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TMI Tax Updates - e-Newsletter
September 27, 2022
Case Laws in this Newsletter:
GST
Income Tax
Benami Property
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Unexplained expenses u/s 69C - Cash Expenses incurred by the assessee - A fair estimation of disallowance of cash expenses needs to be done in this case. - disallowance of expenses @20% in respect of site and conveyance expenses would meet the ends of justice - AT
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Validity of Assessment u/s 144 r.w.s. 143(3) - additions based on seized material. - As on 19.11.2012 the assessment for assessment year 2010-11 was not pending. AO has undisputedly issued the notice under section 142(1) and no notice under section 143(2) of the Act was ever issued, which vitiates the entire assessment proceedings framed under section 144 of the Act, particularly when addition made in these cases is not based on seized material. - AT
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Disallowance of interest expenditure - diversion of funds for non-business purpose - In order to examine the allowability of interest expenditure on funds borrowed, when the part of such borrowed funds utilized for purchasing of shares in ONP, the interest paid by the assessee on the amount borrowed for purchasing of such shares of its managed company, in our opinion, is allowable deduction. - AT
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Unaccounted business receipts - the theory of extrapolation is not logical for determining the actual total Income and it is established law that the assessment should be made on the basis of only incriminating documents found during the course of survey proceedings.- AT
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Expenses of FCCB - allowable capital or revenue expenditure - The assessee has given details as regards to computation of income for expenses on issue of FCCB, security premium on redemption of FCCB and interest booked under FCCB expenses and initial conversion price of Rs.130/- per share from the issue date and until 14.10.2012 was defined by the assessee. - the CIT(A) has rightly allowed the claim as revenue expenditure - AT
Customs
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Validity of assessment order - provisional assessment - since the assessing authority proceeded to finalise the assessment under Section 18(2) of the Customs Act, notwithstanding request being made by the petitioner to await outcome of codified re-test report from the CRCL, Mumbai and utilized the testing report of CRCL, Kolkata and followed by CRCL, New Delhi, the assessment order is required to be set aside. - HC
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Valuation of imported goods - rejection of declared RSP - There is nothing on record to show that the price labels were affixed to the imported goods and sold in the market or offered for sale in the market at the higher prices or that the price list was sent to the buyers or dealers - this is not sufficient evidence to hold that the RSP was mis-declared before the Customs and that the loose labels found in the warehouse reflect the true RSP. - AT
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Classification of imported goods - MC PCB - The specificity of description in the claimed classification is not anywhere matched by the description within which the assessing authorities have sought to place the impugned goods. Moreover, it is clear from the description that ‘parts’, if at all finding fitment within heading 9405 of First Schedule to Customs Tariff Act, 1975, should not be specified or included elsewhere. In the light of the specific description, notwithstanding the addition of a metallic layer which does not find elaboration in the rival heading too, rule 3 (a) of The General Rules for the Interpretation of Import Tariff offers the solution without having to proceed further. - AT
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Classification of imported goods - Instead of deliberating on the validity, and appropriateness, of a tariff item in the First Schedule to Customs Tariff Act, 1975 other than that claimed in the bills of entry after due notice to the importer, the adjudicating authority adopted a process of elimination of the enumeration of descriptions in the Schedules to the ‘integrated tax’ rate notification, and ignoring the scheme of its presentation, with the erroneous assumption of jurisdiction to place goods within the ambit of the residuary entry in Schedule III of the ‘integrated tax’ rate notification. - AT
Direct Taxes
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Benami transaction - attachment of property - While passing such orders as an interim measure to protect the interest of Revenue, there is no hastiness or procedural violation on the part of the respondent, as alleged by the appellant. Having noted the same in proper perspective, the learned Judge has rightly dismissed the writ petitions filed by the appellant challenging the said orders passed by the respondent under section 24(4) of the PBPT Act - HC
Indian Laws
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Existence of arbitration agreement between the parties - This Court is of the opinion that merely because the proposal forwarded on behalf of the respondents, by letter dated 26/06/2012, contained an arbitration clause, which was unilaterally signed only on behalf of the respondents and there was reference thereto in the letter of intent dated 12/07/2012 and the purchase order dated 16/07/2012, it cannot be said that an arbitration agreement came into existence between the parties. - HC
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Dishonor of Cheque - legally enforceable - cheque received through third party - The appellant being the complainant had failed to establish by cogent evidence that the accused/respondent issued the cheque in favour of the complainant in discharge of his liability to pay debt otherwise legally enforceable rather it is established that the cheque was received from another person - HC
IBC
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Invocation and encashment of Performance Bank Guarantee(s) (PBG) granted by the Appellant - surety in a contract of guarantee to a ‘Corporate Debtor’ - A Performance Bank Guarantee does not enjoy the benefits of a moratorium under Section 14 of the Code. - the amount may be utilised for the functioning of the ‘Corporate Debtor’ as a Going Concern. - AT
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Validity of Resolution Plan - only 2% of their ‘Claims’ has been admitted, while the workman and other statutory dues have been paid 100% - Having regard to the fact that the Resolution Plan was approved on 17.01.2021 by the CoC and subsequently by the Adjudicating Authority on 08.04.2021 and more than a year has lapsed, and also keeping in view that the ‘Operational Creditors’ do not have any Voting Right in the CoC and that the Commercial Wisdom of the CoC is non-justiciable and when there is no material irregularity on the face of the record - AT
PMLA
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Money Laundering - proceeds of crime - For issuance of process against the accused it has to be seen only whether there is sufficient ground for proceeding against the accused and for that the Court is not required to weigh the evidentiary value on the basis of materials on record and the only thing the Court is required is to apply its judicial mind and in the case in hand the learned court has taken cognizance by a speaking order. There is no illegality in the order taking cognizance. - HC
Service Tax
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Demand beyond the scope of Show Cause Notice (SCN) - Whether the services in question are admissible input service in terms of Rule 2(l), this issue was never raised in the show cause notice. Therefore, it cannot be expected from the Adjudicating Authority to pass order on the issue which is beyond the scope of show cause notice. - AT
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CENVAT Credit - sale of entire cement division operations - JSW Steel Ltd. (transferor company) provided any services to the appellants or not - there is no element of suppression of facts and the irregular availment of cenvat credit was duly recorded in the books of accounts and audited by the department, the cenvat demand if any, should be confined to the normal period and the extended period of limitation cannot be invoked for effecting recovery of such cenvat credit. - AT
Case Laws:
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GST
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2022 (9) TMI 1149
Unblocking of Input Tax Credit - opportunity of hearing to the petitioner not provided - negative blocking in the nature of futuristic action - HELD THAT:- The process of hearing of the petitioner and consideration the case of the petitioner and documents produced by the petitioner, is underway before the authorities - It is expected that in the above process already initiated by the authorities of hearing the petitioner to consider the petitioner s case in respect of the grievance of the blocking of the part of the Input Tax Credit, the authorities shall arrive at an appropriate decision in accordance with law expeditiously after considering the facts of the case and defence of the petitioner fully. It goes without saying that the such decision with regard to the unblocking of the remainder Input Tax Credit shall be taken by the authorities without being influenced by the earlier communication as well as the grounds raised. This petition is disposed of.
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Income Tax
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2022 (9) TMI 1148
Reopening of assessment u/s 147 - order issued u/s 148A(d) - HELD THAT:- This Court sets aside the order issued under Section 148A(d) for the assessment year 2014-15 and directs the respondents-revenue to issue a supplementary notice u/s 148A(b) within four weeks enclosing all the relevant material, information and documents, including the two documents shown to this Court today after redacting third party information. The petitioner is given liberty to file an additional reply/response within four weeks thereafter. Along with its reply/response, the petitioner shall enclose copies of its Demat Account and its Bank Account Statement. AO is directed to pass a fresh order u/s 148A(d) of the Act in accordance with law. This Court clarifies that it has not commented on the merits of the controversy.
