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TMI Tax Updates - e-Newsletter
September 6, 2021
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Stay of demand - guideline for stay of demand on payment of 20% of the disputed demand (earlier 15%) till the final disposal of the first appeal - Adjustment of future refunds - The condition of the order is set aside to the extent it puts a condition of adjustment of future demands arising to the writ applicants. There shall be unconditional stay of demand against the application filed by the writ applicants till the final disposal of the appeal pending before the ITAT - HC
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Additional interest envisaged u/s 244A(1A) on refund - fresh assessment or not - if the orders to be given effect to are to be made by following the principles already laid down by the higher forum, it would not be a case pf fresh assessment in terms of Section 153(3) or a reassessment in terms of Section 153(2); it would simply mean that the orders of the higher forum are to be applied & followed by the assessing officer - Assessee is eligible to get interest u/s 244A(1A) - HC
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Reopening of assessment u/s 147 - Validity of reasons to believe - non disposing of objections - Change of opinion - As held by the Supreme Court, it is not for the assessee to tell as to how the Assessing Officer has to complete the assessment. - It would be a clear case of change of opinion. What the Assessing Officer purported to do is to review his earlier decision. - proceedings of reopening quashed - HC
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Reopening of assessment u/s 147 - Individual identity of Section 148 as prevailing prior to amendment - applicability of the newly inserted provisions of Section 148A and the amendments brought inter alia w.e.f. 1.4.2021 - the power to issue notice under Section 148 which was prior to the amendment was also saved and the time was extended. In a result, the notice issued on 30.06.2021 would also be saved - no interference is required to be made in the said issuance of notice and accordingly the petitions are dismissed. - HC
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Excess stock of Gold and Silver Jewellery as found during the course of survey proceedings - Additions based on admission in the Statement by the appellant - CIT(A) set aside the demand without calling the remand report from AO - Order of CIT(A) set aside - Matter restored back to AO - AT
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Addition on account of difference of the gross receipts shown in the 26AS in comparison to the ITR - Once the assessee has disputed the said amount pertaining to any of the bills raised by the assessee, then a proper enquiry ought to have been conducted by the AO to verify this fact. The assessee has expressed its inability to force the other party to rectify the TDS statement and consequently 26AS - we set aside this issue to the record of the AO for conducting a proper enquiry - AT
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Addition u/s 56(2)(vii)(b) - difference between the sale consideration declared by the assessee and the stamp duty value - since the difference between the sale consideration declared by the assessee and the stamp duty value is 5.8% (approx), the consideration declared by the assessee should not be disturbed as the variation is within tolerance band of 10%. - AT
Customs
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Classification of goods - Alexa voice remote - the contention of the applicant that Alexa voice remote (3rd Gen) does not merit classification as radio remote control apparatus under 8526 92 00 since it uses Bluetooth technology is facile and not accepted - the appropriate classification of Alexa voice remote (3rd Gen) based on rule 1 and rule 3(b) of GI Rules is under CTH 8526, and specifically under sub-heading 85269200. - AAR
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Classification of goods - Preparation of Essential Oils intended to be imported in retail packs for distribution & marketing in India through General Provision Stores and online channel - Preparation of Essential Oils manufactured by “Bertram” and sold under Siang Pure Brand, which are commonly used for applying on human body/skin without the prescription of medical practitioner. They are claimed to provide relief from headache, motion sickness, dizziness, coughing (throat irritation), stomach ache, inspect bites, joint and muscle pain etc. answer to the description of herbal medicinal products in retail consumer packs, and therefore merit classification under 3004, more specifically sub-heading 3004 90 11 - AAR
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Suspension of Customs Broker Licence - prolonged suspension of license - This Court is of the considered opinion that interim suspension cannot be allowed to continue for a longer period nor the authority on initiation of proceedings are expected to conclude the proceedings by following the procedures as contemplated under Regulation 20 as expeditiously as possible, both in the interest of the Department as well as in the interest of the Customs Broker concerned. - HC
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Levy of penalty on Customs Broker u/r 18 of the CBLR, 2013 - allegation is on the ground that authorization / KYC documents was obtained from middleman instead of importer directly - the adjudicating authority is bound to put to notice the Customs Broker, setting out tentative conclusions or the points on which he differs from the Inquiry Officer. This would facilitate and ensure the right of Customs Broker to defend his case - AT
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Confiscation of imported goods - multi-functional printers - Hazardous & Other Wastes material - Even if it is ignored that CRO 2012 was issued beyond the scope of the parent Act and Rules, the Schedule to CRO 2012 covers only “printers and plotters” at Sl.No.7. It did not cover multi-functional devices. The case of the Revenue is that Ministry of Electronics & Information Technology has issued a circular No.1/2019 dt. 02.05.2019 clarifying that multi-functional devices are basically printers with additional features and covered under the category of 'printers and plotters' as notified in the order - the case of the Revenue regarding prohibition of import lies on a shaky ground of circular issued by MeitY which effectively enlarged the scope of entry in the order itself. - AT
Central Excise
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CENVAT Credit - 1%/2% Additional Duty of Customs (CVD) paid on the imported coal - The appellant has stated that though the appellant had taken CENVAT credit of CVD paid in terms of the Excise Notification, but the appellant subsequently suo moto partially reversed CENVAT credit and with respect to the balance CENVAT credit of 1% CVD paid, the appellant paid additional CVD at the rate of 5% under protest but availed CENVAT credit of only 1% of CVD paid. Though this fact was pointed out by the appellant, but the Commissioner failed to consider this aspect. - Order set aside - AT
VAT
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Reopening of concluded assessments - Under Rule 26-A of the OST Rules, a registered dealer is expected to preserve books of account and other documents including bills, credit and cash memoranda, invoices and vouchers, etc. relating to the business of any year for a period of three years thereafter or for a period of 12 months after finalization of the order of assessment or penalty in appeal, revision or reference for the year to which it relates, whichever is later - As far as the present case is concerned, even if the aforementioned periods of limitation have been crossed, there is no legal basis for the Department in the present case to have sought to re-compute the tax, surcharge and interest payable by the Petitioner for the aforementioned periods. - HC
Case Laws:
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Income Tax
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2021 (9) TMI 206
Validity of order passed by the Income Tax Settlement Commission [ITSC] u/s 245D(4) - selective challenge on one issue of Transfer pricing issue - whether such course can be adopted when the Settlement Commission adjudicated the issues and granted relief on several other issues except one issue, which is under challenge by the way of writ petition. - HELD THAT:- Settlement Commission has passed a detailed order on 27 issues. The petitioner herein is challenging the order of the Settlement Commission in respect of one issue only, which means that the petitioner is dissecting the order of the Settlement Commission. The petitioner cannot selectively accept the portion of the order passed by the Settlement Commission and dispute corrections of the other portions of the order, which in the opinion of the petitioner is not favourable. The petitioner cannot be permitted to dissect the Settlement Commission's order with a view to accept what is favourable to them and reject what is not. Therefore, the writ petition is to be rejected as not maintainable. In the present case, the application submitted by the petitioner has been took up for adjudication and the issues were adjudicated. Undoubtedly, the parties to the Settlement were co-operated and the Settlement Commission arrived a conclusion. Under the provisions of the Act, once the Settlement Commission passed an order, the same became final. As rightly pointed out, a decision of Settlement Commission could be interfered only on certain circumstances, if grave procedural defect such as violation of the mandatory procedural requirements are not followed and if there is no nexus or reasons given at the decision taken by the Settlement Commission. The petitioner cannot adjudicate in respect of the said issue and the issue was left open for further adjudication by the competent authority. If the entire order passed by the Settlement Commission is under challenge, then it is different. However, in the present case, the petitioner has challenged one issue, which was not decided in favour of the petitioner. This being the factum, this Court cannot consider the said issue on merits in the present writ petition. WP dismissed.
