Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
September 3, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Highlights / Catch Notes
Income Tax
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Applicability of the DTVSV Act - Eligibility or otherwise of the petitioner to avail benefit under the scheme - If time to file objections has not yet expired, the assessee can decide for settling the dispute under the scheme. Either ways, the benefit of the applicability of the DTVSV Act cannot be denied solely on the basis of the filing of objections or not. Thus, the acceptance of the said contention advanced by the respondent would make the clarification issued by the 3rd respondent vide answer to question No.16 of FAQs, otiose and redundant. - the DTVSV Act being a beneficial piece of legislation, resort should be made to liberal interpretation rather than literal interpretation, which would render the entire scheme inoperable. - HC
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Short Term Capital Gain arising out of transfer of equity shares - FCCBs/GDRs which were subsequently converted to equity shares - cost of acquisition of underlying shares - whether capital gain has to be computed by adopting the cost of acquisition of the GDRs/FCCBs under clause 7(3) and 7(4) of the 1993 scheme or it has to be computed under section 49(2A) r.w.s. 47(x) and 47(xa) of the Act, as held by the Departmental Authorities? - To be computed as per the clause 7(3) and 7(4) of the 1993 scheme - AT
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CIT(A) power to take up this issue as not born out of the assessment order - Transfer expenses disallowance - the AO has accepted the transfer expenses which was not a subject matter of appeal before the CIT(A). CIT(A) cannot be taken up this issue which was not born out of the assessment order. - AT
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Interest levied by Revenue u/s 234A and 234B - adjustment of cash seized with the tax-liability determined on assessment - the assessee cannot blame Revenue for its own faults in not keeping proper and true record of its own income. The onus and burden is on the assessee to file its return of income in time, which the assessee cannot shift to Revenue merely because an intervening event by way of search and seizure operations have taken place u/s 132(1) of the 1961 Act. - Relief granted for interest u/s 234B but not u/s 234A - AT
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ESOP expenses - non deduction of tds on discount given- assessee has vested ESOP rights to certain employees - there will be time different between “vesting of option” and “exercise of option” - the tax authorities are not justified in holding that the assessee should have deducted tax at source from the discount amount by assessing the same as perquisite in the hands of the assessee in the year in which ESOP was vested in them. - AT
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Addition u/s 40A(2)(b) - purchase of the lands from the Directors at excessive rate - These decisions are all commercial decisions, which have to be taken by the assessee, and it is not for the Assessing Officer to sit in the arm-chair of the assessee and suggest the ways and means to run their business as long as there is no unlawful activity, which has been alleged to have been done by the assessee. - the decision to purchase the lands from the Directors at excessive rate was a prudent commercial decision taken by the assessee company. - HC
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Entitled to registration u/s 12AA and approval under Section 80G - Allegation of charging higher rate of interest from the self help groups in the name of charitable activity - Revenue submits that the CIT recorded a finding that the interest charged would be 35% - we find that there is nothing on record to show that the assessee has charged 35% interest. The interest charged is at 15% per annum and 20% is charged as service charges and obviously, the service charges cannot be on recurring basis - Order of ITAT granting relief to assessee sustained - HC
Customs
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Classification of imported goods - consignment of gold pendants weighing 5 kgs - Since, the goods imported by the petitioner are classifiable under Exim code 711319, the amendment made to the policy condition from ‘free’ to ‘restricted’ would not be applicable. If the import of goods is not ‘restricted’ and is permitted as ‘free’, the subject import cannot be considered as ‘prohibited’ goods liable for confiscation. - HC
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Cancellation of redemption certificate - validity of SCN - power of review - The contentions raised that the redemption certificate is final order, which can be reviewed under Section 16 of the Act is untenable and the redemption certificates issued based on the informations furnished by the petitioner, can never be construed as an order issued after adjudication for the purpose of exercise of power of review and therefore, the impugned show cause notice is issued, based on the report submitted by the Director of Revenue Intelligence, which is a fresh cause of action and more so, in respect of the documents furnished by the petitioner for the purpose of getting a redemption certificate and thus, such illegality or irregularity if any noticed, is to be proceeded with by following the procedures as contemplated under law. - HC
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Smuggling - Gold of Foreign Origin - Commissioner Of Customs (Appeals) quashed the confiscation and penalty - There were no grounds for reasonable belief at the time of seizure that the gold bars were of foreign origin and smuggled. Subsequent investigation has also not established that the gold bars were smuggled and therefore the provisions of Sec 123 of the Customs Act is not invocable - the respondent has submitted all relevant documents in support of his domestic licit acquisition supported by GST Purchase Invoices. - AT
Indian Laws
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Dishonor of Cheque - insufficiency of funds - HC has quashed the entire criminal proceedings - the High Court has grossly erred in quashing the criminal proceedings by entering into the merits of the allegations as if the High Court was exercising the appellate jurisdiction and/or conducting the trial. The High Court has exceeded its jurisdiction in quashing the criminal proceedings in exercise of powers under Section 482 Cr.P.C. - SC
IBC
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Recovery of dues from PSU - Seeking directions for payment of the dues of the company which was deposited as security deposit, along with interest - The question as to whether a PSU ought to be revived or not is a question of policy. In the opinion of this Court, just because there are dues which are liable to be paid by the PSU it cannot be said that each and every PSU which is fully controlled by the Government would have to be revived or that the Government ought to pay the dues of the PSU. The PSU would have its own independent existence. - HC
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Constitutional validity of some of the provisions of the IBC - Government companies to be equated with State or not - It is not an arm of the State. It is usually performing a commercial or/and business functions. A Government Company cannot be equated with a State authority, like National Highway Authority of India (NHAI), which is performing statutory functions or like other Departments, like Postal, Telegraph or the Railways or Public Works Department. - HC
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NCLAT proceedings - Requirements from the parties before the NCLAT to file brief written submissions and copies of the judgments - even assuming that there was no categorical direction by the NCLAT to supply a copy to the Respondent, it was incumbent upon the Appellant to share a copy with the Respondent, to enable the Respondent to defend its case and rebut the issues highlighted by the Appellant in the written submissions. It would be a travesty of justice if the NCLAT takes into account the written submissions of one party without a copy having been shared / exchanged with the other party. - HC
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Appointment of RP - we are not accepting the fear expressed by the Appellant that how could the Resolution Professional appointed by the Creditor itself if appointed by the Adjudicating Authority deal with the application filed by himself for the Creditor and give Report. What the Resolution Professional under Section 99 would be doing was requiring the Debtor to furnish proof of repayment as per Section 99(2) and after doing the necessary spade work Resolution Professional has to recommend acceptance or rejection of the application with reasons. The decision making whether to admit or reject the application would be only by the Adjudicating Authority. - AT
Service Tax
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Valuation - reverse charge mechanism - inclusion of tax deducted at source (TDS) in assessable value for determining the taxable value - when the TDS amount has been borne by the assessee and only the consideration for the services as agreed upon by the parties has been paid to the service provider, the same cannot be included in the taxable value for determining the Service Tax liability. - AT
Central Excise
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Valuation - Scope of the SCN - Since the entire foundation of the show cause notice is based on the wrong notion that the washery is a “related person” of the appellant, the entire demand is liable to be quashed. Further the invocation of Rule 8 of the Valuation Rules has been done mechanically without even appreciating the fact that there is no captive consumption by the appellant or consumption on its behalf and washing of coal is neither production nor manufacture. - AT
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Classification of goods - chelated micronutrient mixtures - Chelated Zinc at 12% EDTA - Chelated Iron as 12% Fe EDTA - MNM Chelated - there is nothing forthcoming on record nor any evidence brought forth by the department to indicate that the Nitrogen present in the impugned goods though in admittedly small percentages are NOT an ‘essential constituent’ of the impugned goods. - goods to be classified under CETA 31.05 - AT
Case Laws:
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GST
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2021 (9) TMI 94
Maintainability of SLP - availability of alternative remedy of appeal - HELD THAT:- Since an appeal lies under Section 107 of the UP GST Act against the order of assessment, we are not entertaining the Special Leave Petition under Article 136 of the Constitution. SLP dismissed.
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Income Tax
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2021 (9) TMI 108
Revision u/s 263 - unexplained unsecured loans taken by assessee - HC uphold the decision of ITAT wherein it was held that, PCIT was not empowered and entitled to revise assessment order u/s. 263 of the Act r/w Explanation 2 - HELD THAT:- SLP dismissed.
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2021 (9) TMI 107
Entitled to registration u/s 12AA and approval under Section 80G - Allegation of charging higher rate of interest from the self help groups in the name of charitable activity - Commercial activity - HELD THAT:- When the activity of the assessee, which grants relief to the poor is not in dispute, the genuinity of the claim made by the assessee for registration ought not to have been rejected solely on the ground that certain service charges are being collected. Admittedly, women of the self help groups are people, who come from the marginalized society and they are poor rural women, who do not have the wherewithal to approach the nationalized banks for availing loan. If the assessee does not carry on such activity by rendering financial assistance to the women of self help groups, they will have to be under the mercy of the private financiers, who are charging exorbitant rate of interest. Considering all these aspects, the Tribunal granted relief to the respondent assessee. In our considered view, there is no question of law much less substantial question of law arising for consideration in this appeal, as the entire matter is factual and much of the factual position with regard to the genuinity of the assessee have not been disputed either by the Tribunal or the CIT. Revenue submits that the CIT recorded a finding that the interest charged would be 35% - we find that there is nothing on record to show that the assessee has charged 35% interest. The interest charged is at 15% per annum and 20% is charged as service charges and obviously, the service charges cannot be on recurring basis. Therefore, the said conclusion arrived at by the CIT is not based on any material - Decided against revenue.
