Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
September 28, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Seizure of goods alongwith the vehicle - E-way bill - The goods in the present case were seized on 11.02.2018 that is only for the reason they were not accompanied with the E-way bill. Since the requirement of the E-way bill was not applicable for the petitioner during the above period, the seizure itself is bad in law. - HC
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Seeking grant of Anticipatory Bail - availment of Input Tax Credit (ITC) based on forged and fake invoices - Having considered the gravity of offence and its implications, this Court is of the view that the applicant is not entitled for anticipatory bail - HC
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Proper officer - Validity of issue of Authorization for access to Business premises issued u/s 71(1) - the Proper Officer for the functions referred to Section 71(1) of the Act, would be the three officers referred to in the column designation of officer authorized and one such Officer being Joint Commissioner (ST) working in the Division - In the instant case, as seen from the impugned proceedings, the authorization for access to business purpose under Section 71(1) of APGST Act was issued by Joint Commissioner (ST). Hence, the argument though appeared to be impressive at the first stage, but on a close perusal of the Notification issued, proved to be incorrect. - Authorization is valid - HC
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Seeking grant of Regular Bail - evasion of GST - kachcha entry (unaccounted transaction) - when trial of the case would not likely to conclude in a reasonable time and the applicant is in custody since 24.03.2022 and considering the bonafide shown by the applicant to deposit the amount, the applicant is to be released on bail subject to conditions - HC
Income Tax
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Exchange in old currency notes seized by the Police Authorities under an order of seizure - directions issued - the respondents shall exchange the old demonetized currency notes with new currency notes subject to the petitioner fulfilling the terms and conditions mentioned above, within a period of 04 weeks of the petitioner approaching the respondents. - HC
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Revision u/s 263 by CIT - The AO ought to have, therefore, exceeded his ambit to verify the veracity of the claims as to agricultural income, exempt u/s. 10, i.e., besides being in explanation of the source of the cash deposit. He having not done so, by seeking the approval of his range head, as enjoined upon him by the Board Circular, binding on him, the said authority was competent to, in exercise of his revisionary jurisdiction, require the AO to examine the same, setting aside the assessment for the purpose. - AT
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Scope of the instructions issued by the CBDT - Exercise of power us/ 119 - A perusal of the said instruction shows that this is practically a search and seizure manual notification. It is an internal communication being guidelines for the notice of the Commissioner of Income tax, Range Head and the AO handling the assessment of search and seizure cases. This notification is not one which has been issued u/s.119 of the Income tax Act, 1961 - AT
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Revision u/s 263 by CIT - write off of the investment in subsidiary under the Normal provisions and under the computation of Book Profits u/s 115JB - . Merely because the AO, after calling for explanation and satisfying himself, has not mentioned the same in his Assessment order would not mean that he has not applied his mind on the specific submissions of the Appellant - on merits also, the claim of investment written off is an allowable deduction - AT
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Addition made being Specified Bank Notes deposited in the bank account of the assessee - whether the assessee had sufficient cash balance in its books for making the said deposits in the bank account? - Assessee has furnished the evidences and replies from the parties - AO had not brought any cogent evidence on record to disbelieve the details furnished by the parties and the assessee. - No additions - AT
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Addition u/s 68 - unexplained cash credit - CIT(A) failed to appreciate the simple accounting entry that when the assessee’s proprietorship concern received a sum on behalf of the partnership firm then such sum will stand on the liability side of the balance sheet of the sole proprietorship concern and when the said sum is repaid back the credit balance is squared off. There is no other mechanism to reflect such entry in any other way as has been shown by the assessee. - Additions deleted - AT
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TDS u/s 195 - reinsurance premium ceded to non-resident reinsurer is not taxable in India under the Income Tax Act, 1961 or under DTAA between India and respective countries where NRRs are tax residents and thus, on impugned payments the assessee is not liable to deduct TDS u/s.195 of the Income Tax Act, 1961. Consequently, payments made to NRR cannot be disallowed u/s.40(a)(i) of the Act, 1961. - AT
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Assessment u/s 153A - addition of LTCG on sale of shares as bogus u/s 68 - where the assessment has attained finality and stands concluded at the time of search and are not abated, then no addition can be made in absence of any incriminating material or documents found during the course of search. - Additions deleted - AT
Customs
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Revocation of Customs Broker license - respondent failed to adhere to Regulation 13(a) of the CHALR, 2004 - The order passed by the learned Tribunal setting aside the revocation of license cannot be held to be wholly perverse considering the facts and circumstances of the case, however, setting aside the order forfeiting the security deposit is not tenable - HC
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Validity of rescinding of Anti Dumping Duty (ADD) - recommendation from designated authority obtained later - The issuance of Notification dated 01.02.2022 by the Central Government rescinding the countervailing duty imposed by the Notification dated 07.09.2017 was a irregular and illegal exercise. The Notification rescinding the countervailing duty could not have been issued when the exercise in law required to be undertaken pursuant to the commencement of the process of Sunset review not completed - HC
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Import of restricted goods or not - capital goods - It is clear from the definition of capital goods that any plant, machinery, equipment or accessories required for manufacture or production, either directly or indirectly, of goods would fall within the scope of capital goods. The scope of word “for manufacture” and “indirectly” appearing in the definition of capital goods under the policy is wide and thus use of such goods having indirect nexus with the manufacture or production of goods also qualify as capital goods. - AT
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Levy of redemption fine and penalty - re-export of goods - misdeclaration of goods - the penalty imposed under Section 112 (a) of the Customs Act, 1962 is proper. However, the penalty of Rs.7 lakhs appears to be on a higher side. The penalty calls for reduction and it is reduced to Rs. 2 lakhs - AT
Indian Laws
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Possession of the secured assets - Once all the requirements under Section 14 of the SARFAESI Act are complied with/satisfied by the secured creditor, it is the duty cast upon the CMM/DM to assist the secured creditor in obtaining the possession as well as the documents related to the secured assets even with the help of any officer subordinate to him and/or with the help of an advocate appointed as Advocate Commissioner. - SC
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Commercial quantity under the NDPS Act - If the contraband seized falls within the provisions of NDPS Act, the weight of the neutral substance would not be ignored while determining the nature of the quantity seized, whether small quantity, commercial quantity or in between - If the alleged contraband seized falls within the definition of ‘manufactured drug’ under Section 2(xi) of the NDPS Act, then the entire notification including the aforesaid ‘Note 4’ will be applicable. - HC
IBC
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Whenever Fraud on a Creditor is perpetrated in the course of carrying on Business, it does not necessarily follow that the Business is being carried on with an Intent to Defraud the Creditor - One cannot remain oblivious of the candid fact that, if the Directors of a Company had acted on a bonafide belief that the Company would recover from its Financial Problems / Difficulties, then, they will not be held liable for the act / offence of Fraudulent Trading. - AT
Service Tax
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Levy of penalty u/s 78 of FA - the appellant paid the service tax and interest for the period from 18.04.2006 onwards before issuance of show cause notice therefore, the case of the appellant is squarely covered under the provision of Section 73(3) of Finance Act, 1994 accordingly, the revenue was not suppose to issue show cause notice therefore, there was no question of imposition of penalty - AT
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Exemption from service tax - works contract - sub contractor - The appellant can claim the benefit of Sr. No. 29 (h) in respect of service of works contract provided as sub contractor to the main contractor wherever the appellant is able to establish that the main contractor was exempted from service tax in respect of works contract - AT
Case Laws:
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GST
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2022 (9) TMI 1206
Seeking grant of Anticipatory Bail - Online interrogation by the proper officer - section 70 of GST Act - HELD THAT:- The impugned order passed by the High Court deserves to be partly modified in the following terms: (i) Respondent Nos.1-7 (except respondent No.2, who is stated to be 92 years old) will join the enquiries-cuminvestigation in-person as and when required; (ii) If respondent No.2 is also required to join enquiry, it is directed that keeping in view his age, he shall be permitted to do so through online mode as already directed by the High Court; (iii) Respondent Nos.1-7 undertake not to seek refund of Rs.28 crores from the appellants pending enquiry under Section 70(1) of the GST Act, and the refund of the said amount will depend upon the final outcome of the abovestated enquiry; (iv) For the balance amount of Rs.6 crores, respondent Nos.1-7 shall execute an indemnity bond within two weeks. Appeal disposed off.
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2022 (9) TMI 1205
Seizure of goods alongwith the vehicle - goods seized on the ground that they were not accompanied with the E-way bill - HELD THAT:- The issue has been considered by the Division Bench of this Court in M/S GODREJ AND BOYCE MANUFACTURING CO. LTD., L.G. ELECTRONICS INDIA PVT. LTD., BHARTI AIRTEL LIMITED, M/S GUALA CLOSURES (INDIA) PVT. LTD., M/S. RAS POLYTEX PVT. LIMITED, RIMJHIM ISPAT LIMITED, RIMJHIM ISPAT LIMITED, M/S. GAURANG PRODUCTS PVT. LTD., M/S. ADITYA BIRLA FASHION AND RETAIL LTD., M/S. NAVYUG AIRCONDITIONING AND M/S. PROACTIVE PLAST PVT. LTD. VERSUS STATE OF U.P. AND 02 OTHERS AND STATE OF U.P. AND 3 OTHERS [ 2018 (9) TMI 1261 - ALLAHABAD HIGH COURT] where it has been held that the goods were not covered with the requirement of E-way bill during 1.2.2018 to 31.3.2018. The goods in the present case were seized on 11.02.2018 that is only for the reason they were not accompanied with the E-way bill. Since the requirement of the E-way bill was not applicable for the petitioner during the above period, the seizure itself is bad in law. Accordingly, the impugned seizure order dated 11.02.2018 passed under Section 129(1) of U.P. GST (Annexure 2 to the writ petition) is hereby quashed and all consequential proceedings stands dropped. The writ petition is allowed.
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2022 (9) TMI 1204
Rejection of the revocation application - Non-speaking order - earlier proceedings were dismissed on the ground that an appellate remedy is available under the Act - principles of natural justice - HELD THAT:- The order passed by the authority cancelling the application for revocation is devoid of reasons. None of the grounds raised by the appellant has been dealt with. It is not clear as to why the department has been dragging the appellant for such a long period, i.e. from August, 2021. If, according to the respondent, there is any adverse material, then a proper show cause notice should have been given to the appellant and her objection should have been invited and further affording an opportunity of personal hearing, a speaking order should have been passed. It is high time that the Commissioner of Commercial Taxes takes note of the manner in which the subordinate officers have been dealing with cases, more particularly matters concerning cancellation of registration and it would augur well to conduct an orientation programme to enable to the officers to be sensitized as to how and on what manner the proceedings should be initiated and how it should be dealt with and how speaking order should be passed. In the instant case there has been total violation of principles of natural justice, the order of rejection of the revocation application is a non-speaking order without considering the vital facts, the Court is inclined to set aside such an order. The order passed in the writ petition is set aside and the writ petition is allowed and the order of rejection of the application for revocation dated 21st March, 2021 is set aside and the matter is remanded to the original authority - Appeal allowed.
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2022 (9) TMI 1203
Seeking grant of Anticipatory Bail - availment of Input Tax Credit (ITC) based on forged and fake invoices - applicant summoned under Section 70 of the Act - HELD THAT:- The allegations are much grave. It is the case of generating fake and forged invoices so as to claim ITC. In their objections, the respondent no.2 has given categorical details of such dubious transactions and has also submitted as to how in one day, the money has routed in different accounts. The applicant transferred the money in his wife s account and, subsequently, from her account, it comes to the applicant s account. It is a kind of act, which effects the economy of the country. Added to it is the non-cooperative attitude of the applicant during enquiry. Having considered the gravity of offence and its implications, this Court is of the view that the applicant is not entitled for anticipatory bail - the instant anticipatory bail application deserves to be dismissed. The anticipatory bail application is dismissed.
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2022 (9) TMI 1202
Detention of goods alongwith the vehicle - the e-way bill was valid up to 22nd January, 2021 and the vehicle, which was transporting the goods was intercepted on 25th January, 2021 and by then, the e-way bill had expired - mala fide intention on the part of the appellants in not extending the e-way bill and transporting the goods after the expiry of the e-way bill, or not - HELD THAT:- The learned appellate authority should consider the question as to whether there was any intentional attempt made by the appellants to evade payment of tax. Since this aspect has not been considered by the learned appellate authority, we are constrained to remand the matter to the appellate authority for fresh consideration. The appeal as well as the writ petition are disposed of and consequently, the order passed by the learned appellate authority dated 30th November, 2021 is set aside and the appeal stands restored to the file of the appellate authority to be decided on merits and in accordance with law.
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2022 (9) TMI 1201
Detention of goods alongwith the vehicle - goods were not accompanied by the valid e-way bill - transaction being an export transaction - wilful intention on the part of the appellants not to generate any e-way bill, or not - Section 129 of GST Act - HELD THAT:- On perusal of the order passed by the first appellate authority, it is found that such exercise has not been done. Therefore, one more opportunity can be granted to the appellants to show their bona fides. This appeal as well as the writ petition are disposed of and the order passed by the appellate authority dated 30th November, 2021 is set aside and the matter stands remanded to the appellate authority. The appeal shall stand restored in the file of the appellate authority and the appellants shall appear before the appellate authority and produce all documents to establish their case that no tax is leviable and there was no willful intention on their part to evade payment of tax so as to attract penalty, after affording an opportunity of personal hearing. Appeal disposed off.
