - allowability of sec.54 deduction - deduction claim of re-investment of the said capital gains in a residential house in USA - Revenue s case before us places strong reliance on the statutory amendment in sec.54(1) vide Finance (No.2) Act, 2014 w.e.f. 01.04.2015 that such an option of re-investment of capital gains for purchasing a residential house abroad is no more available w.e.f. 01.04.2015. HELD THAT:- We are of the considered view that once the statutory provision itself stands amended and the assessee has made her investment which is no more allowable, stricter interpretation in light of Commissioner of Customs (Imports), Mumbai vs. Dilip Kumar And Co. Ors. [ 2018 (7) TMI 1826 - SUPREME COURT ] would indeed hold the field. We thus conclude that both the learned lower authorities have rightly disallowed the assessee s sec.54 deduction claim for her re-investment of long term capital gains in a residential house abroad going by the relevant statutory provision. Assessee appeal dismissed.
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2024 (9) TMI 1108
Claim of refund of excess DDT paid - on dividend declared by assessee, the dividend distribution tax has been paid @ 20.36% as against the rate of 10% provided in the DTAA between India and Singapore - CIT(A) did not accept the contention of the assessee and rejected - HELD THAT:- Both the sides fairly conceded that the issue stands decided against the assessee by the decision of Total Oil India Pvt. Ltd. Oth [ 2023 (4) TMI 988 - ITAT MUMBAI (SB) ] which has been followed on by the ld. CIT(A). Since the ld. CIT(A) while deciding the issue against the assessee followed the decision of Special bench of the Tribunal cited (supra) therefore, in absence of any contrary material brought to our notice, the order of the CIT(A) is upheld and the grounds raised by the assessee are dismissed.
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2024 (9) TMI 1107
Qualification of the expenditure u/s 37(1) - treatment of membership and subscription fees - revenue or capital expenditure - HELD THAT:- The assessee is a proprietor and running business in his own hand. The adjustment was made of the membership fees of the club u/s 143(1) during the processing of return. The assessee was duly asked about the adjustment and reply was given and objection was filed. AR argued that the assessee has taken this membership for his business promotion and for development of his business. Out of the business hour the connection with customer and the meeting with the parties are conducted in the club premises. So, this membership is very much connected for the furtherance of the business. We respectfully relied on the order of in case of Bayer Vapi (P.) Ltd. [ 2019 (5) TMI 1208 - GUJARAT HIGH COURT] and in the case of Swiss Re Services India (P.) Ltd. [ 2023 (10) TMI 979 - BOMBAY HIGH COURT] - In our considered view, expense claimed in the head of revenue expenditure u/s 37(1) is related with the business of the assessee. Assessee appeal allowed.
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2024 (9) TMI 1106
Disallowance of unpaid Electricity Duty u/s 43B - assessee explained that the provisions of section 43B were not applicable to the liability of Electricity Duty and Tax thereon, as it did not fall within the definition of Statutory Liability. - HELD THAT:- In our considered opinion the Ld.CIT(A) has erred in concluding that the Hon ble Supreme Court has yet to decide and only admitted the SLP filed by the assessee against the judgement of Hon ble Gujarat High Court passed for AY 1990-91. [ 2003 (1) TMI 43 - GUJARAT HIGH COURT] Adjustment of Electricity Duty by the Government against the subsidy sanctioned by the Government amounts to valid payment for the purposes of section 43B of the IT Act, vide its order dated 12-09-2012 and deduction should be allowed on a payment basis in the year the payment is made. Assessee has demonstrated that the Hon'ble Supreme Court's order [ 2012 (9) TMI 1251 - SC ORDER] addressed the issue of unpaid electricity duty, requiring a certificate from a Chartered Accountant. AO's failure to consider the Supreme Court's directive and the Tribunal s instructions has resulted in an improper assessment. CIT(A) has failed to take into consideration the judgement of the Hon ble Supreme Court relating to AY 1990-91 and decide the case on merits for the year under consideration. We decide as follows: - The order passed by the CIT(A) confirming the AO's decision is set aside. - The matter is restored to the AO for fresh adjudication in light of the Supreme Court s order and after considering the facts and evidence presented by the assessee, particularly the Chartered Accountant's certificate as mandated. - The AO is directed to provide the assessee with a fair opportunity to present its case and to re-evaluate the issue based on the Supreme Court's directive and the Tribunal s instructions.
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2024 (9) TMI 1105
TP Adjustment - Comparable selection - turnover filter application - HELD THAT:- As following the footprints of the Hon ble Karnataka High Court in the case of Obopay Mobile Technology India Private Ltd. [ 2018 (7) TMI 2129 - KARNATAKA HIGH COURT ] we hold that the turnover is a relevant criteria for choosing companies as comparables in determining the ALP in Transfer Pricing cases. Appropriate turnover filter - In all the decisions relied upon by the learned AR, a consistent view is taken that the application of tolerance range of turnover of ten times on both sides of assessee s turnover was proper. Following the same, we direct AO to adopt the same for a fresh search. With this view of the matter, we set aside the findings of the authorities below and direct the AO/TPO to take the range of turnover filter at ten times on both the ends and conduct search afresh to take a plausible view. Vitae International Accounting Services Pvt. Ltd., Domex E Data Pvt. Ltd., and MPS Ltd.- Vitae International Accounting Services Pvt. Ltd., is engaged in providing accounting, auditing and tax services apart from providing services in the knowledge specific domains to their clients, which require application of knowledge and advanced analytical and technical skills; whereas Domex E Data Pvt. Ltd., is engaged in providing e-commerce operations, involving high end KPO services, which involves business analyticals, financial analytics and market research. MPS Ltd., is engaged in content solutions for the digital world like content authorizing and development, content production, content transformation and fulfilment and customer support. In the case of Maersk Global Centres (India) (P.) Ltd., [ 2014 (3) TMI 891 - ITAT MUMBAI] and in the case of Rampgreen Solutions (P.) Ltd. [ 2015 (8) TMI 931 - DELHI HIGH COURT] we find that the functions performed by Vitae International Accounting Services Pvt. Ltd., Domex E Data Pvt. Ltd., and MPS Ltd., fall broadly in the class of ITeS, but those are akin to the functions enumerated in clause (iv) to (vii) of Rule 10TA(g) of the Rules, thereby rendering themselves to be non-comparables to the assessee. We, therefore, direct AO/TPO to exclude these entities from the list of comparables. Coming to Motiff India Infotech Pvt. Ltd., only reason urged before us to exclude this entity is its huge advertising and promotional expense. On this aspect, learned TPO observed that any independent entity in an uncontrolled market structure would be spending routine marking or sales promotion expenses and per se that does not amount to any extraordinary expense, since it would be impossible to find out any comparable without marketing or sales promotions expense in an uncontrolled market. DRP observed that no material is available to conclude that the brand or the expenses impacted the revenues of this entity. Since there is no dispute on the functional profile of this entity, we find it difficult to exclude this entity from the list of comparables. We direct the learned AO/TPO to conduct fresh study in the light of the above observations and determine the ALP of the international transaction. Appeal of the assessee is treated as allowed for statistical purposes.
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2024 (9) TMI 1104
Estimation of income - Bogus purchase u/s 69C - HELD THAT:- In the circumstances only the profit element can be added to the total income of the assessee. As decided in case of MOHOMMAD HAJI ADAM CO [ 2019 (2) TMI 1632 - BOMBAY HIGH COURT] has held that only the differential profit could be added to the total income of the assessee. In the case of the assessee the embedded differential gross profit is 11.58% for assessment year 2010 11. Accordingly, we direct the learned assessing officer to retain the addition to the extent of 11.58% of the alleged bogus purchases for both the years. Accordingly the appeal of the assessee is allowed partly.
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2024 (9) TMI 1103
Disallowance of deduction u/s 80P(2)(d) - interest income earned by these cooperative society from other cooperative banks - whether the adjustment u/s 143(1)(a)(v) made by the central processing Centre is correct or not.? - HELD THAT:- It is not the case that deduction under section 80P(2)(d) is a deduction provided by any monitoring limit or percentage ratio or fraction. Thus, claim of deduction under section 80P(2)(d) is also not classified as incorrect claim. Merely because part of the interest is disclosed by the assessee is interest income in profit and loss account and part of the income shown by the assessee under the head income from other sources does not change the character of the income and consequent deduction of such income, if available. Therefore, the claim of the assessee in the return of income is also not an incorrect claim. Thus, the adjustment of disallowance of deduction under that section is not permissible adjustment provided under section 143(1) of the act. Therefore the intimation passed under section 143(1) is not sustainable. Cooperative banks are also a co-operative society. Only difference is that those cooperative societies are doing the business of banking as per the banking companies act 1949. Therefore, merely because these cooperative societies cooperative bank they do not lose their status as a co-operative society. The assessee s investment of earning interest income from such cooperative banks which are also cooperative societies whole of such income is deductible under this section. It is not in dispute that assessee is not a cooperative bank and therefore provisions of section 80P(4) of the act does not apply to it. Thus the assessee is eligible for deduction u/s 80P(2)(d) on its income received from all the above cooperative banks - Assessee appeal allowed.
