Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
September 9, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Recovery of erroneous refund of CGST - allegation of availing benefit of irregular Input Tax Credit (ITC) - Export of goods - In view of the specific finding by the Commissioner (Appeals) that the goods were received by the respondents through e-way bills within the same city, there was no requirement of generation of e-way bills as provided under the notification dated 19.09.2018, the said finding has not been shown to be perverse or in any way arbitrary or illegal - No recovery - HC
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Classification of supply - job-work - Supply of services for printing on duplex board belonging to the recipient including cutting, punching and lamination of the duplex board, so printed, would attract tax @ 12% irrespective of the recipient of the services is registered under the GST Act or not.- AAR
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Exemption from GST - fortified atta - the instant supply of services by way of milling of food grains into flour (atta) to Food & Supplies Department, Govt. of West Bengal for distribution of such flour under Public Distribution System is eligible for exemption - AAR
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Classification of supply - rate of GST - outward supply - Agricultural Services or not - planting and nurturing of mangrove seeds and seedlings along with fruit trees in marginalized areas for environment protection against the climatic changes - such supply of services may be treated as ‘environmental protection services’ under chapter Heading 9994 and shall not get covered under chapter Heading 9986 being ‘Support services to agriculture, forestry, fishing, animal husbandry’. - AAR
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Input Tax Credit - inputs/input services - promotional scheme - the applicant is engaged in the business of trading of animal health products and not in the business of provision of food or catering.. Even if the provision of food and catering had been in the course of furtherance of business, the applicant is not entitled to the input tax credit in light of the express bar provided under Section 17(5)(b)(i) of the CGST Act, 2017. - AAR
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Exemption from GST - Pure services - Project Development Service (i.e. Detailed Project Report Service/Beneficiary Document Preparation) and Project Management Consultancy services (PMCS)/Supervision Services - Such services would qualify as Pure Service (excluding works contract service or other composite supplies involving supply of any goods)” and accordingly exempt from the payment of GST - AAR
Income Tax
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Revision of other orders u/s 264 - petitioners sought to expressly withdraw the revision petition filed u/s 264 - application was pending for decision - Thus by not allowing the prayer for withdrawal and proceeding to decide the revision on merits, the revisional authority wrongly exercised jurisdiction vested in it. - HC
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TDS u/s 195 - disallowance u/s 40(a)(i) - allowability of expenditure u/s 37(1) - there is no question of alternating between section 37(1) of the I.T.Act and section 40(a)(i) of the I.T.Act for sustaining the disallowance. The question of going to section 40(a)(i) of the I.T.Act would arise only after the test of section 37(1) is passed by the assessee. - AT
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Rejection of books of accounts u/s 145 - Interestingly, if the observation of the AO is to be accepted, then, it would mean that once an assessee is visited with search proceedings and he after considering the incriminating documents unearthed during the course of such proceedings comes forth with a disclosure of his unaccounted income, then, in all the subsequent years despite there being no iota of evidence that the assessee had indulged in any such nefarious activities for garnering unaccounted income it is to be so presumed because of his chequered past. - AT
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Deduction u/s. 80-IA - Claim denied as return of income was not accompanied by the mandatory audit report as prescribed in Form No.10CCB - assessee has filed an audit report in Form No.10 CCB on 13.11.2017 and processing of return u/s. 143(1) of the Act was done by the A.O, CPC, Bengaluru on 23.03.2019, which is an event much after, the assessee is fully entitled to claim deduction u/s. 80-IA of the Act. - AT
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Taxability of compensation received on acquisition of land - In the instant case the assessee received compensation for compulsory acquisition of commercial land during the F.Y. 2014-15 which was exempted under section 96 of the RFCTLARR Act, as clarified by the CBDT Circular - AT
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Disallowance of depreciation allowance - WDV - plant and machinery were not used during the year due to change in business model - nce an asset is part of the block of assets and depreciation is granted on that block, it cannot be denied in subsequent years on the ground that one of the assets is not used by the assessee in some of the years. The concept of user of assets has to apply on the block of assets as a whole instead of an individual asset. - AT
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Deduction u/s 11 - benefit of particular religious community or caste - The provisions of section 13(1)(b) will apply, the trust being of charitable character with two of its objects exclusively for the benefit of the Kedva Patel Caste. The assessee trust we hold therefore is not entitled to exemption u/s 11 of the Act on incomes applied for the benefit of the Kedva Patel community, as per section 13(1)(b) of the Act. - AT
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Capital gain - JDA entered - Transfer of capital asset - From a reading of the above clauses of the JDA, it is clear that the Developer will take possession of the property for the specific purpose of development only, that too after satisfying the conditions like obtaining approvals etc. The clause also provides that possession given to the develop cannot be regarded as delivery of possession in part performance of Agreement for Sale as contemplated under section 53-A of the Transfer of Property Act, 1882 - No additions - AT
Customs
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Revocation of Customs Broker License - Period of limitation - relevant date for issuing SCN after the offence report - The show cause notice dated 24.01.2020 proceeding to revoke the license of the appellant could not have treated the show cause notice dated 22.10.2019 as the offence report because the said show cause notice dated 22.10.2019 arises out of the offence report dated 16.02.2015 - AT
IBC
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Initiation of CIRP - Corporate Guarantor being a Company - The Company stood guarantor for the loans availed by the three borrowers which are partnership firm and / or proprietary concerns - the liability of the guarantor is co-extensive with that of the Principal Borrower - It was open to the Financial Creditor to proceed against the guarantor without first suing the Principal Borrower - SC
Service Tax
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Refund of service tax paid - specified services used for export of goods - it is not shipping bill specific when more than one shipping bills are involved in a claim. Therefore, there is no requirement to determine FOB value shipping bill wise to determine the formula under Para 1(c) or Para 3 of the Notification. - AT
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Ex-party order - Validity of rejection of appeal by the CESTAT - Assessee / Petitioner could not appear due to non-receipt of notice - The Petitioner is not a small individual trader who is operating out of a premises that is not locatable. The Petitioner is the “Delhi International Airport Limited” (DIAL) whose addresses and contact details in addition to being available online, could have easily been ascertained by the CESTAT. - HC
Central Excise
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Adjudication of SCN within a time limitation - Adjudication proceedings, delayed for more than a decade (for no fault of answering party and without putting answering party on notice for the reason of delay), defeats the very purpose of issuing show cause notice/s and such delayed adjudication is bad in law - HC
VAT
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Recovery of dues - priority of settlement of dues - The State is a secured creditor under the GVAT Act. Section 3(30) of the IBC defines secured creditor to mean a creditor in favour of whom security interest is credited. Such security interest could be created by operation of law. The definition of secured creditor in the IBC does not exclude any Government or Governmental Authority. - SC
Case Laws:
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GST
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2022 (9) TMI 374
Levy of penalty - seizure of goods - Part-B of the e-way bill was not filled on technical glitch - intent to evade present or not - HELD THAT:- It is clear that the only allegation levelled against the petitioner leading to seizure of the goods was that Part-B of the eway bill was not filled up. There is no allegation that the goods being transported were being transported without payment of tax. The explanation offered by the petitioner for not filling the Part-B of e-way bill, is clearly supported by the Circulars issued by the Ministry of Finance wherein the problem arising in filling the part-B of e-way bill was noticed and advisories were issued. In the present case, prima-facie no intent to evade the duty can be ascertained, only on the allegation that Part-B of the e-way bill was not filled, more so, in view of the fact that the vehicle in which the goods were being transported on a Delhi number. The writ petition is allowed with direction to the respondents to refund the amount collected and paid by the petitioner in pursuance to the impugned order within a period of two months from today.
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2022 (9) TMI 373
Levy of GST - payment of tax through wrong forum - evasion of tax or not - HELD THAT:- This is a case where Petitioner has not attempted to evade any tax. This is a clear case where Petitioner has made a mistake and instead of paying the Government of India through the CGST authorities and the State of Maharashtra through the SGST authorities, the entire amount has been paid to Government of India, through Indian Railways. In the Affidavit-in-Reply, Respondent No.5 admits that Petitioner has paid the amount wrongly to Railways and due to huge Railway network, Railway was not in an immediate administrative position to check and react to such wrongful deposits. Respondent No.5 is directed to ensure that the amounts which have been wrongly paid by Petitioner to Railways should be paid to the CGST authorities and SGST authorities within two weeks from today. Petition disposed off.
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2022 (9) TMI 372
Recovery of erroneous refund of CGST - allegation of availing benefit of irregular Input Tax Credit (ITC) - Export of goods - - generation of the e-way bills not done - HELD THAT:- Coming to the facts leading to the present case, the show cause notice as issued to the petitioner had made three precise allegations that the supplier of the goods to the respondents had supplied the goods without generation of the e-way bills which was contrary to the E-Way Bill Rules and thus, the claim of the respondents was liable to be rejected. That being the nature of the allegations levelled in the show cause notice, the submission of Sri K. D. Nag that the goods sent from Surat to Kanpur for export did not carry e-way bills as admitted by the respondents in their memo of appeal, cannot be accepted as it is well settled that the allegations as levelled in the show cause notice should be clear and specific and the findings cannot go beyond the allegations as levelled in the show cause notice. In the present case, the show cause notice is confined to the allegations against the respondents receiving the supplies of goods without the e-way bills, which fact has been dealt with by the appellate authority after perusing the invoices that the goods were supplied to the respondents from Surat to Surat and thus, the notification dated 19.09.2018 was clearly in favour of the respondents. In the present case, no allegations were levelled in the show cause notice to the effect that the respondents had transferred the finished goods for export from Surat to Kanpur without e-way bill as such the arguments of Sri Nag on that count are without any foundation and thus liable to be rejected. In view of the specific finding by the Commissioner (Appeals) that the goods were received by the respondents through e-way bills within the same city, there was no requirement of generation of e-way bills as provided under the notification dated 19.09.2018, the said finding has not been shown to be perverse or in any way arbitrary or illegal in the arguments as raised by Sri Nag - Petition dismissed.
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2022 (9) TMI 371
Works Contract - Post GST era -The claim of the Petitioner is one for money which it seeks as reimbursement from the Opposite Parties - Constitutional Validity of taxes being shared and borne by the petitioner on post enactment Goods and Services Tax Act, 2017 - direction not to restitute the benefit of GST to the petitioner along with interest within a stipulated period in respect of work in which the estimated was prepared under the VAT law - infringement of GST Act - time limitation - HELD THAT:- The instant matter being similar to that of the case decided by this Court in CHANDRA SEKHAR JENA VERSUS STATE OF ODISHA AND OTHERS [ 2021 (10) TMI 1350 - ORISSA HIGH COURT ], the present writ petition is hereby dismissed in the similar fashion and, thus, this Court holds that the claim of the petitioner is hit by law of limitation - It was held in the case of CHANDRA SEKHAR JENA that the agreement in question is dated 26th April, 2016 with the time for completion being 11 months. Clearly, therefore, any claim now raised arising from the said contract would be time barred. It is, therefore, not possible to accede to the prayer of the Petitioner. Before parting, this Court wishes to observe that the petitioner has made a prayer to restrain the opposite parties, authorities of the CT GST Organisation, from taking any coercive steps against the petitioner to recover amount of GST. Qua such a prayer, it is necessary to record that the task of determining the quantum of GST having regard to liability is of the Authority vested with power under the CGST/OGST Act and not within the domain of any other - The claim of the Petitioner ultimately, in simple terms, is one for money which it seeks as reimbursement from the Opposite Parties. It is not possible for this Court in its writ jurisdiction under Article 226 of the Constitution to calculate on a case to case basis which component of the work executed by the Petitioner for reimbursement on account of GST and which is not. This being a disputed question of fact, the Court declines to undertake this exercise in the writ jurisdiction and leaves it to the Petitioner to seek other appropriate remedies available to him in accordance with law. Petition dismissed.