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2021 (9) TMI 203
Stay of demand - guideline for stay of demand on payment of 20% of the disputed demand (earlier 15%) till the final disposal of the first appeal - Adjustment of future refunds - provisions of Section 254(1) and(2A) of the Act - alternate remedy - whether the action on the part of the Revenue is in accordance with law? - HELD THAT:- It is not that the CIT has not granted stay in favour of the writ applicant, but the same is conditional. It is highly doubtful whether such an order can be challenged in an appeal before the ITAT. We are not inclined to reject this writ application only on the ground of alternative remedy. So far as the CBDT instructions are concerned, there is an underlying principle that pending the first appeal, the assessee may be afforded with some protection against coercive recovery on the condition of deposit of some money So far as Section 245 of the Act is concerned, there need not be any debate as regards the power of the Department to adjust the refund, however, such power should be exercised in a reasonable manner. Here is a case wherein the assessee is sought to be deprived of a huge amount towards the refund. A huge amount towards refund is being declined on the ground that a demand is pending for the previous year - One assessee who has to recover significant amount towards the refunds and another who has not to recover the refunds would be put in two different categories because in the first case refund would be adjusted whereas in the second case, no such adjustment is possible. We are also not impressed by the submission canvassed on behalf of the Revenue as regards estoppel. First, there cannot be any estoppel against the statute. We may only observe that the writ applicant has raised issues relating to financial hardships. The writ applicant has pointed out that it has suffered losses in earlier four years - As decided in M/S JINDAL STEEL AND POWER LTD. [ 2016 (9) TMI 1194 - PUNJAB AND HARYANA HIGH COURT] CIT rightly did not grant a complete stay but considered the petitioner's application in the alternative for a stay subject to its paying 15% of the outstanding demand in terms of the Office Memorandum. Writ application succeeds and is hereby allowed. The impugned order dated 12th July, 2019 passed by the respondent No.2, Annexure-A is hereby set aside to the extent it puts a condition of adjustment of future demands arising to the writ applicants. There shall be unconditional stay of demand against the application filed by the writ applicants dated 10th July, 2019 till the final disposal of the appeal pending before the Income Tax Appellate Tribunal. The intimations dated 22nd July, 2019, Annexure-A1 are also hereby quashed and set aside.
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2021 (9) TMI 202
Additional interest envisaged u/s 244A(1A) on refund - meaning of assessment ; difference between assessment assessment order - denial @ 3% of addl. interest for the period between 28.12.2017 i.e., date of ITAT order and 4.5.2019 i.e., the date on which refund was finally granted; this period being seventeen months - It is not my interest to pay the principal, nor my principle to pay the interest HELD THAT:- Article 265 of the Constitution of India mandates that no tax shall be levied or collected except by authority of law; if a tax has been paid in excess of the tax specified, the same has to be refunded; in Tata Chemicals [ 2014 (3) TMI 610 - SUPREME COURT] the Apex Court reasoned out why State should pay interest for holding tax payers' money; a tax refund is a refund of taxes when the tax liability is less than the tax paid; when the said amount is refunded, it should carry interest as a matter of course, since it is a kind of recompense for the unauthorized use or retention of money; refund due payable to an assessee is a debt owed; Parliament has enacted this principle in Section 244A of the 1961 Act; in Aluminium Corporation of India Ltd. v UOI [ 1975 (8) TMI 45 - SUPREME COURT] the Apex Court observed that a good government involves not only diligent collection of taxes, but also ready refunds of excess levies. In CIT v. Purshottamdas T. Patel [ 1993 (8) TMI 21 - GUJARAT HIGH COURT] the Hon'ble High Court of Gujarat has observed that, the word assessment cannot be confined to the act of making an order of assessment; there is a certain legal difference between the terms assessment assessment order ; it can be stated that the use of the word assessment would mean the whole process of determination of income and the same should not be restricted to a mere passing of an assessment order. As to meaning of the term setting aside or cancelling an assessment - A second proviso is added to sub-section (5) of section 153 by the Finance Act, 2017. The said proviso states that where an order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264 requires verification of any issue by way of submission of any document by the assessee or any other person or where an opportunity of being heard is to be provided to the assessee, the Order Giving Effect to the said order u/s.250 or sec.254 or sec.260 or sec.262 or sec.263 or sec.264 shall be made within the time specified in sub-section (3). The dates specified in the Table above shown as B would be relevant for this purpose. Difference between assessment', 'reassessment' or 'recomputation and fresh assessment - it is clear that the term assessment is used in section 153(1) to mean the entire process of assessment; section 153(2) uses the words, assessment , reassessment or recomputation but in respect of section 147 which deals with income escaping assessment; section 153(3) uses the term fresh assessment in pursuance of the orders passed setting aside or cancelling an assessment; therefore, this term fresh assessment , though not defined, contemplates a new assessment consequent to the higher authorities cancelling or setting aside the assessment; Section 153(5), talks of giving effect to an order passed by the higher authorities, wholly or partly, otherwise than by making a fresh assessment or reassessment. - if the orders to be given effect to are to be made by following the principles already laid down by the higher forum, it would not be a case pf fresh assessment in terms of Section 153(3) or a reassessment in terms of Section 153(2); it would simply mean that the orders of the higher forum are to be applied followed by the assessing officer; Present Case: - it is quiet clear from the facts of the case that the respondents have not undertaken any fresh assessment or reassessment; the ITAT has not directed assessment or reassessment at all, but it only asked the TPO to follow its directions in the earlier year; in respect of other issues definitive answers having been given, it cannot be a case of setting aside entire assessment; it is a case of setting aside an assessment only on specific issues Payment of interest on delayed refunds u/s. 244A(1A) - Since it is not a case of fresh assessment, section 244A(1A) would apply to cases covered u/s 153(5). This writ petition succeeds in part- i) A Writ of Certiorari issues quashing the impugned order; petitioner-Assessee is permitted to submit the fresh claim for additional interest at the rate of 3% per annum for the period envisaged in section 153(5) r/w section 244A(1A), within eight weeks. ii) A Writ of Mandamus issues to the respondents to compute the interest amount till date and pay it to the petitioner- Assessee within eight weeks next following. iii) If delay is brooked in complying the above direction, the Revenue shall pay to the petitioner - Assessee an extra interest, at the rate of 1.5 % per month and this amount, after payment, may be recovered personally from the erring officials of the Department.
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2021 (9) TMI 200
Reopening of assessment u/s 147 - Validity of reasons to believe - non disposing of objections - Change of opinion - HELD THAT:- we find that there is a reference to the First Proviso to Section 147 of the Act, which would not arise in the case of the assessee, as neither in the reasons for reopening, the same has been pointed out nor it was the case of the assessee in their objections. - The observation of the AO is an outcome of non application of mind. In the absence of any allegation that there was any fresh material to come to a conclusion that income escaped assessment, the Assessing Officer cannot now take a stand that the claim made by the assessee under Section 37 of the Act, which was acceded to by the Assessing Officer, was incorrect and the expenditure is in the nature referred to in Section 35D of the Act. If this is the observation and reason for reopening, it would be a clear case of change of opinion. What the Assessing Officer purported to do is to review his earlier decision. As held by the Supreme Court, it is not for the assessee to tell as to how the Assessing Officer has to complete the assessment. The AO, while disposing of the objections vide order dated 26.2.2016, has not touched upon the issue relating to jurisdiction. Submission of respondent that if the Court has to come to such a conclusion, then the matter may be remanded to the Assessing Officer to pass a speaking order on the objections filed by the assessee is not convinced to accept the said contention for more than one reason. - Therefore, we are inclined to quash the proceedings of reopening. - Decided against the Revenue.
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2021 (9) TMI 199
Reopening of assessment u/s 147 - Individual identity of Section 148 as prevailing prior to amendment - applicability of the newly inserted provisions of Section 148A and the amendments brought inter alia w.e.f. 1.4.2021- identity of Section 148 as prevailing prior to amendment and insertion of section 148A - grievance of the petitioner that the notice of like nature could have been issued till the cut off date 30.03.2021 as subsequent thereto the new Section 148A intervened before issuance of notice directly under Section 148 - HELD THAT:- The notification is made by the Ministry of Finance, Central Government considering the fact of lock down all over India, it can be always be assumed that the deferment of the application of section 148A was done in a control way. It is settled proposition that any modification of the Executives implies certain amount of discretion and to be exercised with the aid of the legislative policy of the Act and cannot travel beyond it and run counter to it or certainly change the essential features, the identity, structure or the policy of the Act. Therefore, this legislative delegation which is exercised by the Central Government by notification to uphold the mechanism as prevailed prior to March, 2021 is not in conflict with any Act and notification by executive i.e. Ministry of Finance would be the part of legislative function. Under the circumstances by the notifications the operation of Section 148 of the Income Tax Act was extended, thereby deferment of Section 148A was done. It was done by the Ministry of Finance by way of conditional legislation in the peculiar circumstances which arose during the pandemic and lock down and Central Government can not be said to have encroached upon turf of Parliament. Notification would show that it was issued in exercise of power conferred under the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 and time for issuance of notice under Section 148, the end date was initially extended uptill on 30th day of April 2021 and subsequently again by notification dated 27th April, 2021 the time limit of 30th day of April 2021 was further extended up till 30th day of June, 2021. By effect of such notification, the individual identity of Section 148, which was prevailing prior to amendment and insertion of section 148A was insulated and saved uptill 30.06.2021. The pandemic and lock down prevailed all over India. The people could not file their return or comply with the various mandate of Income Tax Act. Considering such situation for the benefit of the assessee and to facilitate the individual to come out of woods the time limit framed under Income Tax Act was extended - As the provisions of Section 148 which was prevailing prior to the amendment of Finance Act, 2021 was also extended. Here in this case, the power to issue notice under Section 148 which was prior to the amendment was also saved and the time was extended. In a result, the notice issued on 30.06.2021 (Annexure P-1) would also be saved - no interference is required to be made in the said issuance of notice and accordingly the petitions are dismissed.