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2021 (9) TMI 106
Addition u/s 40A(2)(b) - purchase of the lands from the Directors at excessive rate - expenditure incurred by the assessee company for payment of the sale price to the Directors - assessee company had purchased larger extent of land from its two Directors/shareholders which was later sold by the assessee at the rate which is far less than the Guideline Value which is far far less than the selling price paid to the Directors - Tribunal holding that the price for the land purchased and paid to the Director was not excessive while comparing with the fair market value of the land - HELD THAT:- As the assessee company owns the land behind the lands owned by the Directors and if the lands owned by the Directors are purchased, then it would give better access to the land owned by the company and it will be a good decision of the company to improve its financial well being. These decisions are all commercial decisions, which have to be taken by the assessee, and it is not for the Assessing Officer to sit in the arm-chair of the assessee and suggest the ways and means to run their business as long as there is no unlawful activity, which has been alleged to have been done by the assessee. Thus, we are of the considered view that the Tribunal was right in affirming the order passed by the CIT(A) holding that the decision to purchase the lands from the Directors at excessive rate was a prudent commercial decision taken by the assessee company. No ground to interfere with the order passed by the Tribunal holding that the price for the land purchased and paid to the Director was not excessive while comparing with the fair market value of the land. - Decided against revenue.
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2021 (9) TMI 105
TDS u/s 195 - Addition u/s 40(a)(i) - fees for technical services liable for TDS or payment for purchase of software - DTAA provisions - HELD THAT:- AO has simply stated that the assessee is liable to deduct tax at source from the impugned payment made to the AE, i.e., he has not addressed the submissions made by the assessee before him that the impugned payment would not fall under the category of royalty or fee for technical services - AO has also not given any independent finding on it. AO has also not discussed about the nature of services provided by the AE to the assessee. Unless the type and nature of services are analysed vis- -vis relevant DTAA provisions, it would not be possible to come to a conclusion on this issue. Tax authorities have not examined the factual aspects properly taking into consideration the definition of the terms namely Royalty and Fee for technical services as given in DTAA. Since the impugned payment is covered by DTAA, the A.O. is required to be examined the taxability of these payments and liability to deduct tax at source in accordance with the provisions of DTAA unless it is shown by the assessee that the provisions of Indian Income Tax Act is more beneficial to it. It has been held in the case of Engineering Analysis Centre of Excellence (P) Ltd [ 2021 (3) TMI 138 - SUPREME COURT] - we are of the view that this issue requires fresh examination at the end of the A.O - Appeal filed by the assessee is treated as allowed for statistical purposes.
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2021 (9) TMI 104
ESOP expenses - non deduction of tds on discount given - taxability as perquisite - assessee has vested ESOP rights to certain employees - assessee claimed a sum being the difference between the market price of shares and the issue price as ESOP expenses u/s 37(1) - Whether the TDS is to be deducted during the current year itself or not - HELD THAT:- DRP has understood that there are 4 stages in grant of ESOP i.e. granting of option, vesting of option, exercise of option and selling of shares - there will be time different between vesting of option and exercise of option and accordingly the period of taxability of ESOP benefits as perquisite may also differ - we are of the view that the tax authorities are not justified in holding that the assessee should have deducted tax at source from the discount amount by assessing the same as perquisite in the hands of the assessee in the year in which ESOP was vested in them. We hold that the assessee is entitled for deduction of ESOP expenses when the rights are vested in the hands of the assessee as held in the case of Biocon Ltd [ 2013 (8) TMI 629 - ITAT BANGALORE] - we direct the AO to allow the claim - AO is entitled to satisfy himself that the assessee has either deducted tax at source when the option is exercised by the employee or has reversed the expenditure when the concerned employee did not exercise the option, if it is considered necessary by the AO. - Decided in favour of assessee.
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2021 (9) TMI 103
Deduction claimed u/s 80P(2)(a)(i) - HELD THAT:- Since the issue of deduction u/s 80P(2)(a)(i) of the Act requires fresh examination in the light of decision rendered by Hon ble Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd. [ 2021 (1) TMI 488 - SUPREME COURT] we set aside the order passed by Ld. CIT(A) on this issue and restore the same to the file of the A.O. for examining it afresh as discussed above. Deduction claimed u/s 80P(2)(d) - HELD THAT:- Identical issue was also restored to the file of A.O. in the case of Thannirupantha Primary Agricultural Credit Co-operative Society Ltd. Vs. ITO [ 2021 (8) TMI 68 - ITAT BANGALORE] and accordingly this issue may be restored to the file of the A.O. Expenses relating to interest income should be allowed u/s 57(iii) - HELD THAT:- Since we have already restored the issue of claim of deduction u/s 80P(2)(d) of the Act, we restore this alternative contention also to the file of the A.O., since the claim of the assessee gets support from the decision rendered by Hon ble High Court of Karnataka in the case of Totgars Co-operative Sales Society Ltd. [ 2015 (4) TMI 829 - KARNATAKA HIGH COURT] . Appeal of the assessee is treated as allowed for statistical purposes.
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2021 (9) TMI 102
Addition u/s 56(2)(vii)(b)(ii) - income from other sources - difference between the consideration amount paid and stamp duty value of property - HELD THAT:- We find that neither the AO nor the ld CIT(A) investigated about the non-genuineness of the agreement. No notice to the seller was issued by ld CIT(A) before taking view that probably the agreement composition being anti date too . The ld CIT(A) took his view only on his presumption and assumption - AO invoked the provision of section 56(2)(vii)(b)(ii), without having any evidence of excess consideration over and above the sale deed. in addition to the sale consideration. Assessee entered in to agreement with the seller on 28.03.2013. The substantial part of the sale consideration was also paid to the seller, which is about 80% of the total sale consideration. Though, ultimately the sale deed was registered on 10.09.2013. The details of sale consideration is also mentioned in the registered sale deed, which strengthen the claim of the assessee that substantial part of consideration was paid on the day of execution of the initial agreement. The assessee claimed that the possession of the land was also obtained by them at the time of agreement. This fact is not disputed by the AO. Assessee entered in agreement with the seller, paid substantial consideration and obtained possession, the sub-clause-(ii) of clause (vii) of sub-section (2) of section 56 was not on the statue book - We find that in absence of sub-clause (ii) in the statue book as on the date of agreement to sale of the property, the AO was not entitle to invoke the said provision. Hence, the ground of appeal raised by the assessee is allowed. The AO is directed to delete the entire addition under section 56(2)(vii)(b)(ii). - Decided in favour of assessee.
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2021 (9) TMI 101
Revision u/s 263 - as per CIT assessment framed u/s 143(3) as erroneous insofar prejudicial to the interest of revenue on account of the deduction granted by the AO under section 80IA(4) - assessee is acting as a works contractor and not the developer and as there was no agreement between the assessee and the Government of Gujarat which is one of the prerequisite for claiming the deduction under section 80IA(4) - HELD THAT:- There remains no ambiguity that there was the agreement between the assessee and the Government of Gujarat, Road Building department. It is also pertinent to note that this fact was brought to the notice to the learned principal CIT during the proceedings by the assessee. Principal CIT in his order has not assailed the contention raised by the assessee before him. Thus, in the given facts and circumstances, there is no violation by the assessee of the provisions specified under section 80IA(4) of the Act. There was no charge of the learned Principal CIT suggesting that the activities performed by the assessee were in the nature of works contract except the allegation that there was no agreement between the assessee and the Government of Gujarat, Road Building Department. As such, in the absence of agreement between the assessee and the Government of Gujarat, Road Building Department, the Principal CIT assumed that the assessee was acting as the works contractor. However, the finding of the learned Principal CIT is not correct in the light of the above discussion. Whether the assessee is acting as a works contractor or a developer as provided under explanation to section 80IA(4) of the Act is the debatable issue - once the AO has taken a view that the assessee is eligible for deduction 80IA(4) of the Act, the view taken by the AO is one of the possible view. Thus on this reason as well the order of the AO cannot be termed as erroneous insofar prejudicial to the interest of revenue - order passed by the learned Principal CIT is not sustainable and liable to be quashed - Decided in favour of assessee.