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2022 (9) TMI 1147
TDS u/s 195 - assessee did not deduct tax at source while making the payments to the Non- Residents - assessee in default u/s. 201(1) - HELD THAT:- The word payee was substituted for resident by the Finance (No.2)Act, 2019 w.e.f. 01.09.2019. Therefore, prior to the amendment, the first proviso to section 201(1) of the Act is applicable only in respect of resident payee and not non-resident payee. Therefore, the ld.CIT(A) despite knowing the fact that the language of section 195(1) for deduction of tax by the payer is clear and unambiguous, gave relief to the assessee by relying on amendment to the proviso to section 201(1) inserted in the statute book by the Finance Act, 2012 w.e.f. 01.07.2012. In our opinion, the said amendment is not applicable to the impugned assessment year. Under these circumstances, we are of the considered opinion that the CIT(A), instead of following the settle position of law that the provisions of statute as on the date of default committed by the assessee would apply and therefore liability u/s. 201(1) arises upon such default, directed the AO to make due verification of taxes paid by the payee and to calculate levy of tax u/s. 201(1) and levy of interest u/s. 201(1A) is not correct. We, therefore, reverse the order of the ld.CIT(A) on this issue and the grounds raised by the revenue are allowed. In view of our above discussion, the grounds raised by the assessee are dismissed.
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2022 (9) TMI 1146
Rectification u/s 154 - error in the title of the order - assessment order in the name of company amalgamated - HELD THAT:- In the case in hand, in the body of the assessment order the Ld.AO has taken cognizance of the fact of amalgamation of the assessee with International Hospital Ltd and that itself is sufficient for the purpose of assessment order indicating that the assessment has been completed keeping in mind the continuity of legal entity of assessee further into amalgamated company. In the impugned order u/s 154 also the ld AO has mentioned this fact that in the body of the order the fact of amalgamation was mentioned. Thus any error in the title of the order has to be considered to be a mistake apparent from the record and cannot be considered to be anything in the form redetermination of an issue. The fact that the error in mentioning the correct name of the Assessee in the assessment order was one of the ground of appeal pending before the ld CIT(A) does not take away inherent power of Ld. AO to correct the mistakes apparent from the record while exercising powers of section 154. There is no question of opportunity of hearing being required in such case. There is no error in the order of the Ld. AO and the ld CIT(A) in confirming the orders of the Ld. AO.
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2022 (9) TMI 1145
Addition u/s 41(1) - cessation of liability as the payment was done in the earlier year - HELD THAT:- The material was supplied to the assessee-company, even if it is considered that the said payment was made by director, why the assessee has not shown such liability against director in its books. The case law relied by assessee Matruprasad C. Pandey [ 2015 (4) TMI 830 - GUJARAT HIGH COURT] is not applicable on the facts of present case as held that amount of old sundry creditors appearing in balance sheet cannot be added under section 41(1) unless and until it is found that there was remission/cessation of liability and that too during relevant assessment year. (underlined by us) As recorded above, during the remand report, the creditor clearly replied that he has already received payment against the supply of sand - FY 2011-12, thus, the liability to make payment was cessed long back, thus, we affirm the order of ld CIT(A). Grounds of appeal raised by the assessee are dismissed.
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2022 (9) TMI 1144
Unexplained expenses u/s 69C - Cash Expenses incurred by the assessee - only grievance of the Revenue is that they are not backed by supporting documentary evidences - HELD THAT:- It is a fact on record that assessee firm is maintaining vouchers which are lying in godown which are voluminous in nature. Considering the deficiencies in the said vouchers not being backed with supporting documents thereon for all the cases, AO had proceeded to estimate the disallowance of expenses thereon @50% which was reduced to 35% by the CIT(A). We find that ultimately entire disallowance of expenses were made only to offset the deficiencies in maintaining of records by the assessee and also by placing reliance on the statement recorded on oath at the time of search from Mr. Pratap Purohit, partner of the assessee. A fair estimation of disallowance of cash expenses needs to be done in this case. Accordingly, we hold that disallowance of expenses @20% in respect of site and conveyance expenses would meet the ends of justice in the instant case for A.Yrs.2015-16, 2016-17 and 2017-18. Accordingly, the grounds raised by the assessee for A.Yrs.2015-16 to 2017-18 and ground raised by the Revenue for A.Y.2016-17 are disposed of in the aforesaid manner. Disallowance made on account of unverifiable purchases - HELD THAT:- Information was received from Sales Tax department that ten parties from whom the assessee had made purchases wherein it was held that those ten parties had indulged in providing accommodation entries and moreover notices u/s.133(6) of the Act could not be served on those parties. In these facts and circumstances, the ld. CIT(A) upheld the addition of profit element of 15% on the value of such disputed purchases which was brought down to 2% by this Tribunal. As said earlier, the assessee had not made any purchases from the suppliers whose names were reflected as tainted dealers in the website of Sales Tax department, Government of Maharashtra during the years under consideration. Hence, in our considered opinion, the decision rendered by this Tribunal for A.Y.2011-12 is factually distinguishable and need not be relied upon for the years under consideration - As during the course of search, certain deficiencies were indeed found in the documentation maintained by the assessee, considering this fact, we hold that disallowance of 2% of the value of purchases made from those six parties alone is required to be disallowed Disallowance of labour contract payments - HELD THAT:- Considering the fact that the labour contractors / Mukadam / labourers would be mobile and would be migrating from one location to another location for the purpose of their work and also considering the fact that during the course of search, certain deficiencies were indeed found in the documentation maintained by the assessee, we hold that disallowance of 2% of specific labour contract disallowances made by the ld AO needs to be sustained, just to take care of the deficiencies. This, in our considered opinion, would meet the ends of justice. Payments made to labour sansthas - AO had identified 14 parties there and issued notices u/s.133(6) - One party responded before the AO by furnishing requisite details. In respect of remaining 13 parties, the assessee furnished all the requisite details that were called for notices u/s.133(6) of the Act even though the said notices were not served on those parties. Hence, the details were called for by the ld. AO were before him either directly received from the parties or received from the assessee, as the case may be. Merely because, the summons issued by the ld. AO to 13 parties thereon were returned unserved, no adverse inference could be drawn on the assessee. Obviously, the summons were issued after 2-3 years from the date of payment of labour charges to those labour sansthas and assessee cannot be expected to have control over all those labour sansthas once the contract work is executed at the relevant site. In any case, nothing defective is found in the details submitted by the assessee in response to notice u/s 133(6) by the revenue. Hence, in our considered opinion, no adverse inference could be drawn on the assessee in respect of payments made to 14 labour sansthas. Accordingly, we specifically direct the ld. AO to delete the addition made u/s.69C.
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2022 (9) TMI 1143
Addition u/s 80IC - company stated to be engaged in the business of induction Heat Seal Cap liner material and Induction Wads - products manufactured by the assessee fall under schedule 13 (at serial No. 19) which is a negative list and, therefore, profit derived from the manufacture of these products is not eligible for deduction -HELD THAT:- We find that the issues involved in this matter are directly and substantially covered in assessee's own case in earlier years [ 2021 (10) TMI 516 - ITAT DELHI] and while respectfully following the same we hold that the assessee is entitled to deduction under section 80 IC and the addition by disallowance of the same, is directed to be deleted. - Decided in favour of assessee.