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2022 (9) TMI 1200
Maintainability of petition - availability of alternative remedy or not - Section 107(1) of the West Bengal Goods and Services Tax Act, 2017 - HELD THAT:- No useful purpose would be served in keeping the writ petition pending and the suggested direction would not only take care the interest of the appellants but also would safeguard the interest of revenue. Accordingly, the appeal and the writ petition are disposed of with the directions imposed. The appellants are directed to file a statutory appeal within a period of 30 days from the date of receipt of the server copy of this judgment and order and remit 10% of the disputed tax along with the appeal memorandum. Upon such payment of the 10% of the disputed tax and filing the appeal, the Assistant Commissioner of Revenue shall address the appellants bankers and keep in abeyance the garnishee notice so as to enable the appellants to operate their bank account. Application disposed off.
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2022 (9) TMI 1199
Maintainability of petition - appealable order or not - opportunity of hearing provided or not - Section 74(9) of the WBGST Act, 2017/ CGST Act 2017 - HELD THAT:- It is found that the authority has recorded that the Registered Tax Prayer (RTP), namely, the appellant has neither appeared nor filed any reply to the intimation given to the appellant. There are no need to go into the controversy as to whether the documents were submitted and as to whether the authority concerned, namely, the Assistant Commissioner of Revenue, State Tax had received those documents as this Court is of the view that one more opportunity can be granted to the appellant to submit all the documents and the cancellation of registration was not justified. If these have been adopted, it will not only safeguard the interests of the appellant but also aid the revenue who were interested in recovery of appropriate taxes. The appeal stands allowed in part and the appeal alongwith the writ petition stands disposed of by directing the appellant to treat the order passed under Section 74(9) of the WBGST Act, 2017 read with CGST Act, 2017 dated 23.03.2022 as an additional show cause notice and the appellant is directed to submit reply alongwith all relevant documents within a period of two weeks from the date of receipt of the server copy of this order.
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2022 (9) TMI 1198
Detention of goods alongwith the vehicle - goods are tax free animal feed supplement with HSN 2309 or not - residue/waste of distillery covered under HSN 2303 or not - HELD THAT:- The legality of the order dated 11.01.2021 (Annexure P-5) passed by the Assistant Commissioner, State Tax, Bathinda raising demand of tax/penalty need not be gone into at this stage. Such view is being taken for the reason that the facts of the case make out a case for remand to the Appellate Authority for reconsideration. Perusal of the impugned order dated 29.06.2022 at Annexure P-7 passed by the Appellate Authority would clearly show that the submissions/grounds raised by the petitioner in the statutory appeal have not even been adverted to, much less dealt with. The impugned order passed by the Appellate Authority, as such, cannot sustain. The present writ petition is partly allowed and the order dated 29.06.2022 at Annexure P-7 is set aside - The matter is remanded back for consideration afresh at the hands of the Appellate Authority and after taking into account all the submissions and contentions raised by the petitioner in the appeal at Annexure P-6.
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2022 (9) TMI 1197
Proper officer - Validity of issue of Authorization for access to Business premises issued under Section 71(1) of the Andhra Pradesh Goods and Services Tax Act, 2017 - contrary to Sub-Section 91 of Section 2 read with Section 5(1) and 5(3) of the APGST Act or not - whether the authorization given to the second respondent herein by the Joint Commissioner is valid in law? - HELD THAT:- A reading of Section 71(1) of the APGST Act, clearly demonstrate that any Officer under this Act, authorized by a Proper Officer not below the rank of Joint Commissioner shall have access to place of any business of registered person to inspect the books of accounts, documents - The Proper Officer referred to in Section 71(1) of the Act would mean the Chief Commissioner or the Officer of the State who is assigned that function by the Chief Commissioner as defined in Section 2(91) of APGST Act. It is very much evident that the Proper Officer for the functions referred to Section 71(1) of the Act, would be the three officers referred to in the column designation of officer authorized and one such Officer being Joint Commissioner (ST) working in the Division - In the instant case, as seen from the impugned proceedings, the authorization for access to business purpose under Section 71(1) of APGST Act was issued by Joint Commissioner (ST). Hence, the argument though appeared to be impressive at the first stage, but on a close perusal of the Notification issued, proved to be incorrect. Therefore, the authorization given by the Joint Commissioner pursuant to the Gazette Notification issued by the Chief Commissioner authorizing certain categories of persons cannot be found fault with. It is also to be noted here that the authorization by the Chief Commissioner came to be issued in terms of Section 2(91) of the Act which categorically states that the Proper Officer would mean not only the Chief Commissioner but also Officer of the State Tax, who is assigned that function by the Chief Commissioner - there are no grounds to grant the relief sought for by the petitioner, namely, to quash the proceeding issued by Joint Commissioner authorizing the Assistant Commissioner (ST) to conduct inspection/search etc. of the premises of the petitioner. The writ petition is dismissed.
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2022 (9) TMI 1196
Seeking grant of Regular Bail (second bail application) - availment of inadmissible input tax credit - Section 132 of the Central Goods and Services Tax Act, 2017 read with Section 132 of Union Territory Goods and Services Tax Act, 2017 read with Section 132 of State(s) Goods and Services Tax Act, 2017 and Section 20 of Integrated Goods and Services Tax Act, 2017 - HELD THAT:- The petitioner earlier also filed bail petition before this Court vide CRM-M-1315-2022 which was dismissed by way of passing a detailed order vide Annexure P-4 on the ground that material witnesses are yet to be examined and also considering the apprehension expressed by the the learned counsel for the respondent that in case the petitioner is released on bail then he may influence witnesses or may tamper with evidence or may flee from justice. There is no change of circumstance during the interregnum period after the dismissal of the earlier bail petition till the filing of the present petition. As per the learned counsel for the respondent, the material witnesses are yet to be examined. Petition dismissed.
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2022 (9) TMI 1195
Seeking grant of Regular Bail - evasion of GST - kachcha entry (unaccounted transaction) - offences punishable under Sections 132(1)(a) and 132(1)(i) of Central Goods and Services Tax Act (CGST Act) and Gujarat Goods and Services Tax Act, 2017 - HELD THAT:- In the facts of the present case, based on the unaccounted transactions, the evasion of tax has been unearthed by the department. The department has already filed the complaint before the Court concerned. The department objected the bail application mainly on the ground that investigation is still under way. This Court is of considered view that, merely raising the contention that investigation is still going on is not enough, but, department should have point out that the further custody of the applicant is necessary. It is on record that, no liability is fixed or determined as per the statutory provisions of the Act. It is the right of the assessee to file an appeal against the assessment subject to deposit of the 10% disputed liability which may not exceed Rs.2 crore. In the facts of the present case, Rs.39,88,318/-, has been recovered during the course of investigation from the applicant. In such circumstances, when trial of the case would not likely to conclude in a reasonable time and the applicant is in custody since 24.03.2022 and considering the bonafide shown by the applicant to deposit the amount, the applicant is to be released on bail subject to deposit of Rs.60 lakhs, before the Office of Chief Commissioner of State Tax, Ashram Road, Ahmedabad within a period of six months in six equal installments from the date of his release - the applicant is ordered to be released on regular bail - application allowed.
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2022 (9) TMI 1194
Maintainability of appeal - fair and sufficient opportunity of hearing provided to the Petitioner or not - non-application of mind - principles of natural justice - Section 107 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- Under identical circumstances, this Court in the case of M/S. SHRI MAHILA GRIHA UDYOG LIJJAT PAPAD VERSUS THE JOINT COMMISSIONER OF COMMERCIAL TAXES (APPEALS) -2, BENGALURU; THE COMMERCIAL TAX OFFICER, AUDIT-2. 1, BENGALURU [ 2022 (9) TMI 1050 - KARNATAKA HIGH COURT] , has set aside the impugned endorsement and remitted back the matter to respondent No.1 Appellate Authority for re-consideration in accordance with law. In the said order, this Court set aside the order passed by the Appellate Authority and remitted the matter back for reconsideration afresh in accordance with law and since the issue in controversy involved in both the petitions are identical, I deem it just and appropriate to set aside the impugned order at Annexure-D dated 14.07.2022 passed by the respondent No.3 Appellate Authority and remit the matter back to the respondent No.3 for reconsideration afresh in accordance with law. Petition allowed.
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2022 (9) TMI 1193
Seeking grant of further time to the petitioners to file revised Form GST TRAN-1 and TRAN-2 or to file fresh Form GST TRAN-1 and TRAN-2 - transitional credit - HELD THAT:- The issue decided in the case of UNION OF INDIA ANR. VERSUS FILCO TRADE CENTRE PVT. LTD. ANR. [ 2022 (7) TMI 1232 - SC ORDER] where it was held that Goods and Service Tax Network (GSTN) is directed to open common portal for filing concerned forms for availing Transitional Credit through TRAN-1 and TRAN-2 for two months i.e. w.e.f. 01.09.2022 to 31.10.2022. Learned counsel for the parties are in agreement that the above direction of the Supreme Court sufficiently covers the interest of the petitioners. No grievance of the petitioners subsist thereafter. The Writ Petitions are disposed of.
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Income Tax
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2022 (9) TMI 1192
TP Adjustment - Comparable selection - Whether ITAT fell in error in holding that the Assessee is not a Knowledge Processing Outsourcing Unit ( KPO ) whereas the Assessee itself in the transfer pricing study report had declared that it is engaged in KPO activities? - HELD THAT:- ITAT has recorded that admittedly, there has been no change in the functions performed by the Assessee for the earlier years and in AY 2009-10 when the said comparables were excluded in the case of the Assessee after analyzing its functional profile. ITAT and the DRP have thus, returned concurrent finding of facts with respect to the functional dissimilarities of the said four comparables with the Assessee. In the present appeal, the challenge is to the said finding of facts and there is no perversity in the said findings. Revenue has not been able to demonstrate that the analysis done by ITAT and DRP while excluding the companies suggested by Revenue from the list of comparables, was in any manner contrary to the settled position in law. This Court in WSP Consultants India Pvt. Ltd. [ 2017 (11) TMI 464 - DELHI HIGH COURT] has held that inclusion or exclusion of comparables per se cannot be treated as a question of law unless it is demonstrated to the Court that the Tribunal took into account irrelevant consideration or excluded irrelevant factors in the ALP that impact significantly. ITAT has not committed any perversity or applied incorrect principle to the given facts and therefore, we do not find that any substantial questions of law arise for consideration in the present appeal. Accordingly, the same is dismissed.
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2022 (9) TMI 1191
Exchange in old currency notes seized by the Police Authorities under an order of seizure - HELD THAT:- The present writ petition is disposed of. Petitioner shall approach the respondents within a period of 04 weeks of receipt of a certified copy of this order whereupon the respondents shall exchange the old demonetized currency notes with new currency notes subject to the petitioner fulfilling the terms and conditions mentioned above, within a period of 04 weeks of the petitioner approaching the respondents.
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2022 (9) TMI 1190
Reopening of assessment u/s 147 - Validity of order passed u/s 148A(d) - penny stock purchases - HELD THAT:- This Court finds that in the impugned order passed u/s 148A(d) it is stated that the petitioner had sold penny stock i.e. M/s Solis Marketing Ltd. for a consideration - The impugned order further states that the petitioner did not furnish the Demat Account Statements or respond to the case on merits of case in his reply to the show cause notice. This Court takes judicial notice of the fact that in the case of another assessee who had similarly purchased the stock of M/s. Solis Marketing Ltd., the revenue department has alleged that the assessee therein had earned long term capital gain which was almost forty-five times the investment within a short span of time. In this case as well, a perusal of the petitioner s reply dated 29th May, 2022 evidences that the shares purchased at face value of Rs.1 were sold at approx. Rs.50 per share earning the petitioner the LTCG which were admittedly claimed as exempt income. AO in the impugned order has also held that the assessee is one of the beneficiary of generating bogus LTCG STCG through M/s Solis Marketing Ltd. in planned manner and has routed her unaccounted income. The total consideration has escaped assessment . In fact, in the impugned order, it has been repeatedly emphasised by the AO that the entire consideration received by the petitioner is income that has escaped assessment. Neither the bifurcation between the STCG and LTCG nor the calculation of income furnished by the petitioner can be accepted at this stage in writ proceedings. The judgment of the Rajasthan High Court in Abdul Majeed [ 2022 (7) TMI 865 - RAJASTHAN HIGH COURT] has no application to the facts of the present case as in the said case only cash deposit chargeable to tax had escaped assessment, without anything more This Court is of the view that the impugned order calls for no interference at this stage. However, the petitioner is given liberty to raise all contentions and submissions before the AO.