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2021 (9) TMI 198
Levy of penalty u/s 271(1)(c) - Defective notice u/s 274 - non specification of charge - Whether the penalty levied u/s 271(1)(c) of the Act is void as the notice u/s 271(1)(c) is bad and defective as it is issued without deleting the appropriate clause under which the penalty proposed to be imposed either for filing of inaccurate particulars of income or for concealment of particulars of income, and as such, the notice is not sustainable and not curable - HELD THAT:- Following the decisions rendered in the cases of CIT vs. Manjunatha Factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] ,CIT vs. SSA s Emerala Meadows [ 2016 (8) TMI 1145 - SC ORDER] and Pr. CIT vs. Sahara India Life Insurance Company Ltd. [ 2019 (8) TMI 409 - DELHI HIGH COURT] we are of the considered view that when the notices issued by the AO are bad in law being vague and ambiguous having not specified under which limb of section 271(1)(c) of the Act, the penalty proceedings initiated u/s 271(1)(c) are not sustainable. We are of the considered view that when the very initiation of the penalty by way of issuance of vague and ambiguous notices u/s 271(1)(c) read with section 274 of the Act without specifically charging the assessee if he has concealed the particulars of income or has furnished inaccurate particulars of such income, subsequent penalty proceedings are not sustainable, hence penalty levied by the AO and confirmed by the Id. CIT (A) is not sustainable and as such, the appeals filed by the assessee are allowed.- Decided in favour of assessee.
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2021 (9) TMI 195
Exemption u/s 11 - denying the registration u/s.12AA - Charitable activity u/s 2(15) - objects of the trust - HELD THAT:- Hon ble Supreme Court in CIT Vs. Andhra Chamber of Commerce [ 1964 (10) TMI 19 - SUPREME COURT] considered a case in which the assessee therein, a chamber of commerce, had principal objects to promote and protect trade, commerce and industries and to stimulate and promote the development of trade, commerce and industries in India or any part thereof. In the light of such objectives, the Hon ble Supreme Court held that public is vitally interested in the promotion of trade, commerce and industries and hence, the same falls within the scope of advancement of any other object of general public utility . Thus, it is apparent that the assessee satisfies the first condition of being in advancement of any other object of general public utility. Whether the assessee was carrying on activity in the nature of trade, commerce or business ? - The assessee-association carried out protests against certain clauses of the Shop Act for which it collected certain sums from its members and then spent it. The same is true for Advertisement receipts and expenses. The assessee organized certain campaign for the promotion of trade and commerce. The amount collected from the members was described as Advertisement receipts and the amount spent on organizing such an event was described as Advertisement cost. The same stands for Cricket Tournament revenue and expenses. Apart from that, there is minor Interest income and some amount of Membership fee. On going through the bifurcation of the Revenue and the Expenses sides for all the four years that have been take note of by the ld. CIT(E) in the impugned order, it becomes apparent that none of the activity is in the nature of trade, commerce or business. Thus, the assessee satisfies this condition as well. The assessee fulfils the requisite conditions for falling under the head charitable purpose as defined u/s. 2(15) of the Act. Apart from that, the ld. CIT(E) has not referred to any other disqualification disentitling the assessee to registration. Overturning the impugned order, we grant the registration - Decided in favour of assessee.
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2021 (9) TMI 194
Revision u/s 263 - CIT set aside the reassessment order u/s 147 rws 143(3) to verify the source of cash deposits into bank to conduct necessary enquiry - HELD THAT:- Admittedly, this case is not case of complete lack of enquiry. As noted above, the Assessing Officer during the assessment proceedings required the assessee to furnish detail income tax return, computation of income, details of bank statement and the reply of questionnaire raised to assessee about the source of deposits - assessee vehemently submitted that assessee s declared income of ₹ 1.80 lakh from business of transportation under section 44AE and ₹ 1.39 lakh from trading in building material respectively (being @ 8% of total turnover of ₹ 17.44 lakh). To support his contention, the assessee filed balance-sheet, trading of profit and loss account as on 31.03.2015, cash book and bank statement. The assessee also claimed that assessee was having cash balance of ₹ 12.41 lakh as on 15.01.2015 and the cash balance in the immediately preceding months was ₹ 12.23 lakh, ₹ 12.02 lakh and ₹ 10.29 lakh as on 31.12.2014, 30.11.2014 and 30.10.2014 respectively. All these facts are not disputed by the Ld. CIT-DR. We find that the Assessing Officer made sufficient enquiries during the assessment and took reasonable and plausible view - if the view taken by Assessing Officer is not acceptable Ld. PCIT, which is otherwise reasonable and plausible order under section 263 cannot be treated as erroneous. For invoking power under section 263 of the Act the twin condition i.e., order is erroneous and in so far as prejudicial to the interest of Revenue must be fulfilled simultaneously at the cost of repetition. We may further add that it is not a case of lack of enquiry, the Ld. PCIT while passing the order under section 263 held that Assessing Officer has not made adequate enquiry. Therefore the order passed by Ld. PCIT u/s 263 is not sustainable and the same is quashed. Assessee s appeal is allowed.
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2021 (9) TMI 192
Revision u/s 263 - unexplained cash deposits - Lack of enquiry or inadequate enquiry - reopening of assessment u/s 147 initiated - HELD THAT:- Assessing Officer during the assessment proceedings required the assessee to furnish detail income tax return, computation of income, details of bank statement and the reply of questionnaire raised to assessee about the source of deposits. Before us the Ld. AR of the assessee vehemently submitted that assessee s declared income of ₹ 1.80 lakh from business of transportation under section 44AE and ₹ 1.39 lakh from trading in building material respectively (being @ 8% of total turnover of ₹ 17.44 lakh). Assessing Officer made sufficient enquiries during the assessment and took reasonable and possible view. In our view, if the review taken by Assessing Officer is not acceptable Ld. PCIT, order under section 263 cannot be treated as erroneous and prejudicial to the interest of Revenue for revising the order Assessing Officer by invoking power under section 263 of the Act the twin condition i.e., order is erroneous and in so far as prejudicial to the interest of Revenue must be fulfilled simultaneously at the cost of repetition. It is not a case of lack of enquiry, the Ld. PCIT while passing the order under section 263 held that Assessing Officer has not made adequate enquiry. Therefore the order passed by Ld. PCIT under section 263 is not sustainable and the same is quashed. - Decided in favour of assessee.
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2021 (9) TMI 190
Reopening of assessment u/s 147 - eligibility of reasons to believe - information that the assessee had made immovable properties transactions - HELD THAT:- From perusal of the reasons recorded, we noticed that whether the provisions of explanation 2(a) or 2(b) of section 147 are applicable or both the sections are applicable . AO had written escaped assessment within the meaning of section 147 . The explanation 2(a) contains the situation where no return of income was furnished by the assessee. In the present case the assessee furnished his return of income, which is evident from assessment order page No. 2, therefore, provisions of explanation 2(a) of Section 147 of the Act does not apply on the assessee. As observed that no addition was made by the AO on the ground of reasons recorded and AO believed that income is escaped assessment.Explanation 3 does not and cannot override the necessity of fulfilling the conditions set out in the substantive part of section 147. An Explanation to a statutory provision is intended to explain its contents and cannot be construed to override it or render the substance and core nugatory. Section 147 has this effect that the AO has to assess or reassess the income ( such income ) which escaped assessment and which was the basis of the formation of belief and if he does so, he can also assess or reassess any other income which has escaped assessment and which, comes to his notice during the course of the proceedings - If after issuing a notice under section 148, he accepted the contention of the assessee and holds that the income which he has initially formed a reason to believe had escaped assessment, has as a matter of fact not escaped assessment, it is not open to him independently to assess some other income. If he intends to do so, a fresh notice under section 148 would be necessary, the legality of which would be tested in the event of a challenge by the assessee. Therefore, we found merit in the contention of the ld. AR and the case laws relied upon by the ld DR are not applicable in the case of the assessee, therefore, we quash the proceedings initiated u/s 147 of the Act. - Decided in favour of assessee.
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2021 (9) TMI 189
Deduction u/s 54F - assessee had filed additional evidence u/r 29A of the ITAT Rules, 1963 - HELD THAT:- As during the appellate proceedings before us assessee had produced additional evidences u/r 29 of the ITAT Rules in support of the claim that he had not acquired the flat in question as such there is no violation of condition prescribed U/s 54F of the Act. According to the assessee, it was truly agreed that in view of the fact that additional evidences were filed by the assessee, therefore, the matter was to be restored to the A.O. on this particular issue but inadvertently, the Bench had restored the matter to the file of ld. CIT(A) for deciding all the issues afresh. We modify the earlier order of the Coordinate Bench and direct for restoration of the matter to the record of the A.O. to consider the additional evidences filed by the assessee and decide the matter afresh only on the issue regarding the flat at Ahmedabad while deciding the deduction U/s 54F of the Act needless to say the assessee shall be granted opportunity of hearing before passing fresh order.