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2024 (9) TMI 1102
Proceedings u/s. 270A(8) - under reporting of income as a sequence of misreporting - AO relevant show cause notice dated 19.09.2022 nowhere specified the corresponding limbs in clauses (a) to (f) to sub-section 9 read with subsection (8) thereof HELD THAT:- We find no merit in Revenue s arguments placing reliance on M/s. Veena Estate Pvt. Ltd. [ 2024 (1) TMI 701 - BOMBAY HIGH COURT] once the issue before their lordships was that of the concerned appellant seeking to frame an additional substantial question of law in section 260A proceedings whereas the law regarding the tribunal s jurisdiction to entertain such a pure question of law, not requiring any further detailed investigation on facts, is already settled in NTPC Ltd. [ 1996 (12) TMI 7 - SUPREME COURT] That being the case, we are of the considered view that going by the foregoing judicial precedent, this tribunal is very much entitled to entertain and decide such a pure legal plea for the first time in section 254(1) proceedings. We accordingly reject the Revenue s instant technical arguments to conclude in light of section 270A (8) (9) r.w. clauses (a to f) that the learned Assessing Officer s failure to pinpoint the corresponding default of assessee s part indeed vitiates the entire proceedings as per Schneider Electric South Asia Ltd [ 2022 (3) TMI 1295 - DELHI HIGH COURT] and Md. Farhan S.A. [ 2021 (3) TMI 608 - BOMBAY HIGH COURT (LB)] in section 271(1)(c) old penal provision. We order accordingly.
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2024 (9) TMI 1101
Unexplained income - Amount received from behalf of customers for tractor sales - assessee was involved in arranging finance for the customers from a NBFC and assessee received an amount from NBFC on behalf of its customer to whom the sale of tractor has been made in the subsequent financial year - HELD THAT:- We have analysed assessment order wherein, the AO mentioned that there was an enquiry u/s. 133(6) of the Act from NBFC/M/s. MMFSL relating to the transactions between the assessee and M/s. MMFSL. In this enquiry it is established that there was no amount due to the financier from the assessee, hence the AO treated the same as unexplained income. In our observation, this information is correct but the interpretation taken by the AO is incorrect as the same amount received from NBFC/M/s. MMFSL, but belongs to the customers on whose behalf the assessee received the same and in very next year disclosed the same in its turnover. Clearly, it s a case of an inadvertent error in classification and has no bearing on the revenue or tax liability of the assessee. Disallowance u/s. 38(2) - depreciation on car presuming, element of personal use by the directors of the company - HELD THAT:- On this issue the position of law is very clear that no disallowance can be made in the hands of the assessee company being an artificial judicial person. At the max, if the AO is able to establish the persons views of the assets of the company the same can be added back as business perks in the hands of directors, but no disallowance can be there in the hands of the assessee company. Based on above, this ground of appeal is also allowed and AO is directed to delete the addition made in the hands of the assessee company. Appeal of the assessee is allowed.
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2024 (9) TMI 1100
Revision u/s 263 - expenditure on SAP Software licence claimed as revenue - as per CIT statement of significant accounting policies and notes to the account , forming part of the financial statements for the relevant year clearly states that cost of software is treated as an intangible asset and amortized over a period of 5 years. As regards the commission and royalty expenditure, much less an inquiry into the admitted non-deduction of TDS, even the nature of services rendered by the foreign parties remains to be specified by the assessee - HELD THAT:- Book treatment would not dictate the allowance or otherwise of an expenditure, where it is otherwise of revenue nature, which, however, would require a finding by the AO, absent, validating the finding by the competent authority of lack of proper inquiry, resulting in lack of due application of mind by the AO in framing the assessment. For instance, capitalization of an expenditure in accounts may not be fatal to its claim as revenue, but the contradiction, which is clear, would need to be explained, and which has as much as not been inquired into. An asset, even if intangible, is liable for depreciation, and cannot be claimed as an expense under the Act, which has no concept of deferred revenue expenditure. As regards commission and royalty expenditure, much less the nature of services rendered, there is nothing to suggest that tax has been deducted at source. The inquiries referred to by Sh. Bhatt are the mere beginning of the process of inquiry, to be taken to its logical end. Even as observed by the Bench during hearing, the AO has made only a semblance of an inquiry; rather, a pretence. It is only on a proper enquiry, which enables him to form a clear view in the matter, so as to issue definite finding/s of fact/s, on which law can then be applied, that it can be said that there has been due application of mind by the assessing authority, a failure whereof vitiates assessment, rendering it liable to revision. The impugned assessment, for the reasons afore-mentioned, clearly suffers from a complete lack of application of mind by the assessing authority, i.e., qua the expenses referred herein. We, accordingly, have no hesitation in upholding the impugned order qua the said aspects. Decided against assessee.
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2024 (9) TMI 1099
Rectification u/s 154 - Maintainability of the levy in the absence of the direction by the AO in the assessment order for levy of interest u/s. 234A - HELD THAT:- The said legal ground could be raised only in appeal against the order charging the said interest without a direction to that effect in the assessment order. The rectification order only seeks to compute the same correctly, i.e., in accordance with the relevant provision of law inasmuch as the assessment made, though u/s. 147, is the first assessment and the return in response to notice u/s. 148(1), the first return. The said order having not been appealed against, had attained finality. The raising of this issue before us is not maintainable. Reference in this context be made to, inter alia, Bhopal Sugar Industries Ltd [ 1960 (9) TMI 11 - SUPREME COURT] , Hindustan Coco Cola Beverages [ 2007 (8) TMI 12 - SUPREME COURT] Continuing further, it was nevertheless a common contention before us that the said ground is not maintainable in view of the law as clarified by the Apex Court per it s decisions in Mansarovar Commercial Pvt. Ltd. [ 2023 (4) TMI 419 - SUPREME COURT] and Bhagat Construction Co. Pvt. Ltd. [ 2015 (8) TMI 621 - SUPREME COURT] following it s constitutional Bench decision in CIT v. Anjum M.H.Ghaswala [ 2001 (10) TMI 4 - SUPREME COURT] as also it s subsequent decision in Karanvir Singh Gossal [ 2012 (9) TMI 334 - SUPREME COURT] . Per the same, adverted to during hearing, it stands abundantly clarified that the matter admits of no two views; the charging of interest u/s. 234A, as indeed u/ss. 234B and 234C, mandatory and compensatory in nature, is automatic. Decisions, holding to the contrary, viz. Tej Kumari [ 2000 (9) TMI 52 - PATNA HIGH COURT] do not represent good law. That being the case, the AO has no discretion in the matter. His failure, therefore, in not issuing the direction to charge interest in the assessment order, is to no consequence, and clearly a mistake, rectifiable u/s. 154. Finally, we consider the aspect of computation of interest, on which, again, no issue was raised by the assessee. The assessment being for the first time, even as observed in South Indian Bank Ltd. [ 2009 (12) TMI 542 - KERALA HIGH COURT] albeit in the context of s. 234B, which is in para materia, as also by the Tribunal in Mariamma Joseph[ 2024 (6) TMI 802 - ITAT COCHIN] - The action of the AO is in clear conformity of the provision, admitting, again, no two views and, thus, liable to be rectified u/s. 154.
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2024 (9) TMI 1098
Taxability of Income in India - Addition made on account of Management Service Fees - HELD THAT:- Quality Development and Training services are concerned, the assessee has offered the same to tax, conceding that there has been transfer of knowhow and technology. Information Technology Services, the CIT(A) after examining the same has come to the conclusion that since make available criteria as specified under India-Singapore DTAA is not satisfied, hence, fee payable in respect of information technology services is not taxable in India. Other services i.e. planning analysis/corporate development, human resources and finance, the CIT(A) has upheld the addition solemnly on the ground that the assessee has not furnished complete details, therefore, exact nature of services could not be determined. Contention of the assessee is that all relevant documents were furnished before the AO, as well as the CIT(A), but the same have not been examined by the First Appellate Authority. Taking into consideration entire facts, we deem it appropriate to restore this issue back to the file of the CIT(A), for re-examine the documents already furnished by the assessee available on record and also any other documentary evidence/submissions furnished by the assessee to substantiate its claim. CIT(A), after examining the documents shall pass a speaking order with regard to Planning Analysis/Corporate Development Services, Human Resources Finance Services, in accordance with law.
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2024 (9) TMI 1097
Applicability of mercantile system or cash system of accounting - HELD THAT:- We consider it appropriate to restore the issue on merits to the file of AO to consider the mercantile system of accounting as applicable in case of assessee and after taking response of assessee on the issue, pass order afresh. Additions sustained by the CIT(A) on account of purchase of iron purchased - As again once it is established that assessee was following mercantile system of accounting, then irrespective of fact that stock was received in the next financial year, while payment was made before 31.03.2010, the disallowance cannot be sustained. Accordingly, we sustain ground nos. 2 5 partly in favour of the assessee.
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2024 (9) TMI 1096
Enhancing the income of the Appellant - Appellant has produced more than ordinary profits in u/s 80IA(10) - sale of goods through tax holiday unit to LPTPL, the Appellant wish to respectfully submit that during the course of proceedings before the Hon'ble DRP, Appellant had filed segmental financial statement before the Hon'ble DRP to substantiate that transaction with respect to sale of goods to LPTPL was undertaken at arm's length price - HELD THAT:- We find that in the instant case, the assessee, for benchmarking the specified domestic transaction of purchase of goods by the assessee to its AE, Luminous Power Technologies Pvt Ltd (LPTPL), has considered internal TNMM as most appropriate method. The assessee has taken the operating profitability on cost for sale made to the third party Amar Raja Batteries Ltd (ARBL) for comparison. On the basis of the TPO report, the DRP held that the products sold by LPTPL to ARBL and to itself are different and that the segmental accounts of LPTPL is not reliable as it is not audited. Accordingly, the DRP rejected the application of internal TNMM method. It therefore emerges that the segmental financial statement being presented before us as additional evidence, was furnished by the assessee during the proceedings before the DRP. DRP had rejected the same on the ground that the segmental accounts of LPTPL with regard to ARBL segment and the assessee segment were not audited, and hence not reliable. This segmental financial statement has now been certified by an independent accountant and being produced before the Tribunal as additional evidence. We are of considered opinion that the segmental financial statement will facilitate proper appreciation and comparison of the transactions entered into with ARBL and itself. Rule 29 of the ITAT Rules, we are of the opinion that this segmental financial statement has direct bearing on the issue of deciding the method to be adopted to determine the Arms Length Price. Without considering the segmental analysis of the transaction for comparison of operating profitability on cost of sale made by company to LPTPL vis a vis third party ARBL, the rejection of internal TNMM method may not adhere to the principals of natural justice. Additional evidence, now being furnished, has a direct and important bearing to adjudicate the present controversy and hence admitted keeping in view the principles of natural justice. Application of the assessee for limited purpose of admitting the additional evidence is allowed for statistical purposes.