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2021 (9) TMI 100
Interest levied by Revenue u/s 234A and 234B - Assessee contended that no interest is chargeable taking into consideration the cash seized during search and seizure proceedings - adjustment of cash seized with the tax-liability determined on assessment - HELD THAT:- Assessee is not entitled for complete relief on the interest payable u/s 234B as first of all the assessee was disputing the search conducted by Revenue u/s 132(1) of the 1961 Act against it and secondly, as per material before us, there is no material to suggest that any estimate of income was filed by the assessee before the competent authorities immediately after search operations, even including the high denomination currency notes of ₹ 1000/- each aggregating to ₹ 50,33,000/- as its undisclosed income, rather, Shri Suresh Chandra Purwar was justifying even the aforesaid high currency notes as not been taxable, in letter dated 06.04.2011 wherein it was claimed that the said sum was received over a period of years under various heads and on a number of occasions. Assessee shall be liable to pay interest u/s 234B on tax so computed on the income so declared in return of income filed on 17.09.2013, till the date of filing of return of income on 17.09.2013. AO is directed to compute liability of interest u/s 234B to this effect. Assessee while filing application with Settlement Commission offered additional income and the assessee has claimed that it discharged its entire tax and interest liability, by making payments towards tax and interest on 18.03.2014. The assessee has claimed that it was not given appropriate credit for payment of taxes, and form no 26AS/challans are produced before tribunal, the AO shall verify and give credit of payment of appropriate taxes claimed to be so paid by assessee on 18.03.2014, after due verification. Then, obviously if taxes stood paid on this date viz. 18.03.2014 as claimed by assessee even on additional income offered in SOF filed with Settlement Commission, no further liability u/s 234B can be fastened beyond this point of time viz. 18.03.2014 to the extent the taxes stood paid(which is subject to verification by AO) - assessee shall be liable to pay interest u/s 234B on tax so computed on the additional income so declared in SOF filed with Settlement Commission on 19/20.03.2014, till the date of payment of tax on 18.03.2014. Reference is drawn to provisions of Section 234B(2A)(a) of the 1961 Act .The AO is directed to compute liability of interest u/s 234B to this effect. Untrue declaration of income filed by assessee before Settlement Commission - Settlement Commission passed an order u/s 245D(4), dated 23.09.2015 bringing to tax additional income, as declaration made by assessee of its income before Settlement Commission,was found by Settlement Commission to be not correct and additional income was brought to tax by Settlement Commission, and since this liability was fastened in September 2015, the assessee will be liable to pay interest u/s 234B till the order was passed by Settlement Commission in September 2015 bringing to tax additional income, owing to untrue declaration of income filed by assessee before Settlement Commission. Reference is drawn to provisions of Section 234B(2A)(b) - AO is directed to compute liability of interest u/s 234B to this effect .we are concerned with ay: 2011-12 and search and seizure operations were conducted by Revenue u/s 132(1) of the 1961 Act, on 25.02.2011. This contention of Revenue to hold Explanation 2 to Section 132B of the Act, which was inserted by Finance Act, 2013 w.e.f. 01.06.2013, to be retrospective is rejected and we hold that said amendment is prospective. Chargeability to interest u/s 234A - The assessee has not filed return of income in time rather the assessee was disputing the search carried on by the Revenue itself, the onus is on the assessee to keep and maintain its record of income as it is the assessee who is in know of its own affairs and the assessee cannot blame Revenue for its own faults in not keeping proper and true record of its own income. The onus and burden is on the assessee to file its return of income in time, which the assessee cannot shift to Revenue merely because an intervening event by way of search and seizure operations have taken place u/s 132(1) of the 1961 Act. Thus, we are not inclined to interfere with the orders passed by lower authorities so far as chargeability of interest u/s 234A is concerned, which we uphold. Thus, the appeal of the assessee is partly allowed
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2021 (9) TMI 99
Income in hands of assessee - transfer of land to SPV - assessee was used as a SPV (Special Purpose Vehicle) for the construction of LodhaSupremus‟ on its own land - HELD THAT:- As relying on assessee's own case 2020 (12) TMI 116 - ITAT MUMBAI] and [ 2018 (8) TMI 2006 - ITAT MUMBAI] assessee was used as a SPV (Special Purpose Vehicle) by SNCML for the construction of LodhaSupremus , which is more likely a Cooperative Society carrying out work for and on behalf of its members out of the cost met by them and no profit could arise in the hands of SPV. Thus, the additions were rightly deleted by Ld. CIT(A) Addition on account of capital gain - sale of godown - HELD THAT:- As relying on assessee's own case 2020 (12) TMI 116 - ITAT MUMBAI] and [ 2018 (8) TMI 2006 - ITAT MUMBAI] assessee was merely holding the godown right as an investment in its books of accounts, the cost of such right was in fact forming part of the project cost (Inventory) in the books of SNCML since the project Lodha Supremus was owned and developed by SNCML.assessee was merely holding the godown right as an investment in its books of accounts, the cost of such right was in fact forming part of the project cost (Inventory) in the books of SNCML since the project Lodha Supremus was owned and developed by SNCML - Since, there is no conversion of capital asset into stock-in-trade and there is no transfer of such right by the assessee-company since it has not sold any units of Lodha Supremus , as all the sales is recognized and taxed in SNCML, there is no question of any taxability in the hands of the assessee. - Decided against revenue.
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2021 (9) TMI 98
Capital gain computation - applicability of provisions of section 50C - transfer of right in respect of a leasehold property - HELD THAT:- What the assessee has sold is leasehold rights in certain property and therefore, the provisions of Sec.50C would not be applicable to such a transaction. The provisions of Sec.50C apply in case of transfer of capital asset being land or building or both and are not applicable in case of transfer of leasehold rights in land buildings. See M/S. GREENFIELD HOTELS ESTATES PVT. LTD. [ 2016 (12) TMI 353 - BOMBAY HIGH COURT] . Also see ATUL G. PURANIK VERSUS ITO [ 2011 (5) TMI 576 - ITAT, MUMBAI] Thus provisions of Sec.50C would not be applicable to the transaction under consideration and therefore, the consequential addition made in the hands of the assessee, would not be sustainable in law - Decided in favour of assessee.
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2021 (9) TMI 97
Capital gain computation - reference matter to the DVO for determining fair market value as per section 50C(2) - difference in the value of the property as determined by the assessee and the SRO value - HELD THAT:- As per the definition of transfer as per section 2(47) of the Act, the arguments advanced by the ld. AR in this regard is hereby rejected. From the assessment order, we observe that the AO has referred the matter to the DVO for determining fair market value as per section 50C(2) of the Act, but, it was not mentioned in the order the details of reference to DVO. He has completed the assessment without waiting for the report of the DVO. As per the judgment of the Hon ble Calcutta High Court in the case of Sunil Kumar Agarwal Vs. CIT [ 2014 (6) TMI 13 - CALCUTTA HIGH COURT] if there is a difference in the value of the property as determined by the assessee and the SRO value, the AO is bound to refer the matter to the DVO and the assessment should be done on the basis of DVO report. We deem it fit and proper to remit the issue back to the file of the AO with a direction to determine the market value of the property as on the date of transfer of capital asset in accordance with law after providing reasonable opportunity of being heard to the assessee in the matter. The assessee is directed to produce all the relevant documents before the AO to substantiate its claim. CIT(A) power to take up this issue as not born out of the assessment order - Transfer expenses disallowance - HELD THAT:- We find that the AO has accepted the transfer expenses which was not a subject matter of appeal before the CIT(A). CIT(A) cannot be taken up this issue which was not born out of the assessment order. In this connection, we rely on the decision of the ITAT, Pune in the case of NARESH SUNDERLAL CHUG [ 2018 (6) TMI 351 - ITAT PUNE] and THE UNITED PROVINCES SUGAR COMPANY LTD. [ 2021 (4) TMI 633 - ITAT KOLKATA] - Order of CIT(A) set aside. - Decided in favor of assessee.
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2021 (9) TMI 96
Rectification of mistake u/s 254 - Validity of order u/s. 201(1) and 201(1A) as barred by limitation - Revenue pointed out that the Income Tax Act does not provide time limit for passing of order u/s.201, 201(1) 201(1A) of the Act, on payments made to non-resident u/s.195 - HELD THAT:- We noted that the AO has passed order u/s.201(1) 201(1A) of the Act, almost after six years. Considering judgments relied upon by the assessee in the case of CIT vs. Satluj Jal Vidyut Nigam Ltd. [ 2009 (12) TMI 679 - HIMACHAL PRADESH HIGH COURT] , case of State of Punjab Ors. Vs. Bhatinda District Coop Milk P. Union Ltd [ 2007 (10) TMI 300 - SUPREME COURT] and DIT (International Taxation) vs. Mahindra Mahindra Ltd. [ 2014 (7) TMI 265 - BOMBAY HIGH COURT] we feel that order was not passed within a reasonable time by the AO and hence, the Tribunal has taken a view which does not fall under the rectification proceedings u/s.254(2) of the Act. Miscellaneous application of the Revenue is dismissed.
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2021 (9) TMI 92
Applicability of the DTVSV Act - Eligibility or otherwise of the petitioner to avail benefit under the scheme - N on acceptance of declaration in Form No.1 filed by the petitioner - applicability of the DTVSV Act denied solely on the basis of the filing of objections - extending the benefit only to an assessee who has filed objections to the draft assessment order and denying it to one who chooses not to file objections to the draft assessment order for various reasons - HELD THAT:- The declaration form is one which is designed under the rules framed under the DTVSV Act.Secondly, based on the clauses contained in the declaration form, the eligibility/applicability of the DTVSV Act cannot be put to test. Thirdly, the interpretation sought to be placed by reading the said sentence in isolation runs contrary to the earlier part of the clarification, wherein it is mentioned that assessee decides not to file objections with the DRP and is waiting for final order to be passed by AO, against which, he can file appeal with the Commissioner (Appeals) . Once, an assessee decides not to file an appeal, it is irrelevant whether time for filing objection has expired or not. If the time for filing objections has expired, the consequences would be that the proposals made in the draft assessment order would be confirmed. Therefore, the proposals made in the draft assessment order would only get converted into Final order, which can be appealed against. If time to file objections has not yet expired, the assessee can decide for settling the dispute under the scheme. Either ways, the benefit of the applicability of the DTVSV Act cannot be denied solely on the basis of the filing of objections or not. Thus, the acceptance of the said contention advanced by the respondent would make the clarification issued by the 3rd respondent vide answer to question No.16 of FAQs, otiose and redundant. As noted in the opening remarks, the DTVSV Act being a beneficial piece of legislation, resort should be made to liberal interpretation rather than literal interpretation, which would render the entire scheme inoperable. In view of the conclusions arrived at as above, the petitioner is entitled to succeed in this Writ Petition. Writ petition is allowed; the impugned proceeding of the 1st respondent dt.30.04.2021 is hereby set aside; the 1st respondent is directed to accept the declaration in Form No.1 filed by the petitioner on 30.03.2021, process the same in accordance with the DTVSV Act of 2020; issue Form No. 3; and permit the petitioner to make the payment of disputed tax as declared in the declaration Form No.1, before the due date as notified.
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2021 (9) TMI 82
Penalty u/s 271(1)(c) - non specification of charge - As per CIT-A assessee has deliberately furnished inaccurate particulars of income with an intention to evade tax and consequently the levy of penalty - HELD THAT:- As held in CIT v. Samson Perinchery [ 2017 (1) TMI 1292 - BOMBAY HIGH COURT] , the order of imposition of penalty has to be made only on the ground of which the penalty proceedings has been initiated and it cannot be on a fresh ground of which the assessee has no notice - where the AO initiated penalty proceedings u/s. 271(1)(c) of the Act for furnishing inaccurate particulars of income, the order imposing penalty for concealment of income was not valid. In the present case, the penalty was initiated for furnishing inaccurate particulars of income, however penalty is levied by the AO for concealment of income - CIT(Appeals) confirmed the penalty on the reason of furnishing inaccurate particulars of income - there is a defect in issue of notice and levy of penalty by the AO and confirmation of penalty by the CIT(Appeals), which invalidates the levy of penalty u/s. 271(1)(c) - Decided in favour of assessee.