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2021 (9) TMI 188
Reopening of assessment u/s 147 - earning of capital gain by entering into JDA with the Developer - HELD THAT:- There was no discussion whatsoever with regard to the earning of capital gain by entering into JDA with the Developer on 15.3.2006. The assessee has not disclosed anything about this transaction either in its return of income or in its computation. There is a total failure on the part of assessee to bring these facts to the notice of the assessing authority. Vide JDA dated 15.3.2006, the assessee being land owner with regard to 38 cents situated at 13/2A, 89, Kodialbail Village, Mangalore Taluk. As per JDA the assessee has to receive 24,000 sq.ft. of built-up area in the apartment for handing over the property. Since the capital gain arising out of this transaction has escaped from assessment and assessee has not disclosed fully and truly all material facts for the purpose of assessment, the case is attracted to the provisions of section 147. After necessary approval, notice u/s. 148 was issued on 20.3.2013. Being so, we do not find any infirmity in the reopening of assessment in this case. Transfer in terms of section 2(47)(v) of the Act when the JDA was entered with the Developer on 15.3.2006 - . The judgment in Chaturbhuj Dwarkadas Kapadia . [ 2003 (2) TMI 62 - BOMBAY HIGH COURT] undoubtedly lays down a proposition, which more often than not, favours the Revenue, but, on the facts of this case, the said judgment supports the case of assessee inasmuch as willingness to perform has been specifically recognized as one of the essential ingredients to cover a transaction by the scope of section 53A of the T.P. Act. The Revenue does not get any assistance from this judicial precedent. As decided in BALBIR SINGH MAINI, CS ATWAL [ 2017 (10) TMI 323 - SUPREME COURT] Under sub-clause (vi) of section 2(47) of the 1961 Act, any transaction which has the effect of transferring or enabling the enjoyment of any immovable property would come within its purview. The expression 'or in any other manner whatsoever' in sub-clause ( vi ) would show that it is not necessary that the transaction refers to the membership of a cooperative society. The object of section 2(47)( vi ) appears to be to bring within the tax net a de facto transfer of any immovable property. The expression 'enabling the enjoyment of' takes colour from the earlier expression 'transferring', so that it is clear that any transaction which enables the enjoyment of immovable property must be enjoyment as a purported owner thereof - Appeal by the assessee is partly allowed.
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2021 (9) TMI 187
Deduction u/s 10A - return of income declaring fringe benefit tax (FBT) at concessional rate of 5% on expenditure on conveyance, hotel and boarding facilities - HELD THAT:- The present proceedings is out of fringe benefit tax. The assessee had claimed concessional rate of tax at 5% on certain expenditure stating its activities constitute ITES as specified in CBDT Notification. The assessee had claimed deduction u/s 10A of the I.T.Act on the ground that the activities of the assessee constitute ITES, and hence, it is a ITES undertaking, eligible for deduction u/s 10A of the I.T.Act. The Assessing Officer disallowed the claim of deduction u/s 10A of the I.T.Act on the ground that the activities of the assessee does not constitute ITES. On appeal, the CIT(A) held the activities of the assessee constitute ITES and assessee was eligible for deduction u/s 10A. The activities of the assessee are in the nature of ITES and is eligible for deduction u/s 10A of the I.T.Act, the issue whether the activities of the assessee constitute ITES has attained finality. Accordingly, the concessional rate of FBT at 5% claimed by the assessee also stands upheld. Appeal filed by the assessee is allowed.
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2021 (9) TMI 186
Excess stock of Gold and Silver Jewellery as found during the course of survey proceedings - Additions based on admission in the Statement by the appellant - CIT(A) set aside the demand without calling the remand report from AO - HELD THAT:- The quantity of stock found during the survey was never disputed by the assessee though the assessee claimed a part of it as not undisclosed. Hence when the assessee has not quantity of the stock found during the survey then the said quantity of the stock itself would constitute incriminating material as it was not recorded in the books of accounts of the assessee. The subsequent bills / invoices produced by the assessee without making the payment of purchases to the extent of ₹ 3,94,50,903/- is always a subject matter of verification and enquiry. Therefore, this finding of the CIT(A) is not sustainable and the same is set aside. CIT(A) while passing the order decided the issue of the remaining Jewellery after reducing the amount of 18Kg.45 Gms Gold allegedly purchased from M/s Pushpa Enterprises, Agra. CIT(A) has not given a conclusive finding but the issue is set aside to the record of the Assessing Officer and that too with a direction to consider the various facts which were explained by the assessee during the appellate proceedings. CIT(A) has passed the impugned order by accepting the evidences as well as the explanation of the assessee without calling a remand report from AO. When the CIT(A) has passed the impugned order without calling a remand report from the Assessing Officer and even giving a finding that there is no incriminating material found during the course of survey which is contrary to the undisputed facts and material on record is not sustainable in law and liable to be set aside. We order accordingly. The Assessing Officer is directed to re-adjudicate these issues after proper verification and examination of record and particularly the genuineness of the transaction of the alleged purchases made by the assessee from M/s Pushpa Enterprises, Agra by considering the status of payment of the said amount by the assessee. Needless to say the assessee be given an appropriate opportunity of hearing before passing the fresh order.
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2021 (9) TMI 185
Bogus LTCG - Addition u/s 68 - assessee received the sum from the bogus or non-existing companies and not assessed to tax - HELD THAT:- As the assessee failed to fulfill the conditions laid down u/s 68 of the Act by way of documentary evidence and we do not find any merit in the submissions made before us. Therefore, we do not find any infirmity in the order of the CIT(A), who followed the judgment of NRA IRON STEEL PVT. LTD. [ 2019 (3) TMI 323 - SUPREME COURT] to confirm the order of the AO and accordingly, upholding the order of the CIT(A), we dismiss the grounds raised by the assessee on this issue.
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2021 (9) TMI 184
Computation of long term capital gains u/s 50C - Fair Market value of the property fixed by the SRO for the purpose of Stamp Duty - assessee had sold / executed sale /transfer deed wherein the subject matter of her right is in favour of vendee as against any land or building component for issuing part therein - HELD THAT:- As decided in RAJITHA DUBBAKA [ 2021 (6) TMI 1058 - ITAT HYDERABAD] such a transfer of the vendor s limited right in respect of land and building than the twin categories of assets, as the case may be, does not come within the purview of application of section.50C - we direct the AO to delete the addition by invoking the provisions of section 50C. - Decided in favour of assessee. Penalty u/s 271(1)(b) - Assessee not complying with notice issued u.s 142(1) - HELD THAT:- As penalty has been imposed by the AO u/s 271(1)(b) for not complying with the notices issued dated 19/01/2015 by the AO u/s 142(1) of the Act. We find from the order of the AO that assessment was completed u/s 143(3) of the Act on 30/03/2015 and in the assessment order, the AO has not recorded any satisfaction for imposing penalty u/s 271(1)(b) - similar issue has been decided in the case of Globus Infocom Ltd[ 2016 (6) TMI 1304 - ITAT DELHI] wherein held that if the assessment order has been passed u/s 143(3) of the Act, penalty cannot be imposed u/s 271(1)(b) - Decided in favour of assessee.
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2021 (9) TMI 182
Addition on account of difference of the gross receipts shown in the 26AS in comparison to the return of income filed by the assessee - AO noted that assessee has not declared the income received from Tata Consulting Engineers Ltd. [TCE] as appearing in 26AS - HELD THAT:- AO has made the addition on the presumption that the amount shown in 26AS is the actual gross receipt of the assessee from TCE without conducting any verification of the facts and CIT(A) has confirmed this addition on the ground that assessee has failed to reconcile this difference - once the assessee has disputed the said amount pertaining to any of the bills raised by the assessee, then a proper enquiry ought to have been conducted by the AO to verify this fact. The assessee has expressed its inability to force the other party to rectify the TDS statement and consequently 26AS - we set aside this issue to the record of the Assessing Officer for conducting a proper enquiry by calling upon the necessary information from TCE and then decide the issue. Disallowance in respect of delay for depositing the employees contribution to ESI and PF - assessee submitted as deposited the employees contribution to ESI and PF belatedly but before due date of filing the return of income u/s.139(1) - scope of amended provisions of Section 43B as well as 36(1)(va) - HELD THAT:- As the amended provisions of Section 43B as well as 36(1)(va) are not applicable for the assessment year under consideration. By following the binding decision of Hon ble Jurisdictional High Court of AIMIL LIMITED, NIRMALA SWAMI, SPEARHEAD DIGITAL STUDIO, M/S. NET 4 INDIA LTD., MODIPON LTD., M/S. EKTA AGRO INDUSTRIES LTD., [ 2009 (12) TMI 38 - DELHI HIGH COURT] the employees contribution paid by the assessee before the due date of filing of return of income u/s.139(1) is an allowable deduction. Accordingly, we decide this issue in favour of the assessee
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2021 (9) TMI 180
Determination of interest u/s 234A, 234B and 234C - Adjustment of advance tax liability with the seized cash - HELD THAT:- Our adjudication to the same goes in assessee's favour and against the department. This is for the reason that Section 132(B)(1)(i) itself includes the amount of liability determined on completion of the assessment u/s. 153A and the assessment of the year relevant to the previous year in which search is initiated or requested is made or interest payable in connection with such assessment . That being the statutory position, we hold that the clinching statutory expression advance tax (supra) in Explanation-II thereof does not deemed to have included any interest which is already treated as allowable in sub-section (1)(i) herein above. We therefore find no merit in the Revenue's sole substantive grievance going by the principles of stricter interpretation as per hon'ble apex court's recent landmark judgment in Commissioner of Customs Vs. Dilip Kumar [ 2018 (7) TMI 1826 - SUPREME COURT] . Penalty u/s 271AAB - non specification of charge - HELD THAT:- Assessing Officer's penalty order nowhere specified as to whether the alleged undisclosed income satisfied that the corresponding statutory parameters prescribed in Section 271AAB, Explanation (C)(i)(A) (B) and (ii) not been recorded or before the date of search in the books of accounts or other documents maintained in the normal course relating to such previous year or otherwise not disclosed before the specified authority (ies) or it had surfaced, either wholly or partly in respect of expense recorded We therefore find no reason to sustain the impugned Section 271AAB penalty. - Decided in favour of assessee.
