Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
September 30, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
FEMA
PMLA
Service Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Fake firms case: Bail granted for alleged ITC fraud without strong evidence.
Bail granted - creation of fake firms, availing and utilizing ITC - offences u/ss 132(1)(b), 132(1)(c), and 132(5) of CGST Act, 2017 - allegations based on witness statements, no documentary evidence adduced - petitioner languishing in jail since 25.06.2024 - trial unlikely to conclude soon - no apprehension of tampering evidence or flight risk - bail granted on furnishing bail bond of Rs.1,00,000/- with two sureties of like amount and conditions.
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Contradictory stance by tax authorities on GST refund application leads to adverse inference.
The petitioner's application for GST refund, filed on 08.09.2020, was within the two-year limitation period prescribed u/s 54 of the CGST Act, 2017. The respondents initially treated this application as timely but later rejected a subsequent application dated 28.03.2020 as time-barred, despite it being a continuation of the original timely filed application. The respondents failed to justify their contradictory stance and provide cogent reasons for rejecting the claim. Their evasive objections and failure to address the original timely filed application led the Court to draw an adverse inference. Consequently, the deficiency memo issued by the Assistant Commissioner rejecting the refund claim was quashed, and the petition was allowed.
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Firm seeks migration under GST portal, inability to file returns resolved.
The petition sought directions for permanent migration of the Petitioner's Firm under the same Goods and Service Tax Number (GSTN) and activation of login credentials on the common portal. The inability to login and migrate prevented the Petitioner from filing returns or paying taxes from July 2017 onwards. In light of the Allahabad High Court judgment in M/s Metro Institutes of Medical Sciences Pvt. Ltd., the respondent authority was directed to immediately allow the Petitioner-Firm to login on the GST portal for completing the migration process, uploading returns, and depositing due taxes. The writ petitions were allowed.
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Taxpayer challenges blocking of input tax credit for alleged forged invoices without actual supply.
Petitioner sought quashing of intimation blocking input tax credit, alleging forged invoices without actual supply of goods or services. Competent officer had reason to believe the input tax credit claim was fraudulent u/r 86A of GST Rules, 2017. Court held that impugned notices/intimation were within jurisdiction and in accordance with GST Act and Rules. No grounds found to interfere with intimation and notices. Writ petition dismissed.
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GSTN registration cancelation due to non-filing challenged; court advocates relaxation for small entrepreneurs.
The petitioner, a contractor enrolled under the GST Act, 2017, had his GSTN registration canceled due to non-filing of returns for six months. Despite claiming to have handed over documents to an accountant, the petitioner failed to file an appeal within the statutory 90-day period due to being unaware of the proceedings. The court held that the Bombay High Court had previously ruled that the limitation period should not be an issue in registration cancellation cases as it does not adversely affect the state's rights. The GST Act aims to promote trade, and denying registration affects the petitioner's livelihood under Article 21. Small entrepreneurs may struggle with technology, so the GST department should amend provisions, convey notices via SMS and regional languages, and relax rules to avoid stifling small businesses. The writ petitions were disposed of.
Income Tax
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Tax reassessment notices quashed for violating time limits despite Revenue's reliance on Abhisar Buildwell.
The High Court quashed the impugned reassessment notices issued u/s 148, holding that the reassessment action was barred by limitation u/s 149(1) read with the First Proviso introduced by the Finance Act, 2021. The Court observed that the Supreme Court's decision in Abhisar Buildwell did not confer a carte blanche to the Revenue to initiate reassessment proceedings overriding the statutory time limits. The observations in Abhisar Buildwell merely clarified that annulment of search assessments would not deprive the Revenue of its power to reassess, subject to fulfilling the conditions u/ss 147 and 148. However, the Revenue failed to initiate reassessment within the prescribed time limits u/s 149(1)(b) or Sections 153A/153C, as applicable prior to the Finance Act, 2021 amendments. The High Court held that the statute does not provide for excluding the period consumed in pursuing annulled search assessments, and the rigid time frames u/s 149 must be adhered to.
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Shares acquired at below FMV: Reassessment quashed - 'Change of opinion' not valid ground.
The High Court quashed the reassessment proceedings initiated by the Assessing Officer u/s 148 of the Income Tax Act, holding it to be a case of "change of opinion" and not a valid reassessment. The assessee had acquired equity shares of a closely held company at below fair market value under the 'Right Issue'. Initially, the Principal Commissioner of Income Tax (PCIT) had dropped the proceedings u/s 263 after considering the assessee's submissions. However, the Assessing Officer subsequently issued a notice u/s 148A(b) to reopen the assessment on the same issue. The Court held that reassessment can only be initiated on grounds not previously considered during the original assessment proceedings. Since the PCIT had already examined the issue and decided in favor of the assessee, the Assessing Officer could not reopen the assessment merely on a "change of opinion" based on the same facts. The approval granted by the higher authority (PCCIT) did not confer legitimacy to the reassessment action, as it violated the settled principles governing valid reassessment. Consequently, the reassessment notice, order, and consequential proceedings were quashed.
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Non-resident trademark purchase attracts TDS; statutory appeal preferable over writ to address territoriality, situs issues.
The High Court held that the petitioner should avail the statutory remedy of appeal against the order u/s 201(1) raising a demand and interest u/s 201(1A) for non-deduction of TDS u/s 195 on acquisition/purchase of a Trade Mark registered in India from foreign/non-resident group entities. The Court opined that mixed issues of fact and law arise, including applicability of territoriality principles and situs of the Trade Mark, which can be effectively examined by the Appellate Authority. The Court observed that the Assessing Officer did not confer jurisdiction upon himself contrary to the Income Tax Act provisions. The applicability or non-applicability of a judicial decision does not present a core jurisdictional issue when tested against the powers conferred under the Act. The Court emphasized that entertaining the writ petition would render the appellate remedy a mere paper provision. The Court also noted the absence of a one-year limitation for an order u/s 201(1) concerning non-residents. Consequently, the Court dismissed the writ petition, permitting the petitioner to file an appeal within 15 days and seek appropriate orders regarding the penalty proceedings and stay on demand enforcement.
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Tax authorities can seek interim custody of seized cash to adjust against tax liability.
The High Court held that the Income Tax authorities have the power to seek interim custody of currency notes seized and produced before the jurisdictional magistrate or reported to the magistrate u/s 102 of the Criminal Procedure Code. When the Income Tax Act empowers the competent authority to requisition assets of assessees and adjust them towards liabilities, if there is reason to believe that the asset represents undisclosed income or property, the competent authority is best suited to hold the seized currency notes until the inquiry or trial concludes. Section 132A allows requisitioning books of account, and the competent authority can seek interim custody of seized assets, even if unable to issue a requisition u/s 132A when the asset is produced before the magistrate. The competent authority can apply for interim custody u/s 451 of the CrPC to prevent Sections 132A and 132B from becoming futile. The direction in an earlier case for returning the amount if proceedings are not completed within six months is unwarranted, as disbursement can be ordered only at the conclusion of the inquiry or trial u/s 452 of the CrPC.
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Salaried employee gets tax relief for doubly taxed foreign income despite late filing.
Foreign tax credit claim for doubly taxed foreign sourced salary income was denied due to belated filing of Form No. 67. The Tribunal allowed the assessee's claim, following its coordinate bench rulings granting relief in similar cases. The Departmental Representative failed to distinguish the cited judgments or provide cogent arguments for a contrary view. Consequently, the Tribunal held that the assessee is entitled to foreign tax credit irrespective of the belated Form No. 67 filing, allowing all grounds raised.
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Penalty Orders Annulled: Time Limitation Breach in Tax Evasion Case.
The key points are regarding the penalty imposed u/s 271D read with Section 269SS, and the issue of whether the penalty orders were time-barred. The Assessing Officer made a recommendation for initiating penalty on 08/12/2017. According to Section 275(1)(c), the first condition is that the financial year in which the penalty proceedings were initiated should have expired on 31/03/2018. The second condition is that six months from the end of the month in which the action for penalty imposition was initiated should have expired on 30/06/2018. However, the Additional Commissioner of Income Tax (Appeals) initiated the penalty on 07/07/2018, despite the recommendation being made on 08/12/2017. Therefore, the penalty orders are barred by the limitation period prescribed u/s 275(1)(c) of the Income Tax Act. Consequently, the orders imposing penalty were deleted, and the decision was against the revenue authorities.
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Assessee's redevelopment interest, GP rate estimation, TDS limits, disallowances, and penalty impositions litigated.
Disallowance of deduction claimed u/s 24(b) was rejected as the assessee was incurring interest expenditure for redevelopment of the house, and the CIT(A) rightly accepted telephone bills as evidence of occupation. Regarding GP rate estimation, the AO analyzed financials and noticed a decline in GP declared, the ITAT directed sustaining 1.5% of trading sales as additional GP due to lack of records on cash discounts. On TDS u/s 194J for rent payments, the ITAT upheld CIT(A)'s findings as payments were small and within prescribed limits. Disallowance of freight expenses and auditor's fees u/s 40(a)(ia) was set aside based on a Delhi High Court ruling on retrospective application. Freight expense addition was partly allowed, excluding income offered by two parties. Cash expenses exceeding the limit u/s 40A were allowed if paid in different occasions below Rs. 20,000 each, subject to producing ledgers. Penalty u/s 271(1)(c) was deleted as most additions were set aside. Penalty u/s 140A(3) for non-payment of self-assessment tax was deleted considering the assessee's reasonable cause and subsequent payment before levy.
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Infra Project Deduction Allowed, Expenses Disallowances Deleted, TDS Exemption on Petty Commissions Valid, Vivad se Vishwas Refund Eligible.
Assessee maintained separate books of accounts and furnished audited financial statements for each eligible infrastructure project, fulfilling conditions for deduction u/s 80IA. CIT(A) rightly allowed deduction, following precedent. Unverified credit balances cannot be added as payments were made through cheques and reflected in books. Ad hoc disallowances of expenses and wages deleted by CIT(A) based on Tribunal decisions. TDS u/s 194H not deducted on petty commission payments below Rs. 5,000, rightly deleted by CIT(A). Assessee opted for Vivad se Vishwas Scheme, paid identified tax, eligible for refund. Cross-objection withdrawn with liberty to restore if dispute not settled under scheme. No interference warranted in CIT(A)'s well-reasoned order.
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Taxpayer's explanations accepted for loan source, stock valuation, raw material consumption; additions deleted for liability cessation, high interest, bank statement.
The assessee received an unsecured loan of Rs. 1 crore from M/s Betala Investment Finance Ltd., which was later transferred to Lahoti Holding Ltd. due to a name change. The authorities accepted the explanation regarding the source of the loan. Regarding stock valuation, the assessee followed a consistent method, and the authorities upheld the assessee's valuation. The authorities also accepted the assessee's explanation for the difference in raw material consumption, considering it a clerical mistake. The addition u/s 41(1) for cessation of liability was deleted as the revenue could not establish remission of income. The disallowance of interest paid above 12% on unsecured loans was rejected, following the principle of consistency as the same rates were allowed in earlier years. The addition based on the stock statement submitted to the bank for obtaining credit limits was deleted, relying on judicial precedents that such statements cannot be the basis for additions u/s 69B.
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Losses carry forward entitlement revised, reopening rejected due to inadequate inquiry.
Assessee arrived at business income after setting off losses. Assessee's entitlement to carry forward losses was revised due to application of Section 79. Case was reopened u/s 147 after obtaining approval u/s 148, citing revision of assessee's entitlement to carry forward losses due to Section 79 application. Claims were examined during original assessment proceedings, and no error prejudicial to Revenue's interests was found. Inadequate inquiry by Assessing Officer regarding certain claims does not warrant invoking Section 263 powers. Revenue failed to establish that Commissioner exercised power in accordance with law. Facts do not fulfill twin conditions of Section 263. Decided in favor of assessee.
Customs
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Solar pump inverter wrongly classified, assessment finalized but demand u/s 28 set aside.
The solar pump inverter is classifiable under CTI 8504 40 90 as an inverter and not under CTI 8541 50 00 as other semi-conductor devices, as claimed by the appellant. When the assessment is finalized through the order-in-original, no demand can be raised invoking the extended period of limitation u/s 28 of the Customs Act in the same order. No penalty is imposable u/s 114A of the Customs Act since section 28 does not apply. The appellant is not eligible for exemption from payment of additional duty of customs based on the claimed classification. The impugned order is modified to uphold the classification and finalization of assessment, but set aside the demand u/s 28, interest u/s 28AA, and penalty u/s 114A. The appeal is partly allowed.
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Appellant's refund claim rejected due to lack of documents to rule out unjust enrichment, new evidence found irrelevant.