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2022 (9) TMI 1189
Revision u/s 263 by CIT - valid assumption of jurisdiction - revision being invalid as the notice u/s. 263 was issued in the name of a deceased person - HELD THAT:- Section 159, it explains, does not bear upon the jurisdiction of the taxing authority, but deals with matters incidental to it. The decision in Sumantbhai C. Munshaw (Decd.), [ 1980 (7) TMI 68 - GUJARAT HIGH COURT] a treatise on the subject, is, thus, consistent with the binding decisions in Kaushalyabai ( 1997 (3) TMI 20 - MADHYA PRADESH HIGH COURT] and Premium Capital Markets Investment Ltd. ( 2005 (1) TMI 54 - MADHYA PRADESH HIGH COURT ) i.e., in principle. In Swaran Kanta v. CIT [ 1988 (11) TMI 91 - PUNJAB AND HARYANA HIGH COURT] the mention of the name of the deceased in the heading of the order, in proceedings, validly initiated, and concluded on the LR, whose is deemed by law (s.159) to be an assessee, was held as valid notwithstanding that the title of the order was not happily worded, which though would not make it invalid for that reason and, besides, is saved by s. 292B. The foregoing explains our decision in non-acceptance of the assessee s case. We may, before parting, also advert to the decision in Guduthur Brothers v. ITO [ 1960 (7) TMI 5 - SUPREME COURT] wherein the Apex Court per it s larger Bench decision explained that where a notice remained undisposed, it did not cease to be operative, and the AO had the jurisdiction to continue the proceedings from the stage where the illegality had occurred. Notice u/s. 143(2) was for limited scrutiny, i.e., qua cash deposited during demonetisation period it was not proper on the part of the revisionary authority to, in exercise of the revisionary power, question the absence of verification in assessment qua agricultural income, disclosed by the assessee - The objection is, to our mind, not maintainable, both on facts and in law . This is as agricultural income is surely one of the sources of cash deposited by the assessee, to verify which the return was selected for scrutiny. Two, that the assessee does not own any agricultural land is an admitted fact. It is only where the land is either owned or taken on rent (as per revenue record), that the income from agricultural activity could be said to be agricultural. The AO ought to have, therefore, exceeded his ambit to verify the veracity of the claims as to agricultural income, exempt u/s. 10, i.e., besides being in explanation of the source of the cash deposit. He having not done so, by seeking the approval of his range head, as enjoined upon him by the Board Circular, binding on him, the said authority was competent to, in exercise of his revisionary jurisdiction, require the AO to examine the same, setting aside the assessment for the purpose. On facts, we approve of the observations by the Pr. CIT being in respect of the infirmities observed by him qua the assessee s explanation in respect of her claim for agricultural income of Rs. 7.01 lacs. The AO, who abysmally failed to do so in the original proceedings, shall question the assessee in the matter keeping the same in mind, though not limited thereto, and neither being bound thereby, inasmuch as it is an open set aside - That is, he shall decide per a speaking order, issuing definite findings of fact upon due enquiry/verification, observing the principles of natural justice. Revision in the instance case is, in our view, attracted under clauses (a), (b) (c) of Explanation 2 to s. 263(1). We decide accordingly, declining interference. - Decided against assessee.
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2022 (9) TMI 1188
Revision u/s 263 by CIT - Scope of the instructions issued by the CBDT - Exercise of power us/ 119 - additions had been made under the head undisclosed investment in silver stock , undisclosed investment in stock , undisclosed sale and disallowance u/s.69A - As submitted AO has followed the appraisal report issued by the Investigation Wing - HELD THAT:- Revenue has not been able to show as to which portion of the appraisal report, the Assessing officer has not complied with. Mere allegation that the AO has not followed the appraisal report would not hold water. Coming to the clause (c) of the Explanation 2 to Section 263, the order or direction or instruction, which is referred therein, are those issued by the CBDT u/s.119. A perusal of the said instruction shows that this is practically a search and seizure manual notification. It is an internal communication being guidelines for the notice of the Commissioner of Income tax, Range Head and the AO handling the assessment of search and seizure cases. This notification is not one which has been issued u/s.119 of the Income tax Act, 1961 Normally, when the Board issues any specific direction u/s.119, it is mentioned that such a direction of circular/order or notification is issued u/s.119. Thus, on this ground itself, the order passed u/s.263 is liable to annulled and we do so. Assessment order passed u/s.143(3) for the impugned assessment year has been subject matter of appeal before the ld CIT(A - In the order of the ld CIT(A), the issue of the stock valuation has already been considered. The ld CIT(A) has also taken cognizance of the fact that pages 2 to 37 of the assessment order is nothing but extract of the appraisal report. This being so, in view of the provisions of Explanation -1 (c) of Section 263 (1), as the order passed by the AO had been the subject matter of appeal filed after the 1st day of June, 1988, the powers of the Pr. CIT u/s.263(1) could extend only to such matters as had not been considered and decided in the appellate order. Both the issues proposed by the pr. CIT was subject matter and has been under the consideration of the ld CIT(A) and the Pr. CIT has also recognized that the ld CIT(A) has adjudicated the appeal and he has also passed his order on 14.10.2019 much before the show cause notice has been issued by the Pr. CIT. Thus, on this ground also, the order passed u/s.263 is unsustainable and same stands quashed. Appeal of assessee allowed.
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2022 (9) TMI 1187
Revision u/s 263 by CIT - application under Vivad Se Vishwas 2020 made - addition in respect of deemed rent U/s 22 r.w.s. 23 of the Act has filed an appeal with the CIT(A) and during pendency of the appeal - HELD THAT:- We find the assessment order under Section 143(3) of the Act was passed on 24.11.2019. On appeal, the CIT(A) considering the facts of VSVS 2020 by the assessee has passed the order U/sec 250 of the Act on 26-05-2021. Whereas, the Pr.CIT on the same facts, were the A.O. has applied the mind and made an addition and passed order, now the Pr.CIT has issued notice u/sec 263 of the Act on 03-03-2022 and passed revision order on 15-03-2022. We are of the opinion that the Pr.CIT has invoked provisions of section 263 of the Act after conclusion of proceedings were the assessee has opted VSVS 2020 and received Form.no.5 after payment of full/final disputed taxes on 1.05.2021. Hence the revision order passed U/sec 263 of the Act is abated. See GOPALAKRISHNAN RAJKUMAR, GOPALAKRISHNAN RAVIM [ 2022 (5) TMI 1388 - MADRAS HIGH COURT] - Appeal of assessee allowed.
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2022 (9) TMI 1186
Exemption u/s 11 - assessee has incurred expenses in foreign currency outside India under the head Expenses on Specialized fairs and Buyers Seller Meet Abroad - HELD THAT:- It is evident that the grants are given specifically for participation in a particular events held in abroad, the grant approval includes a condition that a separate account for the projects have to be maintained. The assessee has utilize the funds as per the terms and conditions of the grant and the grants are not to be utilized in any other purpose than for which it is issued and also that the execution of the project is not be entrusted to any other organization. The up spent grant along with interest @10% from the date of release of the fund has to be reimbursed by the Government. Therefore it is evident that the assessee is not free to use the funds voluntarily as per its own whims and fancies and the same has to be spent as per the terms and conditions of the grant. As in the case of Society for integrated Development in urban and rural areas (SIDUR) [ 2002 (12) TMI 205 - ITAT HYDERABAD-B ] the issue regarding treatment of tide up grants was considered by the Tribunal wherein it was held that voluntarily contributions covered by Section 12 are those contributions freely available to the assessee without any stipulation, which the assessee can utilize towards his objectives according to its own discretion and judgment. The tide up grants for a specific purpose would only mean that the assessee which was voluntarily organization, had agree to act as a trustee of a special fund granted by the donor with the result that it need not be pooled or integrated with the assessee is normal income or corpus. We do not find any legal infirmity or error in the order of the CIT(A) in deleting the addition made by the A.O and we find no merits in the grounds of Appeal of the Revenue.
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2022 (9) TMI 1185
Revision u/s 263 by CIT - write off of the investment in subsidiary under the Normal provisions and under the computation of Book Profits u/s 115JB - main reason for filing of the revised return was the claim of the write off of business investment - HELD THAT:- We do not find any merits in observations of the PCIT for simple reason that the PCIT has not applied his mind to the facts of the case before coming to the conclusion. All the details about the investment and the reason why it is considered as for the purpose of business was explained to AO. The investments have been approved by Government of India/ RBI. The ITAT in Assessee's own case for the AY 2000-01 has held that the investment in the subsidiary in Dubai is for the purpose of business. Submissions before the AO were also submitted before the PCIT. It is apparent that the decision of the AO was based on application of his mind on the submissions of the Appellant. Merely because the AO, after calling for explanation and satisfying himself, has not mentioned the same in his Assessment order would not mean that he has not applied his mind on the specific submissions of the Appellant - we are of the considered view that the PCIT erred in assuming jurisdiction in an issue which has been considered by the AO and his decision is one of the possible views and is not unsustainable in law. Further on merits also, the claim of investment written off to the tune of Rs.184,53,62,000/- is an allowable deduction on the facts of the case and applying the ratio of the decisions referred to supra. Therefore, on this issue assumption of jurisdiction by the PICT fails. Amount debited in the P L A/c towards the winding up of the subsidiary company - Though in the years of making provision the same was disallowed in the memo of computation for the respective years, but in the year under appeal the amount was written off by adjusting the provision against the receivable, but the same was not claimed as deduction in the Memo of income. Therefore, the PCIT's observation in dealing with disallowance of Rs.205.47 Crores is infructuous as (i) claim for deduction of Rs.184.53 Crores has been dealt with by the PCIT separately (earlier point) and the balance of Rs.20.94 Crores was not at all claimed by the Appellant or allowed in the Assessment. In fact, the AR made a feeble attempt that the additional amount of Rs.20.94 Crores being an eligible deduction the appellate authority may allow the additional deduction Rs.20.94 Crores. As this is an appeal against the order of PCIT dealing with erroneous and prejudicial orders, it is not permissible to grant additional benefit while disposing an order of revision u/s 263. Hence, this issue does not arise separately as the claim for Rs.184.53 Crores has been dealt with above and the additional deduction of Rs.20.54 Crores was not claimed by the Appellant in their return. Hence, revision power of the PCIT on this issue is also fails. Deduction claimed while computing book profit under section 115JB for the amount of Rs.138,40,21,000/- which is for diminution in the value of investments - In this view of the matter and settled cases referred above it is clear beyond doubt that the deduction claimed is permissible deduction under regular computation as well as under MAT. The main reason for the PCIT to come to above conclusion is that there is difference between provisions of section 115JA and 115JB. But, fact remains that the Appellant was claiming deduction only under sec 115JB and sec 115JB has similar provision as sec 115JA in so far as provision of diminution in value of assets and withdrawal of provisions. For the reasons stated above, the Appellant had rightly claimed deduction under Book Profits on the write off of assets and exclusion of amounts withdrawn from Provision created earlier. Therefore, we are of the considered view that in the course of Assessment and also the legal provisions and decisions of the Appellate authorities, there is no error in the order of the Assessing Officer or in any event the AO has taken one possible view and hence, the PCIT is precluded from imposing his opinion by resorting to revision u/s 263. Thus, we are of the considered view that the power of revision of PCIT on this issue is also failed. - Decided in favour of assessee.
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2022 (9) TMI 1184
Revision u/s 263 by CIT - Addition u/s 41(1) - liability towards the share application money as on the balance sheet date and has returned an incorrect finding - HELD THAT:- Where the assessee receives share application money, it doesn t incur any loss, expenditure or trading liability and the question of an allowance or deduction made in the assessment for any year in respect of loss, expenditure or trading liability doesn t arise at first place. Therefore, the first condition for invocation of provisions of section 41(1) is not satisfied in the instant case. As a result, the second condition which is an offshoot of the first condition where it says that the assessee has obtained any amount in respect of such loss, expenditure or some benefit in respect of such trading liability by way of remission or cessation thereof, the question of invocation thereof again doesn t arise as the phrase such has to be read in context of first condition where an allowance or deduction has been made in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee. We are of the considered view that there is no legal basis for invocation of provisions of section 41(1) in respect of share application money which continues to remain outstanding pending allotment of shares and continues to remain reflected in the balance sheet of the assessee company as on 31/03/2016 and thus, we set-aside the findings of the ld PCIT in this regard where he says that the order so passed by the AO is erroneous and prejudicial to the interest of the Revenue for non-invocation of section 41(1) and carrying out requisite enquiries in this regard. TDS u/s 194A - Non-deduction of TDS on interest payment to PSIDC, on perusal of the balance sheet and the profit/loss of the assessee company for the financial year relevant to impugned assessment year - HELD THAT:- The application of relevant provisions have to be examined in its entirety including the relevant exemption provisions and tested based on facts and circumstances of each case and merely stating that certain provisions are applicable without establishing its applicability to the facts of the given case cannot be a basis to hold that the order passed by the AO is erroneous as he has failed to apply the relevant provisions. Further, even where it is held that interest so paid is subject to provisions of section 194A of the Act, how the order passed by the AO can be held as erroneous where at first place there is no claim of such interest payment made by the assessee while filing its return of income for the impugned assessment year and we find that the ld PCIT has not addressed the same as well. We find that by virtue of repayment of PSIDC loan, there is a reduction rather than increase in secured loan during the year under consideration and one of the matters for which the case of the assessee was selected for limited scrutiny, even going by the phraseology employed by the ld PCIT in the show cause notice where he says that the case was selected for examining large increase in unsecured loans during the year, we find that matter of repayment of secured loan including the interest thereon was not a subject matter of limited scrutiny and the ld PCIT cannot enlarge the scope of assessment proceedings by invoking provisions of section 263 of the Act. The impugned order passed by the ld. Pr.CIT u/s 263 cannot be sustained in the eyes of law and the same is hereby set aside and the order passed by the AO is sustained. Appeal of assessee allowed.