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2024 (9) TMI 1095
Exemption u/s 11 - denial of registration u/s 12A/12AB - charitable activity or not? - CIT(E) was of the view that assessee-trust is established for the benefit of a particular community and not for general public and thus, the provisions of u/s 13(1)(b) are applicable HELD THAT:- The bar u/s 13(1)(b) has no application to a charitable trust which was created or established prior to commencement of Income-tax Act 1961, as the said trust was found that it existed before coming into force, the bar u/s 13(1)(b) will not apply and entire income would be entitled for exemption u/s 11. Thus, when assessee was in existence much prior to commencement of Income-tax Act, 1961, the embargo of Section 13(1)(b) has no application. We find that CIT(E) before rejecting the application u/s 12A/12AB has not examined the activities of the assessee-trust. Therefore, the matter is restored back to the file of CIT(E) to reconsider the application of assessee on merit and pass order in accordance with law. Needless to direct that before passing the order afresh, CIT(E) shall grant reasonable opportunity of being heard to the assessee. The assessee is also given liberty to file written submission and evidence as and when called for. CIT(E) is directed to consider all such evidences, if so filed by the assessee. The assessee is also further directed to be more vigilant and to make compliance in time as and when called for by CIT(E). In the result, the grounds of appeal raised by the assessee are allowed for statistical purpose.
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Customs
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2024 (9) TMI 1094
Refund of excess duty paid to the Customs Department alongwith Interest - rejection on the ground of being time-barred as per Section 27 of the Customs Act, 1962 - HELD THAT:- A plain reading of Section 27 of the Customs Act, 1962 would reveal that a refund application must be made within one year from the date of payment. However, it does not specify that this limitation applies when the duty was paid by mistake. In similar circumstances, in respect of a service tax matter, the Division Bench of this Court, in 3E Infotech vs. CESTAT, Chennai [ 2018 (7) TMI 276 - MADRAS HIGH COURT ], held that limitation period would not apply where the tax was paid by mistake. A combined reading of the aforesaid provisions viz., Section 11B of the Central Excise Act and Section 27 of the Customs Act would reveal that both the provisions operate in the same manner with respect to claims for refund of duties. They clearly stipulate that a refund claim must be made within one year from the date of payment, and the procedure to be followed for filing such claims. However, neither of the provisions explicitly addresses the ;situations under which the duty or tax was paid by mistake. The matter is remanded to the respondent for reconsideration. The respondent shall re-consider the application for refund filed by the petitioner after affording an opportunity of personal hearing and pass necessary orders within a period of four weeks from the date of receipt of a copy of this order - Petition disposed off by way of remand.
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Insolvency & Bankruptcy
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2024 (9) TMI 1093
Cancellation of the lease deed by NOIDA - claim of right within meaning of Section 116 of Transfer of Property Act, 1882 as a tenant holding over - exclusion of Plot No. SC-01/ D1, Sector 79 Noida from Resolution Plan submitted in the CIRP of the Corporate Debtor - HELD THAT:- It is clear that at no point of time, neither the Corporate Debtor has paid any rent/instalments after the cancellation of the Plot nor any such amount was accepted by the NOIDA. The other Clause under which case is sought to be covered i.e., or otherwise assent to this continuing in possession. There is nothing on the record to prove that NOIDA at any point of time assented to the continuing of the Corporate Debtor in possession . The right of the Corporate Debtor having come to an end after cancellation of the Plot, it cannot claim any rights nor it can claim itself to be a tenant holding over. Reference made to the Judgment of the Hon ble Supreme Court in the matter of Nand Ram (Dead) through Legal Representatives Vs. Jagdish Prasad through Legal Representative [ 2020 (3) TMI 1247 - SUPREME COURT ], in which case Hon ble Supreme Court came to consider the submissions made on the strength of Section 116 of the Transfer of Property Act, 1882. The Hon ble Supreme Court in the said Judgment has held that after expiry of the lease status of Lessee will be that of tenant of sufferance and not of tenant holding over. In the Judgment of the Hon ble Supreme Court, it was reiterated that it is only ascent of the landlord to the continuance of possession after determination of the tenancy will create new tenancy. There is nothing on record to indicate that NOIDA at any point of time, expressly or impliedly assented to the continuance of Corporate Debtor in possession - no right can be claimed by the Appellant on the principal as contained in Section 116 of the Transfer of Property Act, 1882. In the present case, the mere fact that after cancellation of the lease, Corporate Debtor has made a request for restoration of lease, shall has no effect on the termination of the lease which had already been accomplished by letter dated 13.08.2015. The Corporate Debtor cannot claim any right within meaning of Section 116 of Transfer of Property Act, 1882 as a tenant holding over. It is thus concluded that Plot in question i.e., SC 01/D 1, Sector 79, NOIDA is not part of the assets of the Corporate Debtor and Adjudicating Authority did not commit any error in allowing the Application, I.A. No. 1592/ND/2019 filed by the NOIDA for excluding the Plot in question from the CIRP of the Corporate Debtor - the Order of the Adjudicating Authority, excluding the Plot in question from the CIRP of the Corporate Debtor, upheld. Role of NOIDA with respect to the Project in question - HELD THAT:- As per Section 6(1) the object of the authority is to secure the Plan development of the Industrial Development Area. NOIDA has acquired the land for the above purpose and leased out to various entities for planned development - Hon ble Supreme Court had occasion to consider the role of Development Authorities, including NOIDA in respect to the Real Estate Projects with regard to protection of interest of the homebuyers. In Bikram Chatterjee Ors. Vs. Union of India Ors. [ 2019 (7) TMI 1233 - SUPREME COURT ], Hon ble Supreme Court has made several important observations and guidelines with respect to Real Estate Project and duties of the public authorities. When the NOIDA is obliged to monitor the implementation of the Project, it has to take proactive steps with regard to implementation of the Project. Even after cancellation of the Plot on 13.08.2015, no steps have been taken by the NOIDA. The CIRP against the Corporate Debtor commenced only on 09.03.2018, NOIDA had approved the layout and map, it is obliged by the statutory provisions to keep a vigil on the construction done by the Lessee, which had to be in accordance with the Plan and directions issued by NOIDA Authority from time to time. Homebuyers are unsecured Financial Creditor of the Corporate Debtor who do not have any charge on the land. It is only the NOIDA Authority who has charge over assets under Section 13-A of the UP Industrial Area Development Act 1976. Under Section 14, which has been noticed by the Hon ble Supreme Court in the Bikram Chatterjee Ors. NOIDA Authority can cancel the Lease on breach committed by Lessee and resume the site on building and further forfeit the whole on any part of the money which paid in respect thereof. Order dated 11.01.2024 passed by the Adjudicating Authority, allowing I.A. No. 1592/ND/2019 for excluding the Plot SC-01/D-1, Sector 79, NOIDA is upheld - application filed by the RP under Section 30(6) for approval of the Resolution Plan is rejected. Appeal disposed off.