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2022 (9) TMI 370
Seeking permission to petitioners to file Form GST Tran-I to enable the petitioners to claim the carried forward eligible duties of CENVAT/Input Tax Credit on account of Service Tax - due date contemplated under the aforesaid Rule to claim the transitional credit being procedural in nature is directory and or mandatory - Section 140 of the Goods and Services Tax Act, 2017 read with Rule 117 of the Central Goods and Services Tax Rules, 2017 - HELD THAT:- The issue involved and required to be addressed in this captioned group of petitions, has been answered by the Apex Court in case of UNION OF INDIA ANR. VERSUS FILCO TRADE CENTRE PVT. LTD. ANR. [ 2022 (7) TMI 1232 - SC ORDER] where it was held that Goods and Service Tax Network (GSTN) is directed to open common portal for filing concerned forms for availing Transitional Credit through TRAN-1 and TRAN-2 for two months i.e. w.e.f. 01.09.2022 to 31.10.2022. It goes without saying that the aforesaid decision of the Supreme Court shall govern the right of the parties - petition disposed off.
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2022 (9) TMI 369
Classification of supply - supply of goods or supply of services - job-work - printing on duplex board belonging to its customer including cutting, punching and lamination, as and when required by the customer - rate of GST - HELD THAT:- The activities undertaken by the applicant for printing on duplex board belonging to its customer including cutting, punching and lamination, as and when required by the customer, shall be treated as services by way of job work in relation to printing of all goods falling under Chapter 48 where the customer is registered under the GST Act. In cases where the customer is not registered under the GST Act, the same shall be treated as services by way of any treatment or process on goods belonging to another person, in relation to printing of all goods falling under Chapter 48. However, in both the cases, the applicable rate of tax would be 12% as specified at items (ia)(b) and (iia) respectively under entry no. 26 of Notification No.11/2017-Central Tax (Rate) dated 28.06.2017 [corresponding West Bengal Tax Notification No. 1135 F.T. dated 28.06.2017), as amended form time to time. Supply of services for printing on duplex board belonging to the recipient including cutting, punching and lamination of the duplex board, so printed, would attract tax @ 12% irrespective of the recipient of the services is registered under the GST Act or not.
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2022 (9) TMI 368
Classification of supply - composite supply - service by way of milling of food grains into flour to Food Supplies Department, Govt. of West Bengal for distribution of such flour under Public Distribution System - eligibility for exemption under entry No. 3A of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 - rate of GST on mining activity - HELD THAT:- The applicant has been selected for empanelment for crushing of wheat into wholemeal atta and fortify it by premixing of micro-nutrients containing Iron, Folic acid and Vitamin to a specific percentage. The agreement further requires the applicant to pack the crushed stock of wholemeal atta after fortification into properly labelled poly-packs having thickness of 40 microns or above. It, therefore, appears that the activities undertaken by the applicant for milling of wheat into wheat flour, along with fortification and supplied upon packing of the same qualify the definition of composite supply under clause (30) of section 2 of the GST Act where the supply of services by way of milling is the principal supply. Whether this composite supply is made in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution? - HELD THAT:- The agreement between the applicant and the State Government for supply of fortified Wholemeal Atta/Atta is found to be executed in terms of G.O. No. 2834-F.S. dated 6th September, 2017. The said Notification provides guidelines for the procedure of empanelment of flour mills/ attachakki to convert wheat into fortified atta/wholemeal atta in pursuance of clauses 36 and 37 of the West Bengal Public Distribution System (Maintenance Control) Order, 2013 and clauses 33 and 34 of the West Bengal Urban Public Distribution System (Maintenance Control) Order, 2013 - Para 3.1 of the Circular No. 153/09/2021-GST dated 17.06.2021 where it is stated that Public Distribution specifically figures at entry 28 of the 11th Schedule to the constitution, which lists the activities that may be entrusted to a Panchayat under Article 243G of the Constitution. Hence, the instant composite supply made by the applicant is found to be in relation to any function entrusted to a Panchayat under article 243G of the Constitution. Whether the value of supply of goods in this case exceeds 25 percent of the total value of the supply or not? - HELD THAT:- Since price is not the sole consideration for the instant supply, the provision of Rule 27 would apply here which governs the provisions of value of supply of goods or services where the consideration is not wholly in money. In terms of clause (b) of the said rule, the value of supply shall be the sum total of consideration in money and any such further amount in money as is equivalent to the consideration not in money, if such amount is known at the time of supply - in the instant case, the amount of Rs.124 may be considered as equivalent to the consideration not in money for the purpose of determination of value of supply under clause (b) of rule 27 of the GST Rules and such amount is admittedly known to the applicant at the time of supply. Since price is not the sole consideration for the instant supply, the provision of Rule 27 would apply here which governs the provisions of value of supply of goods or services where the consideration is not wholly in money. In terms of clause (b) of the said rule, the value of supply shall be the sum total of consideration in money and any such further amount in money as is equivalent to the consideration not in money, if such amount is known at the time of supply - in the instant case, the amount of Rs.124 may be considered as equivalent to the consideration not in money for the purpose of determination of value of supply under clause (b) of rule 27 of the GST Rules and such amount is admittedly known to the applicant at the time of supply. The value of goods involved in the instant composite supply thus found to be 21.52% of the total value of supply and thus constitutes not more than 25 percent of the value of the composite supply We, therefore, hold that the instant supply of services by way of milling of food grains into flour (atta) to Food Supplies Department, Govt. of West Bengal for distribution of such flour under Public Distribution System is eligible for exemption under serial no. 3A of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 since the supply satisfies all the conditions specified in the said entry.
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2022 (9) TMI 367
Exemption from GST - fortified atta - Valuation of of supply of services provided by the applicant to the State Government - Applicant is a flour miller, engaged in providing services of crushing wheat provided by the State Government, into fortified atta which in turn is supplied by the State Government through Public Distribution System - rate of GST - What components and at what value are to be included in calculation of the % of value of goods in the total value of composite supply for the purpose of Notification No. 2/2018- Central Tax (Rate)? HELD THAT:- The applicant has been selected for empanelment for crushing of wheat into wholemeal atta and fortify it by premixing of micro-nutrients containing Iron, Folic acid and Vitamin to a specific percentage. The agreement further requires the applicant to pack the crushed stock of wholemeal atta after fortification into properly labelled poly-packs having thickness of 50 microns or above. It, therefore, appears that the activities undertaken by the applicant for milling of wheat into wheat flour, along with fortification and supplied upon packing of the same qualify the definition of composite supply under clause (30) of section 2 of the GST Act where the supply of services by way of milling is the principal supply. Whether this composite supply is made in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution? - HELD THAT:- Reliance placed in Para 3.1 of the Circular No. 153/09/2021-GST dated 17.06.2021 where it is stated that Public Distribution specifically figures at entry 28 of the 11th Schedule to the constitution, which lists the activities that may be entrusted to a Panchayat under Article 243G of the Constitution. Hence, the instant composite supply made by the applicant is found to be in relation to any function entrusted to a Panchayat under article 243G of the Constitution. Whether the value of supply of goods in this case exceeds 25 percent of the total value of the supply or not? - HELD THAT:- In the instant case, the applicant receives Rs.10/- and Rs. 50/- i.e., Rs. 60/- in total against fortification cost and packing charges respectively for crushing of 100 kgs of wheat which involves supply of goods. We have to determine whether such value exceeds 25% of the total value of supply or not. According to the applicant, total value of supply would be Rs 260.48/- which includes both cash and non-cash consideration - in the instant case, value of supply shall be the consideration in money and shall also include all the components towards non-cash consideration. The value of goods involved in the instant supply stands at Rs.60/- against total value of supply of Rs. 260.48 thereby the value of goods involved in the instant composite supply stands at 23.03% of the total value of supply i.e., it does not exceed 25% of the value of the composite supply - the instant supply of services by way of milling of food grains into flour (atta) to Food Supplies Department, Govt. of West Bengal for distribution of such flour under Public Distribution System is eligible for exemption under serial no. 3A of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended, since the supply satisfies all the conditions specified in the said entry.
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2022 (9) TMI 366
Classification of supply - rate of GST - outward supply - Agricultural Services or not - fruit trees being cultivated and nurtured at marginalised communities - mangroves being cultivated and nurtured at coastal communities - HELD THAT:- Agricultural produce , as per serial number 4(vii) of Explanation appended to the said notification means any produce out of cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products, on which either no further processing is done or such processing is done as usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market. Whether the aforesaid activities may be treated as support services to agriculture, forestry, fishing, animal husbandry so that such supply of services get covered under serial number 24 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as claimed by the applicant? - HELD THAT:- The applicant doesn t provide such services for food, fibre, fuel, raw material or other similar products or agricultural produce rather the sole object of the services as it has been claimed by the applicant is to enhance biodiversity and re-establish ecosystem function to protect the islands and the populace from erosion - such supply of services may be treated as environmental protection services under chapter Heading 9994 and shall not get covered under chapter Heading 9986 being Support services to agriculture, forestry, fishing, animal husbandry . Serial number 32 of Notification No.11/2017-Central Tax (Rate) dated 28.06.2017 and corresponding West Bengal Notification No. 1135 F.T dated 28.06.2017, as amended from time to time, specifies that tax shall be levied @ 18% on Sewage and waste collection, treatment and disposal and other environmental protection services .
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2022 (9) TMI 365
Input Tax Credit - inputs/input services - promotional scheme - Services provided by the hotel including accommodation, food beverages - Supply of food and beverages by outside caterer to our employees in respect of Business conference meetings - section 16 read with section 17 of the CGST Act, 2017 - HELD THAT:- The promotional scheme was extended by the applicant at their own will voluntarily without any consideration in money. The goods distributed under promotional scheme are not in the nature of discounts to the products but are in the nature of personal consumables and qualifies to be termed as gifts. The 'Scheme Circular' provided by the applicant alongwith Form GST ARA-01 also contains the words 'Gift Option 1', 'Gift Option 2' and 'Gift Option 3'. Further, the gift items are fixed based on the retailers purchase of the targeted products as per Annexure C of the Form GST ARA-01 and not on the sales made by the retailers. Moreover, the rewards are handed out to the successful retailers and no tax invoice/any taxation document are raised for such handout - it is clear that the tax paid on the goods procured for distribution as rewards extended by the applicant in the `Bumper Offer, Winter Bonanza' scheme or any other such scheme is not available to them as ITC in as much as such rewards have been extended as gifts on purchase of animal health products. Admissibility of input tax credit in respect of tax paid - Services provided by the hotel including accommodation, food beverages - Supply of food and beverages by outside caterers to their employees in respect of Business conference meetings - HELD THAT:- From the co joint reading of Section 16 and 17(5)(b) of the Central Goods and Services Tax Act, 2017, it is observed that the ITC with respect to food and beverages and outdoor catering shall be available only where an inward supply of such goods or services or both is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply - the applicant is engaged in the business of trading of animal health products and not in the business of provision of food or catering.. Even if the provision of food and catering had been in the course of furtherance of business, the applicant is not entitled to the input tax credit in light of the express bar provided under Section 17(5)(b)(i) of the CGST Act, 2017.