Appellant's refund claim for differential duty under Notification No. 30/2004-CE was rejected due to failure to produce relevant documents like balance sheets, profit and loss accounts, invoices, and cost data to rule out unjust enrichment. Appellant attempted to introduce new evidence before the Tribunal, which is generally not permitted u/r 23 of the Customs Excise Service Tax Appellate Tribunal (Procedure) Rules, 1982, unless permitted through a separate application. The new evidence submitted was found irrelevant to the facts of the case. The lower authority's view rejecting the refund claim was reasonable, legal, and proper. The appeal was rejected as the lacunae pointed out by the Original Authority and Commissioner (Appeals) remained unaddressed.
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Timber Classification Dispute: Logs Rightly Classified as Sawn Wood, Not "Accurately Cut.
Goods under dispute were sawn New Zealand pine logs classified under CTH 4403 by the importer, while the department sought to reclassify them under CTH 4407. The key issue was whether the goods were cut in standard lengths with extremely accurate dimensions to qualify under CTH 4407. The burden of proving reclassification was on the department. Panchnama and photographs revealed the logs had dimensions of cuboids but not extremely accurate as required. Some logs showed bark traces, indicating lack of extremely accurate dimensions. Department failed to show chipping process was used for better surface than sawing. Conflicting statements by panchas and officials were construed in favor of importer due to lack of expert opinion from department. Relying on precedent, it was held that department failed to discharge burden of reclassification. The goods were correctly classified under CTH 4403.99, and the appeal was allowed.
IBC
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Crisis-hit IECCL's stake sale process amid IL&FS resolution.
Resolution process for Category II company IECCL initiated by IL&FS in January 2021 through Expression of Interest for acquisition of 42.25% shareholding. Process ongoing with participation of ICICI Bank as lead lender and Committee of Creditors meetings. Revised bid by Howen International Fund SPC under consideration by CoC. IECCL resolution process allowed to proceed, with liberty to ICICI Bank to raise objections on extinguishment of entire debt for mere 42.25% shareholding payment. Hearing on related application scheduled, excluding prayers regarding IECCL resolution which commenced in 2021 and to be completed irrespective of pendency.
PMLA
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Money laundering probe into funds swindled via apps promising high returns faces evidentiary, justice scrutiny.
Money laundering case involving public funds looted through apps promising high returns. Petitioner argued trial court failed to consider evidence, violated natural justice principles. Court held bail order only prima facie view, not final decision. Strictly construed money laundering offence ingredients per Supreme Court precedent. Probative value of PMLA statement to be considered at trial stage. Bail cannot be denied merely assuming recovered property is proceeds of crime. WhatsApp chats indicating fund transfers not sufficient to cancel bail at this stage. ED's apprehensions about derailing investigation or flight risk mere apprehensions without substantial reasons. More stringent conditions can be imposed if needed. Transactions claimed as genuine business dealings, proceeds of crime already deposited. Frequent fund rotations disproportionate to business, PMLA statement authenticity to be examined at trial. Investigation completed, complaint filed, no material to cancel bail. Bail granted on relevant considerations. Petition dismissed.
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Accused of money laundering and influencing bank loans, bail denied due to stringent conditions under PMLA.
The petitioner, accused of money laundering under the Prevention of Money Laundering Act (PMLA), sought bail. The court held that Section 45 of PMLA imposes stringent conditions for granting bail, requiring the court to be satisfied that there are reasonable grounds to believe the accused is not guilty and is unlikely to commit an offence while on bail. The prosecution alleged the petitioner influenced a bank to sanction loans to Kiran P.P., from which the petitioner received Rs. 14 crore. The court found prima facie evidence supporting the allegations, including inconsistent statements, unexplained cash credits, and unaccounted capital in the petitioner's business. Relying on Supreme Court precedents, the court concluded there were no reasonable grounds to believe the petitioner was not guilty and denied bail, considering the serious nature of the accusations.
Service Tax
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Commission paid to directors treated as salary is not liable for service tax under reverse charge.
The tribunal held that service tax under reverse charge mechanism is not leviable on commission paid to directors treated as salary in the company's books of accounts and subjected to TDS deduction under Income Tax Act. As per Section 65B(44)(b) of Finance Act, 1994, services by an employee to employer in the course of employment do not constitute 'service'. The directors are employees of the company and the commission paid is for services rendered in their employment capacity, not liable to service tax. The treatment of commission as salary in books, TDS deduction, and CBEC Circular No. 115/9/2009-ST dated 31.07.2009 further support the position that such commission is not taxable as Business Auxiliary Service. Consequently, the demand for service tax was set aside by the appellate tribunal.
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Service tax exemption on amusement park ends; company claims non-taxability; tribunal rules time-barred demand & reversal of CENVAT credit.
The appellant provided two services - servicing of motor vehicles and running an amusement park. The amusement park service was exempt from service tax until 1.6.2015. After that, it became taxable but the appellant did not pay service tax, claiming it was covered under the negative list or exemption. However, the tribunal held that the amusement park service was not covered under the negative list or exemption after 1.6.2015 and hence taxable. Regarding the time limitation, the tribunal held that since the appellant had a bona fide belief of non-taxability and the revenue did not scrutinize the returns, the extended period of limitation cannot be invoked. The demand for short payment of service tax under repairs and maintenance services was also time-barred. The tribunal set aside the confirmed demand of Rs. 72,94,797/- towards reversal of CENVAT credit on merits, relying on court rulings that revenue cannot demand reversal without asking for proportionate reversal. The total confirmed demand of Rs. 1,73,60,105/- was set aside due to limitation. The appeal was allowed.
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Cleaning and other services: Taxability on gross receipts vs. margins debated.
Appellant paid service tax on entire value of cleaning services, but for remaining services paid tax only on margin money after deducting expenses. Commissioner disallowed expenses, stating appellant did not produce evidence of not receiving amount over shown receipts. Appellant incurred expenses for services other than cleaning, not as pure agent. Gross amount received is taxable value as per Section 67, not permissible to deduct expenses. No suppression with intent to evade tax established in show cause notice or orders to invoke extended period of limitation. Late payment fees upheld for delay in filing ST-3 return, being legal obligation unrelated to tax evasion. Demand of service tax, interest and penalties set aside on limitation grounds, but penalty for late return filing upheld.
Case Laws:
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GST
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2024 (9) TMI 1584
Seeking grant of bail - creation of fake firms for availing and utilizing the ITC - offence u/s 132(1)(b), 132(1)(c), and 132(5) of the CGST Act, 2017 - HELD THAT:- From perusal of the complaint and also the prosecution report filed in this case, it is found that the allegations made against the petitioner are based on the statement of witnesses. In regard to creating the fake firms, availing and utilizing the ITC to the tune of Rs.54.33 crore, no documentary evidence has been adduced on behalf of the prosecution in support of the allegations made in the complaint and prosecution report as well against the petitioner. Although, on behalf of the prosecution in Annexure-B of counter affidavit in list of documents/ RUD is given, wherein at Sr. No.37 i.e. RUD-37, details summaries of GSTR-3B of fake firms is mentioned; yet any document relied upon has not been made annexure in proof of same. The petitioner has been languishing in jail since 25.06.2024 and the offence alleged against the petitioner is punishable for five years. Taking into consideration that the trial of this case is not likely to be concluded in near future and also the fact that the prosecution has not shown any apprehension of tampering the evidence or any flight risk of the petitioner - the bail application is allowed. Let the petitioner be released on bail on furnishing bail bond of Rs.1,00,000/-(Rupees One Lakh) with two sureties of the like amount to the satisfaction of the court concerned in aforesaid case with fulfilment of conditions imposed - bail application allowed.
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2024 (9) TMI 1583
Violation of the provision under Section 129 (3) of the Central Goods and Services Act, 2017 - time limitation - specific contention raised by the petitioner is on Annexure P/2, a circular issued under Section 68 of the C.G.S.T Act read with Rule 138 of the C.G.S.T Rules, 2017 - HELD THAT:- It is specifically directed, as per Paragraph No. 2 (g), that an order of detention in FORM GST MOV-06 and a notice in FORM GST MOV-07 has to be in accordance with sub-section (3) of Section 129 of the CGST Act. Here, despite the notice having been issued within time, the petitioner was granted the entire limitation period for filing a reply. The petitioner did file the reply on the last date, in which event the Authority ought to have passed an order on that date itself, after considering the reply. The Authority having delayed the matter, the mandate of Section 129 (3) is not followed. The impugned order cannot be sustained - refund of the amounts paid is directed - petition allowed.
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2024 (9) TMI 1582
Seeking to quash deficiency memo - refund of GST paid by the petitioner concern has been rejected on the ground of limitation - petitioner is also seeking a direction to the respondents to process and release the GST refund of petitioner - HELD THAT:- In terms of Section 54 of CGST Act of 2017, the application for refund of tax was to be filed before the expiry of two years from the relevant date, i.e., the application was to be filed by or before 19.09.2020. A perusal of annexure IV to the writ petition, i.e., Form-GST-RFD-01 reveals that the petitioner concern filed the application for refund of tax on 08.09.2020, i.e., well before the expiry of two years from the relevant date. It is very strange that in the deficiency memo dated 23.09.2020 the respondent No.2 did not take the ground of limitation or that the original application of petitioner concern dated 08.09.2020 was barred in terms of Section 54 of CGST Act of 2017, which leads to the conclusion that on 08.09.2020 the original application of petitioner concern for refund of GST was within time from the relevant date. However, the application dated 28.03.2020, which was filed on the asking of respondent No.2, was rejected by respondent No.2 only on the ground of limitation. Once the respondents had treated the original application dated 08.09.2020 as within time from the relevant date, then how the second application dated 28.09.2020, which was in continuation to the original application dated 08.09.2020 and was filed only on the advice of respondent No.2, became barred by limitation. A perusal of the objections filed by the respondents reveals that the respondents have miserably failed to justify their action in rejecting the claim of petitioner concern. It seems the objections have been filed only for the sake of objections and was a mere formality; the same seem to be evasive in nature. In the objections the respondents have failed to aver anything about the first application filed by the petitioner concern on 08.09.2020 - A perusal of the objections reveals that the respondents instead of taking a particular stance to controvert the claim of petitioner concern tried to avoid the same by simply averring no comments, which leads to the conclusion that the respondents were avoiding to make a direct reply and the same is sufficient for this Court to draw an adverse inference. It seems that before filing the objections the respondents did not go through the case of petitioner concern thoroughly and have taken the matter very lightly. The deficiency memo (Form-GST-RFD-03) issued by Assistant Commissioner, Goods and Services Tax quashed - petition allowed.
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2024 (9) TMI 1581
Challenge to order u/s 73(9) of the Uttar Pradesh Goods and Services Tax Act, 2017 - HELD THAT:- The factual matrix is such that the matter is squarely covered by a coordinate Bench judgment of this Court in Mahaveer Trading Company vs. Deputy Commissioner State Tax and another [ 2024 (3) TMI 334 - ALLAHABAD HIGH COURT] where it was held that ' It has been passed in gross violation of fundamental principles of natural justice. The self imposed bar of alternative remedy cannot be applied in such facts. If applied, it would be of no real use. In fact, it would be counter productive to the interest of justice. Here, it may be noted, the appeal authority does not have the authority to remand the proceedings.' The impugned order dated April 27, 2024 is quashed and set-aside with a direction given to the officer concerned to grant the petitioner another opportunity of filing a fresh reply and thereafter fix a date of hearing and pass a reasoned order. The entire exercise should be completed within a period of two months from date. Petition disposed off.
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2024 (9) TMI 1580
Cancellation of registration of petitioner - bar of time limitation - order has been passed without any application of mind - violation of principles of natural justice - HELD THAT:- In Surendra Bahadur Singh's case [ 2023 (8) TMI 1262 - ALLAHABAD HIGH COURT ] the appeal was barred by time under Section 107 of the Act, however, the coordinate Bench took into consideration the original order and set aside the same being non-reasoned and allowed the petitioner therein to file reply to the show cause notice. The order impugned herein is liable to be set aside. Accordingly, the order dated February 16, 2023 is quashed and set aside. The petitioner is directed to file its reply to the show cause notice within three weeks from date and the adjudicating authority is directed to proceed de novo and pass order after granting opportunity of hearing to the petitioner - Petition allowed.
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2024 (9) TMI 1579
Jurisdiction to issue SCN - excess of the power conferred upon respondent-authority regarding scrutiny of returns as provided under Section 61 of the JGST Act - HELD THAT:- This writ petition is disposed of by giving liberty to the petitioner to explain the reason which has been sought in the second show-cause, within two weeks and the authority concerned will consider the same in accordance with law and depending upon the conclusion, follow-up action be taken in view of the mandate of Section 61 of the JGST Act.