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2021 (9) TMI 179
Exemption u/s 11 - assessee had unspent amount of accumulated surplus - As per AO amount could have been accumulated only for the some specific purpose and not for the general purpose - HELD THAT:- CIT(A) while relying on the various decisions cited in the order has held that the contention of the AO that the amount could have been accumulated only for some specific purpose and not for the general purposes does not hold good. Before us, no fallacy in the findings of CIT(A) has been pointed out by the Revenue nor has the Revenue placed on record any contrary binding decision in its support. In view of the aforesaid facts, we find no reason to interfere to the order of CIT(A) and thus the appeal of the Revenue is dismissed.
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2021 (9) TMI 178
Validity of order passed u/s.143(3) read with section 144C - 'orders passed beyond the period of limitation - orders barred by limitation in terms of Section 153 - statutory time limits for completion of assessments, re-assessments re-computations by the Assessing Officer - HELD THAT:- As safely inferred that the office of the CIT had received the order of High Court on or before the date of notice i.e. 06.10.2017. Accordingly, the period of twelve months for completion of assessment began from the end of the month of October 2017 which ended on 31.10.2018. It is noted that the impugned order was passed on 28.12.2018 which was well beyond the date on which the proceedings got time barred - no infirmity in the order of Ld. CIT(A) holding that the AO did not had the jurisdiction to frame assessment after the limitation period has set in and therefore the assessment order passed by AO on 28.12.2018 was barred by limitation and therefore it is null in the eyes of law. DR s contention that section 292BB of the Act, comes to the rescue of the AO in such events is concerned, we note that the provisions of Section 292BB only cures any defect in the service of any notice issued under the provision of this Act and does not deal with orders passed beyond the period of limitation prescribed under the Act. In the present case the assessee has objected to the validity of the order impugned on the premise that it was barred by limitation in terms of Section 153 of the Act. The facts of the case are thus altogether different and the aforesaid provision relied upon by the Ld. DR has no relevance whatsoever. We thus uphold the order of the Ld. CIT(A) on the legal issue and confirm the action of the Ld CIT(A) holding that the AO did not had the jurisdiction to frame assessment after the limitation period has set in and therefore the assessment order passed by AO on 28.12.2018 was barred by limitation and therefore it is null in the eyes of law. and accordingly dismiss the appeal of the Revenue. Revision u/s 263 - Pr. CIT has interdicted with the assessment order passed by the AO dated 28.12.2018 u/s. 143(3) read with section 144C of the Act, which has been held to be non-est in the eyes of law by the Ld. CIT(A), which decision has now been upheld by us (supra). Therefore, the action of the Ld. Pr. CIT is unsustainable since the assessment order dated 28.12.2018 itself is bad in law. Therefore, the Ld. Pr. CIT has interdicted a non-est order of AO dated 28.12.2018. This issue is squarely covered by the legal maxim subleto fundamento credit opus meaning thereby in a case where foundation is removed the super structure falls.
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2021 (9) TMI 177
Estimation of income - GP estimation on bogus purchases - AO estimated GP on bogus purchases @ 12.5% - HELD THAT:- Assessee has declared GP of 9.42% on regular transactions. This GP has not been disturbed by the AO. In bogus purchase transactions, the modus operandi is that the purchases are made from grey market to save VAT and marginal purchase cost and matching bogus bills are obtained from accommodation entry providers. Taking into consideration entirety of facts, we are of considered view that the ends of justice would be met, if suppressed profit margin on bogus purchases as estimated at 5%. We hold and direct accordingly.
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2021 (9) TMI 176
Addition u/s 56(2)(vii)(b) - difference between the sale consideration declared by the assessee and the stamp duty value - whether the assessee would be eligible for benefit of 3rd proviso to section 50C(1) inserted by the Finance Act, 2018 and subsequently amended by the Finance Act, 2020? - HELD THAT:- Undisputedly, the difference in the sale consideration declared by the assessee and the stamp duty value is 5.8% approximately. The co-ordinate bench in the case of Maria Fernandes Cheryl [ 2021 (1) TMI 620 - ITAT MUMBAI] while considering the similar issue held that the 3rd proviso to section 50C(1) is curative in nature, even though it is stated to be prospective, but it relates back to the date when the statutory provision of section 50C was made effective i.e. 01.04.2003. Even, the subsequent amendment to the aforesaid proviso by the Finance Act, 2020 enhancing tolerance band from 5% to 10% would be effective w.e.f. 01.04.2003. Similar view has been taken in the case of Amrapali Cinema Vs. ACIT (supra) following the decision rendered in the case of Maria Fernandes Cheryl [ 2021 (1) TMI 620 - ITAT MUMBAI] . We find merit in the submissions made by ld. AR - no hesitation in holding that in the instant case, since the difference between the sale consideration declared by the assessee and the stamp duty value is 5.8% (approx), the consideration declared by the assessee should not be disturbed as the variation is within tolerance band of 10%. Consequently, the AO is directed to delete the addition. - Decided in favour of assessee.
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2021 (9) TMI 175
Exemption u/s 11 - Charitable object u/s 2(15) - whether the activity of the assessee as engaged in the development of urban area of Gandhinagar which is in the nature of advancement of general public utility not hit by the newly introduced first and second proviso to sec. 2(15) ? - HELD THAT:- After following the decision in the cases of Ahmedabad Urban Development Authority [ 2017 (5) TMI 1468 - GUJARAT HIGH COURT] and CIT Vs. Gujarat Industrial Development Corporation [ 2017 (7) TMI 811 - GUJARAT HIGH COURT] the Co-ordinate Bench of the ITAT has adjudicated the similar issue on identical fact in the case of the assessee itself [ 2019 (7) TMI 1608 - ITAT AHMEDABAD] wherein the claim of the assessee has been allowed - Decided in favour of assessee.
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2021 (9) TMI 174
Addition being the amount of PF and ESI u/s 36(1)(va) - Delayed employees contribution of PF and ESI - as per assessee amount remitted to the concerned accounts before the due date of filing the return of income - HELD THAT:- As decided in LATE SMT. ANJALI DEVI MAJETI (REP. BY L/R MAJETI NAGARAJU) [ 2021 (5) TMI 993 - ITAT HYDERABAD] since the assessee has deposited the Employees Contribution to the PF and ESI before the date of filing the return of income, as per the amended provision applicable to the relevant A.Y. the same is not to be disallowed. Assessee's appeal is accordingly allowed.