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2022 (9) TMI 364
Exemption from GST - Pure services - Activity in relation to function entrusted to Panchayat or Municipality under Article 243G or Article 243W respectively, of the Constitution of India or not - Project Development Service (i.e. Detailed Project Report Service/Beneficiary Document Preparation) and Project Management Consultancy services (PMCS)/Supervision Services provided by the applicant to the recipient under the Contract from State Urban Development Authority (SUDA) and the Project Management Consultancy services (PMC) under the Contract for PMAY - inclusion of cost of service rendered along with reimbursement of cost of procurement of goods for rendering such service or not - exemption from levy of CGST and UPGST or not. HELD THAT:- As per Si. No. 3 of Notification No. 12/2017-CT (Rate) dated 28.06.2017 Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority or a Governmental authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution are exempt from tax. As SUDA has been established as a state level nodal agency, under the department for Urban Employment and Poverty Alleviation by Uttar Pradesh Government and as per the information contained in Memorandum of Association, it is clear that SUDA is a part of State Government of UP - Further, as per website of Pradhan Mantri Awas Yojana-Housing for All (Urban), Ministry of Housing and Urban Affairs, the PMAY is a Scheme to provide central assistance to Urban Local Bodies (ULBs) and other implementing agencies through States/UTs for Rehabilitation of existing slum dwellers using their land as a resource through private, participation, and affordable Housing in Partnership. As per the details available on website SUDA is the state level nodal agency for PMAY(U) in the state of Uttar Pradesh - the Consultancy services rendered by the Applicant under the contract with SUDA, and for PMAY are in relation to functions entrusted to Municipalities / Panchayats under Article 243W / 243G of the Constitution of India. Whether such services provided by the Applicant would qualify as Pure service or not? - HELD THAT:- The services mentioned in the contract would qualify as Pure Service (excluding works contract service or other composite supplies involving supply of any goods) as provided in serial number 3 of Notification No. 12/2017- Central Tax (Rate) dated 28 June, 2017 issued under Central Goods and Services Tax Act, 2017 ('CGST') and corresponding Notifications No. - KA.N.I.-2-843/X1- 9 (47) / 17-UP. Act-1 - 2017 - Order - (10) - 2017 Lucknow, dated June 30, 2017 issued under Uttar Pradesh Goods and Service Tax Act, 2017 (UPGST Act). For qualifying exemption under the said entry, it is essential that specified services are provided to the Central Government, State Government or Union territory or local authority or a Governmental authority and there is no condition in the notification that the said services are provided directly to the Central Government, State Government or Union territory or local authority or a Governmental authority. Accordingly, the applicant is entitled for exemption if the specified services are provided to SUDA under sub-contract with main contractor.
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Income Tax
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2022 (9) TMI 363
Revision of orders u/s 264 - request for withdrawal of revision application was rejected - period of limitation u/s 264 - HELD THAT:- Option has been given to the assesssee to avail the remedy of revision u/s 264 of the Act within a period of one year provided the assessee has not filed an appeal and the period of limitation for preferring appeal has expired. In the instant case, against the order of assessment dated 16.12.2018, petitioners preferred revision petition on 15.03.2019 within one year of limitation provided for filing revision and also after the expiry of period of limitation for preferring an appeal. It is trite law that whenever a litigant invokes a particular remedy available under a Statute, then the authority before whom the lis is preferred and pending, is ordinarily duty bound to decide the same on merits. It is also settled in law that the aggrieved person who initiates lis has a right to withdraw the same before it is finally decided. This right of withdrawal is absolute but it is subject to the fact that withdrawal can be declined if there are cogent reasons. In the instant case, petitioners sought to expressly withdraw the revision petition filed u/s 264 of the Act. This prayer for withdrawal was made when the revision petition u/S 264 of the Act was pending. Thus by not allowing the prayer for withdrawal and proceeding to decide the revision on merits, the revisional authority wrongly exercised jurisdiction vested in it. This Court, thus, deems it appropriate to set aside the impugned order dated 10.10.2019 passed by respondent No.2 and remand the matter to the revisional authority to re-consider the application for withdrawal said to be filed by the petitioners on 07.10.2019, as expeditiously as possible.
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2022 (9) TMI 362
Validity of Reopening of assessment u/s 147 - notice u/s 148 issued upon a deceased assessee - HELD THAT:- As it is clear that the settled position of law is that a notice under Section 148 issued upon a deceased assessee was void ab initio. Therefore, the notice issued on 13th April, 2021, which was impugned in the writ petition, has to be necessarily set aside. Pursuant to such notice an order of assessment had been passed against a dead person. Therefore, not only the notice issued under Section 148 but also the assessment order are liable to be set aside Respondent department should be granted liberty to proceed in accordance with the amended provisions namely, Section 148A of the Act, by proceeding against the legal representative of the deceased assessee, who had in fact submitted the legal heir certificate and other documents when the assessment was taken up which ultimately culminated in the assessment order dated 25th March, 2022. For the above reasons, the appeal is allowed and the order passed in the writ petition is set aside. The notice issued under Section 148 on 13th April, 2021 on a dead person and the consequential assessment order dated 25th March, 2022 are set aside - Decided in favour of assessee.
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2022 (9) TMI 361
Penalty u/s 271(1)(c) - disallowance of interest under section 36(1)(iii) - amount of interest paid in respect of capital borrowed for the purposes of business or profession has to be allowed as a deduction in computing the income tax under section 28 - As per AO Assessee had furnished inaccurate particulars of income suppressed its real income - HELD THAT: In the present case, it can be seen that penalty proceedings had been initiated against the assessee only on account of the fact that the deduction, which was claimed by the assessee had been disallowed. The issue being squarely covered by the judgment of the Hon ble Apex Court in the case of Reliance Petroproducts (P.) Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] , no substantial question of law, as proposed, arises in the present case. - Decided in favour of assessee.
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2022 (9) TMI 360
Validity of Reopening of assessment u/s 147 - as argued notice has been issued without proper sanction u/s 151 - Notice beyond a period of 4 years - HELD THAT:- This very issue has been dealt with by the decision of this court in JM Financial Investment Consultancy Services Private Limited. [ 2022 (4) TMI 1446 - BOMBAY HIGH COURT] where this court after considering the Relaxation Act as well as the provisions of section 149 as well as section 151 of the Act has observed that even if the Relaxation Act applies to cases of this nature, the provisions of section 149 describing the outer limit 6 years for reopening of an assessment and section 151 dealing with the sanction for an reopening beyond 4 years and within 4 years have not been amended to take care of these eventualities. It is undisputed that the relevant assessment year is 2015-16 and notice for reopening has been issued on 26th March, 2021 which is beyond a period of 4 years. The satisfaction under section 151 has been issued by the Range 3(3), Mumbai which admittedly is a Joint Commissioner, whereas the satisfaction should have been of either the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner in accordance with section 151(1) of the Act. The notice dated 26th March, 2021, is clearly without jurisdiction and deserves to be quashed and set aside. Hon ble Court may be pleased to issue a Writ of Certiorari or a Writ in the nature of Certiorari or any other appropriate writ, order or direction, calling for the records of the Petitioner s case and after going into the legality and propriety thereof, to quash and set aside the said Notice dated 26/3/2021 u/s 148. - Decided in favour of assessee.
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2022 (9) TMI 359
Validity of Reopening of assessment u/s 147 - non obtaining the sanction as per provisions of section 151(1) - whether notice under Section 148 of the Act is one of jurisdiction of the Assessing Officer? - HELD THAT:- It is to be noted that it is purely a question of law and can be raised at any stage. Tribunal in the impugned order has held that assessee had not filed any appeal nor raised any plea during hearing of the appeal on that aspect. It is relevant to record that in the first round of litigation the ITAT had granted full relief to the assessee. Feeling aggrieved by that order, the revenue had filed an appeal before this Court. Once there is no dispute with regard to the question that issuance of notice under Section 148 of the Act is a jurisdictional issue and ITAT had granted full relief to the assessee, we are persuaded to accept the submission made by Shri.Shankar that assessee did not challenge that finding, because, it was unnecessary and would only increase the litigation. In our considered view the matter requires reconsideration in the hands of ITAT on this aspect. Whether the transfer of assets ought to have been considered under Sections 45(1) or 45(4)? - In view of law laid in SHREE CHAMUNDI MOPEDS LTD. v. CHURCH OF SOUTH INDIA TRUST ASSOCIATION [ 1992 (4) TMI 183 - SUPREME COURT] the matter requires reconsideration by the ITAT. Justification in assessing the firm after it had ceased to exist - Undisputed fact is, firm has been converted into a Part IX company. Referring to Section 188 of the Act it was urged by Shri.Aravind that the notice has been rightly issued to the Partnership firm. Since we are persuaded to remand the matter, we do not wish to consider this aspect on merits and keep this contention open. Appeal is allowed. Matter is remanded for fresh consideration by the ITAT as expeditiously as possible. Liberty is reserved to the aggrieved party to challenge the questions of law raised with regard to the merits of the case based on the outcome of the order to be passed by the ITAT on the jurisdictional aspect with regard to issuance of notice under Section 148 of the Act and the valuation.
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2022 (9) TMI 358
Revision u/s 263 by CIT - Addition u/s 68 - Bogus LTCG - HELD THAT:- We find that the Tribunal has recorded that it is true that some persons were engaged in jacking up the price of certain shares like M/s. KPL and made claim of LTCG on loss depending on the necessity of beneficiary. Having said so, the Tribunal observes that one cannot assume that everyone who claims LTCG on sale of shares of M/s. KPL has been participant in this conspiracy to make windfall gain/loss. Identical was the argument in the batch of cases which we had decided, referred above, where the entire modus operandi has been elaborately discussed.Therefore, we find that the Tribunal ought not to have interfered with the exercise of jurisdiction by the Commissioner under Section 263 of the Act. Revenue appeal allowed.
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2022 (9) TMI 357
TP Adjustment - Selection of MAM - TNMM or CUP method - TPO directed adopt TNMM as most appropriate method - HELD THAT:- In this case, the assessee claims that it has compared its transactions with AE with third party transactions of similar nature, where similar type of products has been imported by other importers. The assessee has filed a chart explaining transaction-wise import of goods from its AE with third party importers and claimed that price paid by the assessee is less than the price paid by the third party importers on similar goods and services. The assessee has obtained information from Chennai Customs authorities to compare transactions with its AE. We find that the assessee has tried to establish its case with help of third party importers of similar goods services and claimed that transactions with its AEs are at arm s length price. However, the TPO / DRP has summarily rejected claim of the assessee without assigning any reasons as to why transactions of the assessee cannot be compared with CUP method. Alternative submission before the TPO that in case CUP method cannot be applied, then RPM is suitable method for an assessee like traders/distributors - The predominant revenue from operations of the assessee is from trading in UPS and accessories. Although, the TPO claims that the assessee purchased more than 50% of goods from Indian suppliers, but on perusal of details filed by the assessee, said findings of the TPO appears to be not based on any evidences. On the other hand, the assessee has filed necessary details to prove that it is only engaged in the business of trading in UPS and accessories and its major revenue from operations for the year is from trading in UPS and accessories. Therefore, we are of the considered view that under these circumstances Resale Price Method (RPM) is suitable method for benchmarking transactions with its AEs. The TPO without considering above method has simply rejected arguments of the assessee and has adopted TNMM with Berry Ratio as PLI and benchmarked transactions of the assessee with AE. TNMM method adopted with Berry Ratio as PLI for benchmarking international transactions of the assessee with its AEs - When you compare major expenses of the assessee, other operating expenses is very minimal, when compared to purchase of UPS. From the above, it is very clear that Berry Ratio cannot be applied to facts of the present case, because as we have already stated in earlier part of this order that Berry Ratio can only be applied where operating expenses is main contributor for determining profitability of an assessee. In this case, operating expenses incurred by the assessee is very less, when compared to total amount paid for purchase of UPS from its AEs. Therefore, we are of the considered view that the TPO has completely erred in adopting TNMM with Berry Ratio as PLI for benchmarking international transactions of the assessee with its AEs. Thus we are of the considered view that TNMM with Berry Ratio as PLI cannot be applied as most appropriate method for benchmarking transactions of the assessee with its AEs and thus, we direct the TPO to reexamine case of the assessee and apply either CUP as considered by the assessee to benchmark its transactions or RPM as proposed by the assessee and determine ALP of international transactions of the assessee with its AEs. Accordingly, we set aside the issue to the file of the TPO with a direction to reconsider the issue in light of our discussions given hereinabove for both assessment years. Disallowance of provision for warranty expenses - As per AO assessee could not explain basis of provision for warranty expenses - HELD THAT:- The assessee claims that it has made provision for warranty expenses on the basis of scientific method, where the AO claims that the assessee could not explain basis of provision for warranty expenses. Therefore, we are of the considered view that the issue needs to go back to the file of the Assessing Officer for further examination. Hence, we set aside this issue to the file of the Assessing Officer and direct the Assessing Officer to reconsider the issue in light of the decision of M/s.Rotork Controls India (P) Ltd. [ 2009 (5) TMI 16 - SUPREME COURT] and in case, the assessee could able to explain basis for provision for warranty, then the Assessing Officer is directed to examine case of the assessee in light of the above decision of the Hon'ble Supreme Court and decide the issue in accordance with law. Disallowance of employees contribution to PF ESI u/s.36(1(va) r.w.s. 2(24)(x) - HELD THAT:- If remittance to employees contribution to PF ESI is made on or before due date for filing of return of income u/s.139(1) of the Act, then there cannot be any disallowance u/s.36(1(va) r.w.s. 2(24)(x) of the Act. Hence, we direct the Assessing Officer to verify the issue with reference to date of remittance of PF ESI and in case, the Assessing Officer finds that the assessee has remitted PF ESI on or before due for filing of return of income u/s.139(1) of the Act, then the Assessing Officer is directed to delete additions made towards disallowance of employees contribution to PF ESI.