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2022 (9) TMI 1142
Enhancement of income by CIT u/s 251(2) - Income from sale of Matrix IT Building - head of income from Capital Gains OR Business income - HELD THAT:- The person must be made aware about the allegations so that he gets proper opportunity to rebut it. In this case the Department has not brought on record any document to prove that the CIT(A) had issued to the assessee to explain the assessee the intention of CIT(A) to treat the income as Business Income, which was assessed by the AO as Capital Gain and Income from House property. As mandatory for the CIT(A) to show cause the assessee before making any enhancement. In this case we have already held that changing the head of income from Capital Gain to Business Income and changing income from house property to business income, is enhancement in the facts and circumstances of this case and it is also a fact that no opportunity wasgiven to the assessee before such enhancement. This failure to issue show cause goes to the root of the issue of powers of CIT(A) of enhancement. Therefore, it is held that the treatment by CIT(A) of Capital Gain as Business Income is bad in law and not sustainable. Similarly, the treatment of lease rent as business income is bad in law and not sustainable. Accordingly, the ground number 1,5,6,7 of the Assessee are allowed. Difference in revenue recognition from the Hotel Building - HELD THAT:- It is important to mention here that the assessee for the same reason also reduced the cost for AY 2011-12 and the department has accepted it. It is the same project, the revenue of which was offered on project completion method for AY 2010-11 and 2011-12. It is fact as demonstrated by the assessee by the Registered Conveyance deed that the Total Cost was reduced by the purchaser as Purchaser decided to complete remaining construction on his own cost. Therefore, there was reduction in the cost. It also means the expenditure to that extent will be reduced for the assessee as the assessee do not have to complete the construction. Therefore, the % of completion will accordingly change. Therefore, we direct the AO to recalculate the Revenue from this activity by taking into consideration the reduced Cost taking into consideration the registered conveyance deed. Thus, the matter is remitted back to the file of the AO for recalculation. Accordingly, Assessee s ground number 4 is allowed for statistical purpose. Treatment of Capital Gain as Business Income - HELD THAT:- Proposition of law laid down by the Hon ble High Court M/S. JOGANI DIALANI LAND [ 2019 (4) TMI 1315 - BOMBAY HIGH COURT] is that there is no bar in law for a person dealing in land to also have investment in land. In the case under consideration analysis of facts leads to only one inference that the assessee had kept the impugned asset as investment - we are of the opinion that the impugned Sale is to be Taxed as Capital gain and not as Adventure in the nature of trade. Therefore, we uphold the order of the AO. AO had referred the issue to the departmental valuer for valuation. The Departmental Valuer submitted the report after completion of the assessment, the DVO valued it as mentioned in the order of CIT(A). AO is directed to calculate the Capital gain taking into consideration the valuation done by the DVO. Accordingly, the additional ground number 1 of the Assessee for AY 2011-12 is allowed. As regards to the revenue recognition under percentage completion method for the hotel building, shall apply mutatis mutandis to this appeal. Accordingly, this ground is allowed for statistical purposes. Addition made u/s 14A r.w.r. 8D - HELD THAT:- The assessee had shown exempt income - AO recorded his satisfaction in the assessment order. AO asked assessee to substantiate that no expenditure was incurred for earning the exempt income. There were interest expenses debited in the P L a/c. AO observed that the assessee has not maintained separate books for investments. AO therefore, applied Rule 8D to arrive at the disallowance. It is fact that the assessee has not maintained any separate books. The assessee failed to establish that it has not incurred any expenditure for earning the exempt income. Therefore, we are of the opinion that the AO has rightly applied rule 8D to calculate the disallowance. Hence the same is upheld. Therefore, the ground number 2 of the assessee is dismissed.
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2022 (9) TMI 1141
Assessment u/s 153C r.w.s. 153A OR u/s 144 r.w.s. 143(3) - whether assessment for both the years i.e. A.Y. 2010-11 2011-12 undisputedly being the part of last six assessment years from the date of search were required to be framed under section 153C read with section 153A of the Act and not under section 144 read with section 143(3)? - HELD THAT:- 1st and 2nd proviso to section 153C and 153A of the Act make it clear that the AO acquires jurisdiction on the date on which satisfaction note has been recorded, which ought to be date of search, and in this case date of recording satisfaction has come on record as 19.11.2012, then proceedings under section 153C are required to be initiated for the preceding six assessment years i.e. 2006-07 to 2011-12. As on 19.11.2012 the assessment for assessment year 2010-11 was not pending. AO has undisputedly issued the notice under section 142(1) and no notice under section 143(2) of the Act was ever issued, which vitiates the entire assessment proceedings framed under section 144 of the Act, particularly when addition made in these cases is not based on seized material. In case of assessment year 2011-12, the assessment was pending and notice under section 143(2) of the Act was issued on 24.09.2012. Since the assessment abates again notice under section 153C of the Act was required to be issued. The assessment framed in this case by the AO under section 144 of the Act is not sustainable as the same was required to be framed under section 153C read with section 153A of the Act, hence ordered to be quashed without entering into merits of this case. Consequently, appeals filed by the assessee are allowed and appeal filed by the Revenue is hereby dismissed.
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2022 (9) TMI 1140
Assessment u/s 153A - Unexplained income - income can be considered as unexplained either u/s. 68 or u/s. 69 - documents found during search pertain /relate to the assessee and did not belong to the assessee - HELD THAT:- We find no infirmity in the order of the CIT(Appeals), who specifically observed that in view of the specific satisfaction made in the assessment order to the effect that the documents pertain/relate to the assessee, it is evident that documents did not belong to the assessee, as was the mandate in view of various judicial precedents passed by the High Court/Tribunals in order to invoke provisions of 143(3) r.w.s. 153C of the Act prior to the amendment on 1st June 2015. CIT(Appeals), after taking into consideration the facts of the case and applicable judicial precedents has correctly applied the law to the instant facts before us, and we accordingly uphold the order of Ld. CIT(Appeals).
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2022 (9) TMI 1139
Disallowance u/s. 14A r.w.r. 8D - upward adjustment u/s. 115JB of disallowance under Rule 8D(ii) and 8D(iii) - Whether interest cost includes finance charges? - suo-moto disallowance u/s. 14A by assessee - Contention of the ld. AR that as per definition of interest u/s. 2(28A) of the Act, interest means interest payable in any manner in respect of any money borrowed and includes any service fees or other charges in respect of the money borrowed - HELD THAT:- Commissioner has already held that disallowance to that extent needs to be adjusted for u/s. 115JB of the Act and consequently directed to Assessing Officer to recompute the disallowance u/s. 14A, hence no interference is warranted. In view of the judgments of Joint Investments Pvt. Ltd. [ 2015 (3) TMI 155 - DELHI HIGH COURT] and Caraf Builders Constructions (P) Ltd. [ 2018 (12) TMI 410 - DELHI HIGH COURT] and in order to cutshort the litigation and for just decision of the case, we are allowing the alternative claim of the Assessee to the effects that disallowance, if at all, cannot exceed exempt income earned during the relevant assessment year and therefore, directing the Assessing Officer to restrict the disallowance u/s. 14A of the Act, only to the extent of the exempt income earned during the year. Adjustment on account of subsidy(ies) received to the tune to the books profit of the Assessee computed u/s 11JB - HELD THAT:- We find that in the instant case the Assessee treated the Subsidies/Incentives referred to above as capital in nature and directly incorporated to its reserves, without incorporating in its profit and loss account and inter-alia claimed that such subsidies received were credited to the capital reserves in accordance with the applicable accounting principles/standards as the accounts of the Assessee are correct being duly audited. We observe that both the authorities below without going into the treatment adopted by the Assessee, and without determining/testing the purpose of scheme of the subsidies/incentives and the status of the said subsidies whether the same are capital or revenue in nature as mandated in the case of Sahney Steel and Press works [ 1997 (9) TMI 3 - SUPREME COURT] decided the tax liability of the Assessee u/s 115JB of the Act. In our considered view, the authorities below should have first determined as to whether Subsidies/Incentives received by the Assessee are revenue or capital in nature and after determination of the same, should have decided the tax liability u/s 115JB of the Act, but not otherwise. Hence considering the peculiar facts and circumstances, we deem it appropriate to set aside the decisions of the authorities below on this issue and to remit the said issue to the file of the Assessing officer for decision afresh, by taking into consideration the observations made above. Order accordingly.