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2024 (9) TMI 1578
Seeking directions to the Respondents for permanent migration of the Petitioner s Firm under the same Goods and Service Tax Number (GSTN) and accordingly activate login id with appropriate login credentials at common portal - contention of the petitioner is that due to the inability to login at the common portal and in the absence of the migration, the petitioner cannot file returns or pay taxes and discharge its GST liability from July 2017 onwards - HELD THAT:- In light of the judgment rendered by Hon ble Allahabad High Court in M/s Metro Institutes of Medical Sciences Pvt. Ltd. [ 2017 (10) TMI 784 - ALLAHABAD HIGH COURT] the concerned respondent authority is directed to immediately allow the petitioner-Firm to login on the GST portal for completing the process of migration for uploading its returns and to deposit the due tax. The present writ petitions are allowed.
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2024 (9) TMI 1577
Seeking quashing of the intimation to the petitioner blocking the input tax credit - forged invoices without supply of any goods and services - competent Officer has reason to believe that the claim for input tax credit is fraudulent claim - Rule 86A of the GST Rules, 2017 - HELD THAT:- This Court does not find that impugned notices/intimation are without jurisdiction or contrary to the law as provided under the GST Act or Rules made thereunder. Therefore, this Court find no ground to interfere with the impugned intimation and notices. Hence this writ petition is hereby dismissed.
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2024 (9) TMI 1576
Cancellation of the petitioner's GSTN Registration - time limitation - appeal was not entertained in view of the statutory limitation period prescribed under GST Act, 2017 - HELD THAT:- The petitioner is a contractor doing contract works for the Government and its agencies and enrolled under the central Goods and Service Tax Act, 2017. The petitioner has been provided with GSTN Registration No. 33AAZPE3354N1Z7 The impugned order has been passed cancelling his registration under the GST Act due to non filing of the returns for a period of six months. The petitioner claims that though he had handed over the documents to his accountant, the accountant had not filed the returns in time. Since the petitioner was not aware of the impugned proceedings, he could not file the appeal within the statutory period. The respondent claims that the Statue prescribes specific limitation period of 90 days to file an appeal. A similar issue has been dealt with by a Hon'ble Division Bench of Bombay High Court [ 2023 (2) TMI 759 - BOMBAY HIGH COURT] , wherein it has been held that ' Since it is merely a matter of cancellation of registration, the question of limitation should not bother us since it cannot be said that any right has accrued to the State which would rather be adversely affected by cancellation.' The Central Goods and Service Act was enacted in the year 2017 with an object of levy and collection of tax on intra state supply of goods or services or both by the Central Government. It is not the interest of the government to curtail the right of the entrepreneurs like the petitioner. The petitioner must be allowed to continue his business and to contribute to the State's revenue. In the absence of GST Registration number, a professional cannot raise a bill. If the petitioner is denied a GST registration number, it affects his chances of getting employment or executing works, which ultimately affects his livelihood embodied under Article 21 of the Constitution. The petitioner in this case is a contractor doing contractual works for the Government and its agencies. Most of the small scale entrepreneurs like carpenters, electricians, fabricators etc. are almost uneducated and they are not accustomed with handling of e-mails and other advance technologies - the uneducated traders can also respond to these notices atleast to some extent. Otherwise, these notices will be an empty formality and will not serve any purpose, for which it has been issued. The object of any Government is to promote the trade and not to curtail the same. The method adopted by the department as on today is like strangulating the neck of the small scale entrepreneurs. The cancellation of registration certainly, amounts to a capital punishment so for as the traders are concerned - the department of GST has to think of the consequences and relax the rules and also find the modalities of conveying the show cause notice by way of SMS and also in the regional languages. This court expects the department of GST to take appropriate action by amending the relevant provisions considering the consequences on traders. These writ petitions are disposed of.
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Income Tax
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2024 (9) TMI 1575
Scope of statutory alternative remedy - Special Leave Petition arises out of the order passed by the High Court [ 2024 (2) TMI 1437 - DELHI HIGH COURT] dismissing the writ petition filed by the petitioner questioning the imposition of surcharge and raising demand - HELD THAT:- During the pendency of the present proceedings, there is yet another demand notice dated 28.05.2024 raised for the AY 2023-2024, as per which surcharge computed at 37% and a demand has been raised. Revenue submits that this error is occurring as the Central Processing Centre (CPC) has not adopted the mechanism of deleting excess calculation as it is programmed to so calculate and raise a demand. The technological impediment cannot be a reason for harassing an assessee year after year. Immediate steps must be taken by the Revenue to upgrade the software or take such other steps as may be necessary to ensure that such mistake does not occur in future. Insofar as the order impugned is concerned, the dispute has already been resolved and the amount is said to have been remitted on 06.06.2024. However, for the Assessment Year 2023-2024, the Revenue shall take immediate steps and communicate the order of withdrawal of the excess surcharge amount within six weeks from the date of the receipt of the order. The Central Board for Direct Taxes shall also take necessary steps for rectifying the software as the issue may not be resolved by the Jurisdictional Assessing Officer. Special Leave Petition is disposed of.
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2024 (9) TMI 1574
Settlement applications u/s 245C (1) - statutory requirement of full and true disclosure u/s 245C of the Income Tax Act, 1961, pre-conditions associated with an application under Chapter XIX-A of the Act and effect of violation of the said pre-conditions on the jurisdiction of the Income Tax Settlement Commission [ ITSC ] as well as the fate of the application - As decided by HC [ 2024 (4) TMI 501 - DELHI HIGH COURT] ITSC has erred in law by approving the application of the respondent-assessee group u/s 245C - ITSC further went on to grant immunity from the penalty and prosecution u/s 245H of the Act, which was contrary to the twin conditions stipulated herein above. Thus, the ITSC acted in excess of the jurisdiction conferred upon it under the Act. WP allowed. HELD THAT:- Delay condoned. We are not inclined to interfere with the impugned judgment and, hence, the special leave petition is dismissed
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2024 (9) TMI 1573
Proceedings for reassessment initiated after the decision of the Supreme Court in Abhisar Buildwell Private Limited [ 2023 (4) TMI 1056 - SUPREME COURT ] - Determination of period of limitation - writ petitioners assail the validity of the reassessment action principally on the ground of being barred by time -It is their case that the reassessment action which had come to be initiated after the promulgation of Finance Act, 2021 would not qualify the pre-conditions which are introduced by virtue of the First Proviso to Section 149 (1) - HELD THAT:- Today there cannot possibly be any dispute or contestation on the discovery of incriminating material constituting the foundation for any assessment that may be made under Sections 153A or 153C of the Act. Any dispute that could have possibly be said to exist was ultimately laid to rest by the Supreme Court in Abhisar Buildwell. The only aspect which thus survives for consideration is whether the observations as appearing in Abhisar Buildwell could be read as enabling the respondents to overcome the limitation which stands created in terms of Section 149 of the Act. It is pertinent to note that a reference to Sections 147 and 148 of the Act in Abhisar Buildwell firstly appears where the Supreme Court observed that in cases where a search does not result in any incriminating material being found, the only remedy that would be available to the Revenue would be to resort to reassessment. The liberty which the Supreme Court accorded and the limited right inhering in the Revenue to initiate reassessment was subject to that power being otherwise compliant with the Chapter pertaining to reassessment as contained in the Act. The observations of the Supreme Court cannot possibly be read or construed as a carte blanche enabling the respondents to overcome and override the restrictions that otherwise appear in Section 149 of the Act. The observations of the Supreme Court in Abhisar Buildwell were thus intended to merely convey that the annulment of the search assessments would not deprive or denude the Revenue of its power to reassess and which independently existed. However, the Supreme Court being mindful of the statutory prescriptions, which otherwise imbue the commencement of reassessment, qualified that observation by providing that such an action would have to be in accordance with law. This note of caution appears at more than one place in that judgment and is apparent from the Supreme Court observing that the power to reassess would be subject to the fulfilment of the conditions mentioned in Sections 147 and 148 of the Act. We also bear in mind the order passed on the Miscellaneous Application which was moved by the Revenue before the Supreme Court and more particularly to the prayers that were made therein. The Revenue had specifically alluded to Section 150 of the Act and sought appropriate clarifications enabling it to proceed afresh. It had also sought the liberty to commence proceedings for reassessment within 60 days of the disposal of that application. The said application, however, came to be dismissed with it being left open to the respondents to move a formal application for review, if so chosen and advised. It appears, however, that no such review was ultimately moved. Undisputedly, none of the clauses of Explanation 1 would be attracted in the facts and circumstances of the present batch. The statute incorporates no provisions in terms of which the period which may have been consumed while pursuing an assessment under Sections 153A or 153C is liable to be excluded if such an action were to be ultimately annulled. The fact that the statute seeks to create rigid time frames within which a reassessment action may be initiated stands fortified by the First Proviso appearing in Section 149, and which came to be introduced in the statute book by Finance Act 2021. It is pertinent to note that both Sections 153A and 153C saw significant amendments which came to be made by virtue of Finance Act, 2021. Both those provisions saw the introduction of a sunset clause and the statute mandating that the scheme of search assessment as introduced in the Act originally by way of Finance Act, 2003 would cease to apply to a search initiated on or after 01 April 2021. Notwithstanding the curtains thus being wrung down on Sections 153A and 153C, the Proviso to Section 149 (1) in unambiguous terms provides that in case reassessment is sought to be initiated for a relevant AY falling prior to 01 April 2021, such an action would have to be in conformity with the time limits specified in Sections 149 (1) (b), Sections 153A or 153C, whichever be applicable, and as those provisions stood immediately before the commencement of Finance Act, 2021. The Proviso is thus representative of a clear legislative policy of reassessments being required to be compliant with time frames which existed in the provisions aforenoted and as they stood before the commencement of Finance Act, 2021. The respondents despite the clear enunciation of the legal position with respect to search assessments in terms of our judgements in Kabul Chawla, RRJ Securities and a host of others that followed neither chose to initiate any remedial action nor did they adopt a course correction. Nothing fettered the right of the respondents to commence reassessment if they were of the opinion that, notwithstanding absence of incriminating material, escapement of income had occurred. It was open for the respondents to establish that an action for reassessment was warranted independently and irrespective of no adverse material having been found in the course of a search. We thus find ourselves unable to hold in their favour. Consequently, and for all the aforesaid reasons, we find ourselves unable to sustain the reassessment action. The writ petitions are accordingly allowed. We hereby quash the impugned notices under Section 148 - Decided in favour of assessee.
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2024 (9) TMI 1572
Validity of reassessment proceedings - change of opinion - addition u/s 56 - Assessee had acquired and subscribed the equity shares of a closely held company at below fair market value under the Right Issue - PCIT had dropped the proceedings u/s 263 after considering the petitioner's submissions - HELD THAT:- The use of words reasons to believe in Section 147 has to be interpreted schematically as any other interpretation would lead to the consequence of conferring arbitrary powers on the AO, who may even initiate such reassessment proceedings merely on a change of opinion on the basis of same facts and circumstances already considered during the original assessment proceedings. The provision for reassessment was brought into the statute book to empower the AO to reassess any income only on the ground which was not brought on record during the original proceedings and escaped its knowledge. Admittedly, after considering the reply of the assessee, PCIT had dropped the proceedings initiated u/s 263 of the Act. Thus, it is evident that at the time of initial assessment, as also while conducting proceedings under Section 263, the authorities were aware of shares held by the assessee for a consideration which was considered to be less than fair market value. However, Revenue still proceeded further to purpose initiation of reassessment proceedings by issuing notice under Section 148A(b). It is clear that the reasons for issuing notice under Section 148A (b) were exactly similar to the reasons on which the PCIT invoked Section 263 of the Act. Once the PCIT decided in favour of the petitioner after having considered its reply, AO had no authority to reassess and reopen the assessment under Section 148 of the IT Act. It is a clear case of change of opinion and the reassessment proceedings are in the nature of review of the previous assessment. Grant of approval by the senior authority i.e. PCCIT would not confer legitimacy to the initiation of the reassessment action as the point on which the reassessment was initiated, had already been considered in the previous proceedings. The higher authority cannot grant approval which is in violation of the settled principles on the basis of which reassessment action can be initiated. We are unable to sustain the impugned action for reassessment. The writ petition is accordingly allowed. The impugned notice u/s 148A (b), order passed under Section 148A (d) and notice under Section 148 as also the consequential proceedings emanating there under are set aside.
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2024 (9) TMI 1571
Disallowance u/s 14A r.w.r.8D - explanation inserted to Section 14A by Finance Act, 2022 applied Retrospectively or prospectively - HELD THAT:- In view of the Memorandum Explaining the Provisions in the Finance Bill, 2022 and various decisions rendered by the different High Courts, we also hold that the Explanation inserted to Section 14A vide Finance Act, 2022 is applicable prospectively. Thus, the order passed by the Tribunal dated 06.07.2022, holding that insertion of Explanation to Section 14A of the Income Tax Act, 1961 is clarificatory and thereby retrospective in nature, is erroneous in law. The findings of the Tribunal to the effect that the insertion of Explanation to Section 14A is clarificatory, is contrary to the legislative intention as expressed in Memorandum to the Finance Bill, 2022. We have also taken note of the fact that the Bench of the Tribunal, in earlier decision rendered in Deputy Commissioner of Income Tax, Circle - 4 (1) , Kolkata Versus M/s. Rav Dravya Private Limited [ 2022 (11) TMI 842 - ITAT KOLKATA ] while relying on decision of Delhi High Court in Pr.CIT Vs. Era Infrastructure (India) Ltd. [ 2022 (7) TMI 1093 - DELHI HIGH COURT ] has held that the Explanation inserted to Section 14A is applicable prospectively. However, the same Bench, while deciding the Miscellaneous Applications, preferred on behalf of the appellants subsequently has concluded that the decision of the Delhi High Court is not binding the Tribunal.