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2022 (9) TMI 356
Penalty u/s 271(1)(c) r.w.s. 274 - allegation of defective notice u/s 274 and non specification of clear charge - whether AO has failed to specify the appropriate limb of charges by striking off the inappropriate limb, either in the assessment order while initiating penalty u/s 271(1)(c)? - HELD THAT:- A perusal of the order of CIT(A) shows that it reproduced / scanned the notice issued by the Ld. AO for the purpose of proceedings u/s 271(1)(c) of the Act and the same shows that it is on a Performa where certain columns have been even left blank. Section 271(1)(c) of the Act talks of penalty proceedings in cases where assessing officer is satisfied that any person has concealed the particulars of his income or furnish inaccurate particulars of such income. The section talks of only two nature of default ; First where assessee has concealed the particulars of his income and second where the assessee has furnished inaccurate particulars of such income. DR trying to defend the act of Ld. AO in carving out the third nature of default being a composite default of nature, concealment of income and for furnishing of inaccurate particulars. If the intention of Ld. AO was of finding the assessee guilty of concealment of income and also for furnishing of inaccurate particulars then that would be a case of proceedings for two different defaults but for which a common charge of the nature framed and conveyed to the assessee by the impugned notice is not sustainable. See M/S. SAHARA INDIA LIFE INSURANCE COMPANY, LTD. [ 2019 (8) TMI 409 - DELHI HIGH COURT] - Decided in favour of assessee.
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2022 (9) TMI 355
TDS u/s 195 - disallowance u/s 40(a)(i) - Payment made to the Associate Enterprise (AE) in USA - income deemed to accrue or arise in India - primary contention of the assessee is that it cannot be made liable for default for non-deduction of tax at source when there is no such liability as per the law in force at the time of payment of the same to the foreign AE, namely, STI - HELD THAT:- In the instant case, the impugned assessment year is A.Y. 2008-2009. The law that was applicable is the law which existed during the impugned assessment year i.e., the aforesaid Explanation inserted by the Finance Act, 2007 and the laid down by the Supreme Court in the case of Ishikawajima Harima Heavy Industries Ltd. [ 2007 (1) TMI 91 - SUPREME COURT] - the income is deemed to accrue or arise in India in the hands of the recipient when the services are rendered in India as well as utilized in India. In the instant case, admittedly, services by STI to the assessee are not rendered in India. The aforesaid Explanation was thereafter substituted by the Finance Act, 2010, w.r.e.f 01.06.1976. The newly substituted Explanation provides that income is deemed to accrue or arise in India whether or not the nonresident has a residence or place of business or business connection in India; or whether or not the non-resident has rendered services in India. In other words, the even if the services are not rendered in India, the income of the non-resident is deemed to accrue or arise India. The said Explanation was made retrospective with effect from 01.06.1976. We hold that the Explanation substituted by the Finance Act, 2010 w.r.e.f 01.06.1976 does not apply to the case of assessee (person responsible for deducting tax at source). Hence, the assessee is not liable to deduct tax at source for the reason that consideration received by the STI from the assessee could not have been regarded as income deemed to accrue or arise in India as per the law then existing. Since, we hold that the assessee is not liable to deduct tax at source at the relevant point of time, the other contentions raised by the assessee, whether payment made to STI is income deemed to accrue or arise in India is not adjudicated and is left open. Whether as revenue invoked section 40(a)(i) of the I.T.Act implies that revenue is otherwise satisfied about the allowability of impugned expenditure under section 37(1)? - Similar expenditure was allowed as expenditure upto AY 2007-08. For the AY 2007-08, during the assessment proceedings the AO had raised the objection with regard to the non-deduction of tax for the payment made by Subex Ltd (parent company) to STI. The parent company filed its submissions. A.O. passed assessment order dated 30.12.2010 without making any disallowance under section 40(a)(i) - Such being the case, there cannot be any question about the allowability of deduction under section 37(1) - It is also to be mentioned that the aforesaid transaction being international transaction, the matter was referred to the TPO and the TPO had accepted the price of the international transaction to be arm s length price. In the present case, there is no question of alternating between section 37(1) of the I.T.Act and section 40(a)(i) of the I.T.Act for sustaining the disallowance. The question of going to section 40(a)(i) of the I.T.Act would arise only after the test of section 37(1) is passed by the assessee. In the present case, upon examination of all records and information, lower authorities being satisfied with the claim of section 37(1) of the I.T.Act, proceeded to invoke section 40(a)(i) of the I.T.Act. If section 40(a)(i) of the I.T.Act is held inapplicable, it is not open to the department to revisit the case under section 37(1) of the I.T.Act. This would amount to review of position already taken which is impermissible.
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2022 (9) TMI 354
Deemed taxable income u/s. 44BBA - Computing profits and gains of business of operation of aircraft in the case of non-residents - whether this service tax component is includible in the gross receipts for computing the deemed taxable income u/s. 44BBA? - assessee is a non-resident engaged in the business of operation of airlines and is subjected to income tax under the Act on presumptive basis in terms of section 44BBA - HELD THAT:- Where an assessee who is a non-resident and is engaged in the business of operation of aircraft, a sum equal to 5% of the aggregate of amount paid or payable to the assessee on account of carriage of passengers, live stock material or goods from any place in India and the amount received or deemed to be received in India by or on behalf of the assessee on account of carriage of passengers, live stock material or goods from any place outside India, shall be deemed to be the profit and gains of such business chargeable to tax. We also note that the expression amount paid or payable in section 44BBA(2)(a) and the expression amount received or deemed to be received in section 44BBA(2)(b) is qualified by the words on account of the carriage of passengers, live stock material or goods from any place in India/outside India . Therefore, in our considered understanding, only such amounts which are paid or payable for the service provided by the assessee can form part of the gross receipts for the purpose of computation of gross total income u/s. 44BBA(1). We also note and agree with the submission made by the Ld. Counsel for the assessee that service tax collected by the assessee does not have any element of income, it is collected by the assessee from its customers for and on behalf of the Central Government on account of a statutory levy and, therefore, it does not form part of the receipts of the assessee on which income accrues or arises to it. We are in agreement with the contention of the Ld. Counsel for the assessee that assessee merely acts as a collection agent for and on behalf of the Central Government and after collection, deposits the service tax so collected into the treasury of the Central Government. As in Sedco Forex International Inc. [ 2017 (11) TMI 78 - SUPREME COURT ] was paid mobilization fees from ONGC which was included by the Ld. AO as part of gross receipts for the purpose of section 44BB. Hon ble Supreme Court has observed that mobilization fees is a fixed amount that might be less or more than the actual expenses incurred and contract in question being indivisible one, held that amount received by the assessee as mobilization fee was to be included in gross receipts for computing the deemed profits u/s. 44BB. Thus, the facts of this case are distinguishable from the facts in the present case before us since Hon ble Supreme Court dealt with the issue of inclusion of mobilization fees arising out of the commercial terms, in the gross receipts whereas in the present case before us, the issue relates to inclusion of service tax component in the gross receipt which is a statutory levy collected for and on behalf of the Central government by the assessee. CIT, DR has contended that deduction of expenses is not available from the receipts u/s. 44BBA which in our considered understanding is not tenable since assessee has not claimed service tax component as an expenses deduction. Considering the facts on record, provisions of section 44BBA of the Act, the decision of Hon ble High Court of Delhi in Mitchell Drilling International Pvt. Ltd. [ 2015 (10) TMI 259 - DELHI HIGH COURT ] as well as the position clarified by CBDT in its two circulars we do not find any reason to interfere with the finding and decision given by the CIT(A) and accordingly, dismiss the ground taken by the revenue on the issue under consideration. Accordingly, the appeal of the revenue is dismissed.
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2022 (9) TMI 353
Exemption u/s 11 - grant of registration u/s. 12A - CIT (E) rejected the application for grant of registration on the ground that the assessee has given undue benefit to the President Treasurer and has thus violated the provisions of section 13 of the I.T. Act - genuineness of the address is also in doubt because the address of the partnership firm and that of the assessee are same - HELD THAT:- The issue has not been properly appreciated by the ld. CIT(E) while denying registration u/s.12AA - The various allegations made by the CIT(E) while denying registration u/s. 12AA have been addressed by assessee, which in our opinion requires verification and proper appreciation of facts by the CIT(E). So far as the allegations of the CIT(E) that the assessee trust has paid undue advantage to the President and Secretary is concerned, it is the submission of the assessee that they are looking after 10 centers and the salary paid to them is commensurate with their qualification and the area of operation and therefore, the same in our opinion requires proper appraisal of facts by the ld.CIT(E). Similarly, the allegation that the address of the partnership firm and that of the assessee are same in our opinion cannot be a ground for denying the benefit of registration u/s. 12AA - So far as the allegation of the ld.CIT(E) that the genuineness of the books of accounts are doubtful is concerned, we find merit in the arguments of assessee that the cash withdrawals so made were utilized for payment of salary and various other expenses and there is no violation of section.40A(3) of the I.T.Act. We find from the order of the PCIT that he has granted registration u/s. 12AA for the period from the AY 2022-23 to AY 2026-27. We are of the considered opinion that the matter requires a revisit to the file of the PCIT for deciding the issue afresh and in accordance with law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
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2022 (9) TMI 352
Disallowance of Employees Contributions to ESI PFI remitted u/s 36(1)(va) - difference between the returned income and the income determined u/s 143(1) for late remittance of employees contribution to PF and ESI under the respective Acts - HELD THAT:- On identical facts, the Bangalore Bench of the Tribunal in the case of M/s. Shakuntala Agarbathi Company [ 2021 (10) TMI 1196 - ITAT BANGALORE ] by following the dictum laid down in the case of Essae Teraoka Pvt. Ltd [ 2014 (3) TMI 386 - KARNATAKA HIGH COURT ] had held that the assessee would be entitled to deduction of employees contribution to PF and ESI provided that the payments were made prior to the due date of filing of the return of income u/s 139(1) - It was further held by the ITAT that amendment by Finance Act, 2021, to section 36[1][va] and 43B of the Act is not clarificatory. The amended provisions of section 43B as well as 36(1)(va) of the I.T.Act are not applicable for the assessment year under consideration. By following the binding decision in the case of Essae Teraoka Pvt. Ltd [ 2014 (3) TMI 386 - KARNATAKA HIGH COURT ] the employees contribution paid by the assessee before the due date of filing of return of income u/s 139(1) of the I.T.Act is an allowable deduction. Accordingly, we decide this issue in favour of the assessee and the disallowance made by the Assessing Officer is deleted. - Decided in favour of assessee.