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2021 (9) TMI 168
Disallowance u/s 14A r.w.r. 8D - Assessee made suo moto addition - assessee earned dividend from mutual fund - HELD THAT:- CIT (A) directed the AO to recompute the disallowance u/s 14A by considering the investments from which dividend has been earned by the appellant company and relying on the order of the Special Bench of ITAT in the case of CIT Vs Vireet Investments Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] , we hereby direct that only the investments which yielded the exempt income be considered for computation of disallowance u/s 14A r.w. Rule 8D. Disallowance of Expenses on account of sale of content - HELD THAT:- Disallowance of expenses on a presumption basis with regard to the income received on syndication services has been a repetitive issue from the years 2006-07 to 2014-15. This issue has been decided by the Hon ble Delhi High Court in assessee s own case in assessment years 2004-05 and 2005-06 [ 2016 (3) TMI 1320 - DELHI HIGH COURT] and further in assessment year 2006-07, 2007-08 and 2008-09[ 2017 (9) TMI 1355 - DELHI HIGH COURT] , the issue has been adjudicated in favour of the assessee. Software Expenses and Depreciation claim of software - AO disallowed of the expenditure holding that the software utilized is capital in nature. The depreciation on software claimed @ 60% by the assessee has been scaled down to 25% by the Assessing Officer - HELD THAT:- CIT (A) deleted the addition based on the decision of the Hon ble Delhi High Court in assessee s own case in assessment years 2004-05 and 2005-06 also in subsequent years 2006-07, 2007-08, 2008-09. Since, the matter of software utilized in content production, the software embedded with hardware is an integral part of the computer equipment, the issue has been repetitively held in favour of the assessee and since the ld. CIT (A) has followed the earlier orders of the Tribunal, we decline to interfere with the order of the ld. CIT(A). Expenses of consultancy charges under the head legal and professional expenses - HELD THAT:- CIT (A) has gone through each and every item of expenditure and also the computation of income wherein an amount of ₹ 21,39,865/- spent on account of merger expenses have been suo moto disallowed by the assessee. CIT (A) held that an amount of ₹ 6,00,000/- spent towards valuation of shares for the purpose of merger of the company and ₹ 5,50,000/- paid to independent consultant are in the nature of capital expenditure. Since, the ld. CIT (A) has gone through the details of expenditure and since the assessee has already disallowed an amount of ₹ 21,39,865/-, we hereby hold that the grounds of appeal of the revenue on this issue cannot be sustained. Amortization of expenditure in case of amalgamation or demerger - HELD THAT:- We find that the Section 35DD clearly specifies amortization of expenditure in case of amalgamation and demerger. Since, the expenditure is in connection with the valuation of shares relating to merger, the same needs to be treated in accordance with the provisions of Section 35DD. Consultancy charges paid revenue swayed away by the mention of specific project expenses and treated them as capital expenditure in nature whereas the fact remains that the consultant has been paid for providing services in development of new products and enhancement of existing features on the website which cannot be treated as a new arena of the business operations. Hence, the amount paid should be treated as revenue expenditure.
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2021 (9) TMI 167
Disallowance on proportionate basis u/s 14A - assessee company received divided income on various investments made in earlier years which was claimed as exempt income - suo motu disallowance made by assessee - HELD THAT:- As in OSWAL WOOLEN MILLS LTD. [ 2019 (7) TMI 1601 - ITAT CHANDIGARH] decided the said issue in favour of the assessee holding that there is no defect in the suo motu disallowance computed by the assessee on proportionate basis except certain portion of tax relating to the personal expenditure and allowances which were not taken into consideration. Since the coordinate Bench has allowed the identical ground of appeal in the group company case, we do not find any reason to take a different view. However, in our considered view, the computation submitted by the assessee in this case needs to be verified by the AO to ascertain whether the assessee has computed the same in accordance with the observations made by the coordinate Bench in the said case and in case any defect is found to determine the same afresh after affording a reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes. Additional depreciation - number of days asset put to use - addition being balance 10% on the cost of machinery which was put to use for less than 180 days - AO rejected the claim of the assessee holding that there is no provision in the statute regarding carry forward of the additional depreciation - HELD THAT:- Tribunal has decided the identical issue in favour of the assessee in the case of ACIT vs. M/s Nahar Spinning Mills Ltd. [ 2020 (11) TMI 1010 - ITAT CHANDIGARH] allowing the claim of additional depreciation to be carried forward which had not been claimed in the return of income. - Decided in favour of assessee.
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Customs
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2021 (9) TMI 208
Classification of goods - Alexa voice remote 3rd Generation Model No. L5B83G, intended to be imported - classifiable under Custom Tariff Item 851762 90 or under 8526? - eligibility to claim benefit of Serial number 20 of Notification No. 57/2017-Customs dated 30.06.2017 - interpretation of General Rules for Interpretation of Import Tariff - HELD THAT:- CTH 8517 covers Telephone sets, including Telephone sets, including Telephones for Cellular Networks or for other Wireless Networks; other apparatus for the transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network), other than transmission or reception apparatus of heading 8443, 8525, 8527 or 8528. Sub-heading 8517 62 covers Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus; and 8517 62 90 is the residual sub-heading thereof - CTH 8526 covers Radar apparatus, radio navigational aid apparatus and radio remote control apparatus; and sub-heading 8526 92 00 covers Radio remote control apparatus. The Alexa Fire Stick is to be connected to the HDMI port of a television and its function is to receive the command and transmit message to Internet to receive the desired signals as per the command given through the Alexa voice remote. In this regard, the applicant has declared that the Alexa voice remote (3rd Gen) is primarily meant to operate Fire TV Stick. Therefore, prima facie, the device does function as a transmission and reception apparatus, but the primary objective of the transmission and reception function is to act as a remote control device, giving the device the essential character of a remote control device. Blue tooth devices connected in a Bluetooth network communicate with each other using ultra-high frequency (UHF) radio waves . Therefore, the contention of the applicant that Alexa voice remote (3rd Gen) does not merit classification as radio remote control apparatus under 8526 92 00 since it uses Bluetooth technology is facile and not accepted - the appropriate classification of Alexa voice remote (3rd Gen) based on rule 1 and rule 3(b) of GI Rules is under CTH 8526, and specifically under sub-heading 85269200. Benefit of Serial No. 20 of Notification No.57/2017-Customs, dated 30.06.2017, as amended vide notification No.22/2018-Customs dated 02.02.2018 - HELD THAT:- The benefit is available for all goods other than wrist wearable devices (commonly known as smart watches) falling under sub-heading 8517 62 90. Therefore, the same is not admissible to Alexa voice remote (3 rd Gen), which is classifiable under sub-heading 85269200.
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2021 (9) TMI 207
Classification of goods - Preparation of Essential Oils intended to be imported in retail packs for distribution marketing in India through General Provision Stores and online channel - whether the products fall under Chapter 33 or otherwise? - HELD THAT:- The goods covered by the application are clearly intended for cure and not -care ; and they are intended for sale based on their curative attributes. Further, in view of the test laid down by the Hon ble Supreme Court in COMMISSIONER OF CENTRAL EXCISE, MUMBAI IV VERSUS M/S. CIENS LABORATORIES, M/S. TIME PHARMA [ 2013 (8) TMI 467 - SUPREME COURT ], the determining role ascribed by the Principal Commissioner of Customs to the requirement of prescription by medical practitioner for the goods to be classified as medicament under 3004 does not sustain. Therefore, since the goods are proposed to be imported in retail packs, they are classifiable under heading 3004. Going further, relying on the communication of the Ministry of AYUSH, the ingredients of the goods are described in the authoritative bodies of Ayurveda as listed in the Schedule -I of the Drugs and Cosmetics Act, 1940, the goods are classifiable under sub-heading 3004 90 11. The goods are described in the advance ruling application as Preparation of Essential Oils manufactured by Bertram and sold under Siang Pure Brand, which are commonly used for applying on human body/skin without the prescription of medical practitioner. They are claimed to provide relief from headache, motion sickness, dizziness, coughing (throat irritation), stomach ache, inspect bites, joint and muscle pain etc. answer to the description of herbal medicinal products in retail consumer packs, and therefore merit classification under 3004, more specifically sub-heading 3004 90 11 of the First Schedule to the Customs Tariff Act, 1975.
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2021 (9) TMI 204
Suspension of Customs Broker Licence - initial order of suspension itself was issued belatedly - order of suspension was issued after lapse of 7 months from the date of inspection conducted - Rule 19(1) of the Customs Brokers Licensing Regulations 2013 - grant of interim stay, allowing to continue the license by respondent - HELD THAT:- After passing an order of interim suspension under Rule 19(1) of the Customs Brokers Licensing Regulations 2013, the Commissioner shall, within 15 days from the date of suspension, give an opportunity of hearing to the Customs Broker, whose licence is suspended and will pass such orders as he deems fit either revoking the suspension or continuing it, as the case may be, within 15 days from the date of hearing granted to the Customs Broker. Thus, even in cases where suspension order is issued on contemplation of charges or during the pending enquiry, the Commissioner has to follow the procedures contemplated under Sub-Rule (2) to Rule 19 of the Customs Broker Licensing Regulations 2013. In the present case, such an opportunity was provided and the suspension was continued in the impugned proceedings dated 15.06.2016. However, the proceedings initiated based on the allegations are yet to be concluded. The petitioner filed the present writ petition and by virtue of the interim order granted, the licence is allowed to be continued by the respondent. This Court is of the considered opinion that interim suspension cannot be allowed to continue for a longer period nor the authority on initiation of proceedings are expected to conclude the proceedings by following the procedures as contemplated under Regulation 20 as expeditiously as possible, both in the interest of the Department as well as in the interest of the Customs Broker concerned. Undoubtedly, prolonged suspension of license is also bad in law. Such prolonged suspension would not serve the purpose for which the power of interim suspension is contemplated under the Regulations - As far as the present writ petition is concerned, the impugned order was passed on 15.06.2016 and five years have lapsed and further the petitioner is enjoying the broker licence during the pendency of the writ petition. Petition allowed.