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2022 (9) TMI 1138
Unexplained cash credit u/s 68 - assessee has received share application money from those entities who were providing accommodation entries - CIT-A deleted the addition - HELD THAT:- We do not find any justification in the order of the Ld.CIT(A) in deleting the said addition pertaining to the three concerns as these seem to be mere paper companies. It is also pertinent to point out that the statements of Shri Pradeep Poddar and Shri Anand Sharma are not the only reason for making the addition, but AO has further gone into enquiring the nature of the impugned transaction. Upon perusal of the financials of the alleged companies, it is also evident that the said companies financials did not corroborate with the amount of investment that was made by the said companies with the assessee company. CIT(A) has erred in deleting the addition made by the AO pertaining to three companies and by only sustaining the addition made with regard to four parties to the extent of Rs.1 crore on the ground that the financials of the four companies did not inspire confidence as to the genuineness of the transaction. Though the assessee has submitted details of the said transaction such as bank statements, profit and loss account, balance-sheet, copy of PAN, etc. the same did not inspire confidence as to the alleged impugned transaction because the credibility of the said concerns are questionable as per the financials of the same. The bank transactions of the investor companies seem to be ficitious and none of these alleged investor companies has shown the source of investment. From the above observation and by placing reliance on the decision of Sumati Dayal [ 1995 (3) TMI 3 - SUPREME COURT] and Navodaya Castle (P) Ltd [ 2015 (4) TMI 481 - SC ORDER] , NRA Iron Steel [ 2019 (3) TMI 323 - SUPREME COURT] we hold that the order of Ld.CIT(A) is not sustainable and thereby we set aside the order of the Ld.CIT(A) and uphold the order of the Assessing Officer. Decided against assessee. Validity of reopening of assessment u/s 147 - HELD THAT:- As it is evident that on the basis of the information received from the Investigation Wing that the assessee company is alleged beneficiary of having received share application money from other alleged companies. As evident that AO had received credible information from the Investigation Wing and also the statement of Shri Pradeep Poddar, director of the said companies has admitted the fact that the said companies were used for providing accommodation entries to various parties. This information received from the Investigation Wing is reliable source for the Assessing Officer to reopen the assessment and this reason is sufficient for the AO to have prima facie belief that income has escaped assessment. Upon this reasonable belief, the assessment order under section 143(3) r.w.s. 147 is valid. We find no absurdity in the reopening of the assessment by the Assessing Officer
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2022 (9) TMI 1137
Disallowance of interest expenditure - diversion of funds for non-business purpose - CIT(A) deleted the disallowance - HELD THAT:- It is clear that the assessee obtained loan from Saraswat Co-operative Bank, part of which paid towards purchase of shares of its ONP, having purely business purpose to save the assessee s interest from outside private entities. It is also observed that the purchase of shares of its sister concern was only for saving of assessee s own business, as a result the assessee took over the entire shareholding of ONP which is its sister concern and avoided interference from third party business operations. In order to examine the allowability of interest expenditure on funds borrowed, when the part of such borrowed funds utilized for purchasing of shares in ONP, the interest paid by the assessee on the amount borrowed for purchasing of such shares of its managed company, in our opinion, is allowable deduction. The funds borrowed by the assessee from the Saraswat Cooperative Bank were utilized for the purpose of business and the interest paid thereon would constitute an allowable deduction. There is no diversion of funds for non-business purpose and no finding or allegation from assessing officer to that effect. Assessee utilized borrowed funds for its own business, therefore, assessee is entitled to claim deduction on account of interest expenditure and we find no infirmity in the order of CIT(A) in deleting the disallowance made by the AO on account of interest expenditure.The order of CIT(A) is justified. Ground No. 1 raised by the appellant-revenue is dismissed. Addition made on account of processing fee paid to banking institutions - CIT(A) deleted the said addition by recording its reasons taking into consideration the relief granted to the assessee on account of interest payment - HELD THAT:- In view of our decision on ground No. 1, where we confirmed the order of CIT-A in holding the expenditure on account of interest payment on loans availed from bank for business purpose is allowable deduction, therefore, we find no infirmity in the order of CIT(A) in holding the assessee is entitled to claim deduction on account of processing fees. Thus, we agree with the reasons recorded by the CIT(A) in impugned order and it is justified. Thus, ground No. 2 raised by the appellant revenue is dismissed.
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2022 (9) TMI 1136
Unaccounted business receipts - difference between the yearly estimated professional receipts and actual total professional receipts offered by the assessee in her return of income - loose papers were found only for one month on the basis of which the professional receipt of the entire year was estimated - CIT-A restricted addition - HELD THAT:- CIT(A) has held that he is agreed with the contention of the assessee that the actual receipt for the whole year is bound to differ from month to month and variations are possible depending on seasons, climatic changes, festivals, vacations, etc. and the gross receipts cannot be the net profit of the assessee. On comparison of the return if income for earlier years, the ld CIT(A) held that the assessee has offered substantially higher gross professional receipts. Thus, effectively the assessee has offered additional receipts of Rs.26,24,725/- as actually earned by her against the alleged difference of Rs.33,09,438/- on the basis of extrapolation method. It was also held that the theory of extrapolation is not logical for determining the actual total Income and it is established law that the assessment should be made on the basis of only incriminating documents found during the course of survey proceedings. We find that the finding of the ld CIT(A) is based on sound reasoning that the incrimination material was found for the month of Feb-2014 and the income for remaining months was estimated, which may be differ, depending on various factors. Before, us the assessee vehemently argued that the NP ratio of the assessee for this year is substantially higher comparative to earlier years - we find that the ld CIT(A) restricted the addition of considering all the facts and the evidence on record. In view of the above discussions, we do not find any merit in the grounds of appeal raised by the assessee, thus, we affirm the order of ld CIT(A). In the result, the grounds of appeals raised by the assessee are dismissed. Penalty u/s 271(1)(c) - HELD THAT:- CIT(A) while deciding the appeal in quantum assessment held that the assessee has already declared income on higher side compared to the earlier assessment year. In our view the additions in the quantum assessment was restricted on the basis of different view taken by ld CIT(A). Though, we have affirmed the order of ld CIT(A), still we are of the view that the assessee has neither concealed the particulars of the income nor furnished such facts which leads to furnishing of inaccurate particulars. Thus, in our considered this in not a fit case for levy of penalty under section 271(1)(c) of the Act. Hence, we direct the assessing officer to delete the entire penalty under section 271(1)(c). In the result, the grounds of appeal raised by the assessee are allowed.
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2022 (9) TMI 1135
Revision u/s 263 - delayed payments toward employees provident fund - As per CIT, assessee had made payments toward employees provident fund after due date as prescribed in section 36(1)(va) and AO has not disallowed the same while finalising the assessment and the AO has simply accepted the assessee submission on its face value without inquiring into such claim - HELD THAT:- The issue whether deduction respect of late deposit of employee s provident fund can be granted has been decided against the assessee in the case of CIT vs. Gujarat State Road Transportation Corporation [ 2014 (1) TMI 502 - GUJARAT HIGH COURT] wherein it was held that where assessee did not deposit employees' contribution to employees' account in relevant fund before due date prescribed in Explanation to section 36(1)(va), no deduction would be admissible even though he deposits same before due date under section 43B of the Act. Again the Gujarat High Court in the case of Pr. CIT v. Suzlon Energy Ltd. [ 2020 (2) TMI 792 - GUJARAT HIGH COURT] held that where assessee had not deposited employees' contributions towards PF and ESI amounting Rs. 15.20 lakhs within prescribed period in law and Assessing Officer by invoking provisions of section 36(1)(va) read with section 2(24)(x) made addition of aforesaid amount to income of assessee, impugned addition made to income of assessee was justified. Accordingly, when the issue has been decided by the Gujarat High Court against the assessee, it was on duty of the AO to conduct enquiries in respect of same, and not accept the submission of the assessee on its face value. In the instant facts, no such enquiry was conducted by the AO during the course of assessment proceedings. In view of the above findings, we find no infirmity in the order of the Principal CIT u/s 263 of the Act. - Decided against assessee.
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2022 (9) TMI 1115
Reopening assessment u/s. 147 - Hawala transactions - addition on the basis of allegation of third party - money deposited in the bank account operated by Late Shri Chotalal V. Doshi - HELD THAT:- In the instant set of facts, there is no corroborative evidence has been placed on record to show that it was the assessee who had deposited the said amount in the bank accounts operated by Late Shri Chhotglal V. Doshi, who was a Hawala operator. The entire additions were made only on the basis of statement recorded of son of Late Shri Chhotglal V. Doshi, who has stated that he had written the name in the diary so maintained by him, on the basis of instructions of his father. Apart from this, no evidence has been placed on record to substantiate that the money deposited in bank account maintained by Late Shri Chhotglal V. Doshi, belonged to the assessee. We are of the considered view that the Revenue has not brought forth any substantive/corroborative evidence to demonstrate that the money deposited in the bank account operated by Late Shri Chotalal V. Doshi, belonged to the assessee. Accordingly, in light of the judgement cited above, we are hereby deleting the additions made by the Department. Appeal of assessee allowed.
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2022 (9) TMI 1114
Expenses of FCCB - allowable capital or revenue expenditure - As regards the submissions before the CIT(A), the assessee stated that the issue of FCCB is a Foreign Currency Bond issue and it is basically a debt instrument in the nature of loan and all issue expenses related to that are allowable as revenue expenses - HELD THAT:- After perusal of the records, it can be seen that the assessee though issued foreign currency convertible bonds the same are basically debt instrument and though the decision in case of Secure Meters was related to the issue of fully convertible debentures, the same cannot be totally differentiated as the conditions in regard to FCCB about conversion price, conversion price reset, adjustment to conversion price, redemption of bonds in the event of de-listing and etc. will have very limited bearing while opting for conversion into ordinary equity shares as per the records. The assessee has given details as regards to computation of income for expenses on issue of FCCB, security premium on redemption of FCCB and interest booked under FCCB expenses and initial conversion price of Rs.130/- per share from the issue date and until 14.10.2012 was defined by the assessee. Mere reference on the decision by the CIT(A) cannot be called as not deciding the case on merit. CIT(A) has taken proper cognisance related to various terms offered for raising funds though FCCB into convertible bond of ordinary equity shares and thus ratio of Secure Meters [ 2008 (11) TMI 66 - HIGH COURT RAJASTHAN ] squarely applied in assessee s case by the CIT(A). Appeal of the Revenue is dismissed.