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2022 (9) TMI 351
Deprecation on acquisition cost of participating interests in various blocks - whether the payment made for acquisition cost of participating interests in various blocks would qualify for intangible assets? - whether the expression licences used in section 32(1)(ii) of the Act applies to licences that are relatable to intellectual properties only and not relatable to all type of licences? - HELD THAT:- We find that the issue is squarely covered in favour of the assessee by a series of decisions of ITAT in assessee s own case and the matter has already been travelled to Hon ble High Court and Revenue s appeal has been dismissed. Ld. DR s plea that ITAT s order is suffering from infirmity is not at all tenable. We are bound by the coordinate Bench decision which has also been upheld by Hon ble High Court. In this view of the matter, we do not find any infirmity in the order of the ld. CIT (A) and we uphold the same. Accordingly, grounds no.1, 2 3 are decided against the Revenue. Disallowance to depreciation on support equipment under section 32 (1)(ii) - HELD THAT:- We find that depreciation on these support equipment has already been allowed in earlier year. There is no change in facts or law in this year. Hence, there is no reason why Revenue should change its stand and disallowed depreciation. The case laws referred by ld. CIT (A) as well as the ld. counsel of assessee are germane and support the case of assessee. Hence, the order of ld.CIT (A) is upheld. Disallowance of claim of expenses pending settlement of EPC contract - HELD THAT:- We find that the ITAT has already decided this issue in AY 2006-07 [ 2019 (7) TMI 1577 - ITAT DELHI ] wherein the claim of expenditure was disallowed as well as the addition of income was also deleted. For the present year, ld. CIT (A) has given a finding that these do not pertain to this year. However, Revenue s ground is on merits. We are of the considered opinion that this aspect has already been dealt with by ITAT and same ratio should follow. Accordingly, the AO is directed to consider the issue afresh in the light of the ITAT order as referred above. Pre-acquisition of expenses - AO held that the claim of pre-acquisition expenses u/s 37(1) is not proper as the same is eligible u/s 42 as per the terms of the agreement - HELD THAT:- Since the issue is covered by Hon ble Delhi High Court in assessee s own case, reference to case laws of M/s. Enron Oil and Gas India Ltd. [ 2008 (9) TMI 3 - SUPREME COURT ] by ld. DR is not applicable on the facts here. Hence, the order of ld. CIT (A) is upheld on this issue. Excess depreciation claimed on UPS @ 60% u/s 32(1)(ii) - HELD THAT:- Pursuant to the AO s disallowance in this regard, ld. CIT (A) has decide the issue in favour of the assessee by placing reliance on the decision of Hon ble Delhi High Court in case of BSES Yamuna Powers Ltd. [ 2010 (8) TMI 58 - DELHI HIGH COURT ] wherein it has been held that depreciation on UPS shall be allowed @ 30%. Allowability of expenses incurred on exploration activities u/s 37 of the Act carried out in Farsi block, Iran under a service contract - CIT-A allowed the claim - HELD THAT:- CIT (A) has taken a correct view of the matter. It is certainly settled law that allowability of expenses is not contingent upon earning of income. It has been duly incurred and no doubt has been expressed about the veracity of the expenditure. When no income has accrued in this regard, the expenditure cannot be disallowed on the plank that since income has not been earned expenditure is to be disallowed. In our considered opinion, the order of ld. CIT (A) and the case laws referred by him are germane and duly support the case of the assessee. Hence, we uphold the order of the ld. CIT(A) on this issue. The mere reference to section 42 and the decision of the Hon ble Supreme Court by the Ld. DR does not fructify the case of the Revenue in absence of details submitted as to how they are affecting the issue here. Addition on account of disallowance of prior period income - CIT-A deleted the addition - HELD THAT:- We find that ld. DR is not disputing the findings of the ld. CIT (A) on this issue but only wants the matter to be remitted to AO for verification. We find that the matter has already been examined by ld. CIT(A) and has passed a cogent order. No infirmity therein has been pointed out to persuade us to remit the matter to AO, hence we uphold the order of ld. CIT (A). Revision of opening and closing stock - CIT (A) has dealt with the assessee s request that since the value of closing stock has been increased in AY 2008-09, in AY 2009-10 the value of opening stock should also increase - HELD THAT:- We find that ld. DR has not disputed the CIT (A) s finding and he is only submitting that this is a factual issue and may be remitted to AO. We find that this is exactly what ld. CIT (A) has done. The CIT (A) has noted the assessee s submissions and held that AO may consider the same. Hence, Revenue s ground in this regard is misplaced and hence dismissed. Contribution to abandonment account - claim was an expense which was to be allowed in future years and was a claim which was not acceptable in view of the decision of M/s. Goetze India [ 2006 (3) TMI 75 - SUPREME COURT ] - HELD THAT:- We find that ld. CIT (A) has duly examined the additional evidences and given a proper finding that the expenditure is allowable u/s 57. The ld. CIT (A) s order is well reasoned. The ld. CIT (A) has already found that the assessee cannot get back any amount from the fund. Hence, Revenue s plea that ld. CIT (A) has not decided whether the amount paid is provisional or not is not at all sustainable. Hence, we uphold the order of the ld. CIT (A). TP adjustment - appellant had advanced foreign currency loan from its own funds to its indirect subsidiary ONGC Caspian carrying a rate of interest of 2.5% - bridge loan was advanced by the Appellant to ONGC and short term loan for less than 6 months and was borrowed to bridge the short term gap between the requirement of funds and inflow of funds - HELD THAT:- We agree with the ld. CIT (A) that the TPO has applied erroneous and non-comparable search to benchmark the loan transaction. Further assessee has also submitted additional benchmarking analysis using the loan connector database which also compared well with the rate of interest arrived by the assessee. The TPO has used the data regarding loans which pertains to earlier years where the loan was for a period of 3 years. As the loan given by the assessee was a bridge loan for less than 6 months and has been repaid during the financial year itself, we find that the adjustment made by the TPO has rightly been set aside by the ld. CIT (A). Accordingly, we uphold the order of ld. CIT (A) on this issue. TP adjustment on loan provided to Jarpeno - Jarpeno acquired Imperial Energy Corporation Plc., UK ( Imperial ) in January 2009, for which consideration was advanced by the Appellant to Jarpeno - HELD THAT:- We find that identical issues were decided by the ld. CIT(A) in assessee s own case for earlier AYs i.e. 2010-11 2012-13 wherein addition on similar basis by adopting SBI rates was rejected relying upon the decision of Hon ble Cotton Naturals (I) Pvt. Ltd. [ 2015 (3) TMI 1031 - DELHI HIGH COURT ] We find that ld. CIT (A) has analysed the issue in proper perspective and taken a correct view of the matter, hence we uphold the same. TP adjustment qua interest on these loans to AE - HELD THAT:- We find that Ld. CIT(A) has passed a reasonable order stating that on the basis of facts available on record, the AO/TPO is directed to benchmark the loan transaction of the appellant with ONGC Nile Ganga at 6 months LIBOR + 4%. The AO/TPO is also directed to verify the value of LIBOR after taking the contention of the appellant into consideration. In view of the order of the CIT(A) in AYs 2012-13 and 2013-14, the AO/TPO is also directed to apply 6 months LIBOR rate for benchmarking receipt of interest from ONGC Nile Ganga. Appeal of revenue dismissed.
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2022 (9) TMI 350
Levy of fee u/s 234E - intimation issued u/s 200A - assessee argued enabling clause (c) was inserted in the section 200A w.e.f. 01.06.2015 - whether late filing fee u/s 234E of the Act has rightly been charged in the intimation issued u/s 200A/206CB of the Act while processing the TDS returns/statements as the enabling clause (c) having been inserted in the section w.e.f. 01.06.2015? - HELD THAT:- We understand that earlier, there was no enabling provision in the Act u/s 200A for raising demand in respect of levy of fee u/s 234E. As such, as per the assessee, in respect of TDS statement filed for a period up to 31.03.2015, no late fee could be levied in the intimation issued u/s 200A of the Act. On similar facts, the same issue has been adjudicated and addition has been deleted by the Case of Sudershan Goyal vs. DCIT [ 2018 (5) TMI 1626 - ITAT AGRA ] wherein the judgments of Shri Fatehraj Singhvi and Others [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT ], Sibia Healthcare Pvt. Ltd. [ 2015 (6) TMI 437 - ITAT AMRITSAR ] and Shri Kaur Chand Jain [ 2016 (9) TMI 1442 - ITAT AMRITSAR ] were considered. Accordingly, the order of the CIT(A) is reversed and the fee so levied under section 234E of the Act is cancelled. Decided in favour of assessee.
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2022 (9) TMI 349
Deduction u/s 80IB(10) - mandation of having one project being one acre of plot - plot was divided into two parts due to 30 meters reservation on DP road and 30 meters reservation for HCMTR - HELD THAT:- As decided in assessee own case [ 2018 (9) TMI 1905 - ITAT PUNE] issue regarding two plots had arisen because of the mistake of Architect where the plot was only one, but only for the sake of convenience, numbering was shown as plot No.I and plot No.II by the Architect. The Tribunal after noting various other aspects held that reservation on account of DP road as well as HCMTR would not alter the fact that the said plot was one plot and mere division on account of reservation would not change the character of existing plot. The conditions stipulated in section 80IB(10) of the Act, of the project being one acre of plot, was held to be fulfilled. Conditions stipulated in section 80IB(10) for claiming deduction have been fulfilled by the assessee and necessary evidences have been furnished and therefore, for the year under consideration, the assessee was entitled to get deduction u/s 80IB(10) of the Act. The ld. D.R fairly conceded that the issue is covered in favour of the assessee. Respectfully following the aforestated decision of Pune Tribunal on the same parity of reasoning and the same set of facts and circumstances, the claim of deduction u/s 80IB(10) of the Act which has been allowed to the assessee by the ld. CIT(A) following the Tribunal‟s order (supra) cannot be faulted with for any reason whatsoever. The relief provided to the assessee is sustained.
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2022 (9) TMI 348
Adhoc disallowances @ 10% out of expenses claimed on account of Freight, after sales service, Repairs Renovation, printing stationary, Running maintenance - CIT(A) sustaining a part of the addition made by Ld. ITO on the ground of non-availability of vouchers etc. in support of expenses claimed in books of account - HELD THAT:- As disallowances of expense by the AO without any specific finding with support of corroborative evidence to prove the contrary and merely mentioning that supporting bills/vouchers were missing or not produced would not be sufficient for the purpose of such addition to reject the claim of the appellant s business expenses. CIT(A) without verifying the facts of the case, and considering the written submission of the assessee confirmed the addition on the basis of the observation of the AO. Such observation of the ld. CIT(A) is fallacious, since, expenses were claimed by the appellant assessee for the furtherance and running of its regular business. CIT(A) has not discussed any worthwhile argument as to why, he has treated the expenses claimed by the assessee as bogus. It has been held in plethora of the judgments that any expenses that goes towards proper understanding/or management of owns business is an expense allow u/s 37 - The mandate does not permit the AO to step into the shoes of the business man and dictate him, how he has to manage the business. The authorities below did not point out any specific lacunae as regards to disallowance of expenses. It is noted that assessee is maintaining regular books of account which are subject to tax audit u/s 44AB of the Act. and that the authorities below had not pointed out any defect in the accounts as per the audited books of account of the assessee. DR did not file any contrary view before us. In the case of CIT v. M/s S.S.P. Pvt. Ltd. [ 2011 (7) TMI 574 - PUNJAB AND HARYANA HIGH COURT] the Hon ble Punjab Haryana High Court has observed that where audited books of account along with vouchers were produced by the assessee and thereafter the Assessing Officer has failed to show that the said expenditure was not for the business purposes, then such disallowance made on ad-hoc basis without there being any material would not be justified. Appeal of assessee allowed.