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2021 (9) TMI 193
Levy of penalty on Customs Broker u/r 18 of the CBLR, 2013 - violation of provisions of Regulation 11(a), 11(d) and 11(n) of CBLR, 2013 - allegation is on the ground that authorization / KYC documents was obtained from middleman instead of importer directly - conclusion of allegation without informing the Customs Broker - fair opportunity of hearing not provided - principles of natural justice - HELD THAT:- These Regulations are in the nature of disciplinary rules for a Customs Broker. Revocation of license is a major punishment which affects the livelihood of not only the Customs Broker but also those persons who are employed under him. The punishment being of such major nature, Regulation provides for the conduct of inquiry before adjudication of the Show Cause Notice issued to the Customs Broker. The inquiry proceedings is a measure to be cautious and to give sufficient opportunity to the person whose conduct is the subject matter of the Show Cause Notice. The purpose of such inquiry is to help the adjudicating authority to derive at proper conclusion based on all materials and facts that have been collected during the inquiry. The first stage of such inquiry as laid down in the Regulation is to collect material / statements so as to give opportunity to those persons who are required or relevant to be heard. In the second stage, the Regulation provides for giving opportunity to the Customs Broker to cross-examine those persons whose statements have been recorded. The Inquiry Officer should support his conclusion with reason. The principles of natural justice requires that a copy thereof recording the reasons of disagreement has to be supplied to the Customs Broker so that he is able to reply to the charges levelled against him as against the conclusions arrived by the Inquiry Officer. Thus, the adjudicating authority is bound to put to notice the Customs Broker, setting out tentative conclusions or the points on which he differs from the Inquiry Officer. This would facilitate and ensure the right of Customs Broker to defend his case - In the instant case, though the Inquiry Officer has reported that there is no violation under Regulation 11(a), (d) and (n) of the CBLR, 2013 the adjudicating authority has proceeded to conclude that there is violation of 11(a) and 11(n), without informing the Customs Broker on the ground of disagreement with the inquiry report. The finding rendered by the adjudicating authority that the appellant has violated Regulation 11(a) and 11(n) are without any factual or legal basis and requires to be set aside - penalty set aside - appeal allowed - decided in favor of appellant.
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2021 (9) TMI 183
Confiscation of imported goods - multi-functional devices - requirement to meet the standards as 'printers / plotters' as per Electronics Information Technology Goods (Requirements of Compulsory Registration) Order 2012 or not - scope of Hazardous Other Wastes (Management and Transboundary Movement) Rules, 2016 - prohibited goods or restricted goods - value declared by the respondents in their Bill of Entry, correct or not - revaluation done by the Chartered Engineer correctly or not - levy of redemption fine and penalty - HELD THAT:- A perusal of the entire BIS Rules, 1987 shows that just like BIS Act, 1987, BIS Rules 1987 did not provide for regulating or prohibiting import of goods. Therefore, CRO 2012 has, in clause (3), gone beyond the scope of the Act and the Rules in prescribing a standard for import of goods and in prohibiting import of goods which did not meet the standards. Therefore, it is doubtful, whether in the first place, whether the CRO 2012 is legally sustainable. Even if it is ignored that CRO 2012 was issued beyond the scope of the parent Act and Rules, the Schedule to CRO 2012 covers only printers and plotters at Sl.No.7. It did not cover multi-functional devices. The case of the Revenue is that Ministry of Electronics Information Technology has issued a circular No.1/2019 dt. 02.05.2019 clarifying that multi-functional devices are basically printers with additional features and covered under the category of 'printers and plotters' as notified in the order - the case of the Revenue regarding prohibition of import lies on a shaky ground of circular issued by MeitY which effectively enlarged the scope of entry in the order itself. Confiscation of goods - HELD THAT:- It is undisputed that the goods were second hand in nature and were examined by the Customs under first check and were verified by expert Chartered Engineer and the import duty was recalculated accordingly under CVR 2007. Neither side is disputing the valuation. Therefore, the valuation of the imported goods does not call for any interference. Consequently, the confiscation of the goods or misdeclaration under Section 111 (m) also need not be interfered with. Mutilation of goods - HELD THAT:- CRO 2012 does not cover the impugned goods. Therefore, the question of mutilation of the goods under clause 3 (2) of CRO 2012 does not apply as there was no standard prescribed under the CRO for MFDs. The circulars and letters of the Ministry are at best executive opinions and they cannot take the place of law. We have also observed that the CRO itself has imposed restriction on imports going beyond the scope of BIS Act, 1986 and BIS Rules 1987 neither of which (unlike BIS Act, 2016) provided for prescribed standards or for regulating imports. Therefore, the question of mutilation of goods does not arise. Applicability of Hazardous waste rules - HELD THAT:- The requirement of re-export or destruction under Rule 15 does not apply to the impugned goods. Revenue has, in fact, increased the value of imported goods. Had they been a waste, value should have been Nil or something close to it. Therefore, they are useful goods with some residual life and cannot be called hazardous waste by any stretch of imagination. Therefore, the Hazardous Waste Rules do not apply to the impugned goods. Levy of penalty - HELD THAT:- Section 49 is an enabling section and is not a prohibiting section. There is nothing in the section failure of which may be construed as contravention. A contravention, by definition, implies an act or omission prohibited by law. In this section, there is nothing which requires the importer to do or not to do something. It says that Assistant or Deputy Commissioner of Customs may permit to deposit of goods in a warehouse and the proviso states that the Commissioner can extend the period of storage - there is neither any obligation to do anything nor prohibition of any act under Section 49. Therefore, there cannot be any contravention under Section 49. It is only an enabling provision for the Assistant Commissioner and the Commissioner. Therefore, no penalty can be imposed under Section 117 for contravention of Section 49 and the Ld. Commissioner (Appeals) is correct in setting aside penalty under Section 117 - there is no dispute regarding reduction of penalty under Section 112 (a) by the Commissioner (Appeals) which is fair and reasonable. Appeal dismissed - decided against Revenue.
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Corporate Laws
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2021 (9) TMI 171
Sanction of Scheme of Amalgamation - Section 230 to 232 of the Companies Act, 2013 and other applicable provisions of the Companies Act, 2013 - HELD THAT:- Various directions with regard to holding, convening and dispensing with various meetings issued - directions with regard to issuance of notices also issued. The scheme is approved - application allowed.
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2021 (9) TMI 170
Sanction of the Scheme of Amalgamation - Section 60 to 62 of the Limited Liability Partnership Act 2008 - HELD THAT:- Various directions with regard to holding, convening and dispensing with various meetings issued - directions with regard to issuance of notices also issued. The scheme is approved - application allowed.
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2021 (9) TMI 169
Sanction of Scheme of Amalgamation - Sections 230 to 232 and other applicable provisions of the Companies Act. 2013 (for brevity 'The Act') read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- Various directions with respect to calling, convening and holding of the meetings of the Shareholders, Secured and Unsecured Creditors or dispensing with the same, are issued - directions with regard to issuance of notices also issued. The scheme is approved - application allowed.
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Insolvency & Bankruptcy
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2021 (9) TMI 197
Liability for Fraudulent Conduct of Business - fraudulent transactions - existence of claim of the Appellant against the Corporate Debtor - movement of funds of the Corporate Debtor in the cooperative bank which was opened for the limited period from 19.07.2019 to 15.10.2019 - Section 61 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The Operational Creditor (Appellant) is a public incorporated Company since 09.04.1986 - It is not in dispute that they have not supplied the material and the amount were not due for collection. What wrong has been done by the Operational Creditor is violation of Section 14 of the Code. We are in agreement with the order passed by the Adjudicating Authority to the extent of refund of money and the same is in order - there is no need to interfere with the order of the Adjudicating Authority. The appeal is dismissed.
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2021 (9) TMI 196
Withdrawal of application - application was earlier dismissed on the technical ground that the form FA is not signed by the Operational Creditor - Section 12A of the IBC - HELD THAT:- Ld. Adjudicating Authority has rejected the Application on the ground that the Application Section 12A of the IBC is not filed by the Applicant (Operational Creditor) on whose instance CIRP initiated against the Corporate Debtor. No doubt, as per Section 12A of the IBC, the Application must be filed by the Applicant and Regulation 30A of the Regulations provides the procedure and format of the Application i.e. FA. When the admitted claim of the Operational Creditor and other creditors are satisfied by the Corporate Debtor and CoC approved the resolution for withdrawal of the Application by 100% voting share and the Corporate Debtor has provided a bank guarantee as per sub-Regulation 2 of Regulation 30-A even though the Operational Creditor (Applicant) misusing his position, refused to sign the form FA and does not file Application under Section 12A of the IBC. No cause of action survives in favour of the Operational Creditor to proceed with CIRP - the matter is remitted back to the Ld. Adjudicating Authority to decide the fees and costs of CIRP payable to IRP which shall be borne by the Corporate Debtor. Appeal allowed by way of remand.