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2021 (9) TMI 79
Penalty u/s 271(1)(c) - Defective notice u/s 274 - As argued AO did not strike off the irrelevant portion of the notice for levy of penalty - non-striking off of irrelevant portion in the notice u/s 274 r.w.s. 271(1)(c) - HELD THAT:- For validity of notice u/s 274 r.w.s 271 (1)(c) for non-striking off of the irrelevant portion of the notice AO has struck of paras 2 3 of the notice which are irrelevant to the issue and since according to the Assessing Officer, the assessee concealed the income and also furnished inaccurate particulars of income, he did not strike off any portion of such para. Therefore, the said ground of appeal No.2 of the assessee is not sustainable. It is accordingly dismissed. Outstanding statutory liabilities - Assessee has not offered the interest income to tax - penalty on such addition is sustainable - with regard to the disallowance on which the penalty is levied, we find some strength in the argument of the assessee that these are pertaining to the earlier A.Ys. When they did not pertain to the relevant A.Y, the penalty on such disallowance is not sustainable - we direct the AO to verify the statutory liabilities which pertain to the earlier years and on such items, no penalty u/s 271(1)(c) of the Act shall be levied. Assessee s appeal is partly allowed for statistical purposes.
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2021 (9) TMI 78
TDS u/s 195 - non deduction of tax at source on payment made towards purchase of software - whether the assessee had made the payment towards purchase of a copyrighted article for resale in India or a copyright for use according to its own will and convenience? - HELD THAT:- Payment made is not towards royalty for use of the copyright in the computer software. Therefore, there is no requirement for deducting tax at source under section 195 of the Act, keeping in view Article 12 of India USA DTAA. A reading of the case of ENGINEERING ANALYSIS CENTRE OF EXCELLENCE PRIVATE LIMITED [ 2021 (3) TMI 138 - SUPREME COURT] would make it clear that the view expressed by the Hon ble Karnataka High Court in case of Samsung Electronics Co. Ltd [ 2011 (10) TMI 195 - KARNA TAKA HIGH COURT] have not been accepted. If the ratio laid down in Engineering Analysis Centre of Excellence (P) Ltd vs CIT (supra) is applied to the facts of the present case, it will definitely lead to the conclusion that the assessee having paid the amount of ₹ 23,50,466/- towards purchase of a copyrighted article for distribution in India without having any right to use the copyright, the payment made is not in the nature of royalty as per Article 12 of India USA DTAA. Therefore, there is no requirement for deduction of tax at source under section 195 - disallowance made by the assessing officer and sustained by the learned Commissioner (Appeals) is hereby deleted. These grounds are allowed. Deduction u/s 10B - Disallowance of loss - apportioned the employee related expenses / benefits in proportion of turnover relating to EOU and non EOU unit - claim of the assessee that separate books of account are maintained for EOU and non EOU units - HELD THAT:- Departmental authorities have not properly examined the issue factually - direct the assessing officer to verify the books of account maintained, both, for EOU and non EOU units and if the salary paid to the employees of both the EOU and non EOU units, is found to be on actual basis as per the separately maintained books of account, no disallowance can be made. Thus, the issue is restored back to the assessing officer for the limited purpose of verifying the salary expenditure as per the separately maintained books of account and computing the deduction under section 10B of the Act. These grounds are allowed for statistical purpose.
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2021 (9) TMI 73
Validity of reopening of assessment u/s 147 - period of limitation to reopen the assessment as barred by time - as contended that under the provisions of section 150(2) assessments for AYs 2010-11, 2011-12 and 2012-13 could not be reopened as on the date of passing the appellate order on 30/01/2020 - HELD THAT:- While disposing of the appeal, the CIT(A) may consider and decide any matter arising out of the proceedings, in which order appealed against was passed, even if such matter was not raised by the taxpayer before the CIT(A). As per section 251(1)(c) of the Act, In any other case, he may pass such orders in the appeal as he thinks fit. CIT(A) observed assessee has received an business receipts on account of sale of flats falling under its share. However, the assessee has not disclosed such transactions to the Income Tax Department by way of filing the return of income either within the due dates stipulated u/s.139(1) of the Act or belatedly uls 139(4) of the Act. On the other hand, it is also observed that the AO has not initiated the action in terms of sec. 147 of the Act, for other AYs 2010-11, 2011-12 and 2012-13 - income in respect of 14 flats ta be brought to tax in the hands of the assessee in the AY 2010-11,2011-12 and 2012-13 No infirmity in the directions of the CIT(A) u/s 150 of the IT Act for the AYs 2010-11, 2011-12 and 2012-13. Accordingly, we uphold the order of the CIT(A) and dismiss the ground No. 1 to 3 raised by the assessee in this regard. Computation of turnover arising on sale of flats for each of the AYs 2010-11, 2011-12 and 2012-13 - We direct the AO to examine the computation of turnover for the said AYs as disputed by the assessee.
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2021 (9) TMI 70
Addition u/s 69 - unexplained investment - on money payment made by the assessee for purchase of shop - HELD THAT:- On-money payments while selling its shop and flats. AO in the case of M/s. Runwal Homes Pt. Ltd., had applied the same rate for all the shops and flats sold and arrived at the addition figure to be added as undisclosed income in the hands of M/s. Runwal Homes Pvt. Ltd. Tribunal in the case of M/s. Runwal Homes Pvt. Ltd.[ 2017 (12) TMI 1216 - ITAT MUMBAI] had restricted the said addition only to the extent of incriminating material available during the course of search and deleted the estimation made on account of extrapolation of rate per sq. ft. Entire addition in the assessee's case has been made on the basis of mere statement of Shri Subhodh Runwal and there is absolutely no material involved which is not linked with the on money payment made by the assessee for purchase of shop - even in the same statement of Shri Subhodh Runwal, he had categorically stated that he even disagreed with the department that he had received cash from all sale of shops and flats made by M/s. Runwal Homes Pvt. Ltd. With regard to the estimated addition on account of extrapolation of rate per square feet uniformly for all sale of flats/shops, we find that the same has been already deleted by this Tribunal in the case of M/s. Runwal Homes Pvt. Ltd., vide its order dated 20/12/2017 referred supra. There is absolutely no case for sustenance of the very same estimated addition in the hands of the assessee towards unexplained investment made for purchase of shop. It is for the Revenue to bring on record evidences that assessee had indeed made on-money payments over and above the agreement value. Reliance in this regard is placed on the celebrated decision in the case of K.P. Varghese [ 1981 (9) TMI 1 - SUPREME COURT] - we have no hesitation in directing the ld. AO to delete the addition made in the sum u/s. 69 of the Act in the hands of the assessee.
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2021 (9) TMI 69
ALP adjustment relating to assessee's interest payments benchmarked at SIBOR rates - sum pertaining to the assessee's debentures had been received in foreign currency only - Whether orrowings are in foreign currency and should be benchmarked with reference to Singapore Inter Bank Offer Rate (SIBOR)? - HELD THAT:- Assessee had adopted the very SIBOR+benchmark all along in all preceding assessment years which stands accepted upto this tribunal. We thus find no merit in its stand seeking to adopt a different approach in the impugned assessment year just because the corresponding interest rate on the FCDs has seen an increase as compared to the earlier period. Hon'ble apex court's landmark decision in Radhasoami Satsang Vs. CIT [ 1991 (11) TMI 2 - SUPREME COURT] settled the law that judicial consistency can very well be adopted in income tax proceedings wherein the principles of res judicata are not applicable. We accordingly uphold learned lower authorities' action under challenge making the impugned ALP adjustment(s) relating to assessee's interest payments benchmarked at SIBOR rates.
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2021 (9) TMI 68
Short Term Capital Gain arising out of transfer of equity shares - FCCBs/GDRs which were subsequently converted to equity shares - cost of acquisition of underlying shares - whether capital gain has to be computed by adopting the cost of acquisition of the GDRs/FCCBs under clause 7(3) and 7(4) of the 1993 scheme or it has to be computed under section 49(2A) r.w.s. 47(x) and 47(xa) of the Act, as held by the Departmental Authorities? - HELD THAT:- The cost of acquisition of underlying shares of GDRs shall be the price of the ordinary shares of the issuing company prevailing in the BSE or the NSE on the date of the advice of redemption by the Overseas Depository Bank to the Domestic Custodian Bank - the cost of acquisition of underlying shares of FCCBs would be the conversion price determined on the basis of the price of shares at the BSE or NSE on the date of conversion of FCCBs. In case of Kingfisher Capital COL Ltd. vs. CIT [ 2019 (4) TMI 106 - BOMBAY HIGH COURT] has held that the cost of acquisition of equity shares on conversion from FCCBs/GDRs has to be determined as per clause 7(3) and 7(4) of the 1993 scheme. Same view has been expressed by the Hon ble Karnataka High Court in case of DIT vs. Intel Capital Corporation [ 2020 (10) TMI 521 - KARNATAKA HIGH COURT] . Assessee has adopted the cost of acquisition in terms of clause 7(3) and 7(4) of 1993 scheme, based on the data available in public domain. Thus, respectfully following the decision of the Hon ble jurisdictional High Court noted above, we direct the AO to compute capital gain by following the method prescribed under clause 7(3) and 7(4) of the 1993 scheme (supra).
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2021 (9) TMI 66
Disallowance u/s 14A r.w.s 8D - whether the assessing officer was under the obligation to reject the basis adopted by the assessee for disallowance of expenses against the exempted income before resorting to the provisions of Section 14A r.w.r. 8D? - HELD THAT:- As decided in own case [ 2020 (12) TMI 1112 - ITAT AHMEDABAD] assessee that investments which have been made through the involvement of the PMS providers should be ignored while working out the disallowance of the expenses under Rule 8D of Income Tax Rule. As because such investments were made on the advice of the PMS and for this purpose PMS was compensated by the assessee by way of fees paid to them which has already been disallowed by the assessee - further consideration of such investments for the purpose of disallowance of expenses u/s 14A r.w.r. 8D would lead to double disallowance which is unwanted under the provisions of law. As pertinent to note that the diminution in the value of investments should also be considered while working out the disallowance to be made under the provisions of Section 14A read with Rule 8D of Income Tax Rules - As because such benefit was extended by the AO in the assessment framed under Section 143(3) for the Assessment Year 2007-08 which was not disputed by the assessee. There being no change in the facts and circumstances or the provisions of law, in our considered view the principles of consistency should be followed by the Revenue - we direct the authorities below to extend the benefit of the assessee on account of diminution in the value of investments while working out the disallowance to be made under the provisions of Section 14A read with Rule 8D of Income Tax Rules - Appeal of the assessee is partly allowed.