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2024 (9) TMI 1570
Maintainability of appeal against High Court - Appropriate remedy for the petitioner is to avail of a statutory appeal - order u/s 201 (1) raising a demand and interest u/s 201 (1A) - TDS u/s 195 non deducted on acquisition/purchase of a Trade Mark registered in India by the petitioner from the foreign/non-resident group entities Whether the petitioner has made out any case of patent illegality of the impugned order and / or of any gross jurisdictional error going to the root of the proceedings, so that an exception needs to be carved out, to deviate from the well settled principle of law, that once a statutory remedy as prescribed by law is available, a litigant needs to take recourse to such statutory remedy? - HELD THAT:- We are of the opinion that necessarily mixed issues of fact and law arise for consideration in the present proceedings in testing the impugned order on its merits, which would include applicability of the principles of territoriality as recognized by Toyota Jidosha Kabushiki Kaisha [ 2017 (12) TMI 1886 - SUPREME COURT] - Also the petitioner s contention relying on the decision in Cub Pty Limited [ 2016 (7) TMI 1094 - DELHI HIGH COURT] when it recognizes principles of situs of the Trade Mark being of the ownership of the foreign entity, whether would apply in the facts of the present case, and more particularly on examining the different clauses / terms and conditions of the agreement, so as to be considered that the situs fell outside India, are issues which can be effectively gone into by the Appellate Authority, for appropriate findings of fact to be recorded and thereafter the issue being tested on the principles of law as laid down in the different decisions being relied on behalf of the parties. We may also observe that this is certainly not a case where the Assessing Officer has conferred upon himself a jurisdiction which is not vested in him in law, in passing the impugned order, so that the Court needs to hold that the authority lacked jurisdiction to pass the impugned order. Certainly, if the Assessing Officer was to exercise jurisdiction not vested in him or in a patently illegal manner or ex facie contrary to the substantive provisions of the Income Tax Act, then certainly following the well settled principles of law as laid down in catena of judgments of the Supreme Court, the Court would unhesitatingly interfere in writ proceedings. However, the petitioner s contention that the Deputy Commissioner in view of the decision of the Delhi High Court in CUB Pty Ltd. [ 2016 (7) TMI 1094 - DELHI HIGH COURT] ought to have held that the transaction in question fell outside the purview of the Income Tax Act, as the seller of the trade mark was a foreign entity, is certainly a debatable issue on applicability of the legal principles vis-a-vis the substantive provisions of the Act. This cannot be said to be an issue determining the substantive jurisdiction of the Dy. Commissioner as conferred under the provisions of the Act to initiate an action under Section 201. It would be a question, merely as to whether the principles of law in a given decision, were applicable in the facts and circumstances of the case, and more particularly when it is vehemently contested on behalf of the Revenue that such decision of the Delhi High Court is not applicable to the facts in hand. In our opinion, these are routine issues which arise before the authorities under the Income Tax Act as also the Income Tax Appellate Tribunal or in any adjudicatory process before the Court. However, the applicability or non applicability of any decision, in our opinion, certainly does not present a core jurisdictional issue when tested on the powers conferred on the authority under the substantive provisions of the Act. Considering the facts of the case, once a substantive statutory remedy is provided and available to the petitioner, it would not be appropriate that the Court exercises its extraordinary jurisdiction under Article 226 of the Constitution and entertain this writ petition. If the proposition as canvassed by Mr. Mistri is to be applied, then the appellate remedy as provided under the Act would remain to be a paper provision and every order passed by the Assessing Officer, on the considerations as canvassed before us, would be amenable to challenge in writ proceedings. In our opinion, this is certainly not an acceptable proposition. As decided in Kharghar Co-op. Housing Societies Federation Ltd., through General Secretary Anr. vs. Municipal Commissioner, Panvel Municipal Corporation Ors [ 2023 (4) TMI 1241 - BOMBAY HIGH COURT] Court had held that it may not be appropriate for the Writ Court to short circuit or circumvent statutory procedures and it is only where statutory remedies are entirely ill-suited to meet the demands of extraordinary situations or where private or public wrongs are so inextricably mixed up and the prevention of public injury and the vindication of public justice require a recourse to Article 226 of the Constitution be permitted. Insofar as the issue of limitation is concerned, it appears to be an admitted position that Section 201 ipso facto has not provided for any limitation of one year. We may also refer to the decision of the Division Bench of the Telangana High Court, which considered the decision of this Court in Mahindra Mahindra Limited [ 2014 (7) TMI 265 - BOMBAY HIGH COURT] as also the decision of Bharti Airtel Limited Vs. Union of India [ 2016 (12) TMI 1601 - DELHI HIGH COURT] wherein the Division Bench held that the legislature has consciously not prescribed any time limit for an order under Section 201 (1) of the Act insofar as non-resident is concerned; the reason being that deductee is a non-resident, it may not be administratively possible to recover the tax from the non-resident. We are not persuaded to accept the case of the petitioner that the present writ petition be made an exception and the same be entertained, by not relegating the petitioner to avail of alternate remedy of an appeal, as provided under the Act. We accordingly dismiss this petition permitting the petitioner to avail of the statutory remedy of an appeal. All contentions of the parties on all issues of facts and law are expressly kept open. We permit the petitioner to file an appeal within 15 days from the receipt of the fresh order along with stay application including to make appropriate prayers in regard to penalty proceedings. Till appropriate orders are passed on the stay application, the demand be not enforced against the petitioner.
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2024 (9) TMI 1569
Sustainability of order passed against a dead person - Legal heirs' liability to discharge deceased assessee's liabilities - HELD THAT:- There is no dispute about the aforesaid provision of law but under the principle of natural justice, legal heirs of the deceased assessee are liable to be heard if they are to discharging the liability of the assessee. There is no document to show that notices were tired to be served on the appellant and returned back unserved with a noting that the assessee is no more, therefore, no efforts were made to implead the legal heirs of the assessee. As decided in Savita Kapila [ 2020 (7) TMI 441 - DELHI HIGH COURT] noted that a notice u/s 148 of the Act is a jurisdictional notice, and existence of a valid notice u/s 148 is a condition precedent for exercise of jurisdiction by the AO to assess or reassess u/s 147 of the Act. The want of valid notice affects the jurisdiction of the AO to proceed with the assessment and thus, affects the validity of the proceedings for assessment or reassessment. A notice issued under Section 148 of the Act against a dead person is invalid, unless the legal representative submits to the jurisdiction of the Assessing Officer without raising any objection. Consequently, in view of the above, a reopening notice under Section 148 of the Act, 1961 issued in the name of a deceased assessee is null and void. The impugned order is set-aside and the matter is remanded back to respondent No.1 with direction to decide the appeal afresh. The petitioner shall appear before the respondent No.1-National Faceless Appeal Centre (NFAC).
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2024 (9) TMI 1568
Right of the Income tax authorities to seek interim custody of currency notes seized and produced before the Jurisdictional Magistrate or seized and reported to the Jurisdictional Magistrate in terms of Section 102 of the Code of Criminal Procedure (the Code) - Powers to requisition books of account, etc. u/s 132A - HELD THAT:- When the Act confers power on the competent authority under the Act to issue a requisition and obtain assets of assessees and adjust the same towards their liabilities, if the competent authority has reason to believe that the asset represents either wholly or partly income or property which has not been or would not be disclosed for the purposes of the Act, according to us, the best suited person to hold the currency notes which have been seized in cases of this nature until the culmination of the enquiry or trial, would be the competent authority under the Act provided it is alleged that the asset represents either wholly or partly income or property which has not been or would not be disclosed for the purposes of the Act. Even though this Court held in Abdul Khader [ 1998 (11) TMI 76 - KERALA HIGH COURT] that Section 132A does not empower the competent authority to make a requisition to a court for delivery of assets, it was made clear in the said case that the competent authority under the Act is entitled to seek interim custody of the seized assets. In the said view of the matter, according to us, the view expressed in Union of India that the competent authority under the Act is entitled to seek interim custody of the currency notes in the facts of the said case, is in order. A close reading of the judgment in J.R. Malhotra [ 1975 (12) TMI 170 - SUPREME COURT] would indicate that the case dealt with therein relates to a seizure effected prior to the introduction of Sections 132A and 132B of the Act. What the learned Judge omitted to take note of, is the power conferred on the competent authorities to hold any assets if it has reason to believe that the same represents either wholly or partly income or property which has not been, or would not be disclosed for the purposes of the Act. Of course, the said power is subject to the exception provided for in the first proviso to clause (i) of sub-section (1) of Section 132B. If the competent authority has reason to believe that the amount seized represents wholly or partly income or property which has not been or would not be disclosed for the purposes of the Act and is unable to issue a requisition in terms of Section 132A of the Act for the reason that asset has been produced by the officer or authority who seized the same before the Jurisdictional Magistrate, as clarified by this Court in Abdul Khader, the competent authority shall be held to be authorised to prefer an application seeking interim custody of the currency notes under Section 451 of the Code, for otherwise, Sections 132A and 132B, would become futile. Needless to say, the view expressed in R. Ravirajan that the provisions contained in Sections 132A and 132B are not relevant in the context, does not appear to us to be correct. As we propose to uphold the view expressed in Union of India, it is necessary to clarify that the direction in Union of India that the competent authority under the Act, on receipt of the seized currency notes, shall complete the proceedings contemplated against the person concerned within a period of six months and if not, the amount shall be redeposited and shall be released to the person from whom the amount has been seized, is not in accordance with law. Such a direction is unwarranted inasmuch as the scope of the proceedings is only to decide the person who is best suited to have custody of the currency notes until the conclusion of enquiry or trial. According to us, direction for disbursement/ appropriation of the amounts after completing the proceedings contemplated under the Act can be issued only when the court exercises the power u/s 452 of the Code for disposal of the property at the conclusion of the enquiry or trial. The reference is answered upholding the view taken in Union of India.
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2024 (9) TMI 1567
Revision u/s 263 - CIT observed that the assessee has declared Guarantee income as other income , however, the assessee claimed such income as notional income and reduced the same from total income. HELD THAT:- It is pertinent to note that the aspect of Guarantee income as mentioned in note 28 has been enquired by the AO during the assessment proceedings and after taking the cognizance of the same, the same was allowed by the AO. The Observation of the PCIT that the same was not examined properly is not justifiable on the part of the PCIT. The Notional Guarantee Income charged from joint venture of the investment and hence investment cost has been increased by the said amount cannot be treated as actual income incurred by the assessee. PCIT while invoking the provision of section 263 of the Act has totally ignored the aspect that the AO has verify the same and in fact Notional Guarantee Income has not resulted into any loss of the Revenue as contemplated by Ld.PCIT in para 7.1 of the order passed u/s. 263 of the Act. Thus, in the present case the Assessing Officer has not passed the assessment order which will result into prejudicial to the interest of the Revenue or erroneous to the interest of Revenue. Appeal filed by the assessee is allowed.
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2024 (9) TMI 1566
Revision u/s 263 - as per CIT allowing the claim of exemption u/s 54F was erroneous and prejudicial to the interest of the Revenue - HELD THAT:- It is pertinent to note that the ownership of the land is that of assessee s spouse and her brother-in-law and in fact the assessee has given these details for claiming u/s. 54F of the Act. The assessee has given all the details relating to the construction as well as the purchase of residential house within the prescribed period of 3 years. The contention of the Ld.DR that the land belonging to her spouse and her brother-in-law will not debarred the claim u/s. 54F of the Act as projected by the Ld.PCIT. But besides this the AO has made detailed inquiries at the time of the assessment proceedings and therefore section 263 cannot be invoked for merely the change in opinion/difference of opinion of the Ld.PCIT. AO at the time of the assessment proceedings has taken cognizance of all the details filed by the assessee and therefore the invocation of section 263 itself is not justifiable. Hence, the appeal of the assessee is allowed.
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2024 (9) TMI 1565
Denial of foreign tax credit pertaining to the foreign sourced salary income which is doubly taxed, i.e., in USA as well as India - belated furnishing of Form no.67 - HELD THAT:- We find that the Benches of the Tribunal on pan India basis had delved into the matter and had granted relief to the assessee. The learned Departmental Representative, though relied upon the order of the authorities below, but failed to distinguish any of the above judgments. DR also failed to adduce any cogent material or any arguments to take a view other than the view taken in AKSHAY RANGROJI UMALE [ 2024 (2) TMI 159 - ITAT PUNE] Consequently, relying upon the crudit pronouncements of the Co ordinate Bench of the Tribunal, we hold that the assessee is entitled to foreign tax credit irrespective of belated furnishing of Form no.67. Accordingly, all the grounds raised by the assessee are allowed.