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2022 (9) TMI 1183
Addition made being Specified Bank Notes deposited in the bank account of the assessee - whether the assessee had sufficient cash balance in its books for making the said deposits in the bank account? - HELD THAT:- We find from the perusal of the bank statements for the whole year and the cash book for the whole year which is already forming part of records, the assessee has regularly withdrawn cash from its bank account throughout the year and has been making deposits in bank throughout the year in the bank account. Since remaining balance of the amounts withdrawn from bank after meeting its business expenses that were lying with the assessee had lost its validity of being classified as a legal tender pursuant to announcement of demonetisation policy by the Government of India, the assessee had no choice but to deposit the cash available with it both in the form of cash surplus withdrawals and also the cash received from customers in the designated bank account in Specified Bank Notes during the period 09/11/2016 to 31/12/2016. Out of these parties, 11 parties were selected by the AO for verifying the genuineness of the transaction. Three parties directly appeared before the ld. AO and filed the replies. Eight parties furnished the replies to the assessee and those replies were also submitted by the assessee before the ld. AO. These facts were not controverted by the Revenue before us by bringing any contrary evidences. AO had not brought any cogent evidence on record to disbelieve the details furnished by the parties and the assessee. The banks had fixed the maximum limit of making deposit in cash up to Rs.5,00,000/- in a day during the demonetization period commencing from 09/11/2016 to 31/12/2016. This had mandated the assessee to make frequent cash deposits less than Rs.5,00,000/- during the period 09/11/2016 to 31/12/2016. Accordingly, we hold that the entire cash deposits made by the assessee during the period 09/11/2016 to 31/12/2016 in Specified Bank Notes stood properly explained by the availability of cash balance in its books and hence, no addition thereon could be made u/s.68. Disallowance of depreciation of immovable property - HELD THAT:- As it could be seen that the sale deed has been registered in the name of the assessee before six months from the date of execution of the agreement, hence, effectively the ownership relates back to the date of agreement to the assessee. It is not in dispute that assessee was enjoying the physical possession of the property even prior to the date of agreement as a licensor. Pursuant to entering the agreement the assessee became the beneficial owner of the said property. We have no hesitation in placing reliance on the decision in the case of Mysore Minerals Ltd.[ 1999 (9) TMI 1 - SUPREME COURT] wherein it was held that when assessee was in possession of the property exercising and having right to use and occupy property he would be construed as the owner of the building though a formal deed of title could not have been executed and registered by taking possession of the property and making part payment thereon. It was held by the Hon ble Supreme Court that depreciation u/s.32 of the Act would be eligible to the assessee. Disallowance of donation paid u/s.80G - Claim disallowed by AO as receipts were not submitted by the assessee - HELD THAT:- We find that assessee even before the AO had only sought for grant of deduction u/s.80G for Rs.65,000/- in respect of donations paid to The Saved Pearl Foundation on 10/10/2016 and 24/05/2016 amounting to Rs.32,500/- each. We find that the receipts for these two donations - Hence, we direct the ld. AO to verify the veracity of these two receipts and grant deduction u/s.80G of the Act to the assessee in accordance with law. In any case for the remaining sum of Rs.19,315/-, the assessee is not seeking any relief u/s.80G. Accordingly, the ground No.4 raised by the assessee is partly allowed for statistical purposes.
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2022 (9) TMI 1182
Addition u/s 68 - unexplained cash credit - identity, genuineness and creditworthiness of the persons proved or not? - HELD THAT:- AO was satisfied on the basis of positive replies received to the notices issued u/s 133(6) of the Act and also successful cross-verification of such transactions and AO has specifically observed that the advances were received for the partnership firm M/s. City Live Construction. So, identity, genuineness and creditworthiness of the persons advancing the said sum is not in dispute. The addition has been made merely for the observation that when the said advance was a liability of the partnership firm why it was standing in the books of the assessee. Even, CIT(A) has also confirmed the addition on the basis of this observation of ld. AO. We find no merit in the finding of CIT(A) as he failed to appreciate the simple accounting entry that when the assessee s proprietorship concern received a sum on behalf of the partnership firm then such sum will stand on the liability side of the balance sheet of the sole proprietorship concern and when the said sum is repaid back the credit balance is squared off. There is no other mechanism to reflect such entry in any other way as has been shown by the assessee. Since the assessee has rightly disclosed the said transaction in the books of account as an advance received on behalf of the firm on the liability side of the balance sheet and since genuineness of the sum so received is not in dispute at the end of Revenue parties, we hereby set aside the finding of CIT(A) and delete the addition made by ld. AO u/s 68 - Thus, the effective ground raised by the assessee is allowed.
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2022 (9) TMI 1181
Penalty u/s 271(1)(c) - disallowance under section 14A - HELD THAT:- As far as the first issue of disallowance under section 14A is concerned, the Ld. CIT(A) deleted the penalty and the Revenue did not appeal before us. Therefore, we uphold the order of Ld. CIT(A) on this issue in absence of any appeal and in absence of any objection from the side of the Ld. D.R. and delete the penalty levied by the A.O. on this issue. Exclusion of Income under DTAA Agreement and denying claim of deduction under section 80IA(4) - We find that in assessee s own case for the A.Y. 2011-12 in quantum appeal [ 2022 (1) TMI 1276 - ITAT DELHI] decided the issues in favour of the assessee. Since the issues in quantum appeal are decided in favour of the assessee, the penalty does not survive on these issues. We, therefore, direct the A.O. to delete the penalty on these issues i.e., i.e., Exclusion of Income under DTAA Agreement and denying claim of deduction under section 80IA(4) of the I.T. Act, 1961. Appeal of the Assessee is allowed.
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2022 (9) TMI 1180
Disallowance of delayed contribution towards PF ESI - addition cannot be made u/s 143(1)(a) - HELD THAT:- The alleged amount was deposited before the due date of filing return of income u/s 139(1) of the Act. Therefore, in light of the decision of the Coordinate Bench of this Tribunal in the case of Lumino Industries Ltd. [ 2021 (11) TMI 926 - ITAT KOLKATA] - We find that this Tribunal has taken a consistent view that in such cases where there is a delay in deposit of PF ESI as per the due dates prescribed under the relevant Acts covering PF ESI but the assessee finally deposits the amount before the due date of filing return of income u/s 139(1) of the Act then such disallowances are uncalled for - we delete the alleged disallowance made towards contribution towards PF ESI and allow grounds raised by the assessee. Adjustment of profit on sale of motor car - assessee being a private limited company while computing the total income firstly disallowed the depreciation calculated as per the Companies Act and then reduced the income by the depreciation as per the Income Tax Act - Profit on sale of motor car was also reduced. - HELD THAT:- On perusal of the depreciation chart find that at serial no. 11 the assessee has shown the asset generator and car under the block of 15% opening Written Down Value there is an addition in the block and the sale consideration of car is reduced and after charging depreciation closing W.D.V. - Since the assessee has reduced the sale consideration of sale of car in the block itself and the block still exists at the close of the year, no separate income was required to be shown for the profit on sale of car. Ld. D/R failed to controvert this fact and only contention made by him is that the matter has already been restored to the file of ld. CIT(A). CIT(A) ought to have examined the facts of the case and should have decided the issue but since ld. CIT(A) failed to do so,set aside the impugned order and delete the adjustment of income of profit on sale of motor car and allow ground no. 3 raised by the assessee.
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2022 (9) TMI 1179
Continuation of proceedings in respect of dues for the period prior to the date on which the Adjudicating Authority grants its approval under Section 31 of IBC, once the proceedings have commenced by institution of application under section 7 or 9 or 10 of the Code - HELD THAT:- A reading of the provisions under section 13 and 14 of the Code along with the decision in GHANASHYAM MISHRA AND SONS PRIVATE LIMITED THROUGH THE AUTHORIZED SIGNATORY VERSUS EDELWEISS ASSET RECONSTRUCTION COMPANY LIMITED THROUGH THE DIRECTOR ORS. [ 2021 (4) TMI 613 - SUPREME COURT] , clearly shows that once the proceedings have commenced by institution of application under section 7 or 9 or 10 of the Code, the continuance of the pending proceedings is prohibited and when once they reach the logical conclusion with due approval of the resolution plan by the Adjudicating Authority under sub section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. At any rate, for the time being, this appeal cannot be proceeded with during the continuance of the proceedings under the Code. However, depending upon the result of such proceedings before the adjudicating authority in respect of the corporate debtor, appropriate steps if any, may be taken by the appellant/respondent. The appeal of Revenue is dismissed in limine.
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2022 (9) TMI 1178
TDS u/s 195 - disallowance of reinsurance premium ceded to non-resident re-insurance companies u/s.40(a)(i) - According to AO income of NRRI are accrued or arose in India and or deemed to have accrued or arose in India, because they have business connection in India in respect of reinsurance business thus held that wherever there is no DTAA between India and other contracting States, to whom the assessee has ceded reinsurance premium, question of examining case with reference to DTAA and more particularly, concept of PE does not arise - HELD THAT:- The sum paid by the assessee to NRR is not taxable in India under the Act as well as DTAA between India and respective countries and thus, case laws relied upon by the Assessing Officer on the issue is incorrect. We are of the considered view that reinsurance premium ceded to non-resident reinsurer is not taxable in India under the Income Tax Act, 1961 or under DTAA between India and respective countries where NRRs are tax residents and thus, on impugned payments the assessee is not liable to deduct TDS u/s.195 of the Income Tax Act, 1961. Consequently, payments made to NRR cannot be disallowed u/s.40(a)(i) of the Act, 1961. Hence, we direct the Assessing Officer to delete additions made towards disallowance of reinsurance premium ceded to NRRs. Excess depreciation on UPS - HELD THAT:- UPS is part of computer and eligible for depreciation @ 60% and directed the Assessing Officer to allow 60% on UPS also. Therefore, consistent with the view taken by the coordinate Bench [ 2018 (11) TMI 1539 - ITAT CHENNAI] we are inclined to uphold findings of the learned CIT(A) and direct the Assessing Officer to allow depreciation on UPS @ 60% as claimed by the assessee. MAT computation u/s 115JB - Excess claim of deduction on unexpired premium reserve - AO has added back provision made for UPR to book profit computed u/s.115JB of the Act on the ground that when the assessee has received entire premium income for the relevant assessment year, in the books of account, then any reserve created other than those reserves mentioned in Explanation (1) (b) u/s.115JB of the Act cannot be allowed as deduction - HELD THAT:- As we find that this issue is squarely covered in favour of the assessee by the decision of the ITAT, Kolkata Bench in the case of DCIT Vs. National Insurance Co.Ltd. [ 2016 (8) TMI 326 - ITAT KOLKATA] where the Tribunal, after considering relevant facts and also Rule 6E of Income Tax Rules, 1962, held that if provision for unexpired premium reserve is within allowable limit as prescribed under Rule 6E, then same does not fall in the category of those reserves which have been specified in Rule 1(b) of section 115JB(2) of the Act, and thus, deleted additions made by the Assessing Officer towards excess provision on UPR to book profit computed u/s.115JB(2) In this case, it was contention of the Assessing Officer that the assessee has not furnished necessary break up of premium received during the year to prove that such provision is within permissible limit of Rule 6E of Income Tax Rules, 1962. Therefore, we are of the considered view that issue needs further verification from the Assessing Officer. Hence, we set aside the issue to file of the Assessing Officer and direct the Assessing Officer to examine claim of the assessee and if provision made for UPR is in accordance with Rule 6E of Income Tax Rules, 1962, then, the Assessing Officer is directed to delete additions made towards excess claim of deduction towards UPR to book profit computed u/s.115JB(2) of the Income Tax Act, 1961. Disallowance u/s.14A read with Rule 8D - Assessment of insurance companies - HELD THAT:-We find that the Hon'ble High Court of Madras in the case of the assessee had considered an identical issue and held that section 14A of the Income Tax Act, 1961, stands excluded while computing income tax of an insurance company, in view of non-obstante clause contained in section 44 of the Income Tax Act, 1961. Thus we direct the Assessing Officer to delete additions made towards disallowance u/s.14A read with Rule 8D of Income Tax Rules, 1962. Disallowance of provision for IBNR and IBNER - assessee has made provision for claims incurred, but were not reported (IBNR) and claims incurred, which were not enough reported (IBENR) and such provision has been made for all unsettled claims on the basis of claim lodged by insured persons - HELD THAT:- As decided in own case [ 2018 (11) TMI 1539 - ITAT CHENNAI] provision for IBNR IBNER is not deductible u/s.37(1) of the Income Tax Act, 1961, because such provision is only on unascertained liability, which is not accrued to the assessee for the relevant assessment year. Thus assessee is not entitled for deduction towards provision created for IBNR IBNER and thus, we reverse findings of the learned CIT(A) on this issue for the assessment years 2010-11 2013-14 and uphold findings of the learned CIT(A) for the assessment year 