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2024 (9) TMI 1092
Rejection of claims of the Operational Creditor on the basis that he did not get sufficient documentation - HELD THAT:- The Hon ble Supreme Court of India in the matter of Regen Powertech (P) Ltd. [ 2023 (9) TMI 1406 - SUPREME COURT ] has given ratio decidendi that Resolution Professional has to be neutral party and not expected to take a stand, which is contrary in present appeal where the Appellant filed appeal on merits of the Impugned Order and that too in his personal capacity as Resolution Professional of Corporate Debtor. It is further interesting to note that one Unsecured Financial Creditor, namely, Paton Construction Private Limited who is supposed to have given a loan of paltry sum of Rs. 1 Lakh knowing well that CIRP is being initiated against the Corporate Debtor, then original IRP is removed and the present Appellant is appointed as Resolution Professional, who in turn rejected the claims of Operational Creditor and accepted the claims of the Unsecured Financial Creditor and claims of promoter. This made the way for making Unsecured Financial Creditor of Rs. 1,05,877/- as a Sole Member of the CoC and ousting the Malharshanti Enterprises Limited the Operational Creditor out of CoC having claim of Rs. 1,94, 62, 148/-. Although the Adjudicating Authority in Impugned Order dated 16.02.2023 in Para 22 has recorded that the conduct of the Resolution Professional also need to be thoroughly investigated . However, the Adjudicating Authority did not give directions for the further course of action for the same or direction to the IBBI. Hence, this Appellate Tribunal is required to take this to logical conclusion as we are upholding the Impugned Order in toto. In this background, the IBBI is directed to look into the role of the Appellant in accordance with the law regarding conduct/ misconduct of the Appellant as the Resolution Professional and take further necessary action as deemed fit and warranted on the facts of the case and as per law. Cost of Rs. 10 Lakhs on the Appellant to be paid in Prime Minister s National Relief Fund within four weeks of pronouncement of this order. The compliance for the same will be reported to the Adjudicating Authority by the Appellant. Initiation of CIRP - It is claim of the Appellant that he did not know about the on going proceedings by the Respondent against the Corporate Debtor and only on publication of public announcement by the IRP inviting claims from the Creditors on 28.01.2020, the Appellant came to know about these developments and filed the claim of Rs. 1,05,877/- before the IRP/ RP - HELD THAT:- There are no fault in the finding of the Adjudicating Authority contained in Impugned Order includings as contained in para 20 against which the Appellant has filed this. The Impugned Order merely recorded that an application filed under Section 12 A on the ground of purported settlement entered between the CoC and the sole Appellant herein who is Unsecured Financial Creditor who took a loan just before passing CIRP order is indigenous idea of Corporate Debtor and the Promoters of Corporate Debtor to bring out the Corporate Debtor from the clutches of CIRP which attained the finality through back door entry. The order admitting CIRP against the Corporate Debtor was passed on 27.01.2020. This was for the first and the last time that the Appellant paid money to the Corporate Debtor - there are noting which prevented the Appellant to disburse further amount under the agreement and it is only after the claims of the operational creditor got rejected the Appellant expressed its intention to continue the business relations with the Corporate Debtor. Incidentally it has been brought to our notice by the Respondent No. 1 that the alleged loan agreement was backdated and unstamped documents. There are no error in the Impugned Order and the Appeal devoid of any merits is dismissed. Challenge to claims submitted by the Operational Creditor - fraudulent claims - HELD THAT:- Once the claims of the Operational Creditor have been crystalized and admitted by the Adjudicating Authority while admitting Section 9 application of Respondent No. 1 and initiating CIRP against the Corporate Debtor. We also find that IRP was duly appointed by the Adjudicating Authority who collated the claims and admitted the claims of the Respondent No. 1 basis on the documentation submitted by the Respondent No. 1. It is surprising as how the claims of the Operational Creditor have been rejected later by the Resolution Professional - appeal dismissed.
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2024 (9) TMI 1091
Maintainability of application u/s 9 of Insolvency and Bankruptcy Code (IBC), 2016 - initiation of insolvency resolution process against the Corporate Debtor for the non-payment of dues arising from supply of manpower services - pre-existing dispute between the parties or not - HELD THAT:- It is well-settled law that for an Application under Section 9 of the IBC to be admitted, the Operational Creditor must demonstrate that there is a debt and a default as defined under the IBC. However, if the Corporate Debtor can prove the existence of a bonafide dispute regarding the debt prior to the issuance of the demand notice under Section 8, the Application must be dismissed. In the present case, the emails dated 18.12.2018, 22.05.2019, 26.05.2019 and 25.08.2019 clearly indicate that the Respondent had raised concerns regarding the adequacy of services provided by the Appellant, including manpower shortages and security lapses. These communications occurred prior to the issuance of the demand notice, which was issued on 14.01.2020, and provides sufficient evidence of a pre-existing dispute. The main ground basis which the Appeal cannot be accepted is existence of pre-existing dispute, which is noted in series of email exchange of emails. In such situations of pre-existing disputes, Hon ble Supreme Court in Mobilox Innovation Pvt. Ltd. Vs. Kirusa Software Private Limited [ 2017 (9) TMI 1270 - SUPREME COURT ] had held ' It is clear, therefore, that once the operational creditor has filed an application, which is otherwise complete, the adjudicating authority must reject the application under Section 9(5)(2)(d) if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. It is clear that such notice must bring to the notice of the operational creditor the existence of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties.' The Corporate Debtor had raised a plausible contention about a pre- existing dispute, which in the instant case is not a moonshine or feeble legal argument. Therefore, the Adjudicating Authority was not incorrect to reject the Application filed under Section 9 of the Code. Given the existence of a bonafide dispute, this Tribunal finds no reason to interfere with the Impugned Order of the Adjudicating Authority. The Impugned Order dated 05.03.2024 passed by the Adjudicating Authority is upheld - Appeal dismissed.
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PMLA
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2024 (9) TMI 1090
Seeking enlargement on Bail - Money Laundering - Scheduled offences - swindling of money invested by the Government in a dubious manner - discrepancies including diversion of APSSDC funds through various shell companies - diversion of Government funds - Section 45 of the PMLA - it was held by High Court that 'When time and again, petitioner is continuously attending before the investigating agency and co-operating with the investigation, this Court is of the opinion that it is not necessary to detain the petitioner in jail further. In view of the aforesaid facts and circumstances, this Court feels that request of the petitioner for grant of bail can be considered, however, on certain conditions.' HELD THAT:- At this stage, no case for interference is made with the orders granting bail. The Special Leave Petitions are accordingly dismissed.
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2024 (9) TMI 1089
Seeking grant of bail - money laundering - scheduled offences - HELD THAT:- Tthe appellant, Neeraj Singal, will be released from jail in connection with ECIR/DLZO-II/06/2019 dated 29.08.2019 for the offence(s) punishable under the Prevention of Money Laundering Act, 2002, in relation to the scheduled offence(s) under Sections 467, 471 and 120B of the Indian Penal Code, 1860 and Section 447 of the Companies Act, 2013, on terms and conditions to be fixed by the trial court - In addition to the conditions imposed by the trial court, the appellant, Neeraj Singal, shall comply with the conditions mentioned in Section 438(2) of the Code of Criminal Procedure, 1973. In case there is a violation of any terms and conditions of release, it will be open to the prosecution to seek recall of this order before the trial court - The impugned judgment is set aside - Appeal allowed.
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2024 (9) TMI 1088
Seeking grant of regular bail - Indian National, has committed an offence under Foreign law - scheduled offence - stealing cryptocurrencies - MLA request and powers of the authority under the Act - non-compliance of procedural requirements - Judicial notice of corresponding law - Benefit of the first proviso to Section 45(1) of PMLA - Incriminating material. MLA request and powers of the authority under the Act - HELD THAT:- The offences having cross border implications contemplated are of two categories. First, when any offence has been committed at a place outside India which would have constituted an offence specified in Part A, Part B or Part C of the Schedule had it been committed in India, and the proceeds have been transferred to India; and second when the Scheduled offence has occurred in India and the proceeds have travelled to a place outside India. For the purpose of present case, first category defined in sub-clause (i) of Section 2 (1) (ra) is of relevance, since the case of ED is that proceeds of crime have been transferred from the account of victim in U.S. to the account of petitioner/accused Vishal Moral in India. In the second category described under sub-clause (ii) of Section 2 (1) (ra) there is no confusion as the predicate offence occurs inside the territory of India, therefore, the laws mentioned in the Schedule would directly be applicable. However, the conundrum needs to be resolved in case of first category specified under sub-clause (i) of Section 2 (1) (ra) as neither the offences enumerated under Part A, nor the IPC are globally enacted provisions, rather each foreign country has its own laws inside its territory, albeit they may have similarities with the laws in other jurisdictions. There appears to be substance in the submission of respondent that the request of the U.S. Authorities in the MLA is to obtain evidence and when such a request is received, the ED is empowered to do everything required including arrest of accused post lodging of a case under section 3 and 4 of the PMLA, to gather all evidence that may be available. Non-compliance of procedural requirements - HELD THAT:- The predicate offence has been committed in U.S. and the same is being tried there though it has cross border implications. It is only the offence under PMLA that is being tried in India. Since the proceeds of crime related to the predicate offence have travelled to India, the offence under PMLA being a standalone offence, has been committed in India in its entirety, therefore, no sanction as mandated under proviso to Section 188 CrPC is required for the said offence. Judicial notice of corresponding law - HELD THAT:- Assuming that the MLA request is a certified copy as required under Section 78 (6) of the Evidence Act, 1872, the same is not a substitute for the statute or provision of a corresponding law (United States Code) enacted in the United States of America, which will have to be proved as a question of fact during the course of trial by examining experts on the subject. At this stage no judicial notice can be taken of corresponding law of U.S., therefore, in the absence of material on record in the form of a relevant statute supported by the opinion of experts, there is nothing to establish even prima facie that the alleged predicate offence corresponds to the offences mentioned in the Schedule of the PMLA. Incidentally, in the absence of commission of scheduled offence, there cannot be any proceeds of crime. In the present case, the foundational facts that the alleged crime committed in U.S. is a scheduled offence and consequently the amount which has come to the account of petitioner/accused Vishal Moral is proceeds of crime have not been established even prima facie, therefore, the burden will not shift on petitioners/accused to convince the Court in terms of Section 45 that they are not guilty of an offence of money-laundering under the Act. Non-speaking order of cognizance - HELD THAT:- In the present bail petitions, there is no challenge to the order vide which cognizance was taken by the learned Special Court, therefore, this Court need not delve deep into this submission, but certainly the absence of material to establish commission of scheduled offence in the United States of America, will enure to the benefit of the petitioners in the scheme of broad probabilities. Benefit of the first proviso to Section 45(1) of PMLA - HELD THAT:- Without going into the question as to whether the proceeds from the second transaction have been obtained by way of fraud or theft or by commission of any other offence, suffice it to state that all the offences against the property under Chapter XVII of the IPC, which includes theft as well, are scheduled offences under Part C, if the same have cross border implications. Therefore, prima facie there is no force in petitioner's submission that twin conditions envisaged under Section 45 for grant of bail will not be applicable as the laundered amount is only to the extent of Rs. 80,000/- - Insofar as the contention that in the complaint the ED has not provided the basis of calculating the value of the subject matter, it may be observed that basis of calculation is a matter of trial and the same cannot be gone into while deciding the bail plea of the petitioners. Incriminating material - HELD THAT:- In view of the prima facie opinion of this Court that there is a missing link to establish that the seized amount from WazirX account of petitioner/Vishal Moral are proceeds of crime from an offence committed in U.S. which corresponds to the scheduled offence(s), merely seizure of amount pursuant an MLA request is not sufficient for the petitioner/accused Vishal Moral to assume the burden to convince the Court in terms of Section 45 of the Act that there are reasonable grounds to believe that he is not guilty of an offence under the Act. Delay in trial - HELD THAT:- It is an admitted position that the petitioner/Vishal Moral is in custody since 26.04.2023, therefore, he has been incarcerated for more than 16 months, whereas co-accused/petitioners namely Adnan Nisar and Shivang Malkoti are in custody since 09.05.2023 and have likewise spent more than 16 months in custody, whereas the maximum sentence which can be awarded for the offence under the PMLA is 07 years in the event the petitioners are found guilty. The documents to be proved in the present case also runs into 2500 pages and there are various witnesses to be examined by the ED. However, the present status of the proceedings is that the trial has not commenced, inasmuch as, the charges have not yet been framed. On behalf of the petitioners, it is submitted that further investigations are pending which position was not disputed by the learned Special Counsel for the ED. This Court is satisfied that there are reasonable grounds for believing that the petitioners are not guilty of the offence. Further, on a conspectus of the custody period, the delay in commencement of trial and no likelihood of conclusion of trial anytime in near future, the rigors of Section 45 of the Act deserve to be relaxed - the petitioners have made out a case for grant of regular bail, subject to fulfilment of conditions imposed. Bail application allowed.