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2021 (9) TMI 65
Assessment u/s 153A - scope of 153A proceedings - Whether addition made by the AO is not based on seized material / documents found during the course of search? - HELD THAT:- It is an admitted fact that the time for completion of original assessments has ended and the assessment proceedings attained finality at the time of search for these years. It is also undisputed that additions made by the AO is not based on incriminating material found during the course of search, albeit it is based on the assessment record only. Additions made are beyond the scope of 153A proceedings. This proposition of law has been well settled and reiterated in the case of CIT vs. Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] and Pr. CIT vs. Meeta Gutgutia [ 2017 (5) TMI 1224 - DELHI HIGH COURT] Thus there is no incriminating material qua each of the assessment year roped in under section 153A, then, no addition can be made while framing the assessment under section 153A. - Decided in favour of assessee.
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2021 (9) TMI 64
Addition on account of sundry creditors - as argued no opportunity was given to the assessee to put forth their case or to furnish the relevant material before making this addition - HELD THAT:- When the assessee itself could produce the confirmation letters in respect of two other parties, and the assessee could have produced such confirmation in respect of the other party also before the Ld. CIT(A), we are of the opinion that there would not have been any difficulty for the assessee to produce such confirmation before the learned Assessing Officer himself. We, therefore, believe that assessee could not produce such a letter before Assessing Officer because he was not put on notice of this fact, with reasonable time at their disposal, before passing of the assessment order. On noting this fact, we hold that sufficient opportunity was not rendered to the assessee before making addition in respect of M/s Ambient Prenters Private Limited. Keeping in view the fact that the business activity of the assessee is not in dispute and the sundry creditors are not generally in disputed, and further in view of the smallness of addition, we do not find any justification to remand issue back to the file of the learned Assessing Officer. Inasmuch as there is no adverse comment by the Ld. CIT(A) on the confirmation letter, we accept the contention of the assessee and direct the assessing officer to delete the addition impugned in this appeal.
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2021 (9) TMI 63
Revision u/s 263 by CIT - assessee claiming Depreciation u/s 32 while claiming exemption u/s 11 - as per CIT-A Depreciation to assessee is a case of double deduction and has been allowed without getting into the details since the cost of the assets has been allowed as application of income in the past - HELD THAT:- CIT (E) has misdirected himself while taking the view that depreciation has been allowed without getting into the details which amounts to double deduction by ignoring the fact that the identical issue has been decided in favour of the assessee by the coordinate Bench of the Tribunal in assessment year 2011-12 [ 2018 (9) TMI 2044 - ITAT DELHI] in which assessment framed u/s 143(3) of the Act was also set aside by invoking the provisions contained u/s 263 of the Act by relying upon the decision rendered by Hon ble Supreme Court in case of CIT vs. Rajasthan Gujrat Charitable Foundation [ 2017 (12) TMI 1067 - SUPREME COURT] and as such, depreciation on assets has to be allowed as application of income. Consequently, we hereby set aside the order passed by the ld. CIT(E) u/s 263 of the Act. Resultantly, the appeal filed by the assessee is hereby allowed.
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2021 (9) TMI 62
Rectification of mistake - Treatment to mesne profits - assessee s claim was that the same is capital profit and hence not taxable as duly supported by Special Bench decision of ITAT in the case of Narang Overseas Pvt. Ltd [ 2008 (2) TMI 817 - ITAT MUMBAI] - CIT(A) has not followed the order of larger special bench of the ITAT in the case of Narang Overseas Pvt. Ltd. - HELD THAT:- Why the decision of larger special bench in Narang Overseas Pvt. Ltd. (supra) which has not been reversed by the Hon'ble Jurisdictional High Court is not to be considered has not been dealt with in the aforesaid order. Hence, there is a mistake apparent from record in the order of ITAT. We recall the aforesaid order of the ITAT. The registry is directed to fix the case in the normal course.
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Customs
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2021 (9) TMI 91
Classification of imported goods - consignment of gold pendants weighing 5 kgs - to be classified under Custom Tariff Heading (CTH) 7108 or CTH 7113? - prohibited goods or not - concessional rate of duty in terms of Free Trade Agreement (FTA) - HELD THAT:- The subject goods under import were subjected to refining and manufacturing process, resulting in getting an oval shape with flower symbol and purity being imprinted thereon. Thus, the subject goods were in fully worked and finished condition. Exim Code and CTH 7108 and with sub-heading and item description 7108-12-00 under which heading the respondents seek to classify the subject import deals with Gold - unwrought . The term unwrought as used in the heading means Gold that is not worked upon thereby meaning not subjected to process of refining and reaching finished condition . It is to be noted that from the date of filing of Bill entry by the petitioner on 10.05.2021 till 05.06.2021 i.e., the date of seizure, the respondents did not raise any doubt as to the mis-declaring / mis- classifying the goods as Articles of Jewellery . A reading of panchanama drawn on 05.06.2021 and also the subsequent two panchanamas would show that the correct description of the goods is not given, as it fails to mention that each of the pendant had a protrusion with a hole and a ring through which a chain can be passed through, so that the imported goods can be worn as a hanging in the neck - The term Gold Bar as known to people dealing in such goods, is of a rectangular form having specified length and width and also of a higher weight. That apart, when the Import of Gold was regulated in the Gold (Control) Act, 1968, the bringing in Gold into country in small quantity was in the form of Biscuit - weighing about 50 grams and above, followed by Gold-Bar and the last and bigger form being Gold-Brick. Since, the goods imported by the petitioner are classifiable under Exim code 711319, the amendment made to the policy condition from free to restricted would not be applicable. If the import of goods is not restricted and is permitted as free , the subject import cannot be considered as prohibited goods liable for confiscation. The seizure of import consignment is set aside - the respondents are directed to assess Bill of Entry classifying the goods as falling under CTH 7113 1910, within a period of five (5) days from the date of receipt of a copy of this order - the respondents shall bear the warehousing charges payable for keeping the imported consignment under safe custody till the date of release - Petition allowed - decided in favor of petitioner.
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2021 (9) TMI 86
Cancellation of redemption certificate - Validity of SCN - power of review under 16 alone is exercisable and show cause notice under Section 14 would not lie - Whether an action initiated for cancellation of certificate based on the Intelligence report is to be construed as an order, which is to be reviewed under Section 16 or to be taken as a fresh cause of action for the purpose of initiation of further proceedings by issuing a show cause notice under Section 14 of the Act? HELD THAT:- The scheme of the Act provides Power relating to Search and Seizure under Section 10 of the Act. The Central Government shall authorize any person to enter into the premises, where the goods are kept, stored or processed, manufactured, traded or supplied or received for the purpose of import or export and searching, inspecting and seizing of such goods, documents, things and conveyances connected with such import and export of goods - Sub Section 3 to Section 11 would be coming into operation only if any person submits a document, statement to the Director General or any officer authorized by him and such documents are subsequently found forged or tampered with or false in any material particular. Therefore, the circumstances of invoking the provisions for issuance of show cause notice would arise only if any person submits a document or statement etc., as contemplated under sub-section (3) to Section 11 and such documents are found to be false, forged or fraudulent. Close reading of the scheme of the Act would reveal that the Power of review is exercisable if an order of suspension or cancellation of license is passed by following the procedures as contemplated under the other sections - In the present case, the redemption certificate issued by the third respondent states that based on the statement of exports made by the petitioner, the certificate was issued. The competent authority issued a certificate, stating that export obligation has been fulfilled and such a certificate issued cannot be considered as an order passed after adjudication of issues. Redemption certificate is issued and subsequently, the Director of Revenue intelligence gathered information, stating that the petitioner had submitted false and forged document for the purpose of getting the redemption certificate. The impugned show cause notice issued by the respondent on 20.07.2016 categorically states that Show Cause Notice under Section 14 for action under Section 10 11(2) of FT (D R) Act, 1992 and Section 14D of Foreign Trade (Development and Regulation) Amendment Act, 2010 for cancellation of EODCs . Thus, the intention as well as the purpose for which such show cause notice was issued have been categorically stated in the show cause notice itself - When the respondent could able to establish that there is a fresh cause of action after issuing the redemption certificate arose due to the report of the Director of Revenue Intelligence, and such report is the cause for issuing a show cause notice under Section 14 for the purpose of initiating action under Section10 11 (2) of FT (D R) Act, 1992, thereafter, if necessary, an order under Section 14-D is to be passed, then Section 16 Review would apply only if any such final orders are passed under Section 14-D of the Act and not otherwise. The contentions raised that the redemption certificate is final order, which can be reviewed under Section 16 of the Act is untenable and the redemption certificates issued based on the informations furnished by the petitioner, can never be construed as an order issued after adjudication for the purpose of exercise of power of review and therefore, the impugned show cause notice is issued, based on the report submitted by the Director of Revenue Intelligence, which is a fresh cause of action and more so, in respect of the documents furnished by the petitioner for the purpose of getting a redemption certificate and thus, such illegality or irregularity if any noticed, is to be proceeded with by following the procedures as contemplated under law. In view of the fact that the petitioner has not established the jurisdictional point as raised, the petitioner is at liberty to defend their case by submitting objections / defense statements by availing the opportunities to be provided. The time granted in the impugned show cause notice is extended and accordingly, the petitioner is at liberty to submit their explanation / defense statements and the documents and evidences, if any - Petition dismissed.