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2022 (9) TMI 1113
Validity of assessment - notice against non-existing /Amalgamated entity - approval of scheme of amalgamation / merger - HELD THAT:- A.O. in the instant case had passed the assessment order in the name of Biocon Research Limited, even though sufficient intimation have been made to the A.O. about the merger of Biocon Research Limited with Biocon Biologics Limited during the course of assessment proceedings. The intimation in this regard is tabulated. A.O. was diligently informed about the amalgamation during the course of assessment proceedings and prior to the passing of the draft assessment order / final assessment order, hence, the ratio of the judgment in the case of Maruti Suzuki India Limited [ 2019 (7) TMI 1449 - SUPREME COURT] and Spice Infotainment [ 2011 (8) TMI 544 - DELHI HIGH COURT] continues to apply and the assessment order in the name of amalgamated company is treated as null and void. Appeal of assessee allowed.
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2022 (9) TMI 1112
Disallowance of payment to Retired Partners and subscription fees - allowable business Expenses or not? - HELD THAT:- Both the issues decided in favour of assessee as relying own case for Assessment Year 2009-10 [ 2022 (9) TMI 1048 - ITAT DELHI] and 2011-12 2012-13 [ 2021 (1) TMI 738 - ITAT DELHI ] respectively. - Decided in favour of assessee.
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2022 (9) TMI 1111
Disallowance u/s. 36(1)(iii) - interest paid on Working Capital Loan and Term Loan for purchase of investment in spite of assessee having sufficient funds of its own being available and no fresh investments having been made during the year - HELD THAT:- As in assessee's own case for assessment year 2011-12 [ 2022 (7) TMI 1321 - ITAT CHANDIGARH] and had set aside the issues to the file of the AO vide order. Therefore, respectfully following the above said orders, the issues are set aside to the file of the AO to be decided as per the directions given vide the aforesaid referred - Accordingly, both the issues stand decided in favour of the assessee for statistical purpose.
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2022 (9) TMI 1110
Reopening of assessment u/s 147 - petitioner states that notice issued u/s 148A(d) rejecting the contentions of the Petitioner on the ground that the Petitioner had not submitted any supporting evidence to show that the alleged information was incorrect and therefore the transaction undertaken by the Petitioner remained unexplained - HELD THAT:- It is not understood by this Court as to how the petitioner can prove the negative - It is pertinent to mention that no instance of any transaction between the petitioner and Mr.Naresh Manakchand Jain has been placed on record by the AO. Issue notice. Mr.Abhishek Maratha, learned counsel for the respondent-revenue accepts notice. He prays for and is permitted to obtain instructions within two weeks. List on 6th September, 2022.
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Benami Property
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2022 (9) TMI 1134
Benami transaction - Notice and attachment of property involved in benami transaction - Scope of interim order of this court - allegation of violation of the principles of natural justice - HELD THAT:- It is pertinent to mention herein that applicability of the principles of natural justice and fair play, depends on the facts and circumstances of each case and is subjected to statutory provisions. After taking note of the entire aspects, the learned Judge, while disposing WP directed the respondent to furnish the certified copy of the sworn statement recorded from the appellant during the course of survey proceedings, to him, within a period of one week. While doing so, the learned Judge has rightly rejected the relief sought by the appellant seeking any other sworn statements recorded during the search on 09.03.2017, as the same is absolutely vague, besides the said proceedings were not conducted by the respondent viz., Deputy Commissioner of Income Tax (Benami Prohibition), but by the Investigation Wing Therefore, it cannot be said that there is violative of principles of natural justice, as alleged by the appellant. Allegation levelled by the appellant that the orders under section 24(4) were passed in total disrespect to the interim order of this court - During the course of argument, respondent drew the attention of this court to the documents enclosed in the additional typed set of papers which disclose that the Deputy Commissioner of Income Tax (Benami Prohibition) has placed the draft of section 24(4) orders before the Approving Authority for approval and after obtaining approval from the approving authority, passed the orders under section 24(4) of the PBPT Act. In the mean while, the appellant filed WP and obtained an order of interim stay which was communicated to the respondent by the learned senior standing counsel only on 25.05.2018, according to the counter affidavit filed by them. Such being the factual matrix, this court finds merit and acceptance in the contention made on the side of the respondent that the initiating officer came to aware of the order of interim stay granted by this court only after passing the orders under section 24(4) of the PBPT Act and hence, there is no deliberate or wilful disobedience of the order of this court. It is important to note that the proceedings under section 24 only require a recording of prima facie opinion as to the benami nature of the transaction and the respondent is required to furnish the documents, particulars or evidence and provide an opportunity of being heard to the appellants only at the stage of adjudication proceedings. Accordingly, the first respondent, after making enquiry and calling for reports or evidence and taking into account all the relevant materials, has, with the prior approval of the Approving Authority, passed the orders dated 23.05.2018 under section 24(4), continuing the provisional attachment of the properties till the passing of the order by the Adjudicating Authority under section 26(3), which are purely provisional in nature. While passing such orders as an interim measure to protect the interest of Revenue, there is no hastiness or procedural violation on the part of the respondent, as alleged by the appellant. Having noted the same in proper perspective, the learned Judge has rightly dismissed the writ petitions filed by the appellant challenging the said orders passed by the respondent under section 24(4) of the PBPT Act, however, granting liberty to the appellant to raise all the contentions before the adjudicating authority. Thus, the overall appreciation of the factual matrix as well as the legal principles stated above, would compel this court to come to an irresistible conclusion that the appellant has not made out any ground to interfere with the order of the learned Judge as well as the orders impugned in the writ petitions, at this stage. Accordingly, all the appeals stand dismissed.
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Customs
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2022 (9) TMI 1133
Validity of assessment order - provisional assessment - conflicting reports of different CRCLs - report of CRCL, Mumbai has come to the possession of the petitioner after final assessment order is passed - no opportunity to present the report - principles of natural justice - HELD THAT:- It is borne on record that the provisional assessment has been framed on the basis of the fact that the customs duty is assessed at NIL rate on the material produced by the petitioner that the Fe content of the iron ore fines exported was within the limit specified, however, at the time of final assessment, the opposite party No.1-Assessing Authority had relied on the reports of the CRCL, Kolkata and CRCL, New Delhi which reflected that the percentage of Fe content in subject goods is more than the exemption limit. Therefore, such factual dispute is required to be resolved by the statutory authorities under the statute. Given the law on the subject, suffice to say that since the assessing authority proceeded to finalise the assessment under Section 18(2) of the Customs Act, notwithstanding request being made by the petitioner to await outcome of codified re-test report from the CRCL, Mumbai and utilized the testing report of CRCL, Kolkata and followed by CRCL, New Delhi, the assessment order is required to be set aside. Further reason for setting aside assessment order is that the report of CRCL, Mumbai has come to the possession of the petitioner after final assessment order is passed. The petitioner, therefore, had had no opportunity to present the same before the Assessing Authority during the course of the assessment. There being invasion of principles of natural justice, the petitioner is liable to be afforded an opportunity to produce such evidence to counter the report relied upon by the assessing authority. The assessment order cannot be countenanced in view of conflicting reports of different CRCLs and, therefore, the assessment order is hereby set aside and the petitioner is directed to appear before the assessing authority on 26.09.2022 for necessary instructions along with certified copy of this order - Petition disposed off.
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2022 (9) TMI 1132
Levy of ADD - petitioner has been categorized as non-cooperative - HELD THAT:- The concern of the petitioner is that the DA, for the purposes for the investigation has, inter alia taken steps to gather information from SMTIL, which, according to Mr Jain, is a process that is not contemplated under the 1995 Rules - The petitioner is apprehensive, that if SMTIL were to not furnish the information, then the consequences of such an approach would have to be borne by the petitioner, who is the exporter of the final product. It cannot be accepted by learned counsel for the respondents that the categorization of the petitioner as non-cooperative , at this point in time, is only preliminary in nature - The DA will have to consider the information supplied by the petitioner and thereafter conclude one way or the other as to whether or not the petitioner ought to be categorized as non-cooperative . The official respondents i.e., respondent nos.1 and 2, are put to notice that they would bear in mind the assertion made by the petitioner, which is, that the transaction data was furnished only on 05.09.2022, and therefore, it would require, if not more, at least a couple of days for responding to the same - Petition disposed off.