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2022 (9) TMI 347
Deduction u/s 80P(2)(a)(i) - loans given to nominal members - Whether CIT(A) have erred in denying the exemption claimed under section 80P(2)(a)(i) of the Income Tax Act, 1961 available to Co-operative Societies engaged in the business of banking or providing credit facilities to its members and accepting deposits from its members? - HELD THAT:- We note that the assessee is a Co-operative Credit Society registered under the Karnataka State Co-operative Societies Act, 1959 having two categories of members i.e. regular members and associate/nominal members. We also note that the objective of the society is that of providing credit facilities to its members The basis adopted by the ld. AO for the purpose of making disallowance relates to credit facilities provided to the category of members which are associate/nominal members. We note that the issue in the present appeal before us has been concluded by the decision of Hon ble Supreme Court in the case of The Mavilayi Service Co-operative Bank Ltd. [ 2021 (1) TMI 488 - SUPREME COURT] wherein it is held that full bench judgement in the case of Citizen Co-op Society Ltd. [ 2017 (8) TMI 536 - SUPREME COURT] wherein the Hon ble Supreme Court has considered the decision of Co-ordinate Bench of Supreme Court in the case of Citizen Co-operative Bank Ltd. [ 2017 (8) TMI 536 - SUPREME COURT] as held that section 80P of the IT Act is a benevolent provision, which was enacted by Parliament in order to encourage and promote the growth of the co-operative sector generally in the economic life of the country and must, therefore, be read liberally and in favour of the assessee - once the assessee is entitled to avail of deduction, the entire amount of profits and gains of business that are attributable to any one or more activities mentioned in subsection (2) of section 80P must be given by way of deduction - section 80P(4) is in the nature of a proviso to the main provision contained in section 80P(1) and (2). This proviso specifically excludes only co-operative banks, which are cooperative societies who must possess a license from the RBI to do banking business. Given the fact that the assessee is not so licensed, the assessee would not fall within the mischief of section 80P(4). Thus, respectfully following the said decision of Hon ble Supreme Court in the given facts and circumstances of the case, we direct the ld. AO to delete the addition made and allow the deduction claimed by the assessee u/s 80P(2)(a)(i) of the Act. Accordingly, the grounds of appeal of the assessee are allowed.
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2022 (9) TMI 346
Deduction u/s 80P(2)(a)(i) - income earned from associate/nominal members - HELD THAT:- Admittedly, the assessee is a primary agricultural credit cooperative society and is governed by Karnataka Co-operative Societies Act, 1956 and it is carrying out its co-operative business with its members, the claim of deduction u/s 80P(2)(a)(i) of the Act cannot be denied. Also, assessee does not hold a banking license issued by RBI so as to give it a status of Co-operative Bank. Hence, respectfully following the decision of Hon ble Supreme Court In the case of the The Mavilayi Service Co-operative Bank Ltd [ 2021 (1) TMI 488 - SUPREME COURT] and S1308 Ammapet Primary Agricultural Co-operative Bank Ltd. [ 2019 (1) TMI 116 - MADRAS HIGH COURT] in the given similar facts and circumstances, we reverse the orders of lower authorities and allow this issue in the appeal of assessee for A.Y. 2009-10. Appeals of the assessee are allowed.
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2022 (9) TMI 345
Disallowance of deduction u/s 80P - CPC Bangalore jurisdiction to make this disallowance in the order u/s 143(1) - assessee, a primary agricultural cooperative society declaring nil income by claiming deduction u/s 80P - disallowance has been made merely because the return was filed beyond the due date - HELD THAT:- Sub-clause (v) of Section 143(1)(a) was amended by the Finance Act, 2021 wherein instead of reference to Sections 10AA, 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID or Section 80-IE, the provision instead makes a mention of Section 10AA or under any of the provisions of Chapter VI-A under the head C-Deductions in respect of certain incomes . Accordingly, the enabling provisions to address the amendment in Section 80-AC by Finance Act, 2018 came into play only in 2020-21 assessment year. Thus, no doubt Section 80AC as amended by the Finance Act, 2018 mandated that even for claiming deduction claimed u/s 80P, the return of income was to be filed before the due date as specified under subsection (1) of Section 139. For the AO to insist upon the compliance by way of making a disallowance, the power was vested in the said Authority only vide Finance Act, 2021. Hence, in the absence of the enabling provisions, the CPC Bangalore lacked the jurisdiction to make this disallowance in the order u/s 143(1). In the facts of the present case, admittedly the provision enabling the AO to pass an order relying upon sub-clause (5) of Section 143(1)(a) was not on the Statute for 2018-19 assessment year. Accordingly, for the detailed reasons hereinabove, setting aside the impugned order, the appeal of the assessee is allowed.
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2022 (9) TMI 344
Delayed payment of employees contribution to ESI and EPF u/s.36(1)(va) - Deposits prior to the due date of filing of its return of income - HELD THAT:- Admittedly, it is though a matter of fact borne from record that the assessee had delayed deposit of an amount of Rs.10,02,073/- towards employee s share of contributions towards PF ESIC i.e. beyond the stipulated time period contemplated under the respective Employees Welfare Act, but had deposited the same prior to the due date of filing of its return of income for the year under consideration. Backed by the aforesaid facts, it is the claim of the assessee that now when the amount in question had been deposited prior to the due date of filing of its return of income, therefore, no disallowance of the same was called for u/s.43B As the facts and the issue involved in the aforesaid order of the Tribunal in the case of Ind Synergy Ltd. [ 2022 (4) TMI 36 - ITAT RAIPUR] remains the same as are there before us in the case of the present assessee, therefore, we respectfully follow the same. We, thus, in terms of our aforesaid observations set-aside the order of the CIT(Appeals) and direct the AO to vacate the disallowance.
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2022 (9) TMI 343
Rejection of books of accounts u/s 145 - adopting the net profit at the rate of 10% of the gross contract receipt - HELD THAT:- We are unable to comprehend the observation of the AO, who had rejected the books of account of the assessee for the year under consideration and estimated his income from the contract business @10% of gross contract receipts, for the reason that as the assessee in his application filed before the ITSC, Kolkata for the preceding years i.e AYs. 2006-07 to 2012-13 had admitted certain defects and irregularities in his books of accounts, therefore, it was to be presumed that he would have continued with such accounting malpractices and irregularities in the subsequent years too. Our aforesaid conviction is all the more fortified by the fact that the AO had after calling for and examining the books of accounts of the assessee for the year under consideration a/w bills, vouchers, confirmations etc. had not referred to even a single instance of any such defect or irregularity which would have evidenced that the assessee even during the year under consideration had continued with the accounting malpractices that were adopted by him in the preceding years. Presumption drawn by the AO that that as the assessee had indulged into accounting malpractices in the preceding years, therefore, he would have continued with the same in the succeeding years in the absence of any supporting evidence cannot be subscribed on our part. Interestingly, if the observation of the AO is to be accepted, then, it would mean that once an assessee is visited with search proceedings and he after considering the incriminating documents unearthed during the course of such proceedings comes forth with a disclosure of his unaccounted income, then, in all the subsequent years despite there being no iota of evidence that the assessee had indulged in any such nefarious activities for garnering unaccounted income it is to be so presumed because of his chequered past. By no means such an incomprehensible observation of the AO can be accepted. As regards the reference to the Standard Operating Rate (SoR) by the AO to support his conviction that the income of the assessee from his contract business was justifiably determined by applying a net profit rate @10% to the gross contract receipts for the year under consideration, we are unable to concur with the same. As claimed by the ld. AR, and rightly so, as the SoR for works contracts fixed by the Government departments merely indicates the estimated price of the inputs and expenses and also an estimate of the physical quantity that would be required for execution of the contract, the same, thus, considering manifold factors is too far from the ground realties to have justified earning of a profit margin @10% of the gross contract receipts by the assessee. Concurring with the well-reasoned view taken by the CIT(Appeals) that there was no justification on the part of the AO in rejecting the books of accounts of the assessee and estimating his income from the contract business @10% of the gross contract receipts, uphold his order. - Decided in favour of assessee.
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2022 (9) TMI 342
Proportional deduction u/s.80IB(10) - profit on sale of excluding flats measuring more than 1500 sq. ft. limit when all the flats are forming part of a single project as per the provisions of Section 80IB(10) - HELD THAT:- We find that the issue raised in the present appeal is no more res-integra and is squarely covered by the decision of the Hon ble Jurisdictional High Court in assessee s own case [ 2017 (11) TMI 1999 - CHHATTISGARH HIGH COURT] We find that the Hon ble Supreme Court in the case of Commissioner of Income Tax V. Shreenath Buildcon [ 2018 (12) TMI 1723 - SC ORDER ] had held, that where the constructed area of some residential units exceeded the specified built up area of 1500 sq. ft, then, deduction claimed could not be denied in respect of the entire housing project. We, thus, in terms of our aforesaid observations finding no infirmity in the view taken by CIT(Appeals) who had rightly directed the A.O to restrict the disallowance of the assessee s claim for deduction u/s 80IB(10) proportionately in respect of allotment of sales transactions which do not comply with the conditions of section 80IB(10) and, allow the remaining deduction as claimed by the assessee, thus, uphold the same. Thus, the grounds of appeal raised by the department are dismissed in terms of our aforesaid observations. Appeal of the department is dismissed
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2022 (9) TMI 341
Revision u/s 263 by CIT - Eligibility of deduction u/s 80P on interest income - appellant society earned interest income on investments made with cooperative banks - PCIT was of the opinion that the cooperative bank does not fall under the purview of a cooperative society and therefore the interest income earned from such cooperative bank does not qualify for deduction u/s 80P(2)(d) - HELD THAT:- The error in the assessment order should be one that it is not debatable or plausible view. In a case where the AO examined the claim took one of the plausible views, the assessment order cannot be termed as an erroneous . In the present case, we find that admittedly the interest income was earned from the cooperative banks, the cooperative bank is also a specie of cooperative society, therefore, the interest income earned by the cooperative society from the cooperative banks qualifies for deduction u/s 80(P)(2)(d) of the Act. Such interest also qualifies for exemption u/s 80P(2)(a)(i) as held by the Co-ordinate Bench of Pune Tribunal in the case of Nashik Road Nagari Sahkari Patsanstha Limited [ 2021 (12) TMI 1259 - ITAT PUNE ]. Similarly, as regards to the disallowance of provision for expenses, without going into the merits of the disallowance sought to be made by the ld. PCIT, it would suffice to say that disallowance, if any, shall increase the business profits of the appellant cooperative society. The business profits so inflated shall qualify for exemption u/s 80(2)(a)(i) of the Act. Therefore, even assuming for a moment that the provisions for exemption warrant addition, it does not result into an enhancement of assessed income warranting a revision.Issues which are subject matter of revision, are either covered in favour of the assessee by judicial precedents nor results into any enhancement of assessed income warranting a revision. Thus we are of the considered opinion that the order of revision passed by the ld. PCIT u/s 263 of the Act cannot be sustained in the eyes of law. Hence, the grounds of appeal raised by the assessee stand allowed.
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2022 (9) TMI 340
Deduction u/s. 80-IA - Claim denied as return of income was not accompanied by the mandatory audit report as prescribed in Form No.10CCB - HELD THAT:- Admittedly the assessee has filed return of income claiming deduction u/s. 80IA of the Act on 31.10.2017, but audit report in Form No.10CCB for claiming deduction u/s. 80-IA was filed on 13.11.2017 and the evidence of the same was placed on record. The processing of return u/s. 143(1) was done by the A.O, CPC, Bengaluru and issued intimation dated 23.03.2019, which is much after the filing of audit report. Once, this is a fact, this issue is clearly covered by the decision of AKS Alloys (P.) Ltd. [ 2011 (12) TMI 39 - MADRAS HIGH COURT] and which was affirmed by the Hon ble Supreme Court in the case of CIT v. G.M. Knitting Industries (P.) Ltd. [ 2015 (11) TMI 397 - SC ORDER] . We have also gone through the case law of Hon ble Supreme Court in the case of PCIT v. M/s. Wipro Ltd [ 2022 (7) TMI 560 - SUPREME COURT] wherein the Hon ble Supreme Court has categorically made distinction between the exemption clauses and deduction clauses of the Act. Thus we are of the view that once the assessee has filed an audit report in Form No.10 CCB on 13.11.2017 and processing of return u/s. 143(1) of the Act was done by the A.O, CPC, Bengaluru on 23.03.2019, which is an event much after, the assessee is fully entitled to claim deduction u/s. 80-IA of the Act. We hold so. Accordingly, the orders of the lower authorities are set aside and claim of deduction u/s. 80-IA of the Act of the assessee is allowed. Thus, the appeal of the assessee is allowed.