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2024 (9) TMI 1564
Penalty imposed u/s 271D r.w.s. 269SS - period of limitation - whether penalty orders were time-barred? - HELD THAT:- In the present case, admittedly, the recommendation has been made by the A.O. for initiation of penalty was on 08/12/2017. As per the first condition of Section 275(1)(c) i.e. expiry of the Financial Year in which the proceedings, in the course of which action for imposition of penalty has been initiated and completed on 31/03/2018. As per second condition of Section 275(1)(c) i.e. six months from the end of month in which action for imposition of penalty has been initiated will be expired on 30/06/2018. Additional CIT(A) has initiated penalty on 07/07/2018 whereas the same has been referred to him on 08/12/2017 itself, thus, in our considered opinion, the same is barred by limitation as per provision of Section 275(1)(c) of the Act. Thus, we have no hesitation to delete the orders of penalty - Decided against revenue.
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2024 (9) TMI 1563
Disallowance of deduction claimed u/s 24(b) - AO had disallowed the claim on the basis of the Inspector's report that the premises were demolished and the construction work was being done - HELD THAT:- We observe from the record submitted before us that it was found by Ld CIT(A) that the ITI report was submitted after analyzing the position of the property in the year of inspection i.e., during 2011 and the claim made by the assessee during the current FY ie., 2008-09. We cannot rely on the report collected on the existence and occupation of the assessee, when the same was vacated by the assessee due to relocation. It is fact on record that the assessee was incurring interest expenditure for the purpose of taking loan on redevelopment of the house. The issue is whether the assessee has occupied the house during the current AY. The possible evidence which a normal person submits to prove are, electricity bill, land line telephone bills. CIT(A) has accepted the telephone bill as possible claim of the assessee. We do not see any reason to disturb the findings of the Ld CIT(A), accordingly, the ground raised by the revenue is dismissed. GP rate estimation - Rejecting books of accounts - HELD THAT:- We observed from the record that the AO analyzed the financials of the assessee submitted before him and noticed that the assessee has achieved the turnover many fold compared the previous year and there is decline in the GP declared by the assessee. It is relevant to note that he has analyzed the combined financial data of two types of business carried on by the assessee viz., Trading and manufacturing. The assessee should not have missed the opportunity of retaining the profit of previous year. We noticed that previous year, it has achieved 9.39%, if we remove the manufacturing GP of 7.17% (considering the increase in sales and absolute increase in the GP in Manufacturing activities, the declared results seems to be acceptable), the difference of profit is 2.22%, whereas it has actually achieved 0.50%. We cannot expect to receive similar margin in the trading activities also. The risk factor is very less and hence the expected profit also thin. Due to increase in volume of sales achieved in trading, the GP achieved is not at mark and in our view, it should have achieved at least 2% of the sales, without going into the intricacies like competition, heavy discounts offered merely to achieve sales target etc., in our view, it could have been at 2%. The difference of GP of 1.5% on trading activities, propose to sustain the addition will meet the ends of justice. We propose the above addition due to the fact that the assessee has not maintained the cash discount offered to customers, this is the grey area otherwise, the trading results cannot be rejected as all the bills of purchase and sales are properly accounted. Therefore, we are inclined to direct the AO to sustain 1.5% of trading sales as additional GP. Accordingly, the ground raised by the revenue is partly allowed. TDS u/s 194J on payment of rent - disallowances of rent expenditure made u/s 40(a)(ia) for non deduction of TDS - HELD THAT:- We observe that the assessee utilizes lot of weavers in its business and they are the back bone of the business. It made certain arrangement with the workers and allowed certain allowance by offering them rent and also taken up godowns for its business purpose. It is brought to our notice the submissions made before CIT(A) and the break up of the payments are small and within the limits prescribed under the provisions of section 194J. Therefore, we do not see any reason to disturb the findings of First Appellate Authority. Accordingly, the ground raised by the revenue is dismissed. Disallowance of Freight expenses and auditors fee u/s 40(a)(ia) - HELD THAT:-As observed that the Ld CIT(A) has rejected the submissions of the assessee by observing that the amended provisions in section 40(a)(ia) are applicable prospectively and not applicable to AY 2009-10. The Hon ble Delhi High Court has held in the case of Ansal Land Mark Township (P) Ltd [ 2015 (9) TMI 79 - DELHI HIGH COURT] that it is applicable retrospectively. By respectfully, relying on the above decision, we are inclined to direct the AO to delete the disallowance made in the case of Audit fees. Accordingly, the ground no 2 is allowed. Addition of Freight expenses - We are inclined to direct the AO to consider the delete the amount relating to the income offered by these two parties. With regard to other disallowances, the assessee accepted that they have not maintained proper records and also paid the freight charges in cash. It is difficult to control this aspect and we are inclined to sustain the above said additions excluding the two parties. Accordingly, ground no.1 is partly allowed. Addition u/s 40A - expenses incurred in cash exceeding the limit prescribed - We observed that the assessee made a plea before Ld CIT(A) that the payments were made during the year in different occasions but not substantiated with evidence. After considering the submissions of the both parties, we are of the view that in case the payments are made in difference occasions and the amount is not more than Rs. 20000/- in each case, then AO may allow the expenses. The assessee is directed to file the ledger copy and relevant documents before AO. Accordingly this ground of appeal is allowed for statistical purpose. Penalty u/s 271(1)(c) - As most of the additions proposed by the AO are deleted by the Ld CIT(A) and certain additions were deleted by us in this appeal proceedings. The claim of the assessee relating to the allowability of the expenses. As held in the various cases brought to our notice and the same were reproduced in the above paragraphs, the penalty cannot be levied in the issues raised by the AO in the assessment order and penalty order. Therefore, we are inclined to decided the issues raised by the revenue as well as by the assessee in favour of the assessee. Accordingly, we direct the AO to delete the penalty levied. Penalty levied u/s 140A(3) - Assessee had not paid the said Self Assessment tax - failure of the assessee to respond to show cause notice - HELD THAT:- We observe that the AO has levied the penalty due to the reason that the assessee could not make the payment towards SAT till the last date of assessment. This is fact on record that the Sec.221(1) penalty is a tool to the assessee to levy penalty in order to force the assessee to comply, however, the assessee is also prone to pay the relevant penal interest till the relevant tax are paid. In this case, no doubt the assessee was not paid and also reasonable causes to submitted before the authorities that the payments were made as soon as it came to the notice of the assessee and also when he was in a position to make the payment. It was also submitted that the consultant has not brought to the notice of the assessee the relevant tax dues. Considering the overall situation and mental stress in coping up with the various proceedings initiated on the same time and section 221(1) is leviable only after considering the reasonable cause, in this case, in our considered view, there is reasonable cause brought on record by the assessee and also the assessee has paid the SAT before levy of penalty u/s 221(1) of the Act. Therefore, in our view, the penalty is not justified considering the fact on record. Accordingly, grounds raised by the assessee is allowed.
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2024 (9) TMI 1562
Deduction u/s 80IA - denial of deduction as assessee failed to maintain separate books of account for each of the four projects under Rule 18BB of the Act and failed to furnish the audit report in Form No.10CCB for each project separately - HELD THAT:- As relying on case of Chirakkal Services Co-operative Bank vs CIT [ 2016 (4) TMI 826 - KERALA HIGH COURT] denial of exemption claimed by the assessee under section 80IA of the Act for the reason that the assessee has not claimed the deduction in the original return filed but in the revised return, is not justified. We find that the ld. CIT(A) has passed a well-reasoned order allowing the claim of the assessee for deduction under section 80IA of the Act and therefore, no interference is called for in the order of the ld. CIT(A). We find that the books of account of the eligible projects were separately maintained by the assessee and separate audited financial statements for each project . All the four projects were awarded to the assessee by UPPWD for infrastructure development. All the relevant conditions for claim of deduction under section 80IA of the Act are fulfilled. The business activities of all the four projects are covered in the scope of work defined u/s 80IA (4) of the Act and clarified vide CBDT s Circular No.4/2010 where the assessee acted as a developer in these projects. Therefore, the Assessing Officer was not justified to reject the claim of the assessee for deduction under section 80IA of the Act. We, accordingly reject grounds No.1 2 taken by the Revenue. Addition due to unverified credit balance - CIT(A) has deleted the addition, relying on the judgment of Jagdish Tiwari [ 2013 (10) TMI 85 - ALLAHABAD HIGH COURT ] observing that where payments are made to creditors through cheque and reflected in books of accounts, then addition cannot be made merely because of non-confirmation. We do not find any error in the order of the ld. CIT(A) on this issue. Disallowances of various expenses and adhoc disallowance of wages/labour charges - We find that the ld. CIT(A) has deleted the ad hoc disallowances made by the Assessing Officer, relying on various decision of the Lucknow Bench of the Tribunal in U.P. Corporative Federation [ 2011 (3) TMI 1820 - ITAT LUCKNOW ], Rajmata Devi, Basti [ 2011 (7) TMI 1385 - ITAT LUCKNOW ] and after considering the facts and circumstances of the case. The ld. D.R. could not point out any error in the order of the ld. CIT(A), who has rightly deleted the ad hoc disallowances made by the Assessing Officer. TDS u/s 194H - Addition u/s 40(a)(ia) for non-deduction of TDS - appellant had paid a sum under the head commission but TDS was not deducted u/s 194H - CIT(A) deleted addition - HELD THAT:- The observation of the ld. CIT(A) was that since the payments have been made by the assessee to different persons are petty payments and none of the payment exceeds Rs. 5,000/-, the assessee was not under legal obligation to deduct TDS on these payments. We are of the view that the finding of the ld. CIT(A) is in right perspective and no interference is called for. Assessee opted for Direct Tax Vivad se Vishwas Scheme (VSVS) in relation to its cross objection in Form No 1 and Form No 2 - D.R. submitted that since the designated authority has not issued the requisite Form No.5, certifying that the dispute has been resolved for the year under consideration, the same cannot be considered under VSVS - HELD THAT:- As against the identified tax settlement, since the assessee has already paid tax thus the excess payment of taxes resulted into refund of Rs. 1,57,00,465/-. We also find from record that the assessee has written letters to the designated authority for issuance of Form No.5, but the same has not yet been issued. As per Form No.3 dated 23.12.2020, the amount payable by the assessee for the year under consideration under VSVS by 31.3.2021 is only Rs. 5,12,370/- and the amount refundable to the assessee is Rs. 1,57,00,465/-. Therefore, considering these facts, we allow the request of the assessee for withdrawal of the Cross Objection. However, we make it clear that the Revenue will be at liberty to approach the Tribunal for restoration of this appeal, in accordance with law, if the dispute is not finally settled under VSVS. In that event, the assessee will also be at liberty to approach the Tribunal for restoration of its Cross Objection.