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2024 (9) TMI 1087
Seeking grant of Regular bail - Money Laundering - predicate offence - proceeds of crime - large-scale malpractice and corruption in the framing and implementation of the Excise Policy - multiple activities related to or connected with proceeds of crime of scheduled offences in regard to which the ED registered the case in terms of Section 3 of PMLA, 2002 - HELD THAT:- It is admitted by the parties that the CBI case was registered on 17.08.2022 under Section 120B of the Indian Penal Code, 1860 read with Sections 7/7A/8 of Prevention of Corruption Act, 1988 at Police Station CBI, ACB, New Delhi against Manish Sisodia and others [ 2024 (8) TMI 614 - SUPREME COURT] , wherein the Applicant was named as an accused, but the Chargesheet in the CBI case (predicate offence) was filed without the arrest of the Applicant and he has been admitted to bail in the CBI case vide Order dated 28.02.2023. Moreover, the Applicant is an experienced professional with various educational qualifications and had volunteered to work with Organisations such as UNICEF Canada to educate children about UNICEF s work for children across the world, as well as with Afghans4tomorrow to help improve the business skills of students at the Kabul Education University. The Applicant despite being lodged in Tihar Jail No.4 as an under-trial prisoner, has volunteered as Horticulture Sahayak. The Applicant has deep roots in the society and is not a flight risk and has business and professions which are based in India and he is not likely to abscond from the country. In Manish Sisodia v. Directorate of Enforcement [ 2024 (8) TMI 614 - SUPREME COURT] , there is no possibility of tampering of evidence by the Applicant if the Applicant is granted bail as the case is primarily dependent on documentary evidence which is already seized by the prosecution. Similarly, the apprehension regarding influencing witnesses and that of being a flight risk can be diffused by imposing stringent conditions while granting bail. Therefore, the conditions of triple test are duly satisfied by the Applicant. It is admitted that the Applicant has been behind bars since 06.03.2023, there are around 69,000 pages of documents involved in both CBI and ED matters. Moreover, there are 493 witnesses, who have to be examined on behalf of the prosecution. In the same case, the other accused persons, namely, Manish Sisodia, K. Kavitha, and Vijay Nair have already been admitted to bail in similar circumstances. The Applicant is directed to be released forthwith on bail in connection with the ECIR No. ECIR/HIU-II/14/2022 dated 22.08.2022, registered by the Directorate of Enforcement, subject to furnishing a personal bond in the sum of Rs.10,00,000/- with two sureties of the like amount; to the satisfaction of the learned Special Judge/Trial Court - the Applicant is admitted to bail subject to fulfilment of conditions imposed. Bail application allowed.
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Service Tax
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2024 (9) TMI 1086
Exercise of jurisdiction under Article 226 of the Constitution vis a vis availability of alternative remedy - it is alleged that the Assessing concerned has made wrong calculations by taking the entire period from 01.04.2017 to 31.03.2018 which could not be have been taken into consideration - HELD THAT:- This Court finds it very pertinent to take note of a recent Judgment of the Supreme Court in the case of PHR INVENT EDUCATIONAL SOCIETY VERSUS UCO BANK AND OTHERS [ 2024 (4) TMI 466 - SUPREME COURT (LB)] wherein the Supreme Court dealt with the aspect as regards exercise of jurisdiction under Article 226 of the Constitution vis a vis availability of alternative remedy. Though a perusal of the said Judgment reveals that the said Judgment was delivered in the case of a proceeding under the Securitization And Reconstruction of Financial Assets And Enforcement of Security Interest Act, 2002, but this Court finds it relevant to take note of the observations of the Supreme Court had observed that the High Court ought not to ordinarily entertain a writ petition under Article 226 of the Constitution, if an effective remedy is available to the aggrieved person and such a principle should be applied with great rigor in matters involving recovery of taxes, cess, fees and other types of public money. Whether this Court should entertain the writ petition at all? - HELD THAT:- In the instant case, the exceptional circumstances as stated in the Judgment of the Supreme Court in the case of M/S GODREJ SARA LEE LTD. VERSUS THE EXCISE AND TAXATION OFFICERCUM- ASSESSING AUTHORITY ORS. [ 2023 (2) TMI 64 - SUPREME COURT] is not present in as much as the question which has been raised by the petitioner is on the question of adjudication of facts as in respect to how much amount the concerned Assessing Authority ought to have taken into consideration and which transaction ought not to have been taken into consideration. These aspects in the opinion of this Court can be very well dealt with by the Statutory Appellate Authority. Under such circumstances, this Court finds no ground to entertain the instant writ petition, taking into account that there is an alternative and efficacious remedy available to the petitioner for which the instant writ petition stands dismissed. This Court is of the opinion that the interest of justice would be met, if further 30 (thirty) days time is granted from today to the petitioner to file an Appeal before the Appellate Authority as mentioned in the impugned order dated 27.03.2024 itself. Accordingly, this Court observes and directs that if the petitioner herein files an Appeal within 30 (thirty) days from the date of the instant order, the Commissioner (Appeals) shall decide the appeal on merits without going into the question of limitation. Petition disposed off.
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2024 (9) TMI 1085
Violation of principles of natural justice - petitioner was not issued the show cause notice - territorial jursidiction of respondent No. 2 - jurisdiction in view of the fact that the petitioner or his proprietorship concern do not come within the jurisdiction of the Commissionerate of Dibrugarh - no taxable event had taken place within the said Commissionerate - HELD THAT:- The service of notice ought to have been made by way of registered post with acknowledgement due or by speed post with proof of delivery or by duly approved courier. The question, however, arises that can it be said that Sub-Clause (a) of Section 37C (1) of the Act of 1944 have been complied with if the decision, order, summons or notice has been sent not to the proper address, inasmuch as, there is no denial to the averments made in the writ petition or any materials placed showing that the petitioner had/has any office at the place where the show cause notice was addressed. The answer has to be in the negative. Under such circumstances, this Court is of the opinion that the recourse to Sub-Clauses (b) (c) of Clause 37C (1) of the Act of 1944 is not permissible if the show cause notice was not sent at the proper address. In the instant case, it would be seen from a perusal of paragraph 1.15 of the impugned order that recourse to Sub-Clause (c) of Section 37C (1) of the Act of 1944 was resorted to on the ground that the service of the show cause notice could not be effected at No. 1 Ghilamara, North Lakhimpur which from the materials placed before this Court do not seem to be the address of the petitioner. This Court, therefore, is of inhesitant view that the impugned order dated 25.11.2022, was passed without affording due opportunity to the petitioner and as such, the same violates the principles of natural justice which is a facet of Article 14 and 21 of the Constitution. The consequential effect of the above opinion of this Court is that this Court can invoke its jurisdiction under Article 226 of the Constitution in the present facts. Whether the Office of the Commissionerate, Central Goods and Service Tax, Dibrugarh Division, would have the jurisdiction over the petitioner? - HELD THAT:- The petitioner did not register himself or for that matter do not have a registration under the Finance Act, 1994. The question whether the petitioner had carried out any activities liable for payment of service tax within the jurisdiction of the respondent No. 2 is a question of fact which in the opinion of this Court can be very well adjudicated upon by the jurisdictional Officer. Taking into consideration that the impugned order is held to be bad in law for violation of the Principles of Natural Justice, the petitioner herein would be at liberty to take his defence on the questions as to whether the petitioner would be liable to pay service tax as well as to whether the respondent No. 2 shall have the jurisdiction. Taking into account that the petitioner does not hold any registration under the Finance Act of 1994, and the registration under the CGST Act of 2017 have no relevance, this Court is of the opinion that the issue pertaining to territorial jurisdiction should be decided by the respondent No. 2, provided the respondent No. 2 decide to issue a fresh show cause notice to the petitioner at his proper address. The impugned order dated 25.11.2022 is set aside and quashed on the ground that the same has been passed in violation to the Principles of Natural Justice - Petition disposed off.