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2022 (9) TMI 339
Reopening of assessment u/s 147 - second round of reassessment - Addition towards unsecured loan / unexplained investment - HELD THAT:- Notice u/s.148 was issued in his case qua the investment in land and the AO accepted the genuineness of this transaction without making any addition in his hands. Thus, it becomes evident that the issue, which had attained finality in the first round of the reassessment proceedings with the AO accepting the genuineness and break-up of loan received by the assessee from Dr. A.G. Vakundre, was again sought to be raked up by means of the second round of reassessment. There is no logic in initiating the reassessment proceedings again on the very same basis as constituted the edifice in the first round. The Revenue cannot time and again initiate re-assessment proceedings on the very same issue. Once the proceedings are re-opened, it becomes incumbent upon the AO to give a logical conclusion to such proceedings by examining each and every aspect thereof. Once the genuineness of a transaction is accepted in the first round, the AO is precluded from espousing the same issue once again by means of another round of reassessment. Sword of re-assessment cannot be allowed to hang over the head of the assessee eternally. There has to be an end somewhere, at least of an issue, with the completion of the proceedings in which it was first taken up. We are confronted with a situation in which the AO initiated re-assessment proceedings in the first round on this very issue and passed the order without making any addition by duly recording in the order and accepting the contention of the assessee about having received loan from Dr. A.G. Vakundre with proper details. The re-assessment has been initiated in the second round of proceedings on the same issue, which in our opinion, is totally unfounded. The transactions of acquisition of the land and its payment by Dr. Vakundre are tagged with each other. If the land is the asset of the assessee, then naturally, the corresponding payment is his liability, irrespective of denial by Dr. Vakundre for extraneous considerations. Viewed from any angle, it is patent that the initiation of re-assessment proceedings on this score cannot be validated. We, therefore, overturn the impugned order by quashing the second round of re-assessment proceedings. All the consequential orders passed are hereby set-aside. In view of our decision on the invalidity of the initiation of reassessment proceedings, there is no need to dispose of other grounds raised on merits. - Decided in favour of assessee.
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2022 (9) TMI 338
Undisclosed income - scrutiny assessment - exact amount as not discernable from the statement of 26AS - mismatch between the receipts shown by the assessee, vis- -vis. as per 26AS i.e. TDS details - HELD THAT:- The assessee has explained its position that in the statement of 26AS, the amount for which a bill was prepared by the concerned authority would reflect and sometime it is not necessary that advance given by the assessee should match ultimately with the purchases made by it. The advance could be further adjusted for other purchases. This simple thing has not been appreciated by the revenue authorities. Assessing Officer keeps on making the reference of Bank account, partial payments, etc. If he has any doubt, he should ask Tata Metaliks DI Pipes Limited. In that exercise, lot of unnecessary litigation as well as wastage of resources could be avoided. Similar is the situation with regard to other small issues by making reference of irrelevant things the disallowance has been made. The simple way for AO was to cross verify from the concerned party, without adopting that course, he keeps on drawing inference of defects in the details of assessee by way of a deductive reasoning method. On due consideration of the details, we are of the view that the disallowance is not sustainable. We allow the appeal of the assessee and delete the disallowance. Appeal of assessee allowed.
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2022 (9) TMI 337
Taxability of compensation received on acquisition of land - Exemption un/s 96 of the RFCTLARR Act - income tax liability on any award or agreement made - Addition made under the Head Long Term Capital Gain - whether assessee discharged onus of evidence substantiating his claim of Exemption from Capital Gain on account of Agriculture Land? - exemption allowed to the assessee by the ld. CIT(A) - HELD THAT:- The order passed by the ld. CIT(A) is a reasoned order and as such there is no need to inference by this Tribunal in the order passed by the ld. CIT(A). Besides that in the present case also the CBDT vide Circular No. 36/2016 dt. 25/10/2016 clarified that the compensation received in respect of award or agreement which has been exempt from levy of Income Tax vide section 96 of the RFCTLARR Act shall also not be taxable under the provisions of Income Tax Act, 1961 even if there is no specific provisions of exemption for such compensation in the Income Tax Act, 1961. In the said Circular it is also clarified that no distinction had been made towards compensation received for compulsory acquisition of agricultural land and non agricultural land in the matter of providing exemption from income Tax under the RFCTLARR Act. In the instant case the assessee received compensation for compulsory acquisition of commercial land during the F.Y. 2014-15 which was exempted under section 96 of the RFCTLARR Act, as clarified by the CBDT Circular No. 36/2016 dt. 25/10/2016. We therefore considering the totality of the fact as discussed hereinabove are of the view that the Id. CIT(A) was justified by not confirming the action of the A.O. Accordingly the appeal of the revenue is dismissed.
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2022 (9) TMI 336
Penalty levied u/s 271AAB - whether no search was initiated in its case? - notice u/s 153C was issued on incriminating material belonging to the assessee was found - assessee pleaded that Section 271AAB is not applicable as no search was initiated in its case - CIT-A deleting the penalty levied - HELD THAT:- On due consideration of the facts and circumstances, we do not find any merit in this appeal because the opening line of section 271AAB contemplates that there should be a search for invoking this provision. As during the course of search, if any incriminating material belonging to some other person than the searched person was found, then AO of the searched person would record his satisfaction demonstrating the fact that material belonging to other person was found and it exhibits the escapement of some income from taxation. This satisfaction note is to be transmitted to the Ld. Assessing Officer, who is having jurisdiction on such other person and the AO of other person would issue notice under section 153C. Therefore, sections 153A and 153C deal with two different categories of assessees. The penalty leviable under section 271AAB is with respect to those assessees where search has been conducted. The case of the present assessee falls under second category. The assessment was made under section 153C of the Income Tax Act. We fail to understand from where the Ld. Assessing Officer has brought this statement of disclosure. Statement under section 132(4) is to be recorded during the course of search to find out, whether any declaration is to be made by an assessee or not. The next fatuous attempt at the end of Ld. Assessing Officer is that taxable income determined by him in the assessment order which is almost equivalent to the returned income disclosed by the assessee. The penalty is to be computed by taking cognizance of the assessed income. Here AO has imposed a penalty without making any reference to the income determined in the hands of assessee, rather taking cognizance of the statement of searched person, who might have disclosed it . It is totally against the law and the Ld. 1st Appellate Authority has rightly appreciated the facts and circumstances by deleting the penalty - Revenue appeal dismissed.
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2022 (9) TMI 335
Addition u/s. 56(2)(vii)(b) - difference between the stamp duty value and agreement value of the property - HELD THAT:- From perusal of proviso to section 56(2)(vii)(b) we find that in case the date of agreement fixing amount for consideration for the transfer of immovable property and the actual date of registration of the property are not the same, then the stamp duty value on the date of agreement may be taken for the purpose of the valuation of the impugned property if total or part of the consideration referred in such agreement is paid in a mode other than cash on or before the date of such agreement. The assessee was also provided a payment schedule and thereafter on 1.9.2011 the said agreement took place between M/s. Ideal Real Estate P. Ltd. others and assessee showing sale consideration - As per payment schedule the assessee made first payment on 24-3-2011 through bank by a/c payee cheque of Rs. 1 lakh and subsequently payment was made on various occasions during the financial years 2011-12, 2012-13 and 2013-14. Therefore, it remains an uncontroverted fact that the immovable property in question was agreed to be purchased vide agreement dt. 01-09-2011 and part consideration was paid by account payee cheque before the date of agreement, and, therefore, the value as per stamp valuation authority as on the date of agreement (01.09.2011) should have been taken for the purpose of computing the fair market value (FMV) of the property as contemplated in section 56(2)(vii)(b) - Since it is not in dispute before us that as on 1.9.2011 the value of said property as per stamp valuation authority is not more than the purchase consideration shown in the agreement we are of the view that no addition should have been made by the Ld. AO in the hands of the assessee u/s. 56(2)(vii)(b) - We, therefore, reverse the finding of the Ld. CIT(A) and delete the addition - Thus, effective grounds raised by the assessee are allowed.
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2022 (9) TMI 334
TDS u/s 194A - Disallowance/addition of interest on car loan paid - non deduction of tax at source thereby making disallowance u/s. 40(a)(ia) - HELD THAT:- CIT(A) has observed that the assessee did not press this ground before him and therefore, the same was dismissed. Before us the assessee has again raised this ground stating that M/s. Kotak Prime Ltd. is a subsidiary of M/s. Kotak Mahindra Bank and is in the list of notified exempted institution as provided in section 194A(iii)(f) of the Act. Since the assessee is neither present before us in the hearing nor placed any material to support/substantiate this claim through written submissions, we are of the view that this issue needs to be verified by the AO, before whom the assessee will file necessary details/evidences in support of this ground/claim. In addition to this, the assessee can also provide proof of alleged amount being offered to tax by the M/s. Kotak Prime Ltd. and if requisite certificate of the Chartered Accountants is obtained in the prescribed format evidencing that the alleged amount has been offered as revenue and due taxes have been paid, then the AO shall grant relief to the assessee by not making disallowance u/s. 40(a)(ia) of the Act of the alleged amount. Thus, ground No. 2 raised by the assessee is allowed for statistical purpose. Disallowance of donation and subscription - HELD THAT:- The said amount is claimed to be incurred towards Puja expenses. The assessee could not produce any bills/voucher(s) to substantiate this claim, We, however, looking to the facts of the case and the expenses being incurred by the assessee company on festival and similar customary occasions for its employees find it proper to disallow only 10% of the alleged amount and delete the remaining disallowance. Accordingly, the addition is sustained and remaining disallowance is deleted. Thus, ground No. 3 raised by the assessee is partly allowed.
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2022 (9) TMI 333
Disallowance of depreciation allowance - WDV - plant and machinery were not used during the year due to change in business model - Scope of amended provisions of Section 32 of the Act as amended by the Taxation Laws (Amendment Miscellaneous Provisions) Act, 1986 w.e.f. 01.04.1988 - assessee submitted that it had changed the business model from manufacturing of tea to trading in tea. However, there was no sale or manufacturing of tea during the year due to the circumstances beyond its control - HELD THAT:- As per the amended section 32 of the Act, deduction is to be allowed - in the case of any block of assets, such percentage on the written down value thereof as may be prescribed . Thus, with the amendment, the depreciation is allowed on block of assets. With the aforesaid amendment, the depreciation is now to be allowed from AY 1989-90 on the written down value of the block of assets at such percentage as may be prescribed. Further, with this amendment, individual assets have lost their identity and the concept of block of assets has been introduced for the purpose of calculating the depreciation. We note that CBDT issued a Circular No. 469 dated 23.09.1986 explaining the purpose behind the amended provisions of section 32 of the Act wherein the rationale behind the introduction of concept of block of assets is described. Thus, once an asset is part of the block of assets and depreciation is granted on that block, it cannot be denied in subsequent years on the ground that one of the assets is not used by the assessee in some of the years. The concept of user of assets has to apply on the block of assets as a whole instead of an individual asset. The notes to clauses as mentioned in Finance Bill, 2001 in respect of amendment of section 32 of the Act for the insertion of explanation (5) states that a new explanation (5) in clause (ii) explanation (1) of section 32 of the Act is inserted so as to clarify that the provisions of sub-section (1) of section 32 of the Act shall apply whether or not the assessee has claimed the deduction of depreciation in computing his total income. It also states that this amendment will take effect from 1st April, 2002 and will, accordingly, apply in relation to the AY 2002-03 and subsequent years. Deduction of depreciation is to be allowed mandatorily in computing the profits and gains of business or profession for any previous year. It is undisputed that the plant and machinery, factory building etc., were put to use in the preceding years whereon depreciation has been claimed according to their respective block of assets as per the rates prescribed thereon. It is not a case where we need to deal with the issue of whether assets have been put to use or not so as to form part of the block of assets in their first year. It is not the case of AO that the assets were not put to use at all. Once the assets have been put to use, the claim of depreciation allowance on the said assets cannot be restricted. It is important to note that once it is found that the assets are used for business, it is not necessary that all the items falling within that particular block of assets had to be simultaneously used for being entitled to depreciation. In the present case, we note that assessee submitted that it has changed its business model from manufacturing to trading in tea though no sale or manufacturing of tea happened during the year under consideration. Ld. AO also noted that the machineries might have been tested and maintained to keep it ready to dispose off as per the approval granted by the shareholders, fact of which is noted in the Director s report referred above. In the Director s report, assessee had also submitted that it was open for the assessee to lease out the plant and machinery. All these reflect the intention of the assessee which are in the nature of passive use of the assets on which depreciation has been claimed. As referring to decision of Hindusthan Engineering Industries Ltd.[ 2018 (2) TMI 1691 - ITAT KOLKATA] we hold that the assessee cannot be denied the benefit of depreciation claimed u/s. 32 of the Act in respect of its plant and machinery, factory building, etc. - amendment brought into section 32, especially explanation (5) to subsection (1) of section 32 of the Act, we direct the Ld. AO to allow the claim of depreciation. Accordingly, the ground of appeal is allowed.