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2024 (9) TMI 1561
Addition u/s 68 - unexplained/unsecured loans - HELD THAT:- Admittedly, the loan of Rs. 1.00 crore was received by the assessee from M/s Betala Investment Finance Ltd. during FY 2011-12, which was further carried forward up to FY 2013-14 i.e. year under consideration, wherein the balance of Betala Investment Finance Ltd. was transferred to Lahoti Holding Ltd. which is the new changed name of Betala Investment Finance Ltd Company as per certificate of change of the name issued by Govt of India- Ministry of Corporate Affairs, Registrar of Companies, Tamil Nadu, Chennai dated 15.12.2011. We find merits in the contention of the AR, which were rightly considered by the ld. CIT(A) and therefore, we find substance in the decision of the ld. CIT(A), accordingly, we upheld the same. Resultantly, ground No. 1 of the department stands dismissed. Addition on account of valuation of the closing stock - CIT(A) deleted addition - HELD THAT:- The valuation of stock was computed by the assessee on a consistent method of valuation, AO s opinion to value the stock at selling price without pointing out any departure from the consistent method of valuation on cost cannot be concurred with. We, therefore, find substance in the decision of Ld. CIT(A), and therefore, approve the same. Resultantly, Ground of the department in absence of any cogent material to dislodge the observations of Ld. CIT(A) is unsustainable. Addition on account of difference and consumption of raw material - HELD THAT:- Admittedly, from the facts of the issue demonstrated with supporting evidence i.e., annexures to Form 3CD showing quantitative details of consumption of raw materials as well as finished goods and also the quantitative details furnished before the Ld. AO, it can be construed that there was a clerical mistake on the part of assessee, which was duly explained by the assessee and, therefore, the addition made on account of such mistake cannot be allowed to sustain. CIT(A) have rightly appreciated the facts and deleted the addition, we, therefore, do not find any infirmity in the order of CIT(A) on this issue to interfere with. Consequently, Ground of the present appeal of the revenue being bereft of substance rendered as rejected. Addition u/s 41(1) - cessation of liability stating that there were fictitious liability - CIT(A) deleted addition - HELD THAT:- Cessation of liability or remission of income could not be established by the revenue, the addition was made only for the reason that the explanation of the assessee are not to the satisfaction of the Ld. AO. All material aspects including verification of the facts are dealt with by the Ld. CIT(A), a thorough interpretation of provisions of section 41(1) along with support of guiding principles from the judicial pronouncements, we concur with the observations of Ld. CIT(A) that the cessation of liabilities and benefit from it through unilateral writing of the said liabilities by the assessee, could not be proved by the Ld. AO, therefore, addition invoking provisions of section 41(1) on outstanding liabilities as deemed profit of the year under consideration does not arise. In view of such observations, we do not find any error in the decision of CIT(A) which needs to be modified. Addition on account of excess interest paid on unsecured loan - AO has disallowed the interest over and above paid for more then 12% to various parties, @ 15.6%, 15% 18%. The basis for disallowance was unreasonableness of interest - HELD THAT:- Admittedly in the present case as the rate of interest on which the assessee had availed loan from various parties and paid interest as mutually agreed by them. Such unsecured loans were availed in the earlier years and the rate of interest paid by the assessee in previous years was allowed by the revenue while assessing the case of assessee u/s 143(3). CIT(A) had decided the issue in favour of the assessee following the principle of consistency and no adverse inference by the department in the earlier years. Under such facts and circumstances, when the revenue has allowed the assessee to claim interest expenditure on similar rates in the prior year s then there was no reason for the Ld. AO to make such additions with deviation from his own stand taken in earlier years without any plausible reason brought on record, we, therefore, find substance in the observation of CIT(A) and approve the same. Ground of the revenue s appeal, thus, have been dismissed. Addition on account of stock statement submitted to the bank for obtaining CC limit - The assessee tried to explain the reasons for such variations by way of furnishing reconciliation statement before the Ld. CIT(A). CIT(A) had decided the issue referring to judgments of CIT vs. Apcom Computers Pvt. Ltd. [ 2006 (10) TMI 124 - MADRAS HIGH COURT ] and similar judgments by Hon ble Delhi High Court and Hon ble Gujarat High Court referred to supra. As per all the aforesaid judgments the stock statements furnished before the bank for availing higher credit limits cannot be the basis for addition on account of undisclosed investment u/s 69B. In the present case, as the difference detected by the Ld. AO between stock statement furnished before the bank and regular books of accounts of the assessee could not be further established as actual variation on the basis of any cogent evidence, therefore, the decision of Ld. CIT(A) based on judgments of Hon ble High Courts has the essence to sustain, we accordingly uphold the same
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2024 (9) TMI 1560
Validity of reopening of assessment u/s 147 - addition u/s 69A - Denial of exemption claimed by the Appellant u/s 10(38) in respect of Long Term Capital Gains arising from sale of shares as identified as a penny stock by the report of the investigation wing - HELD THAT:- We hold that the finding returned by the CIT(A) while disposing off Ground raised by the Appellant before the CIT(A) is also contrary to material on record and factually incorrect. We note that in the statement of facts filed before the CIT(A) along with appeal in Form No. 35, the Appellant has reproduced the reasons recorded in writing and the relevant and the relevant extract of objections raised by the Appellant on 25/11/2019. CIT(A) has returned a finding that the Appellant has also failed to submit that the objections were filed during the assessment proceedings . The aforesaid finding returned by the CIT(A) suffers from perversity. As per the judgment of GVK Driveshaft [ 2002 (11) TMI 7 - SUPREME COURT] the objections raised by the Assessee are required to disposed off by the Assessing Officer by passing a speaking order before proceedings with the assessment. Since the Assessing Officer has failed to do the same in the present case, the assessment order, dated 04/12/2019, passed by the Assessing Officer was without jurisdiction. Our view also draws strength from the decision of Bayer Material Sciences Private Limited. [ 2016 (3) TMI 179 - BOMBAY HIGH COURT] , and Fomento Resorts Hotels Ltd. [ 2019 (9) TMI 1284 - BOMBAY HIGH COURT] . Even otherwise, we note that in the identical facts and circumstances, the Tribunal has in the case of the Appellant has accepted the exemption claimed by the Appellant under Section 10(38) of the Act in respect of capital gains arising from the same of same script while allowing appeal preferred by the Appellant for the Assessment Year 2011-12 - addition under Section 69A of the Act as well as the assessment order passed under Section 144 read with section 147 of the Act are quashed. Decided in favour of assessee.
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2024 (9) TMI 1559
Additions made u/s. 68 - unexplained cash credit - CIT(A) deleted addition - HELD THAT:- We note that, from the records filed by the assessee and on perusal of the audited financials, the company has been achieving the huge turnover of exports including the current assessment year 2017- 18, wherein the turnover was Rs. 178.81 crores. The assessee has also earned duty drawback to the tune of Rs. 2,02,16,297/- during the assessment year, which is paid to the exporters by the Government of India for promotion of exports, in proportion to the export turnovers of the company. It is pertinent to note that the assessee has more credits in their bank account during the assessment year, which has been shown as business receipts than the amount mentioned in the notice issued u/s. 148 i.e. Rs. 138.83 crores. Therefore, we are of the considered opinion that, the assessee has proved the source of the huge bank deposits made during the assessment year. We find no infirmity in the order of CIT(A) in deleting the additions made u/s. 68 of as unexplained cash credit - Decided against revenue.
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2024 (9) TMI 1558
Revision u/s 263 - assessee has arrived at business income after setting of losses - It is seen that the assessee's entitlement to carry forward losses was revised due to application of provision u/s 79 - case was reopened u/s 147 after obtaining prior approval u/s 148 from the Principal Commissioner of Income Tax, citing the reason that the assessee's entitlement to carry forward losses was revised due to the application of Section 79 HELD THAT:- Claims were duly examined during the original assessment proceedings itself and neither there was any error nor the same was prejudicial to the interests of the Revenue. Inadequacy of enquiry by the AO with respect to certain claims would not in itself be a reason to invoke the powers enshrined in Section 263 of the Act. The Revenue in the instant case has not been able to make out a sufficient case that the CIT has exercised the power in accordance with law. Rather, in our considered opinion, the facts of the case do not indicate that the twin conditions contained in Section 263 of the Act are fulfilled in its letter and spirit. Decided in favour of assessee.
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2024 (9) TMI 1557
Disallowance u/s 14A r.w.r.8D - assessee has earned dividend income and claimed the same as exempt - assessee has also made suo-motu disallowance - whether the assessee has declared this income of dividend as business income or not and in case it has declared as business income whether the assessee was eligible for claim of deduction u/s. 10(34) and consequently, whether any disallowance is to be made by invoking provisions of Rule 8D(2)(ii) r.w.s 14A? HELD THAT:- We have gone through accounts filed by the assessee i.e., the financial statements and noted that this income is declared as income under the head Income from Business or Profession in Schedule 13 interest earned - income on investments in the profit loss account. We cannot agree with the arguments made by the Ld.CIT DR that dividend income earned from securities held as stock in trade by the assessee bank is not eligible for exemption u/s. 10(34) and consequent disallowance is to be made, while computing expenses under Rule 8D(2)(ii) r.w.s 14A of the Act. This aspect has clearly explained in the case of South Indian Bank Ltd. [ 2021 (9) TMI 566 - SUPREME COURT] that the shares and securities held by a bank are stock in trade and all income received on such shares and securities must be considered to be as business income and consequently, provisions of section 14A of the Act would not be attracted to such income. This has been answered clearly by the Hon'ble Supreme Court and the Hon'ble Supreme Court has also approved the decision of State Bank of Patiala [ 2017 (5) TMI 843 - PUNJAB AND HARYANA HIGH COURT] The decision of the Hon'ble Supreme Court is law of the land and binding for us and hence, by following the same, we direct the Assessing Officer to recompute the disallowance of expenses relatable to exempt income in term of Rule 8D(2)(ii) r.w.s 14A of the Act by excluding shares and securities held by the assessee bank as stock in trade. Thus, the first ground raised by the assessee is allowed. Disallowance of expenses relatable to exempt income by invoking provisions of section 14A r.w.s 8D(2)(ii) of the Rules, while computing book profit u/s. 115JB - Since this issue is covered by the Special Bench decision of this Tribunal in the case of ACIT Vs. Vireet Investments Private Ltd [ 2017 (6) TMI 1124 - ITAT DELHI] we direct the Assessing Officer to delete the addition and thus, this ground is allowed. Non-grant of deduction u/s 80JJAA - assessee stated that this amount is relating to assessment year 2017-18 is allowable in the assessment year 2018-19 as per amended provisions of section 80JJAA - HELD THAT:- We noted that the facts and details regarding 30% additional employees cost incurred during the financial year 2016- 17 relevant to the assessment year 2017-18 is not available on record, so that the effect of amendment can be given. Hence, this issue is remitted back to the file of the Assessing Officer to first verify 30% of additional employees cost incurred during the previous year 2016-17 relevant to the assessment year 2017-18 which is allowable in subsequent year also, in view of subsequent amendment by Finance Act, 2017. Hence, this issue is remitted back to the file of the AO for verification and his decision according to law. Appeal filed by the assessee is partly allowed.
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Customs
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2024 (9) TMI 1556
Classification of imported goods - Solar Pump Inverter - classifiable under CTI 8541 50 00 as claimed by the appellant or under CTI 8504 40 90 as held in the impugned order? - invocation of extended period of limitation u/s 28 of the Customs Act in the same order, when the assessment is finalized through the order-in-original - levy of penalty u/s 114A of the Customs Act - eligibility for exemption from payment of additional duty of customs. Is the Solar Pump Inverter VFD classifiable under CTI 8541 50 00 as claimed by the appellant or under CTI 8504 40 90 as held in the impugned order? - HELD THAT:- It cannot be denied that the primary function of the device is that of an inverter i.e. one which converts direct current into alternate current. Even the inverters used at homes have chips and semi-conductors and also perform several ancillary functions which enhance their utility. For instance, they sense when there is a power cut in the grid and start converting the direct current from the battery into alternate current and supplying it for household use. When the power is restored, the inverter senses it and reverses the system and starts charging the battery using the power from the grid. High quality inverters used at home also ensure that the sine wave quality of the power is good and there is no adverse affect on the devices at home or their performance. Many inverters used at home also have displays which indicate the voltage, level of charge, etc. All these intelligent functions of the domestic inverters are because of the semi-conductors embedded in them. However, they do not cease to be inverters because of these additional functions. Likewise, the Solar pump Inverter VFD imported by the appellant continues to be an inverter and must be classified as such - the correct classification of the imported goods is as inverter under CTI 8504 40 90 and not as other semi-conductor devices under CTI 8541 50 00 as claimed by the appellant. When the assessment is finalized through the order-in-original, can a demand be also raised invoking the extended period of limitation under section 28 of the Customs Act in the same order? - HELD THAT:- It needs to be noted that the demand under section 28 of the Customs Act is a mechanism for the proper officer to reopen an assessment which has already been completed. This has to be done within a period of one year, or as the case may be five years from the relevant date. Explanation 1 (b) to section 28 of the Customs Act clarifies that the relevant date in a case where duty is provisionally assessed under section 18 of the Customs Act, is the date of adjustment on duty after the final assessment thereof or re-assessment as the case may be. The finalization in this case was completed through order-in-original passed by the Joint Commissioner. Any demand of duty under section 28 of the Customs Act in such a case will arise after the finalizing of this assessment that means after the order-in-original was passed. Until then, the assessment had not yet been completed - while the appellant is required to pay duty as per the final assessment, no demand under section 28 of the Customs Act can be raised. Consequently, any recovery of interest under section 28AA of the Customs Act which follows the confirmation of demand under section 28 of the Customs Act also does not apply to this case. Is any penalty imposable under section 114A of the Customs Act upon the appellant? - HELD THAT:- As is evident, section 114A of the Customs Act provides for imposition of penalty, where demand is made under section 28 of the Customs Act and such demand arose by reason of collusion or any willful mis-statement or suppression of facts by the appellant. Since section 28 of the Customs Act does not apply in this case neither will section 114A of the Customs Act. Is the appellant are eligible for exemption from payment of additional duty of customs? - HELD THAT:- The appellant s claim of the benefit of N/N. 24/2005-CUS dated 01.03.2015, N/N. 12/2012-CE and N/N. 21/2012-CUS are all based on their claim of this classification. Having decided the classification in favour of the revenue, it cannot be held that the appellant will be entitled to the benefit of these notifications. The impugned order is modified to the extent that though the classification of the goods and the finalization of assessment of duty is upheld, the appellant is required to pay duty as final assessment. The demand under section 28, interest under section 28AA and penalty under section 114A of the Customs Act are set aside. The appeal is party allowed.