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2022 (9) TMI 1131
Valuation of imported goods - rejection of declared RSP - reassessment of Additional Duty of Customs on the imported goods as per the RSP in the loose labels found in the warehouse - recovery of differential duty, if the goods are confiscated and allowed to be redeemed but have not been redeemed - Confiscation of goods - penalty - HELD THAT:- As per section 125 (2), if the goods are redeemed by the owner or the person from who they are seized, such person shall, in addition to the redemption fine, pay duty on the goods. Evidently, if they are not redeemed, payment of duty in addition to fine shall not apply. If the goods are not redeemed, on confiscation, the goods vest with the Central Government as per section 126 of the Act. If the importer does not clear the goods and for that reason the goods are sold by the custodian under section 48, the duty is to be recovered from the sale proceeds as per section 150 and not from the importer. This has also been made clear by the Board in the Customs Manual. Similarly, if the goods are confiscated absolutely or the option of redemption has not been exercised by the importer, in terms of section 150, such goods must be sold and the duty has to be recovered from the sale proceeds. Thus, goods which are confiscated and which are not allowed to be redeemed or which have not been redeemed vest in the Central Government and the officer adjudicating the case has to take their possession. Whether in the factual matrix of this case, the demand of differential duty and confiscation of the goods and imposition of penalties are sustainable? - HELD THAT:- Undisputedly, the process prescribed under section 138B was not followed by the Commissioner with respect to the statements. Therefore, the statements are not relevant to this case on this ground alone. Further, the statements have also been retracted later. Thus, if the statements are removed, what is left are the loose labels found in the warehouse and the price lists found in the warehouse. There is nothing on record to show that the price labels were affixed to the imported goods and sold in the market or offered for sale in the market at the higher prices or that the price list was sent to the buyers or dealers - this is not sufficient evidence to hold that the RSP was mis-declared before the Customs and that the loose labels found in the warehouse reflect the true RSP. Consequently, the rejection of RSP, redetermination of duty, confiscation of the goods and imposition of penalties cannot be sustained. Appeal allowed - decided in favor of appellant.
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2022 (9) TMI 1130
Classification of imported goods - MC PCB - MC PCB NBL 7W9 S1P to 835 V1.0 25*25*1 mm 7*13 Panel Tc=1W/m Copper thickness 0.5 Oz (FOR MFG OF LED LAMP) - to be classified under tariff item 8534 00 00 or tariff item 9405 99 00 of First Schedule to Customs Tariff Act, 1975? - printed circuit boards or not - HELD THAT:- The specificity of description in the claimed classification is not anywhere matched by the description within which the assessing authorities have sought to place the impugned goods. Moreover, it is clear from the description that parts , if at all finding fitment within heading 9405 of First Schedule to Customs Tariff Act, 1975, should not be specified or included elsewhere. In the light of the specific description, notwithstanding the addition of a metallic layer which does not find elaboration in the rival heading too, rule 3 (a) of The General Rules for the Interpretation of Import Tariff offers the solution without having to proceed further. The assessing authorities has not been discharged in accordance with the law as held. The classification adopted by the assessing authorities fails in the face of the specific entry which the respondent herein has not been able to demonstrate as having been excluded from the claimed description. Appeal allowed.
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2022 (9) TMI 1109
Classification of imported goods - diagnostic kits ELISA - diagnostic kits CLIA - diagnostic reagents on backing - controls and calibrators - other consumable reagents - to be classified under tariff item 3822 0019 or 3822 0090 of First Schedule to Customs Tariff Act, 1975 - applicability of N/N. 1/2017 Integrated Tax (Rate) dated 28th June 2017 which prescribes the rates at which integrated tax is to be levied on inter-state supply of goods - HELD THAT:- It is not the case of Revenue that any or all of the impugned goods do not find fitment in heading 3822 of the First Schedule to Customs Tariff Act, 1975 or that the integrated tax rate at serial no. 80 of Schedule II is, by the corresponding description, unquestionably excluded from every tariff item comprising heading 3822 of the First Schedule to Customs Tariff Act, 1975. Nor is it the case of Revenue that the kits at serial no. 180 of Schedule I of the integrated tax rate notification do not find placement in chapter 38 of First Schedule to Customs Tariff Act, 1975. The exercise in classification undertaken in adjudicating the proposal to take recourse to an alternate entry should have adhered to the judicially established rules of engagement. Instead of deliberating on the validity, and appropriateness, of a tariff item in the First Schedule to Customs Tariff Act, 1975 other than that claimed in the bills of entry after due notice to the importer, the adjudicating authority adopted a process of elimination of the enumeration of descriptions in the Schedules to the integrated tax rate notification, and ignoring the scheme of its presentation, with the erroneous assumption of jurisdiction to place goods within the ambit of the residuary entry in Schedule III of the integrated tax rate notification. Insofar as the imported goods are concerned in the light of statutory circumscribing of levy of integrated tax', and there being no prejudice to interests of revenue thereby, the declared classification of the imported goods prevails. Legislative intent is not imposition of burden of integrated tax on the person importing goods and the onus for altering classification has not been discharged. The charge of misdeclaration of goods does not sustain and hence confiscation and penalty are also set aside. Appeal allowed.
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Insolvency & Bankruptcy
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2022 (9) TMI 1129
Invocation and encashment of Performance Bank Guarantee(s) (PBG) granted by the Appellant - surety in a contract of guarantee to a Corporate Debtor - Scope of section 14 of IBC - whether fraud or irretrievable injustice has been done? - HELD THAT:- Section 14(3)(b) states that a surety in a contract of guarantee to a Corporate Debtor is not covered under Section 14 - Section 3(31) Describe Security Interest and states that Security Interest shall not include a Performance Bank Guarantees. A Performance Bank Guarantee does not enjoy the benefits of a moratorium under Section 14 of the Code. It is pertinent to mention that the CIRP commenced on 07.11.2019 and notices for invocation were sent prior to the commencement on 18.10.2019. The actual disbursement took place pursuant to the Order of the Hon ble High Court of Telangana. Having regard to the fact that the Bank Guarantees stood invoked vide letter dated 18.10.2019 by the Corporate Debtor on the ground that the Appellant has failed to perform its obligations in terms of the Agreements, read with Clause 2 of the Bank Guarantees and also keeping in view that there are no material on record with respect to any fraud, we do not find any illegality or infirmity in the Order of the Impugned Order. The question of fraud has been dealt with by the City Civil Court, which held that there was no element of fraud involved. It is the case of the Resolution Professional that the amount of Rs.2,50,16,972/- be released and permitted to be utilised against the overall outstanding amount of Rs.13,06,30,410/- to ensure that the plant of the Corporate Debtor is kept running as a Going Concern - the amount may be utilised for the functioning of the Corporate Debtor as a Going Concern. Appeal dismissed.
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2022 (9) TMI 1128
Validity of Resolution Plan - only 2% of their Claims has been admitted, while the workman and other statutory dues have been paid 100% - HELD THAT:- Section 24(3)(c) specifies that Operational Creditors or their representatives if the amount of their aggregate dues is not less than 10% of the dues are to be given Notice of each CoC Meeting, Section 24(4) of the Code specifies that the representative of the Operational Creditors , may attend the Meeting of CoC but shall not have any right to vote in these Meetings - it cannot be stated that there was any prejudice caused to the Appellants herein in terms of Section 24(3) not having been complied with. Also, there is no documentary evidence on record to establish that a name of a representative of the Operational Creditors was indeed given to the RP and the RP had chosen to ignore the same, as it is the specific case of the RP that no such information was ever tendered to him. There is no material irregularity warranting any interference as it is compliant with Section 30(2) of the Code. Having regard to the fact that the Resolution Plan was approved on 17.01.2021 by the CoC and subsequently by the Adjudicating Authority on 08.04.2021 and more than a year has lapsed, and also keeping in view that the Operational Creditors do not have any Voting Right in the CoC and that the Commercial Wisdom of the CoC is non-justiciable and when there is no material irregularity on the face of the record, there are no illegality or infirmity in the Order of the Adjudicating Authority. Appeal dismissed.