2014-15 and reject ground taken by the assessee. Contention of the assessee that actual utilization of IBNR IBNER should be allowed - We find that what was disallowed by the Assessing Officer is only provision created for the relevant assessment year, but there was no discussion on the spending in respect of IBNR IBNER. In case, the assessee has made actual utilization towards IBNR IBNER, then same needs to be allowed as deduction on payment basis. In other words, the compensation payable by the assessee has to be allowed in the year in which amount of compensation was determined. Therefore, we direct the Assessing Officer to verify claim of the assessee and in case, the assessee is able to prove actual utilization towards IBNR IBNER, then the Assessing Officer is directed to allow claim of the assessee. Excess depreciation claimed on motor vehicles - AO has allowed depreciation @ 15% as per Item 3 of Part A of Appendix - entry 2, which is applicable to general category of motor cars acquired or put to use on or after 01.04.1990 - HELD THAT:- We find that this issue is squarely covered in favour of the assessee by the decision of the Hon'ble High Court of Bombay in the case of CIT vs. M/s. Birla Global Asset Finance Co. Ltd. [ 2012 (8) TMI 773 - BOMBAY HIGH COURT ] where the Hon ble High Court has defined the term commercial vehicles' in light of Motor Vehicles Act, and held that commercial vehicle includes light motor vehicles. The Hon'ble Bombay High Court in the case of CIT Vs Shah Rukh Khan [ 2011 (8) TMI 1368 - BOMBAY HIGH COURT ] had considered very similar issue and held that commercial vehicle includes light motor vehicle also. In this case, there is no dispute with regard to fact that higher depreciation claimed on the vehicles is light motor vehicles which were acquired on or after specified date. Therefore, we are of the considered view that the assessee is entitled for higher depreciation @ 50% on motor vehicles and thus, we direct the Assessing Officer to delete additions made towards excess depreciation on motor vehicles. Disallowance of payment made to motor vehicle dealers - HELD THAT:- This issue is covered in favour of the assessee by the decision of ITAT, Chennai in the case of United India Insurance Co. Ltd. [ 2018 (10) TMI 1096 - ITAT CHENNAI ] where an identical issue has been considered by the Tribunal and held that payment made to motor vehicle dealers is allowable deduction - assessee is eligible for deduction towards payment made to motor vehicle dealers, because there is sufficient proof for rendering services by said dealers. However, fact remains that the order passed by the CESTAT is not available to the AO, we are of the considered view that the issue needs to be set aside to the file of the Assessing Officer for limited purpose of verifying the issue with reference to the CESTAT order and allow the claim of the assessee. Hence, we set aside the issue to the file of the Assessing Officer and direct that Assessing Officer to verify facts with reference to order passed by the CESTAT in the assessee s own case with reference to investigation carried out by the Service Tax Directorate. AO finds that there is finding on rendering of services, then the Assessing Officer is directed to delete additions made towards disallowances of payment made to motor vehicle dealers. Addition towards profit on sale of investments - AO has considered profit on sale of investments as taxable income - HELD THAT:- We find that the Hon'ble High Court of Madras had considered an identical issue in the case of United India Insurance Co. [ 2019 (7) TMI 387 - MADRAS HIGH COURT ] and held that profit on sale of investments is not taxable in the hands of insurance companies - In the case of M/s.Bajaj Allianz General Insurance Co. Ltd. [ 2009 (8) TMI 810 - ITAT PUNE-A ] had considered identical issue and held that income from profit on sale of investments by insurance companies is not taxable, after deletion of sub-rule (b) of Rule 5 of First Schedule. Therefore, from the above, it is very clear that profit on sale of investments is not taxable in the case of insurance companies. The learned CIT(A), after considering relevant facts has rightly deleted additions made by the Assessing Officer towards profit on sale of investments and thus, we are inclined to uphold findings of the learned CIT(A) and reject ground taken by the Revenue. TDS u/s 194J - Disallowance of payment made to Third Party Administrators - AO disallowed payment made to Third Party Administrators u/s.40(a)(ia) of the Act on the ground that the assessee ought to have deducted TDS on such payments - HELD THAT:- When the CBDT itself clarified that payments made by the assessee to hospital through TPAs are subjected to TDS from the TPAs, question of deducting TDS on such payments by the assessee does not arise. It is practically impossible to deduct TDS on payment made to beneficiaries / hospitals, when the assessee is not directly making payment to hospitals. The learned CIT(A), after considering relevant facts has rightly deleted additions made by the Assessing Officer and thus, we are inclined to uphold findings of the learned CIT(A) and reject grounds taken by the Revenue for the assessment years 2010-11 2013-14. Non-applicability of section 115JB of IT act for insurance companies - HELD THAT:- As decided in own case [ 2018 (11) TMI 1539 - ITAT CHENNAI] held that upto the assessment year 2013-14, provisions of section 115JB of the Act, does not apply to the insurance companies, because insurance companies are preparing their financial statements in accordance with guidelines issued by IRDAI and not as per part II III of Schedule VI of the Companies Act. Thus we are of the considered view that provisions of section 115JB of the Act, has no application to insurance companies and thus, adjustments made by the Assessing Officer towards book profit cannot be sustained and thus, we direct the Assessing Officer to delete additions made to book profit u/s.115JB of the Income Tax Act, 1961. Addition made towards UPR to book profit u/s.115JB - HELD THAT:- As in National Insurance Co.Ltd. [ 2016 (8) TMI 326 - ITAT KOLKATA ] held that provision for UPR is not an item contemplated to be added in Explanation 1 to section 115JB(2) - we direct the Assessing Officer to delete additions made towards UPR to book profit u/s.115JB of the Income Tax Act, 1961, for both the assessment years. Addition of IBNR IBNER to book profit u/s.115JB - HELD THAT:- We find that provisions of section 115JB of the Income Tax Act, 1961, has no application to insurance companies upto assessment year 2013-14 and thus, no addition can be made to book profit computed u/s.115JB of the Act, including addition towards IBNR IBNER upto assessment year 2013-14 and thus, we direct the Assessing Officer to delete additions made towards IBNR IBNER to book profit u/s.115JB of the Act for the assessment year 2013-14.
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2022 (9) TMI 1177
Validity of assessment - non-issuance of notice u/s. 143(2) - ITO Ward-1(2) OR Ward-1(4) jurisdiction over the case of the assessee? - HELD THAT:- It is an undisputed fact that the notice u/s. 143(2) was issued by the ITO, Ward-2(3) on 27.09.2013 and the same was served on the assessee on 30.09.2013. The case was received by ITO, Ward-1(2), being the jurisdictional officer on 16.12.2013, on transfer from ITO, Ward-1(4), Visakhapatnam, which was originally received from ITO, Ward-2(3), Visakhapatnam. Due to change in incumbency, notices u/s. 143(2) and 142(1) were issued to the assessee on 19.12.2013 calling for books of accounts, bills and vouchers and other information. An admitted fact that the file was transferred to ITO, Ward-1(4) who has no jurisdiction over the case of the assessee. Subsequently, the ITO, Ward-1(4) came to know about lack of jurisdiction and transferred the case to ITO, Ward-1(2). ITO, Ward-1(2) without issuing notice u/s. 143(2) and without giving any opportunity to the assessee passed assessment order u/s. 143(3). The matter of transfer of the assessee's case was neither intimated to the assessee by the concerned AO nor the Ld. CIT(A) has passed any order as required u/s. 127 of the Act by giving an opportunity of being heard to the assessee after recording the reasons. Therefore, the contention of the assessee is that the order passed u/s. 143(3) is bad in law, void-ab-initio and it is not a valid assessment order. We hold that the notice issued by ITO, Ward 2(3), Visakhapatnam is without jurisdiction and non-est in law and void-ab-initio. The assessment order passed by ITO, Ward-1(2), Visakhapatnam u/s. 143(3) of the Act dated 28.03.2014 was without issuance of mandatory statutory notice u/s. 143(2) of the Act by the AO. Hence the grounds raised by the assessee are allowed.
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2022 (9) TMI 1176
Assessment u/s 153A - addition of LTCG on sale of shares as bogus u/s 68 - incriminating material or documents or information found during the course of search or not? - HELD THAT:- We find that on the date of search i.e. 31.10.2010, the assessment for the AY 2006-07 had already attained finality and in terms of section proviso to section 153A, it was unabated assessment. Admittedly, the addition on account of LTCG on sale of shares is not based any incriminating material or documents or information found during the course of search, albeit it was on the basis of computation of income and the information already given in the income tax return which already stood assessed. It is now well settled law where the assessment has attained finality and stands concluded at the time of search and are not abated, then no addition can be made in absence of any incriminating material or documents found during the course of search. Accordingly, the addition made by the AO u/s 68 is unsustainable on the ground that it is beyond the scope of assessment u/s 153A. Accordingly, the ground of the appeal raised by the revenue is dismissed. - Decided in favour of assessee.
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2022 (9) TMI 1150
Attachment orders - additional affidavit on record pointing out specific financial constraints on its business operations on account of the interim order - Pleadings are complete in the said application - application of the Petitioner seeking partial modification of the interim order has been heard from time to time - HELD THAT:- Though a suggestion is made by Respondent that the AO will be free to take recourse having the books of accounts of the Petitioner audited by an expert, yet the said suggestion is strongly refuted by the senior counsel for the Petitioner. We are not dealing with the merits of the rival contentions taken in these proceedings and the assessing officer will take such steps as are available to him, in accordance with law. It is made clear that the above order has been passed on the basis of offer made by the Petitioner and will not be considered as a precedent in any other proceeding. Accordingly, the attachment orders and this Court s order are modified in the manner stated above. However, this order shall come into effect from the date the Petitioner deposits the additional 100 crores in terms of para 7(i) above. Upon deposit of the said sum, the AO will withdraw the attachment orders and will communicate the same to the parties to whom attachment orders were served. With the above directions, present writ petition and pending applications stand disposed of.
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Customs
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2022 (9) TMI 1175
Exoneration from penalty in the proceeding under Section 124 of the Customs Act, 1962 - revocation of Customs Broker license or not - Whether the Tribunal ought to have done so when the charge against the agent was serious i.e. not advising the customs properly under the regulations with regard to the mis-declaration of the description of the goods by the exporter? HELD THAT:- The respondent having received the export order from a third party is also to be held guilty for not being able to advise his client to comply with the provisions of the Act as the respondent did not know who his client was and it is through a third party they had received the job order. Therefore, the respondent cannot be fully exonerated from the proceedings. Thus, taking into consideration the reasoning of the learned Tribunal which was arrived at taking note of the fact that the respondent was completely exonerated in the proceedings initiated under Section 124 of the Act and proposal to levy penalty was dropped and also the fact, that the respondent cooperated with the investigating agency, the discretion exercised by the learned Tribunal cannot be termed to be either arbitrary or perverse. The period during which the license stood revoked, i.e., commencing from the date of suspension till the date of revocation vide order dated April 13, 2012 and till date would be a deterrent to the respondent to carry on his functions in future as a Customs House Agent strictly in accordance with the terms of the license and faithfully and diligently undertake the activities bearing in mind the important role played by a CHA in the Customs House. The order passed by the learned Tribunal setting aside the revocation of license cannot be held to be wholly perverse considering the facts and circumstances of the case, however, setting aside the order forfeiting the security deposit is not tenable - The respondent having failed to adhere to Regulation 13(a) of the CHALR, 2004 cannot be exonerated completely and, therefore, the period during which the license stood revoked till it is restored shall be treated as a penalty and the order of confiscation of security deposit passed by the competent authority stands restored with a direction to the respondent to furnish fresh security deposit to the satisfaction of the Department. The appeal is allowed in part.
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2022 (9) TMI 1173
Seeking provisional release of seized goods - prohibited goods - Section 110A of the Customs Act, 1962 - HELD THAT:- Even a partial prohibition will not prevent the release of the goods provisionally and there cannot be any bar in releasing the goods if not prohibited in terms of any circular. Petition is disposed of directing the respondent authority concerned to release the goods in question upon furnishing of bank guarantee of Rs.56 lakhs which was determined by the respondent department as a redemption fine and if such bank guarantee is furnished to the respondent authority concerned, the goods in question shall be released within 48 hours from the date of furnishing of such bank guarantee.
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2022 (9) TMI 1172
Validity of Disclosure Statement - levy of ADD - Applicability of time period of one year contemplated in Rule 17 for the purpose of completion of investigation - HELD THAT:- It was stated by learned senior counsel for the petitioners that submissions already made to the authority will be re-submitted to the authority during the course of the day. The petitioners are permitted to re-submit to ensure that they reach the Designated Authority - The court does not express any opinion on the merits. Petition disposed off.