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2024 (9) TMI 1555
Refund of differential duty between the duty already paid and the duty that would have been leviable - benefit of N/N. 30/2004-CE dated 9.7.2004 - appellant has not produced relevant documents like balance sheet, profit of loss accounts, invoices, cost data and other basic financial records of the relevant periods to rule out unjust enrichment - HELD THAT:- This is a case where the refund claim filed by the appellant had been rejected for not having produced relevant / corroborative documents. Certain documents and statements were filed before us along with the appeal. Those documents were found to be not relating to the facts in issue and pertained to Anti-Dumping Duty as against the basic customs duty paid towards the impugned Bills of Entry claiming the benefit of Notification No. 30/2004-CE dated 9.7.2004. Ordinarily fresh evidence cannot be entertained at the Tribunal. Rule 23 of the Customs Excise Service Tax Appellate Tribunal (Procedure) Rules, 1982 states that the parties to the appeal shall not be entitled to produce any additional evidence, either oral or documentary, before the Tribunal. Thus, the general principle is that the appellate court should not travel outside the record of the Original Authority, unless the Tribunal itself feels the need to do so. The Hon ble Supreme Court has in its judgment in Chittoori Subbanna Vs Kudappa Subbanna [ 1964 (12) TMI 46 - SUPREME COURT ] recognized that it is possible to include additional grounds in the grounds of appeal by moving a separate application for permission before the appropriate forum for its consideration. No such Miscellaneous Application has been filed in this case. It is found that not only has there been no separate prayer for including fresh documents / evidence, even that submitted is not relevant to the facts of this case and hence the lacunae pointed out by the Original Authority and in the impugned order of the Commissioner (Appeals) continues to survive. This being so the appeal merits to be rejected. The lower authority has taken a view which is reasonable, legal and proper - Appeal rejected.
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2024 (9) TMI 1554
Demand of differential duty - levy of personal penalty - wrongful classification of goods - sawn New Zealand pine logs - to be classified under CTH 4403 or under CTH 4407? - burden to prove on Department - department failed to discharge the burden of reclassification - HELD THAT:- To classify the goods under CTH 44.07, department has to show that goods were found cut in standard length with extremely accurate dimensions. Burden of proof is on the department, as it has sought to re-classify the product. The photographs taken in presence of panchas that are scanned and reproduced on page 25 to 27 of impugned order reveal that the goods are having dimensions of cuboids but it cannot be considered to be of extremely accurate dimensions, as is the requirement of the note. The terms used by Panchnama of goods being were not found to be squared logs, but were found to be of standard cut lengths with extremely accurate dimensions are as per H.S.N. Panchnama also indicates that 10% logs showed presence of bark traces. It was indicated that dimensions were not extremely accurate. Further the photos on records, as under also do not reveal extremely accurate dimensions. Further, logs with traces of bark, in any case cannot be considered as having extremely accurate dimensions. Department has also not shown that process of chipping was used to obtain better surface than sawing. Benefit of conflicting and in complete statements of panchas, C.H.A and A.R of the appellants in the absence of any expert opinion by the department as chipping having been involved also has to be construed in favour of the appellant, as burden of proof in classification matters is on the department. There are merit in the submissions made that the impugned goods deserve classification under 44.03 and not under T.H. 4407. Reliance in this regard also is placed on the decision of Hon ble Tribunal in the case BHAIRAMAL GOPIRAM VERSUS COMMISSIONER OF CUSTOMS, CALCUTTA [ 2000 (6) TMI 474 - CEGAT, KOLKATA ], wherein, it was held that ' It is well settled that the burden in such cases is upon the Revenue to show that the goods fell under 4407.' The department has failed to discharge the burden of reclassification. There are no merit in holding impugned goods as classifiable under T.H. 44.07. It is found that same have been correctly classified under T.H. 4403.99. Since classification dispute is at the core of the controversy and same has been decided is in favour of the party, other issues for decision are relegated to redundancy. Appeal allowed.
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Insolvency & Bankruptcy
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2024 (9) TMI 1553
Seeking grant a relief as part of the IL FS Resolution Framework for resolution of Category II Companies by permitting writing down of the entire share capital of such Category II Companies upon payment of the bid value/proceeds without the requirement of obtaining any further approvals from the shareholders of such Category II Companies, resulting in the final resolution of the said entities - HELD THAT:- From the facts and sequences of the events, it is clear that for the resolution of IECCL, steps were taken by the IL FS from January 2021 for issuing an invitation for Expression of Interest dated 13.01.2021. The invitation for Expression of Interest clearly mentions that Expression of Interest are invited for acquisition of 42.25% of the issued, subscribed and paid up share capital of IECCL held by IL FS and IFIN. The process in pursuance of the above invitation for expression is proceeding as on date. The ICICI Bank being lead lender of the IECCL has also participating in the process including the meetings of the CoC of the IECCL held from time to time. The submission of the IL FS is that the process of IECCL has gone too far and which is going for last three years be allowed to be completed and voting which has already been commenced and last date of which voting is 30.09.2024. The instance of ICICI Bank is not interdicted. Where the revised bid submitted by Howen International Fund SPC requires consideration is not for this Tribunal to assess and it is for the CoC to take a call. Letter sent by Howen International Fund SPC dated 07.07.2024 has extended its validity of fresh EMD till 31.09.2024. In event, the process of sale of 42.25% shareholding of IECCL is on-going resolution process is completed, the said shall not preclude the lenders including the ICICI Bank to raise objection on extinguishment of its entire debt. Liberty granted to the ICICI Bank to raise its objection on extinguishment of its entire debt for mere payment for 42.25% shareholding of IECCL. List IA No.5036 of 2023 on 14.10.2024 for hearing and all the objections on the application including the objection filed by the ICICI Bank - It is clarified that the resolution of IECCL which commenced from 13.01.2021 need to be completed irrespective of pendency of IA No.5036 of 2023 and it is clarified that the prayers made in IA No.5036 of 2023, IECCL shall be treated to be excluded.
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FEMA
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2024 (9) TMI 1552
Depositing 50% amount, as a pre-condition for entertaining the Application for Condonation of Delay - scope of of statutory provisions under the Maharashtra Co-operative Societies Act and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. HELD THAT:- The main proceedings before the DRT u/s 17 would have been registered and the DRT would have then commenced the hearing on the merits of the application filed u/s 17. DRAT only had to consider whether the order of the DRT can be construed to be perverse and erroneous so as to cause interference. In view thereof and considering the law as is settled by this Court in Dilawar Hakim [ 2005 (10) TMI 617 - BOMBAY HIGH COURT ] DRAT could not have directed the Petitioner to deposit 50% of the amount due from him keeping in view that an auction sale had already occurred and the DRT had not determined any amount to be recovered from the Petitioner. Moreover, the Petitioner has deposited Rs. 50,00,000/- with the DRAT. We, therefore, conclude that in the matters of condonation of delay, unless the delay is condoned, the main proceedings would not be taken up for hearing. Hence the stage of depositing the amount as may be prescribed / engrafted in any statute as a pre-condition for entertaining a substantive proceeding, would not be applicable for dealing with applications for condonation of delay. Writ Petition is allowed. The impugned order of the learned DRAT dated 17.10.2022, to the extent of directing the Petitioners to deposit 50% of the amount, stands quashed and set aside. The proceedings are remitted to the learned DRAT. DRAT would consider whether the impugned order of the DRT, refusing to condone delay, is sustainable or not. All contentions to this extent, are kept open.
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PMLA
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2024 (9) TMI 1551
Legality of the bail granted to the respondent - Large-scale money laundering - public money was looted through apps such as Power Bank App, Tesla Power Bank App, Ezplan, etc., by luring people with the promise of doubling their money in a short period - proceeds of crime - Petitioner have emphatically argued that the learned trial court has not discussed the entire material on record and has made certain observations which are contrary to the facts - violation of principles of natural justice. HELD THAT:- To start with the order granting bail is only a prima facie view being expressed by the court and such observations are not taken into consideration while deciding the matter finally. Generally, any observations made at the stage of bail are not taken into account after the parties lead their evidence and the matter is appreciated by the learned trial court. The case of the ED is based on the fact that the entity of the respondent has received the funds from the first, second and third layer entities. It is to be kept in mind that even as per Vijay Madan Lal Chaudhary [ 2022 (7) TMI 1316 - SUPREME COURT ] it has categorically been held that ingredients constituting the offence of money laundering needs to be construed strictly. It is also no longer a matter of debate that the probative value of statement under section 50 of PMLA is to be considered at the stage of trial. The bail cannot be denied merely on the assumption that the property recovered from the respondent must be proceed of crime. The ED has also sought cancellation of bail on the ground of certain WhatsApp chat of Mr. Saurin Shah another director in M/s Sagar Diamond Ltd. indicates that he was in touch of Vaibhav Shah for preparing legal declaration/affidavit of Akash Corporation. The criminality regarding transfer of funds is something which is to be considered at the stage of trial. The least discussion at the time on the merits of the case is desirable so as not to prejudice either of the parties. The apprehension of the ED that if the petitioner is allowed to be remain on bail he may derail the investigation or is a flight risk are mere apprehension and no substantial reason has been given. The E.D. may always move the court for imposing more stringent condition. The facts of the case may be very serious in nature but that has to be tested and examined during the course of trial. The defence being put up is that all the transactions between the firm of the respondent with other entities are the genuine sale transactions in the normal course of business. It is also a matter of record that alleged proceeds of crime of Rs.7.10 crore has already been deposited by Mr. Vaibhav Deepak Shah. The frequent rotation of funds disproportionate to the nature of business of Mr. Akash Panchal and the authenticity of statement under Section 50 of PMLA is required to be examined during the trial. The investigation has already been completed and the complaint has already been filed - there is no material on record to allow the application of ED for cancellation of bail. This Court considers that there is nothing on record to indicate that the bail has been granted on the irrelevant considerations. Petition dismissed.
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2024 (9) TMI 1550
Money Laundering - scheduled offence - proceeds of crime - gravamen of the prosecution allegation against the petitioner is that he influenced the Bank and got loans sanctioned to Kiran.P.P, out of which the petitioner took Rs.14/- Crore - HELD THAT:- Section 45 of PMLA starts with a non- obstante clause, which has an overriding effect on the general provisions of the Code of Criminal Procedure (Cr. P.C). There is a specific embargo to grant of bail to a person accused of an offence under the Act, which are: (i) that the Public Prosecutor must be given an opportunity to oppose the application for bail, and (ii) the Court must be satisfied that there are reasonable grounds for believing that the accused person is not guilty of such offence and that he is not likely to commit any offence while he is on bail. Section 65 of the Act mandates that the provisions of the Cr. P.C shall apply in so far as they are not inconsistent with the provisions of the Act. Also, Section 71 of the Act states that the provisions of the Act shall have an overriding effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force. Therefore, the conditions enumerated in Section 45 of the Act have to be complied with even in respect of an application for bail made under Section 439 of Cr. P.C. Consequently, the power to grant bail to a person accused of having committed an offence under the Act is not only subject to the limitations imposed under Section 439 of Cr. P.C., but also subject to the rigour imposed by the twin conditions under sub-section (1) of Section 45 of Act. In Gautam Kundu v. Directorate of Enforcement [ 2015 (12) TMI 1133 - SUPREME COURT ], the Hon ble Supreme Court has held that the compliance of Section 45 of the Act is mandatory to grant bail to an accused person. In Directorate of Enforcement Versus Aditya Tripathi [ 2023 (5) TMI 527 - SUPREME COURT ] the Honourable Supreme Court has held that merely because the chargesheet is filed, it cannot be a ground to release the accused on bail in connection with the scheduled offences under the Act. Investigation for the predicate offences and the investigation by the Enforcement Directorate for the scheduled offence under the PML Act are different and distinct. The petitioner has raised a specific ground that the written grounds of arrest were not served on him. On an appreciation of the materials on record, it is found that in the arrest order dated 04.09.2023, the Authorised Officer has specifically recorded that he has reason to believe that the petitioner is guilty of an offence under the Act. The grounds of arrest were duly prepared, served, read over and understood by the petitioner at the time of his arrest. Hence, it is concluded that the said contention is untenable. Whether this Court is convinced that there are reasonable grounds for believing that the petitioner is not guilty of the offence alleged against him and he is not likely to commit any offence while he is on bail? - HELD THAT:- The essence of the accusation is that, out of Rs.24.56/- Crore obtained by Kiran P.P as loan from the Bank, Rs.14/- Crore was paid to the petitioner both through bank transfer and in cash. In the statement recorded on 04-09- 2023, the petitioner has stated that he had received only Rs.2,15,50,000/- from the Bank through Kiran P.P. Conversely, Kiran.P.P has asserted that he handed over Rs.1.25/- Crore to the petitioner in cash in 2014, and an additional Rs.3/-Crore in 2016. Kiran P.P has further stated that cash loans of Rs.14/- Crore were given to the petitioner and to other persons as instructed by the petitioner on multiple occasions. Jijor has corroborated these cash transactions in his statement. Furthermore, the petitioner s Chartered Accountant had noticed an additional capital of Rs.4,08,65,254/- in the financial statement of the petitioner s proprietary concern, which was not reflected in his income tax returns. Although the petitioner submitted a letter of Jayarajan P, claiming that he had invested Rs.4/- Crore in cash in the petitioner s business, Jayarajan. P has denied making such a payment. This prima facie shows that Rs. 4/- Crore is unaccounted money. Additionally, a total of Rs.44.50/- lakh was deposited and Rs.15.50 lakh was withdrawn in the petitioner s Bank account No.103100010035463 at the Varadliam Service Co-operative Bank Ltd. The petitioner was maintaining forty-four accounts in various Banks. The cash credits in the petitioner s ten bank accounts for the financial years 2014-15 to 2016-17 is Rs.1,35,87,612/-, Rs.1,52,92,407/- and Rs.87,93,532/-, respectively. These materials, particularly the above cash credits, prima facie lends support to the prosecution allegation against the petitioner regarding layering of the proceeds of the crime. Collectively, these factors prima facie appear to substantiate the prosecution case. In Manish Sisodia s case [ 2024 (8) TMI 614 - SUPREME COURT ], the Honourable Supreme Court granted bail to the appellant in that case, considering the prolonged period of incarceration, the trial in the case had not commenced despite the assurance given by the respondents in the earlier round of litigations and the Trial Court had not followed the directions in paragraphs 28 and 29 of its first order regarding the right of the appellant to speedy trial - In the case on hand, the principles laid down in Manish Sisodia s case are not applicable. Therefore, the petitioner cannot draw analogy or parallels to the precedent set forth in the said case. On a careful analysis of the facts and circumstances of the case, the materials placed on record, the rival submission made across the Bar, and on considering the parameters under Section 45 of the Act, there are no reasonable grounds for believing that the petitioner is not guilty of the offences alleged and that he is not likely to commit the offences if he is enlarged on bail. In the light of the serious nature, gravity and severity of the accusations levelled against the petitioner, without expressing anything on the merits of the case, the petitioner is not entitled to be released on bail at this stage - the bail application is dismissed.