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2021 (9) TMI 75
Smuggling - Gold of Foreign Origin - illicit import into India - contradictions in statements of Jeweller, Sri Prabhash Chandra Jalan proprietor of M/s Jalan Jewellers - jeweller id Bullion Merchant or not - mismatch in Gold Ledger - mismatch of invoices for sale of bullion - huge amount of ₹ 78,00,000/- was recovered from the rented premises of M/s JalanJewellers - Indian Currency. Contradictions in statements of Jeweller, Sri Prabhash Chandra Jalan proprietor of M/s Jalan Jewellers - jeweller id Bullion Merchant or not - HELD THAT:- There is no mention of the statement dated 07/08/2018 of the respondent Sri Prabhash Kumar Jalan in the list of Relied Upon Documents enclosed with the Show Cause Notice and that the respondent in his reply to the Show Cause Notice requested for providing the RUDs. It is also found that the name of Respondent has been wrongly mentioned as Prabhash Chandra Jalan. However no copy of the said statement or any other statement of the Respondent has been produced during the hearing by the Revenue. However there is mention of two statements of Sri Prabhash Chandra Jalan in Para 16/E and Para 22/C of the Show Cause notice. It is apparent that the name of the Respondent has been wrongly mentioned in all these places - there is nothing contrary to the statement of the Respondent. Mismatch in Gold Ledger - Gold is clearly not mentioned in their stock register - burden of proof that the same is not smuggled is on the person from whose possession the gold is seized, is not discharged - HELD THAT:- In the instant case it is found that the documents i.e Purchase Register, Sales Register, Balance Sheet, Bank Account details etc submitted by the respondent during investigation which were examined/scrutinized by the department and it was revealed as mentioned in Para 18 and 30 of the Show Cause Notice and the Order In Original, respectively, that all purchases and sales were under proper tax invoices - Considering the fact that the respondent submitted all documents which were asked for by the department during investigation and no discrepancy being found on examination of them, we feel inclined to hold that the gold bars were domestically purchased under legal documents and the respondent has discharged the burden U/s 123 of the Customs Act 1962 to prove that the gold bars were not smuggled. Mismatch of invoices for sale of bullion - modus operandi followed goes against the principle of business practice - seized cash, sale proceeds of the smuggled gold and liable to confiscation or not - HELD THAT:- It is an admitted position that the respondent submitted all the documents as and when asked for by the Department. It is also an admitted position that those documents were examined and scrutinized by the department, which revealed that the purchases and sales were under proper tax invoices. It therefore leads us to believe that the Gold bars were not smuggled into the country. It is not established that there were sales of smuggled Gold. The identity of seller and purchaser is also not established by evidence. The respondent has duly accounted for the claimed amount of cash of ₹ 3,31,50,000 by submitting documents including GST Sales Invoices of gold which were examined and scrutinized during investigation and found to be under proper tax invoices reflected in the Cash book showing a closing balance of ₹ 3,35,76,215.85 as on 04/06/2018 - no violation of Section 121 of the Customs Act 1962 has been laid out. Huge amount of ₹ 78,00,000/- was recovered from the rented premises of M/s JalanJewellers - on-going illegal business transaction between Sri PrabhasJalan and Sri Dhuriya of Allahabad - HELD THAT:- The department has failed to prove in the first place that there were valid grounds for presumption at the time of seizure that the seized 6000 gms gold was of foreign origin and smuggled into India. Evidently the seized 6kgs of gold did not bear any foreign markings. No evidence could be adduced by the department in its subsequent investigation that the seized gold was of foreign origin and smuggled into the country. But the respondent Sri Prabhash Kumar Jalan has submitted all relevant documents including GST purchase and sales invoices and GST returns, Purchase and Sales registers etc covering both the Gold and Indian Currency, which have been admittedly examined by the department revealing no discrepancies as in Para 18 of the SCN, corresponding to Para 30 of the OIO. There were no grounds for reasonable belief at the time of seizure that the gold bars were of foreign origin and smuggled. Subsequent investigation has also not established that the gold bars were smuggled and therefore the provisions of Sec 123 of the Customs Act is not invocable - the respondent has submitted all relevant documents in support of his domestic licit acquisition supported by GST Purchase Invoices. Indian Currency - HELD THAT:- It is found that the ingredients to invoke Sec 121 of the Customs Act is not established to prove that the Indian Currency is the sale proceeds of smuggled goods. The findings of the Commissioner (Appeals) that the confiscated gold was not of Foreign origin and smuggled into India, is agreed upon - the findings of the Commissioner (Appeals) that the confiscated Indian Currency amounting to ₹ 3,31,50,000 which has been claimed by the respondent is not established or proved to be the sale proceeds of smuggled Gold, is also agreed upon, is agreed upon - there is no justification for imposition of penalty on the Respondent u/s 112(b) and 114AA of the Customs Act 1962. Appeal dismissed - decided against Revenue.
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Insolvency & Bankruptcy
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2021 (9) TMI 90
Recovery of dues from PSU - Seeking directions for payment of the dues of the company which was deposited as security deposit, along with interest - Writ Court is being used as a forum for recovering dues which, according to the Petitioner, are admitted - seeking an extraordinary remedy of recovery against the Union of India on the ground that HPCL is a PSU - HELD THAT:- Admittedly, the claims of the Petitioner have already been filed before the Liquidator. In so far as the security deposit is concerned, the question as to whether the said amount would have to be treated as one which is held in trust by the company is a question which would be considered by the liquidator. If the Petitioner-company is, in any manner, aggrieved by the opinion of the liquidator, it is free to challenge the same before the appropriate forum i.e., the NCLT and avail of its remedies in accordance with law. The question as to whether a PSU ought to be revived or not is a question of policy. In the opinion of this Court, just because there are dues which are liable to be paid by the PSU it cannot be said that each and every PSU which is fully controlled by the Government would have to be revived or that the Government ought to pay the dues of the PSU. The PSU would have its own independent existence. In a writ petition which is seeking recovery of amounts, the Court cannot direct the Union of India to revive the Company. The scope of this writ petition is limited. If the Petitioner wishes to raise this as a legal issue, it may avail of its remedies in accordance with law. Since the liquidation process is underway and some assets of the Petitioner-company are stated to have been advertised for sale, upon any amount being recovered from the sale of the assets, the Petitioner-company is free to approach the liquidator for taking a view in respect of the amounts due, including the Security deposit, in accordance with the provisions of the IBC - Petition disposed off.
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2021 (9) TMI 89
Constitutional validity of some of the provisions of the Insolvency and Bankruptcy Code, 2016 - Government companies to be equated with State or not - Applicability of provisions of the Insolvency Code as not applicable for Government Companies - HELD THAT:- Not only was there a challenge to the constitutional validity of Section 87 of the Arbitration and Conciliation Act, 1996 but a challenge was also there to various provisions of the Insolvency Code. Therefore, the contention of the learned senior counsel for the petitioners that the matter relating to the Insolvency Code was not before the Court, is not correct. The petitioners then argued that Government Bodies other than Government Companies are exempted from the Insolvency Code as they are statutory authorities of the Government Department and, therefore, they cannot be taken before the adjudicating body under the Insolvency Code. On the other hand, the petitioners, who also owes large amount of dues to its Operational Creditors can be taken to the adjudicating authority under the Insolvency Code. Therefore, apart from a challenge to Section 87 of the Arbitration and Conciliation Act, 1996, there was also constitutional challenge to the Insolvency Code. It is not an arm of the State. It is usually performing a commercial or/and business functions. A Government Company cannot be equated with a State authority, like National Highway Authority of India (NHAI), which is performing statutory functions or like other Departments, like Postal, Telegraph or the Railways or Public Works Department. This distinction has been clearly made by the Hon ble Apex Court in the case of Hindustan Construction Company Limited, [ 2019 (12) TMI 5 - SUPREME COURT] which is binding upon this Court. Petition dismissed.
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2021 (9) TMI 87
NCLAT proceedings - Requirements from the parties before the NCLAT to file brief written submissions and copies of the judgments - jurisdiction of the NCLAT to issue such direction - primordial ground raised by the Appellant is that there is no Rule or procedure which permits the NCLAT to direct filing of written submissions / judgments and exchanging copies thereof, between the parties - HELD THAT:- Appellant may be right in his submission that there is no written procedure which provides for filing of written submissions or exchanging copies thereof between the parties, but that, in our view, cannot lead to a conclusion that the impugned orders of the NCLAT are illegal. As rightly held by the learned Single Judge, Courts or Tribunals usually direct filing of the brief written submissions in order to facilitate the adjudication and crystallize the issues involved in the matter before them. The questions of law and facts are placed before the Courts in a concise manner, which certainly streamline the course of proceedings, and exchanging the copies of the written submissions enables each side to meet the case of the other side more effectively at the time of final hearing. Direction to exchange the written submissions between the parties - HELD THAT:- It is a matter of practice in all Courts and Tribunals as also a facet of principles of natural justice that when any party to a lis files any pleading/affidavit/document before a Court or a Tribunal, a copy is required to be given to the other side, as no document etc. can be relied upon by the Court without giving an opportunity to the other side to effectively deal with the said document - In the present case, Appellant has filed his written submissions before the NCLAT on 02.11.2020. Therefore, even assuming that there was no categorical direction by the NCLAT to supply a copy to the Respondent, it was incumbent upon the Appellant to share a copy with the Respondent, to enable the Respondent to defend its case and rebut the issues highlighted by the Appellant in the written submissions. It would be a travesty of justice if the NCLAT takes into account the written submissions of one party without a copy having been shared / exchanged with the other party. There are no merits in the appeal - appeal dismissed.
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2021 (9) TMI 67
Exclusion of 317 days from the date the CoC in their commercial wisdom has decided to liquidate the Corporate Debtor u/s 33 of the Code as well as on account of lockdown due to COVID-19 pandemic - HELD THAT:- This is a case where no publication of Form G was made and the extended period of CIRP period has expired on 18/03/2021. Therefore, there is no alternative but to order the liquidation of the Corporate Debtor. The Corporate Debtor is ordered to be liquidated in terms of section 33(2) of the Code read with subsection (1) thereof - Application allowed.