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2024 (9) TMI 1084
Reversal of CENVAT Credit under Rule 6 of the CENVAT Credit Rules, 2004 - CENVAT Credit on Group Personal Accident Policy, Group Term Life Policy, and Group Mediclaim Policy taken for employees - penalty and interest on tax liability discharged under Reverse Charge Mechanism on legal services - HELD THAT:- Insofar as the reversal of CENVAT credit in respect of non-taxable services in the State of Jammu and Kashmir is concerned, the Tribunal has firstly taken note of the conceded position of the respondent-assessee providing both taxable as well as non-taxable services. It is in the aforesaid context that it has ultimately upheld the right of the assessee for a proportionate reversal in accordance with Rule 6 (3) of the CENVAT Credit Rules, 2004. In the absence of the appellant having been able to establish any intent on the part of the respondent-assessee to evade payment of duty, there are no justification to interfere with the view ultimately expressed by the CESTAT. Appeal dismissed.
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2024 (9) TMI 1083
Time limitation - suppression of facts or not - eligibility for CENVAT Credit on input services while also claiming abatement under Notification No. 01/2006-ST - HELD THAT:- Once when the ST-3 returns were filed regularly, the Department cannot allege fraud, collusion, wilful mis statement or suppression of facts, and invoke the extended period of time. In the instant case, the Appellant has regularly filed ST-3 returns consequent upon obtaining Service tax registration. the original authority has failed to give a finding to the effect that considering the facts and circumstances of this case, how extended period is invocable. The impugned order notes that the extended period is invokable as the availment of Cenvat Credit came to the knowledge of the officers during the audit of the records of the appellant. There has been no evidence led by the Department of any positive act of suppression or fraud by the appellant. In this case the Appellant has filed returns regularly and disclosed all information to the department - the extended period of limitation is not invocable in this case. The CESTAT Delhi in M/S INTERNATIONAL AIR CHARTER VERSUS COMMISSIONER OF CENTRAL TAX (APPEALS II) , DELHI [ 2023 (12) TMI 1004 - CESTAT NEW DELHI] , allowed the appeal of the assessee on limitation, finding that mere suppression of facts, as alleged by the department, is not enough and there must be a deliberate and wilful attempt on the part of the assessee to evade payment of duty. In the absence of any intention to evade payment of service tax, which intention should be evident from the materials on record or from the conduct of the assessee, the extended period of limitation cannot be invoked. The entire demand in the instant case is for the extended period - the show cause notice dated 23.04.2016 is barred by time, as extended period is not invokable in the facts and circumstances of the present appeal. The impugned order is set aside and the appeal is allowed.
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2024 (9) TMI 1082
Liability of service tax on job work manufacturing of RMC - Revenue is of the view that job work carried out by the appellant is liable to service tax as the exemption under Notification No.08/2005-ST is not available on the ground that the recipient of service is not paying the Central Excise duty - HELD THAT:- It is found that prima facie the activity of process of RMC by the appellant as a job worker appears to be manufacture under Section 2(f), however in both the orders of the lower authorities, it was not clearly discussed that whether the processing of RMC by the appellant is an activity which amounts to manufacture in terms of Section 2(f) of Central Excise Act, 1944. If the activity is found to be manufacture as per Central Excise under Section 2(f) of Central Excise Act, 1944, the same is excluded from the purview of definition of Business Auxiliary Service . In such case the activity will not be taxable, therefore, vital aspect of manufacture needs to be carefully examined. The matter should be remitted back to the adjudicating authority to pass a fresh order in relation to demand of service tax under business auxiliary service. As regard of demand of Rs.15,436/- on GTA service, as conceded by the Learned Counsel the same is upheld - appeal allowed by way of remand.
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2024 (9) TMI 1081
Rebate of service tax paid on specified services used for export of goods - period from July 2012 to December 2013 - Rejection of rebate claims filed by the appellant on the ground that they have violated the condition of N/N. 52/2003-Cus dated 31.03.2003 and N/N. 22/2003-CE dated 31.03.2003, in as much as the Granite Blocks manufactured by the appellant were directly exported from the Quarry without getting processed from the premises of the EOU - rejection also on the ground that the appellant has not produced documents such as original invoices, Self certification on input service, FIRC/BRC copies - time limitation. HELD THAT:- The appellant has claimed rebate in respect of services such as transportation charges, stuffing of cargo, CHA, THC etc. - It is found there is no allegation either in the Notice or in the impugned order that these services were not used in connection with export of goods. It is observed that the only condition prescribed in N/N. 41/2012 for allowing the rebate is that the specified services should be utilized in the export of goods. The proceedings pending before appellate authority for violation of condition of Notifications 51/2003 and 21/2003 cannot be a reason for rejecting the rebate claims. Once it is established that the specific services were utilized in connection with the export of goods, the appellant would be eligible for the rebate as provided under the Notification 41/2012 - In the present case, there is no dispute regarding the export of goods. Also there is no dispute regarding utilization of the specified services in the goods exported. Accordingly, the appellant has fulfilled all the conditions stipulated in 41/2012 for availing the rebate. Thus, the rejection of rebate claims on account of non-fulfillment of conditions of Notification No. 51/2003 dated 31.03.2003 and Notification No. 21/2003 dated 31.06.2003 is legally not sustainable. Allegation of non-production of documents for the purpose of processing the rebate claim, such as Original invoices, Self certification on input services, FRIC/BRC copies etc. - HELD THAT:- The appellant has to explain before the authorities that they have furnished all documents required for processing the rebate claims. For this purpose, the matter needs to be remanded back to the Adjudicating Authority for verification of the documents. Time limitation - HELD THAT:- The claim was originally filed on 28.06.2013, which is within the period of 1 year from the date of export. However, when some clarification was asked for from the appellant and the claim was resubmitted on 13.09.2013, the Adjudicating Authority has considered the re-submission date of 13.09.2013 as the date of filing of the claim and concluded that the claim was hit by the bar of limitation - the rebate claim was originally filed on 28.06.2013, which was within the period of one year from the date of export. The date of re-submission is not the date of filing of the rebate claim - the claim has been filed within the time period of 1 year from the date of export and it is not hit by limitation of time. Appeal disposed off.
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2024 (9) TMI 1080
Appellant was providing rent-a-cab service or not - extended period of limitation - demand with interest and penalty. Whether the appellant was providing rent a cab service? - HELD THAT:- Admittedly, the appellants are providing motor vehicles to various clients based on the agreements and received considerations for the same. It is also admitted that ownership of the vehicle continued to remain with the appellant with registration, insurance and other requirements so that the vehicle is owned by the appellant all throughout - In the instant case, it is noted that the car had been hired on monthly basis by the client SECL, as per the sample work order. The rate contract also stipulated that such rate is inclusive of service tax. Accordingly, the impugned order is correct in holding that the appellant is liable to service tax in respect of the services rendered by him under the category of rent-a-cab services . It is also noted that the aforesaid work order specifically includes that the rate was inclusive of service tax. This clearly means that the appellant was liable to pay the service tax dues for the provision of the said service. Extended period of limitation - Suppression of facts or not - HELD THAT:- The appellant had taken service tax registration under the rent -a -cab service in 2001- 02. The appellant had filed the returns upto 31.3.2005, and thereafter stopped filing returns. It is recorded in the show cause notice that it was during the examination of the records of SECL that the activity of the appellant came to the knowledge of the department - the appellant was aware that he/she was liable to pay the service tax dues for the provision of the said service, and failed to do so. This clearly establishes their intent to evade the tax. In view of the same, the extended period has been correctly invoked by the department. Payment of interest - HELD THAT:- In the case of PRATIBHA PROCESSORS VERSUS UNION OF INDIA [ 1996 (10) TMI 88 - SUPREME COURT] the Supreme Court held that Interest is compensatory in character and is imposed on an assessee who has withheld payment of any tax as and when it is due and payable . Accordingly, the demand of interest in the impugned order is correct. Penalties - HELD THAT:- Penalty u/s 77 upheld - Section 78 of the Finance Act,1994 provides for reduced penalty at 25%, provided the service tax and the interest thereon is paid within 30 days from the date of communication of the order of the Central Excise Officer determining such service tax - In the instant case, the order in original was passed on 31.10.2017. As per the impugned order, the appellant has paid the entire tax and interest amount on 11.07.2016, which is well before the date of the instant order in original. In view of the above, the appellant is eligible for the benefit of reduced penalty under Section 78 of the Act. Appeal allowed.