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2022 (9) TMI 1127
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Time limitation - HELD THAT:- It can be seen that the purported acknowledgment dated 09.03.2015 of the Corporate Debtor in a letter from the Operational Creditor addressed to the Corporate Debtor wherein, the Corporate Debtor has acknowledged the receipt of the said letter, and not the contents of the same. The stamp of the Corporate Debtor mentions Contents not verified . As such, the same cannot be considered as acknowledgement of debt under section 18 of the Limitation Act, 1963. However, even if the purported acknowledgment dated 09.03.2015 were to be considered, the resultant limitation period would still come to an end on 09.03.2018. Even if, under section 14 of the Limitation Act, 1963, the period of pendency of the winding up petition No. 161 of 2016 (from February 2016 to 29.03.2016) is excluded, the limitation period will still only extend till may 2018 - The limitation period in the instant case would resume from 29.03.2016 and would have been extinguished by May 2018. The proceedings under section 9 of the Code, however, were filed on 31.12.2019. The instant petition, therefore is barred by limitation. This Adjudicating authority is satisfied that the instant petition is both incomplete and barred by limitation and therefore is liable to be dismissed.
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2022 (9) TMI 1126
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - reply to the main Company Petition not given, despite giving opportunities to file reply in the matter - time limitation - HELD THAT:- The Last date of invoice is 23.12.2019 and the date of filing is 06.04.2021 and it is well within the Limitation. This Bench has jurisdiction to deal with this Company Petition. The Petition made by the Operational Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount of one lakh rupees stipulated under section 4(1) of the IBC, as per the date of filing of this petition. Therefore, the default stands established and there is no reason to deny the admission of the Petition. In view of this, this Adjudicating Authority hereby admits this Petition and orders initiation of CIRP against the Corporate Debtor. Petition admitted - moratorium declared.
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2022 (9) TMI 1125
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - authorisation of signatory of the petition - date of default mentioned in the petition - HELD THAT:- As per clause 4(c) of the loan agreement dated 06.05.2018, the loan amount is disbursed against the interest calculated @ 3% per month. Further clause 3 of loan agreement dated 06.05.2018 and the certified copy of board resolution dated 14.05.2018 of the corporate debtor authorizing to avail the loan facility from the applicant clearly states that the amount disbursed shall be utilized in the Krbing work, PQC and DLC work, stone pitching, Toe Wall, Darfin chute work at KME Expressway project that has been awarded by Pan India Infra projects Private Limited. It is clear that when a default takes place, and debt becomes due and is not paid, the Insolvency Resolution Process shall begin against the corporate debtor - the present application is complete in all respect. The applicant financial creditor is entitled to move the application against the corporate debtor in view of admitted outstanding financial debt and default of the same by the corporate debtor. In terms of Section 7 (5) (a) of the Code, the instant petition stands admitted - Petition admitted - moratorium declared.
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PMLA
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2022 (9) TMI 1124
Money Laundering - proceeds of crime - scheduled offence - presumption in interconnected transactions - burden of proof - HELD THAT:- The Court has gone through the materials on record and finds that there are allegations against the petitioners, the company as well as the Directors who are the petitioners in the respective petitions. In paragraph no.17 of the complaint it has been disclosed that their transactions were limited to provide accommodation entries in lieu of cash only that on receipt of cash, cheques were issued to the companies either as share application or loan. One of the witness Shri Mridul Bhowmick at paragraph no.18 of the complaint has stated that he is not knowing that whether any share certificate is in possession and he was not aware whether any share certificate has been issued at all. Vivek Kumar Goenka has said so in paragraph no.19 of the complaint. Thus, prima facie it appears that intentionally the proceed of the crime has been transferred in the name of share to the petitioners and the petitioners firm. For issuance of process against the accused it has to be seen only whether there is sufficient ground for proceeding against the accused and for that the Court is not required to weigh the evidentiary value on the basis of materials on record and the only thing the Court is required is to apply its judicial mind and in the case in hand the learned court has taken cognizance by a speaking order. There is no illegality in the order taking cognizance. Admittedly, section 23 of the Prevention of Money Laundering Act, 2002 speaks of presumption in interconnected transactions and the burden of proof is on the accused in light of section 24 of the said Act which can be proved in the trial - The complaint does base on the certain statement evidence of certain persons it is not necessary to obey the factual prosecution which is said out of running proceeds of crime and the Court is not required to go into the details of that statement while will hamper or embarrass the learned trial court. Petition dismissed.
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Service Tax
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2022 (9) TMI 1123
CENVAT Credit - iput services or not -- Maintenance or Repairs service - Consulting Engineer Service - Management Consultant Service - Erection Commissioning service - Information Technology services received from a foreign service provider - reverse charge mechanism - HELD THAT:- This issue was correctly decided by the Adjudicating Authority inasmuch as Section 66A was added retrospectively in Rule 3 for allowing Cenvat credit. Whether the services in question are admissible input service in terms of Rule 2(l), this issue was never raised in the show cause notice. Therefore, it cannot be expected from the Adjudicating Authority to pass order on the issue which is beyond the scope of show cause notice. It is settled law that any issue which is not flowing from the show cause notice being beyond the show cause notice, need not be addressed by the authority. There are no error on the part of the Adjudicating Authority for not considering the issue of admissible input service in terms of Rule 2(l) - appeal dismissed - decided against Revenue.
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Central Excise
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2022 (9) TMI 1122
Refund of unutilized/accumulative Cenvat credit - inputs used in manufacture of goods exported under bond to a SEZ unit - quarter of April 2008 to June 2008 - Rule 5 of Cenvat Credit Rules, 2004 read with Notification No. 05/2006 dated 14.03.2006 - HELD THAT:- There is no denial to the fact that the assessee/respondent has cleared its final product to SEZ unit i.e. from DTA to SEZ and accordingly, the transaction in question admittedly was export of finally manufactured goods. The impugned refund claim along with the connected documents for the Quarter April 2008 to June 2008 was filed within the time limit of one year stipulated under Section 11B of Central Excise Act, 1944 - Since the refund claim pertains to the refund of Cenvat credit, the same was out of the bar unjust enrichment in terms of para C of provision to Section 11B(2) of Central Excise Act, 1944 - The appellant was entitled for the impugned refund. The Commissioner (Appeals) has held the order of Original Adjudicating Authority to have been beyond the scope of show cause notice, it is observed that in the show cause notice, refund claim was proposed to be rejected on the ground that the issue is dependent on the outcome of the judgment of the Hon ble Gujarat High Court in ESSAR STEEL LTD. VERSUS UNION OF INDIA [ 2009 (11) TMI 141 - GUJARAT HIGH COURT] , whereas, the Original Adjudicating Authority has rejected the claim not only on the said proposed ground but also on the ground that the amount of Cenvat credit availed on imports during the relevant quarter April 2008 to July 2008 was set off against the duty paid on the goods cleared during the said quarter, where after only an amount of Rs. Rs.2,16,37,636/- was available to the appellants against the refund claim of Rs.27,40,82,605/- - There is no error committed by Commissioner (Appeals) when the O.I.O has been held to have been passed on some extraneous factors which were neither proposed in the show cuase notice nor were related to the issue. The appeal of Revenue is dismissed.
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2022 (9) TMI 1121
Disallowance of input service credit - group mediclaim policy - personal accident policy - time limitation - HELD THAT:- The issue in respect of the admissibility of cenvat credit in respect of group mediclaim policy and personal accident policy is no longer res integra for the period prior to the amendments made in April 2011 to the Cenvat Credit Rules. Admittedly in this case the entire period of dispute is prior to April 2011. The Commissioner (Appeals) should not have denied Cenvat Credit in respect of group mediclaim policy and personal accident policy to the extent it pertains to the employee only. However, the case law cited above although say that the benefit should not be admissible to that part of the service which is in respect of the family members of the employees, as the breakup of the part which is in respect of the employees and that in respect of family members of the employee is not there, the matter needs to be remanded back to the original authority for determination of the credit amount which is in respect of the family members of employee. Time Limitation - HELD THAT:- The facts in respect of availment of Cenvat Credit in respect of these services was in the knowledge of the Revenue, neither the show cause notices nor the order-in-original have given any reason for invoking extended period of limitation - In absence of any finding of existence of the ingredients required for invocation of extended period of limitation, there are no merits in invoking the same for making the demand of inadmissible cenvat credit. The order to this extent is set aside and also the order to the extent it pertains to imposition of penalty under Rule 15(1) of Cenvat Credit Rules. The appeal is partly allowed to the extent as indicated above and the matter remanded back to the original authority for redetermination of the inadmissible cenvat credit i.e. in respect of the insurance services pertaining to the family members of the employee of the appellant.