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2021 (9) TMI 60
Seeking appointment of Resolution Professional and calling report under Section 99 of the IBC - HELD THAT:- The Parliamentary intent was to treat personal guarantors differently from other categories of individuals. The intimate connection between such individuals and corporate entities to whom they stood guarantee, as well as the possibility of two separate processes being carried on in different forums, with its attendant uncertain outcomes, led to carving out personal guarantors as a separate species of individuals, for whom the Adjudicating authority was common with the corporate debtor to whom they had stood guarantee - The fact that the process of insolvency in Part III is to be applied to individuals, whereas the process in relation to corporate debtors, set out in Part II is to be applied to such corporate persons, does not lead to incongruity. What appears is that action against Personal Guarantor can be maintained during pendency of CIRP of Corporate Debtor or even later. The scheme which appears to be provided by the legislature appears to be that when application under Section 95 is filed by the Creditor/s by themselves or through Resolution Professional as per the prescribed format, the interim-moratorium kicks in when the application is filed - we are not accepting the fear expressed by the Appellant that how could the Resolution Professional appointed by the Creditor itself if appointed by the Adjudicating Authority deal with the application filed by himself for the Creditor and give Report. What the Resolution Professional under Section 99 would be doing was requiring the Debtor to furnish proof of repayment as per Section 99(2) and after doing the necessary spade work Resolution Professional has to recommend acceptance or rejection of the application with reasons. The decision making whether to admit or reject the application would be only by the Adjudicating Authority. The observations have been made by the Adjudicating Authority that the Corporate Guarantor (should have been only 'Guarantor') has not filed any submission and on date of hearing there was no representation. It appears that the Adjudicating Authority was of the view that service of 'Form C on 29th August, 2020 and 'Amended Form C' on 28th January, 2021 was the notice. Having gone through the Form and Rules and Regulations, we do not find that anywhere it is provided that when the Form is submitted it would also contain notice of date as to when the matter is coming up before the Adjudicating Authority. In the absence of any such requirement, we find that there has to be limited notice for presence conveying the filing of application and commencing of Interim Moratorium under Section 96 from date of filing (to be mentioned). The appointment of Mr. Ram Ratan Kanoongo as Resolution Professional is not disturbed. It is stated that he has already given report - Appeal allowed in part.
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Service Tax
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2021 (9) TMI 95
Condonation of delay in filing appeal - satisfactory explanation for delay not provided - HELD THAT:- The explanation is offered in the application seeking condonation of delay. The explanation is not satisfying. The delay cannot be condoned - Civil Appeal is dismissed on the ground of delay.
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2021 (9) TMI 83
CENVAT Credit - Excise Duty/Additional Customs Duty (CVD) on inputs and capital goods - input services which have been used for the construction of Mall, further used/usable for providing taxable output service - HELD THAT:- Reliance placed in the case of M/S. DLF PROMENADE LTD., (EARLIER M/S. BEVERLY PARK MAINTENANCE SERVICES LTD.) VERSUS COMMISSIONER, SERVICE TAX, DELHI [ 2020 (4) TMI 42 - CESTAT NEW DELHI] where it was held that there is no manner of doubt that CENVAT Credit availed by the appellant on inputs, inputs services and capital goods service used for construction of the Mall, which was ultimately let out could not have been denied to the appellant. The facts of the instant case are slightly different as in the present case the appellant could not complete the construction of the mall. However, this fact should not in any way affect the admissibility of credit to the appellant as the admissibility of the credit availed prior to 01.04.2011, has been settled in principle. It is also on record that the appellant reversed the credit availed by it after 01.04.2011 and intimated the Department. The demand in instant case pertains to the credit availed by the appellant before 01.04.2011 - it is held that the appellant has correctly availed the credit on inputs and input services, the duty and tax on which has been paid by the appellant. To that extent, the impugned order is not sustainable. Credit Rules imposed certain conditions for allowing credit in terms of Rules 4 9 and cast certain obligations upon the assessee in terms of Rule 6. The quantum of admissibility of credit depends on satisfying the conditions imposed therein and the discharge of obligations. In such circumstances it is not possible to quantify the admissible credit at this juncture. For this limited purpose, the issue needs to be remanded to the Adjudicating Authority. The issue remanded to the adjudicating authority for quantifying the credit admissible - appeal allowed by way of remand.
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2021 (9) TMI 81
Valuation - reverse charge mechanism - inclusion of tax deducted at source (TDS) in assessable value for determining the taxable value - Technical Consultancy Services and Project Consultancy Services - Section 66 of the Finance Act, 1994 read with 2(1)(d)(iv) of the Service Tax Rules, 1994, before the introduction of Section 66A of the Finance Act - extended period of limitation - Eligibility for cum-tax benefit. HELD THAT:- The issue as to whether the appellants are liable to pay Service Tax under reverse charge mechanism before the introduction of Section 66A in the Finance Act, 1994 is settled by the decision of the Hon ble High Court of Bombay in the case of INDIAN NATIONAL SHIPOWNERS ASSOCIATION VERSUS UNION OF INDIA [ 2008 (12) TMI 41 - BOMBAY HIGH COURT ]. The Hon ble High Court held that the liability to pay Service Tax under reverse charge mechanism would arise only after the introduction of Section 66A with effect from 18.04.2006 to the Finance Act, 1994. The said decision was upheld by the Hon ble Supreme Court in UNION OF INDIA VERSUS INDIAN NATIONAL SHIPOWNERS ASSOCIATION [ 2009 (12) TMI 850 - SC ORDER ] - the demand of Service Tax till 18.04.2006 cannot sustain. Levy of service tax - TDS borne by the appellant while grossing up of the consideration payable to the service provider - HELD THAT:- The TDS is paid / deposited to Government by the appellant out of a statutory liability. Such activity of deducting the tax at source is a legal obligation and the amount so deducted cannot be taken as consideration for services rendered. The amount on which the parties have reached a consensus ad idem can only be the consideration for the services. Further, the amount of tax deducted varies and depends upon the rate in force. There is no agreement by the parties with regard to the amount of TDS that has to be deducted. It wholly depends upon the law prevailing in the direct tax regime. The decision in the case of M/S. HINDUSTAN OIL EXPLORATION CO. LTD. VERSUS COMMISSIONER OF GST CENTRAL EXCISE [ 2019 (2) TMI 1248 - CESTAT CHENNAI ] have categorically held that when the TDS amount has been borne by the assessee and only the consideration for the services as agreed upon by the parties has been paid to the service provider, the same cannot be included in the taxable value for determining the Service Tax liability. The demand for the entire period (3/2004 to 9/2007 and 10/2006 to 9/2007) cannot sustain and requires to be set aside - the issue is also found in favour of the appellant. Extended period of limitation - HELD THAT:- The issue is wholly an interpretational one and there were several litigations pending before different fora. So also, it has to be noted that the appellant has dutifully discharged the Service Tax liability on the entire consideration paid by them. The demand is only on the TDS portion remitted under the Income Tax Act. There is no positive act of wilful suppression with intention to evade payment of Service Tax brought out by the Department for invoking the extended period - the demand is time-barred and cannot sustain. Eligibility for cum-tax benefit - HELD THAT:- Since it is held that there is no liability to pay the differential tax, the issue of cum-tax benefit has no relevance and the demand confirmed cannot sustain and requires to be set aside. Appeal allowed.
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2021 (9) TMI 77
Refund of service tax - inland haulage Charges - services used beyond the place of removal for export of goods - N/N. 41/2012-ST dated 29.06.2012 - HELD THAT:- The issue is no longer res Integra as the identical issue has been considered by this Tribunal in the case of JAIN IRRIGATION SYSTEMS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI [ 2015 (11) TMI 972 - CESTAT MUMBAI] where it was held that the appellant was responsible for the delivery of the goods in the hands of the appellants clients. Hence services received by the appellant for such activity is eligible for refund under N/N. 41/2012-ST. Since the inland haulage Charges has been paid by the exporter, they are entitled for the refund of the Service Tax paid on such inland haulage Charges - Appeal allowed - decided in favor of appellant.
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2021 (9) TMI 71
Nature of activity - service or deemed sale - supply of workwear on rent / lease basis as per the requirement of each customer - period involved is 2015 16, 2016 17 and April 2017 to June 2017 - HELD THAT:- The issue as to whether the activity of renting of workwear is a service or deemed sale has been analyzed by this Tribunal in the appellant s own case [ 2020 (11) TMI 14 - CESTAT CHENNAI ] for a different period, where it was held that work wear does not amount to supply of tangible goods so as to attract service tax. The demand raised cannot sustain and requires to be set aside - Appeal allowed - decided in favor of appellant.
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Central Excise
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2021 (9) TMI 80
CENVAT Credit - input services or not - certain services used at a depot outside the factory, from where the manufactured finished goods were cleared/sold - activities relating to business - HELD THAT:- The co-ordinate Delhi Bench of the CESTAT in the case of BARMALT (INDIA) PVT. LTD. VERSUS COMMISSIONER OF C. EX., DELHI-III [ 2015 (12) TMI 213 - CESTAT NEW DELHI] has dealt with an identical situation and held that input services used for storage up to the place of removal continued to be covered under the definition of input service. Therefore, the service tax paid on rent is also available as credit - The above ruling takes care of Section 4(3)(c)(iii) of the Central Excise Act, 1944 as well and hence, the impugned order cannot be sustained. Appeal allowed - decided in favor of appellant.
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2021 (9) TMI 76
Relevant time for calculation of Interest on the differential duty paid subsequent to the removal of the goods - price is provisional at the time of removal of the goods - interest is chargeable from the due date taking the date of removal of goods or at the time of payment of differential duty - HELD THAT:- The issue is no longer in dispute as the same has been settled against the assessee by the Larger Bench of the Hon ble Supreme Court in the case of M/S. STEEL AUTHORITY OF INDIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIPUR [ 2019 (5) TMI 657 - SUPREME COURT] where it ws held that the interest is chargeable. The facts and circumstances of the present case are identical to the facts of the case, therefore, the appellant is required to pay the interest from the due date taking the date of clearance of the goods till the date of payment of differential duty - appeal dismissed.
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2021 (9) TMI 74
Valuation - Scope of the SCN - related persons or not - transferor and the transferee units owned by the same legal entity - raw coal transferred by the appellant s coal producing unit, namely, WJ Area to its washery unit - dispute with regard to valuation is only for the period upto October 2015 (during the period when the units were separately registered with jurisdictional excise authorities) - revenue neutrality - extended period of limitation - HELD THAT:- The entire case of the Revenue is based on the observation that the two different units of the appellant are related persons but the relevant Rule 9 has not been invoked - Since the entire foundation of the show cause notice is based on the wrong notion that the washery is a related person of the appellant, the entire demand is liable to be quashed. Further the invocation of Rule 8 of the Valuation Rules has been done mechanically without even appreciating the fact that there is no captive consumption by the appellant or consumption on its behalf and washing of coal is neither production nor manufacture. Revenue neutrality - HELD THAT:- Since the issue is decided on merits to hold that Rule 8 of the Valuation is not applicable in the instant case, we are not further entering into the issue of revenue neutrality as pleaded by the appellant. Extended period of limitation - HELD THAT:- In so far as the limitation is concerned, we do not find any positive evidence in the entire SCN to prove the element of fraud or suppression and hence, the extended period is not applicable in the instant case. Appeal allowed - decided in favor of appellant.