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2021 (9) TMI 173
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Service of demand notice - HELD THAT:- The present claim of ₹ 22,14,86,000/- of the Applicant has arose out of the two High Seas Sales Agreement, the dispute relating to which was referred by the Applicant to the Sole Arbitrator. Admittedly, the Corporate Debtor has raised dispute over the claim of the applicant within 10 days, as prescribed under Section 8 of the Code, vide its reply to the Demand Notice dated 28.01.2021. The Corporate Debtor in reply to the demand notice, has referred to the Arbitration Proceedings and claimed pre-existing dispute - further the applicant itself had initiated the Arbitration Proceeding to resolve the dispute relating to its claim, which resulted in dismissal of the claim being pre-mature. The documents on record sufficiently indicate that there has been a pre-existing dispute between the parties prior to issuance of demand notice. Hence, there being a pre-existing dispute and a situation in which the Applicant/Operational Creditor itself has referred the dispute to the Arbitration proceeding, which resulted in dismissal of the claim of the Applicant being pre-mature, the operational Creditor has failed to prove that its operational debt is undisputed. In terms of Section 9(5)(ii)(d) of the IBC, the moment it is established that there is a pre-existing dispute, the Corporate Debtor gets out of the clutches of the I B Code. Petition dismissed.
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Service Tax
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2021 (9) TMI 181
Levy of service tax - Manpower Supply Service - Job works/contract works - appellant has discharged the service tax on the impugned services or not - grant of cum-tax benefit - Penalty imposed after the period 2012 - HELD THAT:- For the period prior to 2012, the issue stands covered in favour of the appellant wherein the Tribunal in G. RAMAKRISHNAN, K. BALAKRISHNAN, P. KANNUSAMY, M. ARULPRAKASAM, R. ATHINARAYANAN, S. SUBBURAYALU VERSUS CCE ST MADURAI [ 2019 (3) TMI 42 - CESTAT CHENNAI] has held that as per definition of Manpower Supply Services, the demand cannot sustain for the job works / contract works done by the appellant for TAFE. It is argued by appellant that they have discharged the service tax liability and the matter may be remanded to verify the same and also to look into the issue of cum-tax benefit. On perusal of the impugned order, it is seen that though the appellant has raised this contention, the same has not been considered by the authorities below. The matter with regard to the period after 2012 is remanded to the adjudicating authority who shall determine afresh the duty demand for the period after 1.7.2012 and examine whether service tax on these services has been discharged. Penalty imposed after the period 2012 - HELD THAT:- Being an interpretational issue the appellant cannot be saddled with the guilt of intention to evade tax. Further, there is no allegation or finding of any positive act on the part of the appellant of willful suppression to evade service tax. On such score, imposition of penalty is unwarranted and requires to be set aside. The appeal is partly allowed and partly remanded.
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Central Excise
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2021 (9) TMI 191
CENVAT Credit - 1%/2% Additional Duty of Customs (CVD) paid on the imported coal - Customs Notification No. 12/2012-Cus dated March 17, 2012, as amended on by Notification dated March 1, 2016 - CVD paid @2% is duty of excise as specified in the Excise Tariff Act or not - HELD THAT:- A Division Bench of the Tribunal in M/S HINDALCO INDUSTRIES LTD. APPELLANT VERSUS GST, BHOPAL RESPONDENT [ 2018 (3) TMI 1124 - CESTAT, NEW DELHI ] , considered this precise issue and held that if additional duty of customs has been paid after taking into consideration the Customs Notification dated March 17, 2012, there would be no bar for availment of CENVAT credit in terms of rule 3(vii) of the Credit Rules. The provisions of rule 3 of the Credit Rules and the three decisions rendered by the Tribunal in Hindalco Industries Ltd., JAYPEE SIDHI CEMENT PLANT VERSUS COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX, CUSTOMS AND EXCISE, JABALPUR [ 2019 (7) TMI 250 - CESTAT NEW DELHI ] and M/S. ASAHI SONGWON COLORS LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST., VADODARA [ 2018 (9) TMI 159 - CESTAT AHMEDABAD ] were examined by the Tribunal and after distinguishing the decision of the Gujarat High Court in LONSENKIRI CHEMICALS INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE CUSTOMS AND SERVICE TAX, VADODARA-I [ 2018 (9) TMI 1439 - GUJARAT HIGH COURT ], which decision had also subsequently been distinguished by the Tribunal in C.C.E. S.T.- Surat-I vs. M/s. Aarti Industries Limited [ 2019 (3) TMI 240 - CESTAT AHMEDABAD ], the Tribunal concluded that if additional duty of Customs was paid after taking into consideration the Customs Notification dated March 17, 2012, there would be no bar for availment of CENVAT credit in terms of rule 3 (vii) of the Credit Rules. In view of the decision of the Tribunal in the appellant s own case [ 2020 (10) TMI 1032 - CESTAT NEW DELHI ], it has to be held that the Commissioner committed an illegality in disallowing CENVAT Credit of 1%/2% CVD paid on the imported coal under the Customs Notification No. 12/2012-Cus dated March 17, 2012, as amended on by Notification dated March 1, 2016. The Commissioner has also taken into consideration the fact that for the Financial Year 2012-13, the appellant had paid duty under the Excise Notification because of which credit was not admissible - The appellant has stated that though the appellant had taken CENVAT credit of CVD paid in terms of the Excise Notification, but the appellant subsequently suo moto partially reversed CENVAT credit and with respect to the balance CENVAT credit of 1% CVD paid, the appellant paid additional CVD at the rate of 5% under protest but availed CENVAT credit of only 1% of CVD paid. Though this fact was pointed out by the appellant, but the Commissioner failed to consider this aspect. The order dated February 26, 2019 passed by the Commissioner adjudicating the five show cause notices deserves to be set aside - Appeal allowed.
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CST, VAT & Sales Tax
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2021 (9) TMI 205
Reopening of concluded assessments - Second round of litigation - Earlier, the Court set aside the impugned orders on the sole ground of violation of the principle of natural justice - The Court directed that notice be issued to the Petitioner and after affording it an opportunity of being heard, a fresh reasoned order should be passed by the Dy. CST, Balasore. - HELD THAT:- Under Rule 26-A of the OST Rules, a registered dealer is expected to preserve books of account and other documents including bills, credit and cash memoranda, invoices and vouchers, etc. relating to the business of any year for a period of three years thereafter or for a period of 12 months after finalization of the order of assessment or penalty in appeal, revision or reference for the year to which it relates, whichever is later - As far as the present case is concerned, even if the aforementioned periods of limitation have been crossed, there is no legal basis for the Department in the present case to have sought to re-compute the tax, surcharge and interest payable by the Petitioner for the aforementioned periods. Once the assessment for a period has attained finality, and has not been re-opened by the Department in accordance with law, it is not possible for the amount of the tax, surcharge and interest payable for that period to be re-computed - In the present case too appears to be no scope for re-opening of the concluded assessments or re-computation of the amount of tax and surcharge payable for the aforementioned periods 2000- 2001, 2001-2002, 2002-2003 and 2003-2004. This Court finds the impugned re-computation orders to be unsustainable in the eye of law and therefore they are hereby set aside - Petition allowed.
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2021 (9) TMI 201
Power to rectify mistake - error apparent on the face of record - submission of C-forms earlier with a request to recompute the demand on the basis of the same, but the same has not been considered while making the impugned assessment - Section 84 of TNVAT Act - HELD THAT:- A careful perusal of Section 84 of TNVAT Act and more particularly the language in which Section 84 of TNVAT Act is couched, makes it clear that it is a provision which is for rectifying errors apparent on the face of the record and such power is vested with the Assessment Authorities, Appellate Authorities and Revisional Authorities besides Tribunals. This provision is akin to Section 152 of 'the Code of Civil Procedure, 1908'. Therefore, in assessment proceedings, if there is grievance qua certain points raised or certain materials placed before original authority not having been considered, that can qualify as a ground for appeal but cannot be slithered through as a rectification. Rectification is necessarily for errors that may have crept in and more particularly, errors which may have crept in inadvertently. Therefore, Section 84 of TNVAT does not come to the aid of writ petitioner in the captioned writ petitions. Principles qua alternate remedy - HELD THAT:- There is no impediment whatsoever for writ petitioner to file statutory appeal under Section 51 of TNVAT Act. This is more so, as this is the second round of litigation. Therefore, there is no reason much less compelling reason to demonstrate that the appeal remedy cannot be resorted to in the case on hand - this Court is informed that owing to earlier rounds of litigation, already certain deposits have been made by assessee and that there is also a time frame for preferring the appeal. Writ Petitions are disposed of, holding that it is for writ petitioner to avail alternate remedy under Section 51 of TNVAT Act - Petition disposed off.
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