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2024 (9) TMI 1079
Violation of condition that Cenvat credit and benefit of Notification No.12/2003-ST had not been availed when the appellant have produced a general declaration from transport agency to this effect - availing the abatement of 75% from the gross amount in respect of goods transport service under N/N. 32/2004- ST - reverse charge mechanism - HELD THAT:- N/N. 32/2004-S.T. prescribes the condition that the transport agencies should not avail the benefit of Cenvat credit and the benefit of N/N. 12/2003-S.T in order to extend the benefit of N/N.32/2004-S.T. to the service recipient who is liable to pay the service tax on reverse charge mechanism. The adjudicating authority did not accept the declaration only on the ground that such declaration should be made on the body of the consignment note. The contention of the adjudicating authority as well as the Commissioner (Appeals) that the declaration is only to convey the fact that the transport agency is not availing the Cenvat credit as well as the benefit of N/N. 12/2003-S.T. dated 20.06.2003, is completely disagreed - It does not make any difference whether the declaration is given by the transport agency is general or it is given on the consignment note. Moreover, the department could not bring any evidence that such declarations are false or the transport agencies have availed the Cenvat credit and N/N. 12/2003-S.T. In such position the denial of the abatement of 75% to the appellant under N/N. 32/2004-S.T. is only on assumption and presumption. On the face of it the declaration given by the transport agencies evident the fact that the transport agencies have not taken the benefit of both provisions. Therefore, there are no reason why on the basis of general declaration by transport agency benefit of 75% abatement as provided under N/N. 32/2004-S.T. can be denied. This issue has been considered by the Hon ble High Court of Gujarat in the case of COMMR. OF SERVICE TAX, AHMEDABAD VERSUS CADILA PHARMACEUTICALS LTD. [ 2013 (1) TMI 353 - GUJARAT HIGH COURT] where it was held that ' Notification requiring the receiver of the service to pay the tax also does not stipulate any such condition. Therefore, the requirements prescribed by the Board as per circular cannot be mandatory and cannot be used for denying substantive rights.' Thus, the appellant has correctly availed the abatement of 75% under Notification No.32/2004-S.T. - the impugned order is not sustainable - appeal allowed.
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2024 (9) TMI 1078
Levy of service tax - job-work - process of chrome plating by electroplating process on gravure printing cylinders received from different manufacturers - Business Auxiliary Service or not - Eligibility for benefit of N/N. 12/2012-ST under serial no.30 (c) - HELD THAT:- It is found that the appellant have carried out the job work process namely chrome plating by electroplating process on gravure printing cylinders which in turn used by principal in the manufacture of excisablegoods on which excise duty is paid. From the exemption entry, it is found that an intermediate production process as job work in relation to any goods on which appropriate duty is payable by principal manufacturer is exempted. In the present case the appellant s intermediate production process is chrome plating by electroplating process on gravure printing cylinders which directly used in relation to the manufacture of goods on which appropriate duty is payable by the principal manufacturer. Both the lower authorities have interpreted that the very goods on which the job work process is carried out should be cleared on payment of duty. It is their contention that since the cylinder on which the chrome plating was carried out itself is not cleared on the payment of duty. Therefore, the exemption is not available. As per the facts of the present case the chrome plating by electroplating process on gravure printing cylinders is a vital process which is directly related to the goods which is manufactured by the principal manufacturer on which appropriate duty is payable by the principal manufacturer. There are no reason to deny the legitimate benefit of the exemption to the appellant - the impugned order is set aside - appeal allowed.
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2024 (9) TMI 1077
Demand of differential service tax - credit notes issued on account of lowering of contract price due to Progressive Plant Available Factor less than 75% - Chargeability of service tax on the value of spares and consumables supplied during the course of provision of service of operation and maintenance of power plant of the service recipient - Cenvat credit availed on such spares and consumables. Whether the credit notes issued on account of lowering of contract price on account of PAF less than 75%, is liable to service tax or otherwise? - HELD THAT:- Even though by way of credit note the contract price has been lowered but the same was on account of less performance with regard to PAF less than 75% as per contract between the respondent and service recipient. With this arrangement it is clear that when there is low performance i.e. PAF is less than 75%, the service is not as per the contract and for lower performance of service the amount was deducted by way of credit notes. It is also the fact that the amount of credit notes stand reduced from the contract price as mentioned in the contract therefore, the reduced amount of fees is the actual amount which is charged by the respondent to M/s. GMDC Limited. The provisions of Section 67 of Finance Act, 1994 clearly provides that gross value for charging service tax is the value which is charged towards provision of service - In the present case, the contract price minus credit note amount is the gross value charged by the respondent to service recipient M/s. GMDC Limited. Therefore, it is the reduced amount of service charge as gross value which is strictly in terms of Section 67 of the Finance Act, 1994 therefore, no further notional addition can be done for charging service tax - the Adjudicating Authority has rightly dropped the proceedings to the extent the demand of service tax on the credit note issued by the respondent to the recipient i.e. M/s. GMDC Limited. Whether service tax is charged on the value of spares and consumables supplied during the course of provision of service of operation and maintenance of power plant of the service recipient? - HELD THAT:- It is found that the contract is for two transactions one is for service simpliciter i.e. maintenance and operation of power plant and the service charge for the same is fixed only for service and the second limb of contract is for supply of spares and consumables which is nothing but sale of goods. In this fact, the value of spares and consumables cannot be included in the service of operation and maintenance of power plant. Cenvat credit availed on such spares and consumables - HELD THAT:- The respondent has undertaken to reverse the credit involved in the spares and consumables on which no service tax was paid. Accordingly, the appellant is required to reverse the cenvat credit in respect of spares sold by them on which no service tax was paid. There are no infirmity in the order of the Adjudicating Authority therefore, Revenue s appeal is not maintainable hence the Revenue s appeal is dismissed.
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2024 (9) TMI 1076
Time limitation - suppression of facts or not - Eligibility for exemption under SEZ Rules 2006 - providing security services to M/s Larsen Toubro Limited and availed the exemption eligible under Rule-10 of the SEZ Rules, 2006 - HELD THAT:- The appellant in their ST-3 returns for the period April to September 2010 declared the value towards exempted service which is in respect of service provided in the SEZ. The appellant had a bonafide belief that service provided in SEZ as sub-contractor is exempted under N/N. 9/2009-ST, as amended vide N/N. 17/2011-ST. Since the appellant have declared in the ST-3 return the value of exempted service which is subject matter of the present appeal, there is no suppression of fact on the part of the appellant. Moreover, the appellant had strong prima-facie case on merit also therefore bonafide belief of the appellant cannot be doubted. There is no malafide intention in non-payment of service tax in respect of service provided in SEZ. Accordingly, the demand is not sustainable on the ground of time-bar itself. Hence, the impugned order is set-aside - Appeal allowed.
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2024 (9) TMI 1075
Taxability - services rendered by the appellant as Consulting Engineer - export or not - period 01.04.2006 to 24.02.2009 - Rule 3 of Export of Service Rules, 2005 - liability of appellant to pay service tax on Club or Association Service and other services received by them during the period 2006-07 to 2010-11 - invocation of extended period of limitation. Whether the services rendered by the appellant as Consulting Engineer qualified as export during the period 01.04.2006 to 24.02.2009 under Rule 3 of Export of Service Rules, 2005? - HELD THAT:- The appellants are engaged in the provision of Consulting Engineers Service under contracts entered into with their foreign principals; the appellants prepare the drawings and designs as required for the specific projects, send it to their principals for modifications and approvals and on approval upload the same in the Central Repository of the overseas entity through a dedicated WAN; the foreign entities of the appellant, who in turn entered into agreements with projects executed in India, supply designs, drawings etc. relating to the projects. The appellants have thus submitted the drawings and designs in respect of projects like Jamnagar Export Project, KG-D6, Dabhol Project etc. - The case of the appellants is that the drawings and designs though prepared by them are whetted and improved upon by their overseas principals and only after their final approval, the same is uploaded in the Central Repository; they are preparing the designs as per the direction of their overseas entities under a contract; they are receiving the consideration thereof from their overseas entities and they have no communication, whatever, between them and the Indian companies who are using such drawings. It is found that learned Commissioner observes that during the period under consideration, export of service is also subject to the condition that the service is delivered outside India and is used outside India or service provided from India and is used outside India as the case may be ; as the services rendered by the appellant are tailor made to the Indian companies, they cannot be used outside India and therefore, to that extent, the services are not used outside India - CBEC Circular dated 13.05.2011 cites as an example that it is possible to obtain a consultancy report from a service provider in India, which may be used either in the location of the customer or in any other place outside India or even in India; in a situation where the consultancy, though paid by client located outside India is actually used in respect of a project or an activity in India, the service cannot be used outside India. In respect of the exemption claimed by the appellants towards the supplies claimed to have been rendered to M/s JERP Project, Jamnagar, learned Commissioner himself finds that the exemption contained under Notification No.09/2009 or 15/2009 is not applicable as in this case, the services have been provided by the assessee to the aforesaid overseas group company by electronic media in connection with M/s JERP Project of Reliance Group in India - There is nothing on record to show that there has been any communication between the appellants and the Indian projects leaving alone any agreement between them - the services rendered by the appellants to their overseas entities constitute export of services during the impugned period and accordingly, the demand on this issue cannot survive. Whether the appellant is liable to pay service tax on Club or Association Service and other services received during the period 2006-07 to 2010-11? - HELD THAT:- The payment made was towards the use of professional associations and clubs abroad which were utilized by the officers or employees of the company when they visited abroad for their professional work. Department could not produce any evidence to show that the said service is enjoyed in India. The service being rendered and utilized abroad, the taxability of the same in India does not arise. As regards the demand on other services, we find that the appellants have accepted their liability and paid duty with interest before the issuance of Show Cause Notice. In view of the facts and circumstances of the case, no case for levy of penalty has been made. Demand of Service Tax to the extent of Rs.5,29,728/- and interest of Rs.1,58,833/-, which is already paid by the appellant, is confirmed; rest of the demand is set aside - All the penalties are, however, set aside - Appeal allowed in part.