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2021 (9) TMI 72
Classification of goods - chelated micronutrient mixtures - Chelated Zinc at 12% EDTA - Chelated Iron as 12% Fe EDTA - MNM Chelated - to be classified under Chapter Heading 3808 of CETA, 1985 or under CETA 3015 as other Fertilizers - N/N. 4/2006-CE dated 1.3.2006 - HELD THAT:- The above issue was analyzed in the appellant s own in M/S. CARESS INDUSTRIES VERSUS COMMISSIONER OF GST CENTRAL EXCISE, SALEM [ 2018 (9) TMI 248 - CESTAT CHENNAI] case for a different period wherein the Tribunal had held that in a recent decision of the Tribunal, in Commissioner of Central Excise, Hyderabad Vs. Aries Agrovet Industries Ltd. [2017 (7) TMI 289 - CESTAT HYDERABAD], where it was held that In view of presence of nitrogen, and also considering that they are mixtures and not separate chemically defined compounds, the said goods would therefore come under the ambit of micronutrient fertilisers and will then required to be classified as in other fertilisers in CETH 31.05. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2021 (9) TMI 84
Reversal of Input Tax Credit - inputs are purchased inside the State of Tamil Nadu - stock transfer for job work and conversion to a factory of the petitioners located outside the State of Tamil Nadu, but brought back to Tamil Nadu for sale on payment of VAT - constitutional validity of Section 19 (2) (ii) of the VAT Act 2006 - HELD THAT:- The issues raised in the present writ petition are no more resintegra as the Hon'ble Division Bench of this Court struck down Section 19 (2) (ii) of the VAT Act 2006, in the case of Patina Gold Ornaments Pvt.Ltd., vs. Assistant Commissioner (CT), Park Road Circle, Erode and Another [ 2017 (10) TMI 185 - MADRAS HIGH COURT] where it was held that the respondents cannot retain ITC on goods purchased within the State, by invoking provision of section 19(4) of the 2006 Act to the extent of rate of tax provided therein, ie., three per cent (which was the rate provided therein at the relevant point of time), as that would make the relief inefficacious since the subject goods, i.e., bullion / wornout jewellery on which tax credit was sought by the writ petitioner was imposed at the rate of one per cent. The impugned order of Assessment is set aside and the respondents are directed to adjudicate the issues by affording opportunity to the writ petitioner and pass fresh Assessment Order by following the procedures as contemplated - Petition allowed.
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Indian Laws
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2021 (9) TMI 93
Grant of special leave to file appeal - Dishonor of cheque - signatories are authorised to sign on behalf of the Mukta Developers or not - presence of two signatories - HELD THAT:- The cheque clearly has a stamp as Mukta Developers Authroised Signatory and there are two signatures below it. The complainant has not taken any steps as per provisions of NI Act to serve notice to the firm or to other signatory. Section 142 opens with non-obstant clause and mandates that no Court shall take cognizance of any offence punishable under Section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque and, such complaint is made within one month of the date on which the cause of action arise. Proviso to section 142(1)(b) states that the cognizance of complaint may be taken by the Court after the prescribed period, if the complainant satisfies the Court that he has sufficient cause for not making a complaint within such period. There is no substance in the contention that he was not aware that cheque is issued by Mukta Developers. Thus, explanation offered for not joining accused Mukta Developers or other signatory as accused is false. There is no justification whatsoever. On the face of the cheque itself it is clear that it was drawn in favour of Mukta Developers. In view of facts and circumstances involved in the matter and provisions of NI Act the order passed by the JMFC is perfectly justified. There is no case made out to entertain the appeal - the leave to appeal is rejected.
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2021 (9) TMI 88
Dishonor of Cheque - material alteration in the cheque or not - change of date for revalidation without the consent and knowledge of the petitioners - void cheque as per Section 87 of NI Act or not - ingredients of the offence under Section 138 NI Act present or not - HELD THAT:- Section 87 NI Act consists of two parts. The first part indicates that in case the alteration is made with the consent of both the parties, they would be disentitled to complain against such alteration. Only when a cheque is altered by the payee or holder without the consent of the drawer, the issue of cheque becoming void would arise. In the present case, it is contended that the material alteration was done in the cheque by the complainant without the consent of the petitioners. On the other hand, in the complaint, it has been alleged that it was petitioner No. 1 who re-handed over the cheque containing the material alteration. It is apparent that the factum of who carried out the material alteration is disputed and a disputed question of fact cannot be gone into by this Court while exercising its powers under Section 482 Cr.P.C. The petitioners would need to adduce evidence in trial in support of their assertion and to rebut the presumption. The contention of petitioners that initially on presentation, the cheque in question was encashed and the amount was credited and as such no offence under Section 138 NI Act is made out - HELD THAT:- The same is found fallacious and therefore rejected. The complainant has alleged that initially when the cheque in question was presented, the amount was credited to his account. However, in pursuance of an email dated 12.03.2020 sent by petitioner No. 1 to the Bank threatening legal action and a further police complaint, the transaction entry was reversed in favour of the petitioners and money was debited from the complainant s account with the net effect that the amount under the cheque remained unpaid - this Court is of the opinion that the ingredients of the offence under Section 138 NI Act are made out. The last contention raised on behalf of the petitioners that no proceedings are maintainable against petitioner No. 1 as he is not a signatory to the cheque in question and the complaint lacks material particulars - HELD THAT:- The cheque was issued from an account that was jointly held by both the petitioners. As per the complainant s stance, it was petitioner No. 1 who had re-handed over the altered cheque signed by petitioner No. 2. In the complaint, it has been stated that all the dealings had taken place with petitioner No. 1. In view of the above, there are no merit in the contention and the same is rejected. Petition dismissed.
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2021 (9) TMI 85
Seeking grant of anticipatory Bail - Dishonor of cheque - applicant is ready and willing to abide by all the conditions including imposition of conditions with regard to powers of Investigating Agency - offenses punishable under Sections 406, 420, 120(B), 114 of the Indian Penal Code and under Sections 3 and 4 of the Gujarat Protection of Interest of Depositors Act, 2003 - HELD THAT:- Perusing the material placed on record and taking into consideration the facts of the case, nature of allegations, gravity of offences, role attributed to the accused, without discussing the evidence in detail, at this stage, the anticipatory bail is granted to the applicant. This Court has also taken into consideration the law laid down by the Hon'ble Apex Court in the case of SIDDHARAM SATLINGAPPA MHETRE VERSUS STATE OF MAHARASHTRA AND OTHERS [ 2010 (12) TMI 1085 - SUPREME COURT] , wherein the Hon'ble Apex Court reiterated the law laid down by the Constitution Bench in the case of GURBAKSH SINGH SIBBIA VERSUS STATE OF PUNJAB [ 1980 (4) TMI 295 - SUPREME COURT] to hold that No hard and fast rules can be laid down in discretionary matters like the grant or refusal of bail, whether anticipatory or otherwise. No such rules can be laid down for the simple reason that a circumstance which, in a given case, turns out to be conclusive, may have no more than ordinary signification in another case. The present application is allowed. The applicant is ordered to be released on bail in the event of his arrest on executing a personal bond of ₹ 10,000/- with one surety of like amount on the conditions imposed.
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2021 (9) TMI 61
Dishonor of Cheque - insufficiency of funds - High Court has quashed the entire criminal proceedings mainly on the grounds that the original complainant Kaptan Singh for all practical purposes is ranked outsider and stranger to the deal and therefore the criminal proceedings initiated at his behest cannot continue - HELD THAT:- In the present case the High Court in exercise of powers under Section 482 Cr.P.C. has quashed the criminal proceedings for the offences under Sections 147, 148, 149, 406, 329 and 386 of IPC. It is required to be noted that when the High Court in exercise of powers under Section 482 Cr.P.C. quashed the criminal proceedings, by the time the Investigating Officer after recording the statement of the witnesses, statement of the complainant and collecting the evidence from the incident place and after taking statement of the independent witnesses and even statement of the accused persons, has filed the charge-sheet before the Learned Magistrate for the offences under Sections 147, 148, 149, 406, 329 and 386 of IPC and even the learned Magistrate also took the cognizance - the High Court cannot appreciate evidence nor can it draw its own inferences from contents of FIR and material relied on. It is further observed it is more so, when the material relied on is disputed. It is further observed that in such a situation, it becomes the job of the Investigating Authority at such stage to probe and then of the Court to examine questions once the charge-sheet is filed along with such material as to how far and to what extent reliance can be placed on such material. The High Court has failed to appreciate and consider the fact that there are very serious triable issues/allegations which are required to be gone into and considered at the time of trial. The High Court has lost sight of crucial aspects which have emerged during the course of the investigation. The High Court has failed to appreciate and consider the fact that the document i.e. a joint notarized affidavit of Mamta Gupta Accused No.2 and Munni Devi under which according to Accused no.2 - Ms. Mamta Gupta, ₹ 25 lakhs was paid and the possession was transferred to her itself is seriously disputed - Nothing is on record that any suit for specific performance has been filed. Be that as it may, all the aforesaid aspects are required to be considered at the time of trial only. Therefore, the High Court has grossly erred in quashing the criminal proceedings by entering into the merits of the allegations as if the High Court was exercising the appellate jurisdiction and/or conducting the trial. The High Court has exceeded its jurisdiction in quashing the criminal proceedings in exercise of powers under Section 482 Cr.P.C. Even the High Court has erred in observing that original complaint has no locus. The observation is made on the premise that the complainant has not placed on record the power of attorney along with the counter filed before the High Court. However, when it is specifically stated in the FIR that Munni Devi has executed the power of attorney and thereafter the Investigating Officer has conducted the investigation and has recorded the statement of the complainant, accused and the independent witnesses, thereafter whether the complainant is having the power of attorney or not is to be considered during trial. The impugned judgment and order passed by the High Court quashing the criminal proceedings in exercise of powers under Section 482 Cr.P.C. is unsustainable - Appeal allowed.
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