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2022 (9) TMI 1120
CENVAT Credit - sale of entire cement division operations - JSW Steel Ltd. (transferor company) provided any services to the appellants or not - Time limitation - HELD THAT:- The disputed debit notes were issued by debiting the books of account of the appellant, with the narration being re-imbursement of expenses incurred for procurement of Clinker . It is evident from such debit notes that when the expenses were incurred for procurement of inputs by M/s. JSW Steel Ltd., such company was not merged or taken over by the appellant. Further, there is also no mention about the specific services, which were procured by the transferor company. Sub-rule (1) Rule 3 of the Cenvat Credit Rules, 2004 permits a manufacturer of final product to take cenvat credit of various duties paid on the inputs or capital goods received in the factory of manufacture of final products and input services by such manufacturer. Since M/s. JSW Steel Ltd. was entirely a separate corporate entity at the time of procurement of inputs, the requirements of the said statutory provisions have not been complied with by the appellants inasmuch as, at the time of procurement of inputs, the transferor company was the beneficiary of such cenvat credit of Central Excise duty or Service Tax paid on the inputs/input services - there are no infirmity in the impugned order passed by the learned Commissioner (Appeals) in denying the cenvat benefit to the appellants. Time limitation - HELD THAT:- Since, there is no element of suppression of facts and the irregular availment of cenvat credit was duly recorded in the books of accounts and audited by the department, the cenvat demand if any, should be confined to the normal period and the extended period of limitation cannot be invoked for effecting recovery of such cenvat credit. In the present case, it is an admitted fact on record that the show cause notice was issued by the department on 21.06.2017, which is much beyond the normal period prescribed under Section 11A of the Central Excise Act, 1944 read with Rule 14 ibid - the appeal filed by the appellants should succeed on the ground of limitation. The appeal is allowed in favour of the appellants on the ground of limitation.
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Indian Laws
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2022 (9) TMI 1119
Decree for recovery of possession in respect of plot - It is alleged that the said adjacent plot of land is also in the unauthorised occupation of the Appellant - mesne profit - HELD THAT:- The existence of a cause of action and/or, in other words, the existence of circumstances giving cause for initiation of action is imperative for initiation of a suit. A suit can only be entertained when the cause of action has arisen and not otherwise. Any future event does not constitute cause of action. The cause of action is the fact or bundle of facts which would be necessary for the plaintiff to plead and prove, in order to get a judgment of the Court in his favour. The cause of action is the expiry of the lease of the suit property, that is Plot No.4/4 and refusal of the Appellant to vacate the suit property in spite of request, and the consequential liability of the Appellant to the Respondent, to pay damages for wrongful occupation and/or mesne profits for wrongful occupation - There can be no doubt that the verdict of the Trial Court has assumed finality in respect of Plot No. 4/4. The Respondent is entitled to possession of Plot No. 4/4. The Respondent is also entitled to mesne profits at the rate of Rs.50,000/- per month from 1st March 2006, as directed by the High Court to make over, till the date on which the Appellant offered possession of Plot No. 4/4 to the Respondent. Order 7 Rule 3 of the Code of Civil Procedure mandates that where the subject matter of the suit is immovable property, the plaint shall contain a description of the property sufficient to identify it, and in case such property can be identified by boundaries or numbers in a record of settlement or survey, the plaint shall specify such boundaries or numbers - There could be no doubt that a decree should not to the extent practicable be allowed to be defeated. At the same time, a decree can only be executed in respect of the suit property if the suit property is easily identifiable. The extent of the suit property would have to be determined by the Executing Court, as a question relating to execution, discharge or satisfaction of the decree. This Court cannot shut its eyes to the fact that part of the land belongs to the Delhi Government for which Appellant is paying Revenue to the Delhi Government - Appeal allowed.
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2022 (9) TMI 1118
Dishonor of Cheque - insufficient funds - rebuttal of presumption - discharge of burden to prove - preponderance of probabilities - section 138 of NI Act - HELD THAT:- The law is clear on the point that when the complainant discharged the initial burden to prove the transaction led to execution of the cheque, the presumption under Sections 118 and 139 of the N.I Act would come into play. No doubt, these presumptions are rebuttable and it is the duty of the accused to rebut the presumptions and the standard of proof of rebuttal is nothing but preponderance of probabilities. It has been settled in law that the accused can either adduce independent evidence or rely on the evidence tendered by the complainant to rebut the presumptions. In the case on hand, it appears that the accused did not adduce any evidence. Though during cross examination of PW1 issuance of blank cheque and subsequent filling up of the same were suggested, the said suggestions were denied by the complainant - Apart from the said suggestion, no positive evidence to rebut the presumption either adduced or available in this case. Therefore, it has to be held that the courts below rightly convicted the accused under Section 138 of the N.I Act. As per mandate of Section 357 (1)(b) of Cr.P.C, when the court imposes sentence of fine or a sentence of which fine forms a part, the court may when passing judgment, order the whole or part of the fine to be paid as compensation for any loss or injury caused by the offence, when compensation, is, in the opinion of the court, recoverable by such person in a civil court. Section 357(3) of Cr.P.C provides that when a court imposes a sentence of which fine does not form a part, the court may when passing judgment or order by way of compensation, such amount, as may be specified in the order to the person who has suffered any loss or injury by reasons of the act or accused has been so sentenced - Thus in an offence under Section 138 of the N.I Act when the court imposes imprisonment and fine, fine forms part of the sentence. In such cases, the court has to order payment of compensation from the amount of fine as provided under Section 357(1)(b) of Cr.P.C. - the sentence is modified. Appeal allowed in part.
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2022 (9) TMI 1117
Application for referring the matter to arbitration - existence of arbitration agreement between the parties - whether the documents on record, upon which the parties have placed reliance, demonstrate existence of such an arbitration clause/agreement? - HELD THAT:- This Court is of the opinion that the trial Court committed a grave error in failing to appreciate the true purport of the documents on record. For an arbitration agreement to come into existence between the parties, there ought to be a document executed on behalf of both the parties, showing consensus ad-idem, incorporating such an arbitration clause/agreement. The only document signed on behalf of both the parties is the letter of intent dated 12/07/2012, which admittedly contains no arbitration clause/agreement. Similarly, even the purchase order dated 16/07/2012, which is signed only on behalf of the petitioners does not contain such an arbitration clause. This Court is of the opinion that merely because the proposal forwarded on behalf of the respondents, by letter dated 26/06/2012, contained an arbitration clause, which was unilaterally signed only on behalf of the respondents and there was reference thereto in the letter of intent dated 12/07/2012 and the purchase order dated 16/07/2012, it cannot be said that an arbitration agreement came into existence between the parties. The trial Court failed to appreciate this aspect of the matter while exercising power under Section 8 of the Act of 1996 - Petition allowed.
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2022 (9) TMI 1116
Dishonor of Cheque - legally enforceable - cheque received through third party - acquittal of the accused - rebuttal of presumption - section 138 and 139 of NI Act - HELD THAT:- It appears from the available document, Exhibit-E that the vehicle in question was registered in the name of Tinkori Mandal on 6th August, 2003 and the vehicle was acquired on hire purchase with the financial assistance from Malda Co-operative Agricultural Bank Limited. In absence of any document establishing the nexus between A.B. Construction and Mourya Finance Company Limited, the appellant/complainant has failed to prove that A.B. Construction or Ajay Basu had any obligation to pay to appellant any money and chaque in question was given in discharge of such obligation. On the contrary, accused/respondent was successful in rebutting the presumption arising out of the provision of Section 139 of the Negotiable Instrument Act. The appellant being the complainant had failed to establish by cogent evidence that the accused/respondent issued the cheque in favour of the complainant in discharge of his liability to pay debt otherwise legally enforceable rather it is established that the cheque was received from Ajit Sinha. The impugned judgement passed by learned Trial Court does not warrant any interference - appeal against order of acquittal merits no consideration and dismissed.
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