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2022 (9) TMI 1171
Validity of rescinding of Anti Dumping Duty (ADD) - recommendation from designated authority obtained later - Sunset review investigation in respect of continuance of countervailing duty, already initiated and kept undecided, during the currency of the period of original Notification imposing such duty - Power of Central Government - import and purport of the words 'unless revoked earlier' occurring in sub-section (5) of section 9 of the Act. HELD THAT:- The notification levying the countervailing duty once issued under Section 9(1) of the Act, has an expiry period from the date of imposition, unless revoked earlier. It also provides that respondent no.1 may extend the period further, if it is of the opinion that the cessation of such duty is likely to lead to continuation or recurrence of subsidy and injury . Two important pre-requisites are postulated by the first proviso of Section 9(6) of the Act. They are, (a) a review being conducted by respondent no.2, and (b) subsequent formation of an opinion by respondent no.1 on the basis of the review, that is, whether cessation of countervailing duty would lead to continuation or recurrence of subsidisation and injury. These pre-requisites are required to be satisfied at the time of imposing as well as discontinuing the countervailing duty. In M/S. KUMHO PETROCHEMICALS CO. LTD., FAIRDEAL POLYCHEM LLP VERSUS UNION OF INDIA AND OTHERS [ 2014 (7) TMI 732 - DELHI HIGH COURT] , the Delhi High Court held in relation to the anti-dumping duty that the procedural requirements included finding of causal link between dumping and inquiry to domestic inquiry. It was held that the injury is to be determined on objective examination of positive evidence of extent of dumping assessed through loss of market share of domestic inquiry in comparison to dump imports on the effective prices of said goods. In para 14 of the decision, the High Court delineated as to what was the comprehensive procedural requirements relating to investigation. The enabling power not to continue the anti-dumping duty/countervailing duty available under the provision, would not obliterate the requirement for the Countervailing Authorities to disregard or overlook the statutory requirement of fulfiling condition to establish about the prejudicial effect to the domestic industry and the ingredients mentioned in the section such as continuation or recurrence of subsidisation and the resultant injury to the domestic industry. Establishing these elements are sine qua non even before withdrawal or rescindment of the duty under the scheme of the provisions. In the present case, the Central Government acted without having with it recommendation of the Designated Authority in issuing the Notification rescinding the countervailing duty. The recommendation of the designated authority secured after statutory exercise and after going into the relevant considerations and criteria, was to be the source material for the Central Government to act. The Central Government acted without availability of foundational aspects and jurisdictional facts to proceed to issue the notification. Conferring such licence and power to act in such a way on the Central Government would be extending unfettered and arbitrary powers - The words unless revoked earlier occurring in sub-section (6) in section 9 of the Act would have to be construed accordingly. The same procedure including making of inquiry and ascertaining the aspect injury to the domestic industry, will have to be read into before power to revoke is exercised. It would be reasonable to apply Section 21 by construing the words like manner by equating them, for the purpose of present issue, with the procedure required under the statutory provisions of Customs Tariff Act, 1975 and relating to imposition of countervailing duty. The issuance of Notification dated 01.02.2022 by the Central Government rescinding the countervailing duty imposed by the Notification dated 07.09.2017 was a irregular and illegal exercise. The Notification rescinding the countervailing duty could not have been issued when the exercise in law required to be undertaken pursuant to the commencement of the process of Sunset review not completed - It was not permissible for the Central Government to issue the Notification rescinding the countervailing duty in absence of any recommendatory exercise and without waiting for such recommendations of the designated authority in accordance with prescribed procedure. The Central Government has no power to issue Notification in the manner issued, in absence of any without waiting for the recommendation by the designated authority. The Notification No.1/2022-Customs (CVD) dated 01.02.2022 issued by respondent no.1 rescinding the countervailing duty is hereby quashed and set aside - Respondent no.2 shall immediately proceed in respect of Sunset review process in relation to the continuance or otherwise of the countervailing duty already commenced as per Notification dated 08.10.2021.
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2022 (9) TMI 1170
Confiscation - redemption fine - penalty - import of restricted goods or not - import of office furniture/equipment being part of complete stainless steel tube manufacturing plant (second hand goods) - capital goods or not - HELD THAT:- There is no dispute to the use of the subject second hand office furniture/equipment in relation to the manufacturing of goods and hence the subject goods are part of complete stainless steel tube manufacturing plant. The authorities below have nevertheless taken a view that the said goods are not required for manufacture or production of goods and therefore not capital goods in terms of para. 09.08 of Foreign Trade Policy 2015-2020. The said view of the authorities below is bereft of any rational. If the said goods are part of the complete plant and its use in relation to the manufacturing of goods is not disputed, they are indeed required directly or indirectly in manufacturing of goods. It is clear from the definition of capital goods that any plant, machinery, equipment or accessories required for manufacture or production, either directly or indirectly, of goods would fall within the scope of capital goods. The scope of word for manufacture and indirectly appearing in the definition of capital goods under the policy is wide and thus use of such goods having indirect nexus with the manufacture or production of goods also qualify as capital goods. Since the subject goods qualify as capital goods in terms of para. 2.31 Sr. No. I (c) of the Policy; the import was in accordance with the policy - the said goods cannot be held to be liable for confiscation under Section 111(d) of the Customs Act 1962. Consequently, neither redemption fine under section 125 of the Act was warranted nor penalty under Section 112 (a) of the Act was required to be imposed, hence the same cannot be sustained. Appeal allowed - decided in favor of appellant.
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2022 (9) TMI 1169
Seeking provisional release of the impugned goods - import of used Digital Multifunctional Printers / Devices (MFDs) - non-compliance with the provisions of Domestic laws under the Bureau of Indian Standards (BIS) Act, 2016 read with the Electronics and Information Technology Goods (Requirements for Compulsory Registration) Order (CRO), 2012 - failure to obtain DGFT authorization as required for the import of second hand goods, as required under paragraph 2.31 of the FTP, 2015-20 - mis-declaration of value of the imported used MFDs in violation of Section 14 of the Customs Act, 1962 - HELD THAT:- Reliance placed in the case of THE COMMISSIONER OF CUSTOMS, CHENNAI VERSUS M/S. KUTTY IMPEX [ 2022 (9) TMI 1049 - CESTAT CHENNAI] , wherein it was held that the First Appellate Authority was correct in allowing the appeal thereby ordering provisional release of the goods in question, and since there is no change in the facts, the same is required to be followed in the case on hand as well - Following the above ratio decidendi, therefore, the appeal of the Revenue is dismissed. The appeal of the Revenue is dismissed.
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2022 (9) TMI 1168
Levy of penalty u/s 112(b)(i) of the Customs Act, 1962 - mis-declaration of imported goods - attempt to clear the imported goods neither under the Customs Act nor under the specific provision invoked having made an offence - violation of IPR - Confiscation - enhancement of value - HELD THAT:- It was the appellant claiming himself to be the importer who entered into the picture by introducing Mr. Haarif and also introducing the name of Mr. Devender Yadav, which facts were not at all disputed by the appellant anywhere, either in his reply or his explanations and hence, he is any person insofar as the provisions of Section 112 ibid. are concerned. When the appellant is in no way concerned with the goods in question, the very act on his part to get the same removed itself proves the mala fide intention on his part and therefore, the same is held to be sufficient to justify penalizing under Section 112(b)(i) ibid. This itself will sufficiently take care of the contentions urged on behalf of the appellant, by which the intention of the appellant stands clearly exposed inasmuch as he not only assumed the role of importer, but also was responsible for impersonation as an Import Staff. The appellant has repeatedly and merely claimed that there was nothing on record to evidence his role, other than the statement of Mr. Haarif (alias Saravana Balan), who is also a co-noticee, but he has never denied that Mr. Haarif was sent by himself. When this is not rebutted directly or indirectly, it is opined that this is a sufficient reason to suspect the motive and involvement of this appellant in attempting to clear the consignment knowing fully well that he is neither the owner nor the importer and that the goods in question did not belong to him. There is no dispute as to the fact that by virtue of there being an attempt to smuggle items contrary to the prevailing rules and regulations, the goods have become liable for confiscation and hence, have been confiscated within the meaning of Section 111(d) ibid., for the violations as indicated by the Adjudicating Authority [paragraphs 41 (d), (e), (f) and (g)] - appeal dismissed.
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2022 (9) TMI 1167
Levy of redemption fine and penalty - re-export of goods - misdeclaration of goods - anti dumping duty - Import of assorted goods - Balloon machine, Plastic balloon pump, Party throw flower, Plastic clothing accessories, Load cell, Embroidery machine needle, Glitter paper, Encoder etc. - whether the Redemption Fine of Rs.6 lakhs imposed under Section 125 of the Customs Act, 1962 in regard to goods at Sl.No.6 7 to reexport and the penalty of Rs. 7 lakhs imposed under Section 112 (a) of the Act ibid is legal and proper? HELD THAT:- The Hon ble jurisdictional High Court in the case of SANKAR PANDI VERSUS UNION OF INDIA [ 2001 (12) TMI 83 - MADRAS HIGH COURT] relied upon the decision of the Hon ble Apex Court in SIEMENS LIMITED VERSUS COLLECTOR OF CUSTOMS [ 1999 (8) TMI 84 - SUPREME COURT] has held that there cannot be any doubt that the petitioner is entitled to re-export the articles in question and for the abovesaid purpose, it is not necessary for him to pay redemption fine as imposed by the authorities. In the present case, it is also seen that on an earlier occasion, the very same goods were imported by the appellant-importer from the very same supplier through Nhava Sheva Port. The documents relating to the earlier imports have been furnished by the appellant and it is stated that they have been produced before the original authority also. Taking note of these facts into consideration and also relying upon the decision of the Hon ble jurisdictional High Court, the redemption fine imposed in the present case requires to be set aside. The appellant has argued to set aside penalty of Rs.7 lakhs imposed by the adjudicating authority. It has to be stated that the appellant is not contesting the reclassification or levy of differential duty - the penalty imposed under Section 112 (a) of the Customs Act, 1962 is proper. However, the penalty of Rs.7 lakhs appears to be on a higher side. The penalty calls for reduction and it is reduced to Rs.2,00,000/- (Rupees Two lakhs only) and ordered accordingly. Appeal allowed in part.
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Insolvency & Bankruptcy
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2022 (9) TMI 1166
Seeking contribution to the Corporate Debtor, under Section 66 (2) of IBC, 2016 - fraudulent and knocked off Receivables - Preferential Transactions - fraudulent motive/dishonest intention - diversion of Receivables of the Corporate Debtor - HELD THAT:- It is not in dispute that the Corporate Debtor Insolvency Resolution Process (CIRP) had attained finality and that the Resolution Plan became Functus Officio and he cannot file / pursue any Petition/ Application on behalf of the Company - The ingredients of Section 23 of the Insolvency Bankruptcy Code, 2016 pertains to the Role of the Resolution Professional to conduct Corporate Insolvency Resolution Process (CIRP) in managing the affairs of the Corporate Debtor during the Resolution Process Period and not at a later point of time. This Tribunal, significantly, points out that, whenever Fraud on a Creditor is perpetrated in the course of carrying on Business, it does not necessarily follow that the Business is being carried on with an Intent to Defraud the Creditor - One cannot remain oblivious of the candid fact that, if the Directors of a Company had acted on a bonafide belief that the Company would recover from its Financial Problems / Difficulties, then, they will not be held liable for the act / offence of Fraudulent Trading. The aspect of Fraudulent Trading requires a very High Degree of proof, which is attached to the Fraudulent Intent. To put it emphatically, a more compelling Material / Evidence is required to satisfy the conscience of this Tribunal, on a preponderance of probability. Apart from that, an isolated/ solo fraud case, against the person, then, action in tort can be resorted to, as opined by this Tribunal. No wonder, a Creditor, who was defrauded, will have recourse to an alternative remedy, under Civil Law. In the instant Case on hand, the Appellant / Applicant before the Adjudicating Authority (National Company Law Tribunal, Division Bench II, Chennai) had filed application under Section 66 (1) of the Insolvency and Bankruptcy Code, 2016. In this connection, this Tribunal significantly points out that in respect of an Application (Filed under Section 66 of the Insolvency and Bankruptcy Code, 2016) Fraudulent Trading / Wrongful Trading, by the Applicant/ Resolution Professional is concerned, Tangible Materials / Relevant Facts are to be pleaded in an Unambiguous and Unequivocal Terms, by supplying the necessary details / facts as the case may be. The averments projected by the Appellant / Applicant in application do not come within the Four Parameters, of the ingredients of Section 66 of the Insolvency and Bankruptcy Code, 2016). Viewed in that perspective, the Impugned Order dated 01.07.2022 in application passed by the Adjudicating Authority (National Company Law Tribunal, Division Bench II) in dismissing the Application, without Costs, is free from any Legal error. Consequently, the Appeal fails. Application dismissed.
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2022 (9) TMI 1165
Initiation of CIRP - NCLT admitted the application - Corporate Debtor failed to make repayment of its dues - Financial Creditors - debt declared as Non-Performing assets - applicability of time limitation - Notice under SARFAESI Act also issued - whether debt was acknowledged by the Corporate Debtor or there was offer of OTS? - HELD THAT:- There is no dispute that the account of corporate debtor was declared NPA on 30.09.2013 . It is also not in dispute that balance sheet for the year 2014-15, 2015-16 showing acknowledgement was brought to the notice of the Adjudicating Authority. It is also not in dispute that on 16.4.2014 the corporate debtor had submitted balance cum security letter acknowledging the debt. The said balance sheet of 2014-2015 and 2015-16 were uploaded by the corporate debtor on the portal of MCA website. Thereafter on 23.02.2017 the corporate debtor vide its letter dated 23.02.2017 submitted proposal for settlement of dues. There is no reason to accept the plea of Learned Counsel for the appellant that the initiation of CIRP was barred by limitation. The question regarding acknowledgement has already been set at rest by three Judges Bench of Hon ble Supreme Court in ASSET RECONSTRUCTION COMPANY (INDIA) LIMITED VERSUS BISHAL JAISWAL ANR. [ 2021 (4) TMI 753 - SUPREME COURT ]. Whatever points have been raised by the learned counsel for the appellant in the present case, is squarely covered by the Hon ble Supreme Court in Bishal Jaiswal case. As per judgement of the Hon ble Supreme Court in a proceeding under the IBC, provisions of Limitation Act is applicable though Section 238A was inserted in the IBC w.e.f. 6.6.2018. It has been clarified by the Hon ble Supreme Court that it was clarificatory in nature and it was having retrospective effect. The application under Section 7 of the Code was filed by the Financial Creditor within the period of limitation. The appellant has never raised any dispute on the question of debt i.e. recoverable amount nor a dispute has been raised regarding endorsement in the balance sheet or offer of OTS. In such view of the matter there is no reason to interfere with the impugned order - Appeal dismissed.