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Central Excise
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2024 (9) TMI 1074
Demand of differential duty - appellant did not submit CAS-4 Certificate issued by the Cost Accountant to the department - value was proposed to be determined as per 110% of value mentioned in the invoice raised to the sister concerned - whether the value at which the appellant have paid the duty is 110% of cost of manufacture of the excisable goods or otherwise? HELD THAT:- The appellant admittedly worked out the cost keeping in mind that the same is 110% of cost of the manufacture. However, the appellant have on the safer side calculated higher value since the CAS-4 is always available only after the completion of the year. Subsequently, during the adjudication the appellant have submitted CAS-4 certificate for the entire period, the same was rejected by the Adjudicating Authority stating that the said certificate is Xerox copy. This approach of the adjudicating authority is arbitrary, absolutely illegal and in violation of principles of natural justice. When the adjudicating authority have seen Xerox copies of the CAS-4 certificate, before the rejecting the same on the ground that it is a Xerox copy, he must have asked original from the appellant. Therefore, he gravely erred is not complying the principles of natural of justice. Since the adjudicating authority has observed that due to Xerox copy, a CAS-4 certificate cannot be accepted, at least the Learned Commissioner (Appeals) before him the original certificates were produced should have considered the same and after verification, the appeal could be decided accordingly. The impugned order is not sustainable - Appeal allowed.
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2024 (9) TMI 1073
Valuation of Excise Duty - whether the freight and/or insurance charge is includible in the assessable value of excisable goods in the fact that the sale of the goods is on ex-factory basis? - HELD THAT:- The issue involved in the present case is no longer res-integra as the same has been decided for the earlier period in the appellant s own case on the same nature of transaction of excisable goods. The Tribunal in [ 2024 (5) TMI 194 - CESTAT AHMEDABAD ] held that ' freight and/or insurance is not includable in the assessable value. Consequently, demand of duty on this count is not sustainable.' In view of the above decision of the Tribunal in the appellant s own case, the demand in the present case is not sustainable. Hence, the impugned order is set aside - appeal allowed.
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2024 (9) TMI 1072
Classification of goods - Drilling Rigs suitable for Drilling Wells and Blast Holes (Mining) which are generally mounted on the truck chassis/crawler during the period from 01.03.1986 to 29.02.1988 - to be classified under tariff heading No. 8430 or under chapter heading No. 8705? - eligibility for exemption N/N. 242/86-CE dated 03.04.1986 - HELD THAT:- There was no occasion for the appellant to claim the exemption Notification 242/86-CE dated 03.04.1986, for the reason that there was a dispute about classification as the appellant had claimed the classification under 84.30 as against the Revenue s claim under 87.05. This dispute has been settled by the Hon ble Supreme Court in the appellant s own case reported at COLLECTOR OF CENTRAL EXCISE, BARODA VERSUS L. MP PRECISION ENG. CO. LTD. [ 2003 (12) TMI 57 - SUPREME COURT] . Only after the said judgment of the Hon ble Supreme Court it has been settled that the goods manufactured by the appellant i.e. Drilling Rigs mounted on truck chassis/crawler is classified under chapter 8705. Once the classification is settled, the Notification No. 242/86-CE which is applicable to the goods falling under Chapter 8705 became eligible to the appellant. In the case of M/S. FIBROTEX (PROCESSORS) VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI-IV [ 2015 (11) TMI 1587 - CESTAT MUMBAI] Tribunal has considered the similar issue wherein the facts was that initially the assessee had not claimed the benefit of notification but at a later stage the exemption was claimed and the same was extended to the assessee. Thus, even though the assessee did not claimed the exemption notification which otherwise eligible to the assessee in the classification list the benefit of the same claimed at a later stage cannot be denied. Condition of the notification that the appropriate duty of excise has been paid on the chassis of such vehicles and equipments used in manufacture of such vehicles - HELD THAT:- There is no case of the department that the chassis of vehicle on which the Drilling equipment was mounted and also on such equipment no duty paid. In this regard it is a settled law that all the goods available in the market are deemed to be duty paid. Therefore, the inference of the Revenue that at this stage the fact that whether the chassis and equipments used in the manufacture of special purpose motor vehicle is duty paid or otherwise has no relevancy - it is settled that chassis and equipments used for manufacture of special purpose vehicles are considered as deemed duty paid. Therefore, the condition of N/N. 242/86-CE stand complied for and the appellant is eligible for the said exemption. The impugned order is set aside - appeal allowed.
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2024 (9) TMI 1071
Levy of Excise duty - moulds and fixtures manufactured and captively consumed for manufacture of other final products when such moulds and fixtures are sold by issuing commercial invoices but not removed from the factory - eligibility for exemption N/N. 67/95-CE dated 16.03.1995 - HELD THAT:- The issue is no longer res-integran the light of the decision of this Tribunal in the appellant s own case COMMR. OF C. EX., VADODARA VERSUS AUTOMOTIVE STAMPING ASSEMBLIES LTD. [ 2011 (9) TMI 878 - CESTAT AHMEDABAD] where it was held that ' It is an unconditional exemption which provides exemption to capital goods manufactured in a factory and used within the factory. It is not the case of the Revenue that goods have been removed from the factory at all. Once goods are manufactured and used in the same factory, the notification squarely applies.' Thus, it can be seen that the facts in the above cited decision and the facts of the present case in the appellant s own case are absolutely identical. The present impugned order is not sustainable - Appeal allowed.
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2024 (9) TMI 1070
Refund of duty - whether the appellant have complied with the conditions of the Notification No. 12/2012-CE dated 17.03.2012 or not? - time limitation - Vehicle having a passenger capacity of less than 13 persons and gets registered as Taxi. Procedural lapses and their impact on the refund claims - HELD THAT:- The basic condition for claiming the benefit of N/N. 12/2012-CE dated 17.03.2012 is that if the vehicle having a passenger capacity of less than 13 persons and gets registered as Taxi with the State Regional Transport authority, the applicable rate of excise duty is reduced by 20% and the same has to be refunded to the manufacturer and who in turn will refund to the dealer and finally to the ultimate customer. There is no denying of the fact that refunds which have been filed by the appellant fulfill all the conditions of the exemption N/N. 12/2012-CE dated 17.03.2012, prescribed under condition number 26 of the serial number 273 except that they have taken credit in PLA on 22.03.2018 i.e. after the period of six months from the payment of duty on the motor vehicles. The basic requirement is that vehicle has to be used as Taxi for the purpose of availment benefit of the exemption notification. This condition has properly been fulfilled and all the relevant documents have been provided by the appellant to the department while filing the refund claims. The credit taken in PLA beyond the period of six months is only a procedural lapse and same cannot enable the department to reject the entire refund claims of the appellant, when the legislature provides that where after clearances of vehicles from the factory gate, a vehicles is used as Taxi. Same is entitled for concessional Excise Duty. Thus the substantive benefit of exemption notification cannot be denied to the appellant only on procedural lapse which has been made good at a later stage by the appellant. Time limitation - rejection of refund claims of the appellant on the ground that the refund claim is hit by time bar inasmuch as no claim has been filed within six month from the date of clearances of the said motor vehicles - HELD THAT:- It is found from the record that the findings of the Commissioner (Appeals) are factually incorrect as the refund claims have been filed from 01.07.2017 to 27.12.2017 for clearances which have been affected from January 2017 to June 2017 - the condition normally mentioned that period of six months is applicable from the date of duty paid on the motor vehicles which have been cleared and which at a later dated registered as TAXI with the Regional Transport department. It is found that condition 26 of the said notification stands fully complied with the requirement and the refund claim is not barred by period of limitation. The SCN nowhere alleges that the refunds have not been filed within a given time period as provided under condition number 26 of the aforesaid notification. Thus it clearly appears that the order-in-appeal has travelled beyond the allegations which have been made in the show cause notice. Therefore, the finding on time-bar given by the Commissioner (Appeals) is otherwise also legally not sustainable. The impugned order-in-appeal is legally not sustainable - appeal allowed.
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2024 (9) TMI 1069
Reversal of Cenvat Credit - Invocation of extended period of limitation - appellant submits that the Adjudicating Authority has not given bifurcation of the items specifically on which the demand has been confirmed - HELD THAT:- The first SCN was issued on 05.05.2011 and second SCN was issued on 30.01.2011. He has clearly noted that the Show Cause Notices have not brought in any evidence to rely upon their allegations. After this, he has gone on to direct the officers of Headquarters Anti Evasion Unit to do the necessary verification and submit their findings which was done by them between 06.03.2013 to 07.03.2013. There is no legal sanctity to undertake such an exercise after the Show Cause Notice was issued. Once the Show Cause Notice is issued and reply is filed by the Appellant, the Adjudicating Authority is required to consider the allegations vis- -vis the replies filed by the Appellant and come to a conclusion. He cannot step into the shoe of the investigating authority and undertake a fresh investigation. In this case his undertaking of such an exercise has vitiated the entire adjudication process since the principles of natural justice have not been followed. The observation of the Adjudicating authority clarifies that the goods in question have been used by the Appellant in their manufacturing process. Therefore, even on this count, the Appeals are allowed. The impugned order is set aside - appeal allowed.
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CST, VAT & Sales Tax
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2024 (9) TMI 1068
Refund claim - misplacement of files by officials leading to delay in payment and reconstruction of files - entitlement to statutory interest on the refund amount - HELD THAT:- From the materials on record, it is apparent that the petitioner herein is entitled to the total amount of Rs. 37,87,166/- on account of refunds for the assessment years 1993-94, 1995-96, and 1998-99. The affidavit which has been filed on behalf of the respondent No. 2 does not deny the said figure. It has also been mentioned in the affidavit filed by the respondent No. 2 that the matter has been placed before the Government for approval after being processed from the Office of the Commissioner of Taxes. This Court disposes of the instant writ petition with a direction to the respondents and more particularly the respondent No. 2 to ensure that the payment is made to the petitioner in respect to the amount of Rs. 37,87,166/- within a period of 4 (four) months from the date of a certified copy of the instant order is served upon respondent No.2 - Petition disposed off.
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