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Service Tax
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2024 (9) TMI 1549
Levy of service tax under reverse charge mechanism on the commission paid to Directors which was given treatment as part of salary as per the books of accounts and TDS deduction status as per 26AS of Income Tax - HELD THAT:- As per the sub clause (b) of sub-Section (44) of Section 65 of Finance Act, 1994, it is clear that provision of any service by an employee to the employer in case of his employment does not fall under the definition of service. As per the facts in the present case, the Directors to whom the commission was paid by the appellant are employees of the Company as per the Board s resolution. The Directors in the capacity of employees provided service to the employer i.e. present appellant Company. Therefore, the service whatsoever provided by the Directors to the appellant is in the course of their employment with the appellant Company. Therefore, the same is out of the purview of service in terms of Section 65B(44) (b) of the Finance Act, 1994. The appellant have also booked the payment made to the Directors as salary in their books of accounts and the same has been accepted by the Income Tax department. The TDS was also deducted under the head salary under Section 192 of the Income Tax Act. All these facts go on to prove that the considerations paid to the Directors are in course of employment of the Directors. Therefore, the same is not taxable being not a service as per definition of service under Section 65B(44) of the Finance Act, 1994. From CBEC vide Circular No. 115/9/2009-ST dated 31.07.2009 it is clear that any commission paid to the Directors of the Company is not a commission i.e. within the scope of Business Auxiliary Service hence service tax would not be leviable on such amount. This Circular is binding on the departmental authorities therefore, the lower authorities ought not to have confirmed the demand taking a view against the view taken by Board vide Circular dated 31.07.2009. Thus, it is settled beyond any doubt that the commission paid to the Directors by the Company does not fall under the service as Business Auxiliary Service accordingly, not liable to service tax. Therefore, impugned order is set-aside - appeal allowed.
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2024 (9) TMI 1548
CENVAT Credit - common input services - non-maintenance of separate records - period 1.10.2014 to 30.06.2017 - extended period of limitation - Short payment of Service Tax under the category of Repairs and Maintenance services - . CENVAT Credit - common input services - non-maintenance of separate records - period 1.10.2014 to 30.06.2017 - HELD THAT:- Admittedly, the appellant is providing two different services, one that of servicing of motor vehicles and another one is on account of running of Amusement park. These two services are being rendered from two different locations. As per the Agreement copies submitted by the appellant, the appellant is running the Amusement park since the year 2010. Prior to 1.7.2012, the services were exigible to Service Tax only when the particular Service was within the services defined under Section 65 of the Finance Act 1994. Admittedly, this service was not under the Service Tax bracket at that time. Subsequently, from 1.7.2012, all the services except those which are listed in the Negative List under Section 66D or those services, which are exempted under Notification No.25/2012 ST dated 20.6.2012, are taken as services on which Service Tax is required to be paid - in view of the service coming under Negative List even after 2012, the appellants were not paying the Service Tax. The Negative List after amendment with effect from 1.6.2015, omitted (j) of Section 66D. Therefore, from 1.6.2015, the Amusement park activity are no more covered under the Negative List, nor is it being claimed by the appellant that they are covered under the provisions of exemption Notification No.25/2012 ST dated 20.6.2012 as amended. It can be observed that this clause (a) of Section 66D provision is specifically applicable for the services rendered by the Government or local authority. In the present case, the Amusement park is not run by the Municipality. Though the appellant would have taken permission from the Municipal Corporation to operate the same, it cannot be by any stretch of imagination be taken as a service being rendered by the Govt. or Local authority. Without dispute, the Amusement park is being run by the appellant who is a commercial entity and not any Govt / local authority. Hence, it cannot be accepted that the arguments of the appellant on this count. Thus it is clear that after 1.6.2015, the appellants are neither covered under Negative List nor are they covered under any exemption Notification. Time limitation - HELD THAT:- There are no allegation of the Revenue that they are charging the Service Tax or collecting the same from the visitors to the Amusement park. Admittedly right from the beginning of their operations in 2010, they were enjoying complete exemption from payment of Service Tax, which became taxable only with effect from 1.6.2015. Generally, when any new service becomes eligible to Service Tax, or any prior exemption is withdrawn, it is for the Revenue to immediately undertake investigation and verification of providers of such service so as to ensure that such persons are made to pay the Service Tax - The fact that there is no allegation that they were collecting the Service Tax, would lend credence to the appellant s submission about their bonafide belief that they are not required to pay the Service Tax. In the case of the appellant, they were already operating under the jurisdiction of Service Tax authorities and were filing their ST 3 Returns and their turnover as per the P L accounts and Balance Sheet could have been checked for proper compliance. There is nothing to indicate that any scrutiny was being undertaken for the ST 3 Returns being filed. Short payment of Service Tax under the category of Repairs and Maintenance services - HELD THAT:- It is found that the data has been gathered by the Revenue from the Balance Sheet figures and after reconciliation with the ST- 3 Returns. Even here, without taking up any scrutiny of the Returns periodically, this demand has been raised and confirmed after 5 years. In respect of Manpower Supply, since the Service Tax payable would be eligible for cenvat to the appellant himself, it is found that this would result in a revenue neutral situation, wherein no suppression can be alleged - no case of suppression has been made out against the appellant - even in respect of the confirmed demand of Rs.19,32,214/- towards the Maintenance and Repairs Services and Rs.4,68,928/- towards the Manpower Services cannot be legally sustained on account of time bar. Relying on the ratio laid down by the Hon ble High Courts of Telangana and Kolkata, wherein it is held that the Revenue cannot directly demand the reversal @ 6/8% of the exempted turnover, without asking the assessee to reverse the cenvat credit on proportionate basis, we set aside the confirmed demand of Rs.72,94,797/- on merits. As per observations in the earlier paragraphs that no case has been made out towards suppression, read with the cited case laws on limitation, it is held that the confirmed demand of Rs.72,94,797/- is not legally sustainable even on account of time bar. The total confirmed demand of Rs. 1,73,60,105/- is set aside on account of limitation - The confirmed demand of Rs.72,94,797/- on account of CENVAT availment is set aside both on account of merits and on account of limitation. Appeal allowed.
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2024 (9) TMI 1547
Failure to discharge due Service Tax liability - Late payment fees - penalties - extended period of limitation. HELD THAT:- Undisputedly appellant has paid service tax on the entire value of the service provided under the category of cleaning services. In respect of the remaining services they have paid service tax on the margin money i.e the value of the service provided after deducting the expenses made by them towards the provision of such service. This fact has been reflected in the profit and loss account of the appellant. Commissioner (Appeal) has siught to disallow the expenses incurred for provision of this service by stating that the appellant has not produced any documentary evidence to the effect that they have not received any amount over and above the value shown as receipt for provision of this service. During the period of dispute appellant has incurred the expenditure towards the provision of services other than the cleaning services. However these expenses could not be called as amounts received as Pure Agent . The value of the taxable service as has been rightly held by the first appellate authority shall be the gross amount received for the provision of service as per Section 67 of the Finance Act, 1994. Hence claiming deduction of these amounts from the gross amount received could not be a permissible deduction as per the Section 67 or Rules made there under. These cannot be said to be reimbursable expense also as claimed by the appellant. Hence on merits there are not much force in the submissions made by the appellant. Time Limitation - HELD THAT:- In the impugned order or order in original/ show cause notice, nothing has been stated as to how the mere fact of not disclosure of certain amounts in the ST-3 return would have constituted suppression with the intention to evade payment of service tax - no reason put forth in the show cause notice or the orders of lower authorities for holding that the appellant has suppressed the facts with intent to evade payment of service tax - there are no merits in the impugned order to the extent it uphold the demand by invoking extended period of limitation. As entire demand has been made by invoking the extended period of limitation, the same cannot be upheld. Late payment fees - HELD THAT:- It is found that appellant had filed the ST-3 return after delay of about 65 days for which late payment fees has been imposed. The fact of delay in filing the ST-3 return has not be countered by the appellant. Imposition of late payment fees is a legal obligation and has no relation with the evasion of tax - the demand made towards the late payment fees as prescribed by statute is upheld. The appeal is partly allowed to the extent of setting aside the demand of service tax, interest and penalties imposed under Section 78 on the ground of limitation. However, the penalty imposed for late filing of return is upheld.
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2024 (9) TMI 1546
Failure to discharge service tax - Photography Services - printing and sale of various stationery items and printing and sale of photo albums, photo books, photo calendars etc; on conducting an investigation - HELD THAT:- This Tribunal has already held that the activity undertaken by the appellants amounts to manufacture and is exempt from payment of Central Excise duty and therefore, service tax cannot be demanded - The Bench observed in the case of Venus Albums Co. Pvt. Ltd. [ 2018 (11) TMI 754 - CESTAT CHANDIGARH ] held that 'the activity undertaken by the appellant amounts to manufacture and classifiable the Chapter 4911, therefore, no service tax is payable by the appellant.' The impugned order is set aside - appeal allowed.
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2024 (9) TMI 1545
Short payment of service tax - Availment of benefit of abatement on tax payable on the value of GTA services in terms of N/N. 32/2004-ST dated 3.12.2004 - appellant is a GTA and not consignee or consignor of the goods - HELD THAT:- The SCN in the present case was issued on the ground that the appellant is not a GTA and therefore they are not entitled to the exemption in terms of N/N. 32/2004-ST dated 3.12.2004. It is also found that the impugned order and the Order-in-Original passed by the authorities below have gone beyond the allegations in the show cause notice because in the show cause notice there is no allegation regarding the non-fulfillment of conditions for claiming benefit of Exemption Notification. Any evidence beyond the show cause notice is not sustainable as held in the case of Suzuki Motorcycle India Private Limited [ 2023 (11) TMI 370 - CESTAT CHANDIGARH ], therefore, on this account, the demand is liable to be set aside. It is found that the benefit of exemption notification has been denied on the ground that the conditions are not satisfied in terms of exemption notification for claiming the abatement the following conditions are satisfying, namely, (a) the Cenvat credit should not be availed on the inputs or capital goods used for transport service; and (b) the benefit of N/N. 12/2003-ST should not be availed in respect of the goods transport agency service - the department has failed to prove that the conditions mentioned in the notification are not satisfied in the present case. The department has not brought any evidence to prove that the GTA has taken CENVAT credit or availed of the benefit of the N/N. 12/2003-ST dated 20.6.2003 and therefore, the benefit cannot be denied on the basis of circular dated 27.07.2005 prescribing the procedure for declaration. The impugned order is not sustainable in law therefore, set aside - appeal allowed.
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