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2022 (9) TMI 1164
Seeking inclusion of applicant bank into the CoC - Financial Creditor has been declared a related party to the Corporate Debtor (Corporate applicant) and has been ousted from the CoC - HELD THAT:- The relationship of the Financial creditor (herein ) and the corporate debtor is that the Kanodia foundation controls 31% of voting rights or a general control over the corporate debtor and by virtue of the fact that the HVM is owned to the extent of 99.9% by KF, it also controls crosses the bar of holding more than the 20% voting rights stipulated in Section 5(24)(j). Thus KF-HVM- SUASTH are related parties. What has already been said regarding 5(24) (i) and is appropriately depicted in the organogram to conclude that the stipulations are evidently matching the current configuration of the parties/entities. Thus, in terms of the stipulations of the code, HVM is a body corporate of a holding company (KF) to which the corporate debtor is a subsidiary (to the extent of ~ 31%) applicable and, therefore, there is no infirmity or contradiction in the letters of the RP given at page 57 of the application - Examining the status of the parties on the last postulate of Section 5(24)(h), it would be na ve to think that a director or a manager of the Suasth Healthcare would not be accustomed to act on the advice, directions or instructions of Kanodia Foundation, which would be synonymous with HVM being a 99.9% ownership of KF. Thus even on this count also the present case crosses the bar of 5(24)(h). There are no hesitation in holding that HVM is a related party of the Corporate Debtor i.e. Suasth Healthcare Foundation and that the RP has not erred in holding the same - application dismissed.
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2022 (9) TMI 1163
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - primary defence raised by the Corporate Debtor is that the Corporate Debtor made payments to the Operational Creditor for the months of January 2018, February 2018 and March 2018 (until 21st March) and further paid other dues - HELD THAT:- On a plain reading of the Non-Disclosure Agreement, it is clear that the Corporate Debtor had agreed to make two payments as mentioned in Clause 2 (e) and Clause (i). There is nothing to suggest any connection of 2 (e) with Clause (i). Whereas it is construed that clause 2 (i) is in reference to clause 1 (a) and thus the same has been discharged with. Hence, the payment made for the months of February and March, 2018 cannot be construed to be in discharge of the liabilities rising out of Clause 2 (e). Thus, the Corporate Debtor has failed to comply with the terms of Clause 2 (e) of the Agreement and has committed default. The application 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 stipulated under section 4(1) of the IBC. Therefore, the default stands established and there is no reason to deny the admission of the Petition. In view of this, this Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor. Petition admitted - moratorium declared.
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2022 (9) TMI 1162
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existenc eof debt and dispute or not - time limitation - service of demand notice - whether the demand notice in Form 3 dated 30.07.2019 was properly served? - HELD THAT:- The petitioner has placed a copy of the registered postal receipts and copy of demand notice which was delivered to the corporate debtor.Therefore, demand notice was duly served. Whether the operational debt was disputed by the corporate debtor? - HELD THAT:- It is to be noted that none appeared on behalf of the corporate debtor despite repeated service and has been set ex parte vide order dated 13.12.2021. Moreover, the petitioner has appended compliance affidavit u/s 9(3)(b) stating that there is no reply given by the corporate debtor relating to a dispute of the unpaid operational debt. Even corporate debtor have received the notices but have not replied to the same (attached as Annexure-F of the main petition). It is stated that there is no pre-existing dispute between the parties. Whether this application is filed within limitation? - HELD THAT:- This application was filed on 24.09.2019 vide Diary No.5078. Whereas the date of default is 14.04.2018, therefore, this Adjudicating Authority finds that this application has been filed within limitation. In the present petition, all the requirements have been satisfied. It is seen that the petition preferred by the petitioner is complete in all respects. The material on record clearly goes to show that the respondent committed default in payment of the claimed operational debt even after demand made by the petitioner. In view of the satisfaction of the conditions provided for in Section 9(5)(i) of the Code, the petition is admitted. Petition admitted - moratorium declared.
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2022 (9) TMI 1161
Pre-Packaged Insolvency Resolution Process - new procedure for resolving cases of Micro, Small and Medium Enterprises (MSME) under IBC - Section 54C of IBC (Pre-Packaged) - what is the role of the Adjudicating Authority when there is a Section 7 IBC petition filed and pending long before the present PPIRP application is filed? - HELD THAT:- This Adjudicating Authority is a creature of the statute and has to work within the framework of the IBC. It is seen from the objects and reasons of the amendment to the IBC which came into effect on 04.04.2021, the Parliament in its wisdom after having enacted the IBC Code, 2016 thought it fit to have an alternative mechanism by bringing in the concept of pre-package by way of an Amendment on 04.04.2021. On a reading of the objects and reasons, one factor is clearly discernible that the Government wanted a hybrid method of Insolvency Resolution Process which includes creditors in control (Section 7, 9 or 10) as well as debtors in control (PPIRP). The Government opted for the hybrid method by bringing this Ordinance. How the hybrid method should work? - HELD THAT:- While bringing the amendment into force the Parliament in its wisdom perceived a situation where the Adjudicating Authority will be faced with the dilemma as to how the matter should be resolved if there are applications are filed or pending under IBC Chapter IIIA as the case may be. It is a situation of FC in control versus the CD in control - In order to ensure that the Adjudicating Authority does not face a logjam and to resolve the overlap, Section 11A was brought into force laying down the parameters as to how the Adjudicating Authority will deal with the cases of this nature. The pre-package application under Chapter III-A which has been filed on 12.07.2022, cannot take precedence over the Section 7 of IBC application which was filed on 21.10.2020, and remained pending though heard and reserved and re-heard on a number of occasions. The Section 7 IBC application filed and pending in the case will have to be given precedence over the pre-package application - Merely because there was a delay in the admission of CIRP proceedings in the Section 7 IBC application, this Tribunal finds no justification to allow the pre-package to take precedence. We are bound by the mandate of Section 11A(4). Further our view is fortified by reading the paragraph 3.16 (c) of Insolvency Law Committee Report which is already extracted earlier. It clarifies the object and intent behind Section 11A(4). The object of Section 11A is to guide the Adjudicating Authority to deal with applications of IBC-vs. Pre pack based on relevant dates as between them (Section 11A(1) (2) (3) and to ensure that there is no clash between the applications filed prior to the Amendment dated 04.04.2021 and application filed after coming into force of the Amendment dated 04.04.2021 Various scenarios have been identified under Section 11A and the guiding principle has been given to the Adjudicating Authority. The guiding principle enjoined in Section 11A (1), (2), (3) (4) is binding on this Adjudicating Authority. Therefore, there cannot be any deviation, however, much the real estate allottees' plead that it will be in their best interest. The PPIRP i.e. (IBPP)-02(PB)/2022 cannot be entertained in view of the pending Section 7 IBC petitions C.P. No. (IB)-1081(PB)/2020 C.P. No. (IB)-1775(PB)/2018. Since the CD has already given the consent for admission of CIRP in the earlier proceedings as recorded and that, the debt and default is already admitted and recorded by this Tribunal in the earlier order dated 07.06.2021 recorded in para 10 above, which has not been modified or altered. The CD has also admitted debt and default as it is a pre condition for Chapter III-A petition. Therefore, there is no further enquiry needed on debt and default. The CD having conceded to debt and default both in terms of operational creditor earlier and real estate allottee presently, no further enquiry on debt and default is required. Petition dismissed.
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PMLA
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2022 (9) TMI 1160
Pre-arrest Bail application - Obtaining loan fraudulently - running of bogus firms and inflating the turnover - Correctness of decision of the Directorate of Enforcement not to arrest all the accused - framing of charges - HELD THAT:- Given the nature of allegations against the petitioner, there would be no justification to send the accused to pre-trial custody at the stage of framing of the charges. In GURBAKSH SINGH SIBBIA VERSUS STATE OF PUNJAB [ 1980 (4) TMI 295 - SUPREME COURT] , a Constitutional Bench of Supreme Court held that the bail decision must enter the cumulative effect of the variety of circumstances justifying the grant or refusal of bail. In the present case, without commenting on the case's merits, in the facts and circumstances peculiar to this case, the petitioner makes a case for bail, subject to the following terms and conditions, which shall be over and above and irrespective of the contents of the form of bail bonds in chapter XXXIII of CrPC, 1973 - in the event of arrest, the petitioner shall be released on bail in the case mentioned above, subject to furnishing a personal bond of Rs. One lac only, and furnishing one surety for Rs. Five lacs, to the satisfaction of the Trial Court. Before accepting the sureties, the concerned officer must satisfy that if the accused fails to appear in Court, then such surety is capable of producing the petitioner before the Court. Petition allowed.
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Service Tax
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2022 (9) TMI 1159
Levy of penalty u/s 78 of FA - demand of service tax for the period post 18.04.2006 and interest thereon has been paid prior to issue of show cause notice - services received from overseas under reverse charge mechanism in terms of Section 66A of the Finance Act, 1994 - HELD THAT:- The appellant have admittedly paid the service tax on the service received from foreign country in terms of Section 66A on reverse charge basis and interest thereupon was also paid before issuance of show cause notice. The issue on merit is whether there is levy of service tax on reverse charge mechanism on the service received from the overseas. This issue has undergone litigation in various cases before various forums. The hon ble Supreme Court in the case of UNION OF INDIA VERSUS INDIAN NATIONAL SHIPOWNERS ASSOCIATION [ 2009 (12) TMI 850 - SC ORDER] held that the levy of service tax is not legal on the said service prior to 18.04.2006 on the ground that Section 66A was enacted on 18.04.2006 only therefore, prior to this stage the levy was not legal and correct. Since the issue involved grave interpretation of law, there cannot be any mala fide intention on the part of the appellant - Moreover, the appellant paid the service tax and interest for the period from 18.04.2006 onwards before issuance of show cause notice therefore, the case of the appellant is squarely covered under the provision of Section 73(3) of Finance Act, 1994 accordingly, the revenue was not suppose to issue show cause notice therefore, there was no question of imposition of penalty. The penalty is not imposable on the appellant hence, the penalty imposed under Section 78 and upheld by learned Commissioner (Appeals) is set aside - Appeal allowed.
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2022 (9) TMI 1158
Non-payment of appropriate service tax - Commercial Industrial Construction service - Construction of Residential Complex Service - Works Contract Service - Consulting Engineer Services - Supply of tangible goods service. Construction works - HELD THAT:- Admittedly for the construction works, the appellant was not only providing services but was also providing the material. The submission of learned counsel for the appellant is that such a service provided by the appellant would be covered under the works contract service w.e.f. 01.06.2007, as was held by the Supreme Court in COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT ] where it was held that Works contract were not chargeable to service tax prior to 1.6.2007 - thus, demand not sustainable. Period upto 30.05.2007 - HELD THAT:- Annexure-IX to the show cause notice has divided the services provided by the appellant into two categories. The first is under construction service upto 30.05.2007 and the second is under the works contract service for the remaining period of the demand. Works contract service became taxable w.e.f. 01.06.2007 - It is not in dispute that the appellant was providing services as well as materials. In such circumstances, the service could not have been confirmed under any category except works contract which service became taxable only w.e.f 01.06.2007. Thus, confirmation of the demand under CICS and CCS prior to 01.06.2007 cannot be sustained. Period post 01.06.2007 - HELD THAT:- The demand has been proposed in the show cause notice under works contract but it has been confirmed under CICS or CCS. It is a settled law that the demand proposed under a particular category cannot be confirmed under a different category. Consulting engineer service - submission of the learned counsel for the appellant is that it should have been confirmed on the amount of Rs. 1,19,96,452/- which was actually realized/received during period in issue and not on the basis of gross billing of Rs. 1,58,08,357/- - HELD THAT:- This submission of learned counsel for the appellant deserves to be accepted for the reason that the demand could have been calculated only on the amount actually realized/received during that period. Demand in respect of supply of tangible goods service relating to Vibrators and JCB Excavators provided on rent - HELD THAT:- There was a transfer of right of possession and effective control of the goods and, therefore, could not have been subjected to levy of service tax since it would amount to deemed sale under article 366(29A) of the Constitution of India. The impugned order dated 28.03.2004 passed by the Commissioner cannot be sustained and is set aside except to the extent it concerns the services provided under consulting engineer service. This issue relating to levy of service tax on consulting engineer service would have to be remitted for re-determination of the amount of service tax on Rs. 1,19,96,452/- which was the amount actually realized/received by the appellant during the period - Appeal allowed in part and part matter on remand.
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2022 (9) TMI 1157
Exemption from service tax - works contract - sub contractor - construction services like construction of roads, laying down of water pipelines, construction of boundary walls, construction work required for erection/installation of road lights etc. - Applicability of N/N. 25/2012- ST dated 20.06.2012 - HELD THAT:- It is not in dispute how many services like construction of roads, laying down of pipelines etc were provided within the confines of GIDC. It is also not in doubt that GIDC is operated under Gujarat Industrial Development Act, 1962 and is developed by the state government of Gujarat for establishment and for organizing industry in industrial areas. In these circumstances all the services provided by the appellant within the confines of GIDC directly, GIDC would be covered under Sr. No. 12 (a) of Notification 25/2012- ST only if these said civil structure or any other original work meant predominantly for use other than for commerce, industry or other business and in the instant case it cannot be said that GIDC are not meant for promotion of industry or commerce. In these circumstances it cannot be said that Sr. No. 12(a) of the Notification No. 25/2012 provides any exemption to the work done by the appellant. Since GIDC are open to general public also apart from various industry and trade, it can be said that the said services bridges, tunnels in GIDC are open for to general public in that sense the benefit of Sr. No. 13 (a) of Notification No. 25/2012- ST dated 20.06.2012 can be extended to the roads, bridges, tunnels for goods transporting within the GIDC. The appellant has not specified the specific details of all the work done by the main contractor and therefore, has not substantiated the claim by the main appellant. The appellant is not entitled for any benefit of Sr. No. 12 (a) of Notification No. 25/2012. The appellant can claim the benefit of Sr. No. 13(a) of Notification No. 25/2012 in respect of roads constructed by them in GIDC. The appellant can claim the benefit of Sr. No. 29 (h) in respect of service of works contract provided as sub contractor to the main contractor wherever the appellant is able to establish that the main contractor was exempted from service tax in respect of works contract - there are no evidence supports the same has been produced and no bifurcation has been given. Matter remanded to the original adjudicating authority to decide a fresh by examining each case and testing the same on the parameters prescribed - Appeal is allowed by way of remand.
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2022 (9) TMI 1156
Refund of unutilized CENVAT Credit of the Service Tax paid - input services - Air Travel Agent Service - Car Parking Service - Hotel Service - Foreign Exchange Service - Rent-a-cab Service - Construction Service - Event Management Service. HELD THAT:- The denial of CENVAT Credit on the impugned services relating to Air Travel Agent Service, Car Parking Service, Event Management Service, Rent-a-cab Service and Foreign Exchange Service is required to be allowed since the denial is held to be incorrect. To this extent, therefore, the impugned order is set aside and the claim of the appellant is directed to be allowed. Hotel Services - HELD THAT:- This Bench in the earlier Order had remanded the issue for fresh consideration to the file of the Adjudicating Authority and hence, the same is required to be followed here as well. This issue, therefore, is allowed by way of remand. Construction Service - HELD THAT:- There are no supporting evidences other than a mere statement that the said service is not for the construction of a building or civil structure. In the absence of documents in support in this regard to say that the construction involved only repairs and maintenance or bringing up temporary structures, this matter also requires to be looked into again by the Adjudicating Authority. This issue is also, therefore, allowed by way of remand to the file of the Adjudicating Authority, however, with a direction to the appellant to offer all relevant documents in support of its claim. Denial of refund an amount of Rs.1,10,742/-, being not debited from the Education and Secondary Education Cess account - HELD THAT:- The issue is also to be looked into afresh, which appears to be a procedural error. This issue is also, therefore, remanded to the file of the Adjudicating Authority. Denial of refund of an amount of Rs.1,41,073/-, which is on account of the difference between the amounts shown in the ST-3 returns and Form-A - HELD THAT:- It appears that the authorities below have not verified those documents before passing the orders. It is opined that even this issue requires re-adjudication. Hence, the denial of refund on this issue is set aside and the matter is remanded to the file of the Adjudicating Authority, before whom the appellant shall once again furnish all supporting documents for enabling the Adjudicating Authority to pass a speaking order. The appeal stands partly allowed and partly remanded.
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Central Excise
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2022 (9) TMI 1155
CENVAT Credit - input services - transportation service - nexus with the manufacture of the goods or not - HELD THAT:- It cannot be said that the High Court has committed any error in denying the input tax credit and holding that such a service is excluded from the input service. The Special Leave Petition stands dismissed.
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Indian Laws
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2022 (9) TMI 1174
Legality of possession of all exotic animals/ birds by persons (other than those who have made voluntary disclosure with the time contemplated in Advisory, dated 11.06.2020(Annexure -3), issued by Respondent No. 1 - whether the person in possession of such exotic animals/ birds be forthwith prosecuted for violation under the Customs Act by Department of Revenue Intelligence and under the Wild Life (Protection) Act, 1972? - HELD THAT:- The Advisory is an executive direction to maintain inventory of exotic species and regulate the import of such species. The exemption that is provided in the Advisory is limited to dispensation with explanation of source of exotic species. Consequence of non-declaration within the time stipulated in the Advisory is that the owner of exotic species is required to comply with all requisite documentation under the extant laws and regulation. There is no change in the statutory provisions in this regard to the period pre or post advisory - The judgment of Bombay High Court in the matter of Anil Naidu Versus UOI [ 2019 (12) TMI 72 - BOMBAY HIGH COURT ] as well as the judgment passed by the Allahabad High Court in the matter of Dinesh Chandra Versus UOI [ 2019 (9) TMI 881 - ALLAHABAD HIGH COURT ], which clarify the position in regard to the inapplicability of the penal provisions of Wild Life Act, 1972 and the Customs Act 1962 in regard to exotic species continue to apply as per extant laws and regulations despite advisory dated 11.06.2020. Despite the above settled legal position continuing even for the undeclared stock of exotic species, court can neither legislate, nor direct Government to legislate in a particular manner. The Court cannot direct the Central Government to forthwith make amendments against legislative will to include all exotic species in the Wild Life (Protection) Act, 1972 and also in the Notifications issued under Section 11B, 123 and 135 of the Customs Act, 1962. Court can neither direct seizure/ confiscation contrary to existing provisions, nor can direct change in classification of such bailable offence to non-bailable offence, to enable arrest and prosecution of all the persons concerned with such undeclared stock of exotic animals / exotic birds. There are sufficient safeguards available in law to prevent cruelty to animals which are also applicable to exotic species. Directing the amendments in the tow Acts as suggested or even to suggest the Respondents to legislate such amendments, would lead to chaos and no public purpose will be achieved - Unless a person is caught smuggling exotic species on the international borders, no presumption can be drawn that domestic keeper have illegally imported the exotic species on the ground that such person has not declared ownership of exotic species within the stipulated time, or has acquired such species after the stipulated time, for any arrest/prosecution/confiscation based on presumption would be unreasonable and violation of rights guaranteed under Article 14 and 21 of Constitution of India. Petition dismissed.
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2022 (9) TMI 1154
Possession of the secured assets in exercise of powers under Section 14 of the SARFAESI Act - tenancy rights - scope and ambit of the powers to be exercised under Section 14 of the SARFAESI Act - while exercising the powers under Section 14 of the SARFAESI Act, the District Magistrate/designated authority could have passed such an order that unless and until the secured creditor terminates the tenancy rights of the third person by following due procedure of law and further orders regarding possession of the mortgaged property then and then only an application under Section 14 of the SARFAESI Act will be decided? HELD THAT:- On a fair reading of Section 14 of the SARFAESI Act, it appears that for taking possession of the secured assets in terms of Section 14(1) of the SARFAESI Act, the secured creditor is obliged to approach the District Magistrate/Chief Metropolitan Magistrate by way of a written application requesting for taking possession of the secured assets and documents relating thereto and for being forwarded to it (secured creditor) for further action. The statutory obligation enjoined upon the CMM/DM is to immediately move into action after receipt of a written application under Section 14(1) of the SARFAESI Act from the secured creditor for that purpose. As soon as such an application is received, the CMM/DM is expected to pass an order after verification of compliance of all formalities by the secured creditor referred to in the proviso in Section 14(1) of the SARFAESI Act and after being satisfied in that regard, to take possession of the secured assets and documents relating thereto and to forward the same to the secured creditor at the earliest opportunity. Once all the requirements under Section 14 of the SARFAESI Act are complied with/satisfied by the secured creditor, it is the duty cast upon the CMM/DM to assist the secured creditor in obtaining the possession as well as the documents related to the secured assets even with the help of any officer subordinate to him and/or with the help of an advocate appointed as Advocate Commissioner. At that stage, the CMM/DM is not required to adjudicate the dispute between the borrower and the secured creditor and/or between any other third party and the secured creditor with respect to the secured assets and the aggrieved party to be relegated to raise objections in the proceedings under Section 17 of the SARFAESI Act, before Debts Recovery Tribunal. The High Court has not committed any error in passing the judgment and order and directing the designated authority to dispose of the application under Section 14 of the SARFAESI Act - SLP dismissed.
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2022 (9) TMI 1153
Dishonor of Cheque - existence of legally enforceable debt or not - Civil wrong or not - burden to prove - section 138 of NI Act - HELD THAT:- A perusal of the facts show that the cheque in question was issued on 08.10.2014 and it was dishonoured on the third day i.e. on 10.10.2014. It is a matter of record that there is no agreement between the parties for execution of any work. No bill is produced by the petitioner qua incurring any expenditure in execution of the contract. The respondent has successfully discharged the onus to prove that there was no admitted liability against her. There is no evidence on record to establish that there was any legal debt or liability against the respondent/accused. The learned Appellate Court has found that the agreement for providing services was terminated immediately and, therefore, the demand was made for return of the cheque to the petitioner/ revisionist. The Appellate Court has rightly found that the judgment on conviction and sentence was unsustainable and, therefore, the same has rightly been set-aside. This court does not find any merit in the submissions made by learned counsel for the petitioner and therefore, this revision stands dismissed. Both the revision petitions are hereby dismissed.
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2022 (9) TMI 1152
Dishonor of Cheque - discharge of legal debt or not - genuineness of books of accounts - cross examination of accountant of the firm - offence u/s 138 of the Act - HELD THAT:- The present petitions are liable to be dismissed as in para 1 of the complaint, specific stand has been taken that proper account books are being maintained during its regular course of business and the respondent-complainant wanted to examine the Accountant of the Firm, only in order to prove the factum of the account books and outstanding amount in order to prove the legally enforceable debt and the said material is very important for the just decision of the complaint and further, by summoning the income tax records, the complainant wanted to substantiate the legal debt and the outstanding amount of the accused Firm. Further, no prejudice will be caused to the petitioners as the opportunity to cross-examine the witnesses has already been granted to them. It is the settled law that object underlying the provisions of Section 311 Cr.P.C. is that there may not be failure of justice on account of mistake of either party in bringing the valuable evidence on record or leaving ambiguity in statements of witnesses examined from either side. The exercise of widest discretionary power under Section 311 Cr.P.C. should ensure that the judgment should not be rendered on inchoate, inconclusive speculative presentation of facts and if evidence of any witness appears to the court to be essential to the just decision of the case, the same should be exercised. Petition dismissed.
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2022 (9) TMI 1151
Commercial quantity under the NDPS Act - percentage of a narcotic drug - recovery of 110 bottles of Phensedyl New weighing 100 gms each and having a Codeine concentration of 0.17% per bottle - Seeking grant of bail In case of manufactured drug with a miniscule percentage of a narcotic substance, the weight of the neutral substance ought to be ignored while determining the nature of the quantity seized i.e. small, commercial or in between or not? Whether Note 4 of the S.O. 1055 (E) dated 19th October, 2001 published in the Gazette of India, Extra., Pt.II, Sec3 (ii) dated 19th October 2001, as amended on 18.11.2009, should be held inapplicable to manufactured drug which contain a miniscule percentage of a narcotic drug? HELD THAT:- It is an admitted position that in the present case, the seized substance i.e. 110 bottles of Phensedyl New is a preparation within the meaning of Section 2(xx) of the NDPS Act. Such preparation to be declared as manufactured drug would have to be notified by the Central Government under Section 2(xi)(b) of the NDPS Act. All manufactured drugs are included within the definition of the narcotic drug under Section 2(xiv) of the NDPS Act. In other words, a preparation to be included in the NDPS Act, would at the first instance have to be declared a manufactured drug . At this stage, it is also pertinent to take note of Entry 35 in notification titled Manufactured Narcotics Drug (as contained in Government of India Notification No. S.O. 826 (E) dated 14.11.1985 and S.O. 40(E) dated 21.09.1993 and S.O. no. 1431 (E) dated 21.06.2011) issued in exercise of powers conferred by Sub Clause (b) of Clause (xi) of Section 2 of the NDPS Act which pertains to substance Methyl Morphine - as per the aforesaid notification, if any manufactured drug within the meaning of Section 2(xi)(b) of NDPS Act contains not more than 100 mg of Methyl Morphine, commonly known as Codeine, per dosage unit, and in that drug, Codeine is compounded with one or more ingredients and if in the said drug the concentration of Codeine is not more than 2.5% in undivided preparation, and the drug has been established in therapeutic practice, it will not be a preparation within the meaning of manufactured drug and, therefore it will not to be a narcotic drug . If the contraband seized falls within the provisions of NDPS Act, the weight of the neutral substance would not be ignored while determining the nature of the quantity seized, whether small quantity, commercial quantity or in between - If the alleged contraband seized falls within the definition of manufactured drug under Section 2(xi) of the NDPS Act, then the entire notification including the aforesaid Note 4 will be applicable. This matter may be placed before the appropriate bench for considering the question of grant of bail.
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