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2022 (9) TMI 332
Addition u/s.56(2)(vii)(b)(ii) - difference between guideline value of the property and consideration paid for purchase of property - HELD THAT:- The facts borne out from the record are indicate that the assessee had purchased property along with co-owner, Mr.C.R.Rajaram, for a consideration of Rs.36 lakhs and the guideline value of the property as per the stamp duty authorities was at Rs.68,03,167/-. AO has made addition u/s.56(2)(vii)(b)(ii) of the Act, towards difference between guideline value and consideration paid for purchase of property as unexplained investment. CIT(A) has sustained the additions made by the AO. We find that similar addition has been made in the hands of co-owner, Mr.C.R.Rajaram, and appeal filed by the co-owner, is pending before the Ld.CIT(A). When the very same issue is considered in the hands of the two assessees on the issue of difference between guideline value and consideration paid for purchase of property as per the provisions of Sec.50C of the Act, in our considered view, the appeals filed by both the assessees needs to be decided simultaneously, because, the decision taken in one case may have bearing on the other appeal filed by the co-owner. Since the appeal filed by the co-owner is pending before the CIT(A), we deem it appropriate to set aside this appeal filed by the assessee to the file of the CIT(A) and direct the CIT(A) to decide both the appeals simultaneously and decide the issue involved in the appeals in accordance with law. Appeal filed by the assessee is allowed for statistical purposes.
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2022 (9) TMI 331
Disallowing interest expenses - interest bearing loans taken by the assessee has been utilized for the purpose of interest free loans - HELD THAT:- As per financial statement, it is also clear that the borrowed funds have not been utilized for the investments in LKP Finance Ltd., since opening and closing balance reflects the same figure. It has been further observed that there is increase in the loan from UBHL to the extent and on further perusal of long term loan schedule no.7 there is increase of 13.39 crores which is interest free loans and advances. During the course of arguments, AR drew our attention to copy of HDFC Bank current account and ld.AR of the assessee was tried to reconcile that the particular interest bearing funds have been returned to the UBHL but he produced the bank statement only. From the bank statement, it cannot be ascertained that the funds have been utilized for refunding to the UBHL. At this moment, considering the fact that the assessee has not produced copy of ledger accounts and any confirmation from the party, considering the totally of the facts and circumstances of the case we think it to send back to the assessing officer for the verification the raised by the assessee before us, and the assessee is directed to establish/substantiate before the AO that the particular interest bearing funds have not been utilized for the purpose of interest free loans. Appeal of the assessee is allowed for statistical purposes. Expenditure on management consultancy services - AO has accepted the revenue generated and restricted the addition to the extent which is incurred over and above from in the previous assessment year. The AO has accepted the revenue generated towards management consultancy fees but the assessee has not filed any agreement made with the UB holding company Ltd. with regard to the nature of services to be provided. Even before us the ld. AR could not file any documentary evidence for justifying any services rendered by them. On perusal of the assessment year 2014-15 the assessee has incurred the similar nature of expenditure but no any revenue has been received. During the impugned assessment year the assessee has received consultancy income which has been credited into profit and loss account and the manpower cost has also been increased by Rs.88,19,232/-. Before us, the assessee is not furnished any nature of services rendered by these two employees to whom the amount has been paid. No doubt, for earning income the expenditure is required to be incurred by the assessee. Considering the totality of the facts and circumstances of the case, we restrict to the disallowance from the total expenditure to the extent of 50%. Appeal decided partly in favour of assessee.
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2022 (9) TMI 330
Deduction u/s 11 - benefit of particular religious community or caste - Kedva Patel Community - denial of exemption was for the reason that the assessee trust was found to be created for the benefit of a particular religious community or caste, i.e Kadva Patidar, trigerring Section 13(1)(b) which denies exemption u/s. 11 to such Trusts - HELD THAT:- A bare perusal of the objects reveals that the first two objects clearly are solely for the benefit of Kadva Patels only, arranging accommodation facilities for them and helping the community members during marriages. The rest appear to be for the benefit of all members of society and thus not restricted to a particular community. Going further whether Kedva Patels could be termed as a religious community, we find that the answer is in the negative. The aspect, relating to the origin to Kadva Patel community and the Leuva Patel community was examined in detail by the ITAT, Ahmedabad B Bench in the case of Leuva Patel Nutan Kelwani Mandal [ 1984 (11) TMI 80 - ITAT AHMEDABAD-B] and it was categorically held that these communities owe their origin to the fact that they were agriculturist and not to any particular religion and therefore cannot be treated as a religious community for invoking section 13(1)(b) of the Act. In the said case the ITO had examined the President of the Leuva Patel Nutan Kelwani Mandal to determine whether they belonged to a particular religious community or caste. Whether it constitutes a caste, in our view, the answer is in the affirmative. There can be no doubt that the Kedva Patels are a caste. Owing their origins to agriculturists, this community clearly represents social stratification with defined occupation, lifestyle and customs, though the same over period of time may have faded. But their cultural characteristics are still defined and have an inherited social lifestyle. AO, in the case of Leuva Patel Nutan (supra), while tracing the historical background of Leuvas, stated that Leuvas and Kedva Patels were agriculturists originating from different sections of Punjab who had migrated to Gujarat and are closed communities having no relations with each other in marriage and dinner. It is but obvious that Kedva Patel is undoubtedly a caste. Even the AO in the case of Leuva Patel Nutan (supra) states so in para 8 of his order, reproduced above mentioning that both Leuva and Kedva Patels are different castes. What emerges from the above deliberation is that two objects of the assessee trust are for the benefit of a particular caste, i.e Kedva Patel, providing boarding and lodging facility and enabling marriages of the members of this caste only. The rest of the objects are clearly for the benefit of public at large, providing medical benefit, assistance to the needy and those in distress during natural calamities, to the public at large without any discrimination in caste or creed. Question whether section 13(1)(b) would apply only to charitable trusts established solely for communal purposes or to those for mixed purposes also, has been considered by the apex court in the case of CIT vs Dawoodi Bohra Jammat [ 2014 (3) TMI 652 - SUPREME COURT] in which case the Hon ble apex court found that the trust had both religious and charitable flavor and on the question of applicability of section 13(1)(b) to such trusts went on to hold that it would apply to such mixed trusts also. Thus in the present case also the provisions of section 13(1)(b) will apply, the trust being of charitable character with two of its objects exclusively for the benefit of the Kedva Patel Caste. The assessee trust we hold therefore is not entitled to exemption u/s 11 of the Act on incomes applied for the benefit of the Kedva Patel community ,as per section 13(1)(b) of the Act.The AO is directed to determine the incomes so applied,after verifying all facts giving the assessee a due opportunity of hearing, and deny application of the same for charitable purposes. The AO is directed accordingly to compute the taxable income of the assessee in accordance with law. All decisions relied upon by the Ld.Counsel for the assessee are either distinguishable for the reason that they were rendered on the issue of grant of registration u/s 12A of the Act, which is a totally different proposition, where the provisions of section 13(1)(b) in any case do not get invoked at all. We have also dealt with the issue of nature of the Kedva Patels and found them to be a caste. The decision of the ITAT in the case of Leuva Patel Nutan Kelwani Mandal (supra) which the assessee has relied upon stating that it was established in the said case that both the Leuva and Kedva Patel Community were neither religious communities nor caste, we have noted examined the issue only from the aspect of the community having any connection with a particular religion. Therefore it cannot be said that there was any finding relating to the group of people representing a caste. - Decided against assessee.
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2022 (9) TMI 329
Revision u/s 263 by CIT - Case of the assessee was reopened u/s 148 on the basis of an information of the Sales Tax Department, Govt. of Maharashtra that the assessee is beneficiary of Hawala entries - G.P. addition made on account of alleged Hawala purchase - according to the ld. Pr.CIT, the assessment was finalized without carrying out any enquiries and no efforts were made to verify the purchases and hence, according to the ld. Pr.CIT, the assessment was found to be erroneous and prejudicial to the interests of the Revenue - assessee opted for the Direct Tax Dispute Resolution Scheme, 2016 (DTDRS) and have filed a petition which is pending for finalization - HELD THAT:- As the assessee had not only challenged the addition but also challenged the jurisdiction of the A.O.. Moreover, while considering the decision of Siddhartha Tubes Ltd. [ 2002 (5) TMI 220 - ITAT INDORE] we are of the view that once the order has been settled under DTDRS Scheme, 2016, not only the issue of G.P. addition is settled but also the challenge of the jurisdiction by the assessee is settled. Pr.CIT who himself has settled the dispute by issuing Form No. 5 in favour of the assessee thus in that eventuality, the same Pr.CIT is not expected to again invoke provisions of Section 263 of the Act in the given facts and circumstances of the case. Thus, we quash the proceedings initiated U/s 263 of the Act. Appeal of the assessee is allowed.
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2022 (9) TMI 328
Capital gain - JDA entered - Transfer of capital asset - whether possession given to the develop cannot be regarded as delivery of possession ? - as per JDA clauses Developer will take possession of the property for the specific purpose of development only, that too after satisfying the conditions like obtaining approvals etc. HELD THAT:- From a reading of the above clauses of the JDA, it is clear that the Developer will take possession of the property for the specific purpose of development only, that too after satisfying the conditions like obtaining approvals etc. The clause also provides that possession given to the develop cannot be regarded as delivery of possession in part performance of Agreement for Sale as contemplated under section 53-A of the Transfer of Property Act, 1882. The assessee has given only permissive possession and not legal possession. Accordingly, following the decision of Dr. Krishna Prasad Mikkilineni [ 2022 (2) TMI 480 - ITAT BANGALORE] we hold that transfer has not taken place during the year under consideration. Accordingly, capital gain is not assessable in the hands of the assessee during the year under consideration. We therefore uphold the order of the CIT(A). - Decided against revenue.
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Customs
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2022 (9) TMI 327
Grant of Advance Licenses for duty free import of thermal paper - fulfilment of export obligations by procuring duty free materials from the local market by availing facility under sub-rule (2) of Rule 19 of the Central Excise Rules, 2002 or not - Applicability of N/N. 43/2002-Cus., dated 19 April 2022 and 93/2004-Cus., dated 10 September 2004 - HELD THAT:- On a perusal of the Order impugned passed by CESTAT, it can be seen that the appeal preferred by the Respondent was allowed only on the ground that it had fulfilled its export obligations as was confirmed vide the letter dated 23 November 2005 issued by the Respondent. However, it is found that the Tribunal has not at all dealt with the view expressed by the Original Authority in extenso as regards the manner, in which the goods imported under the export policy as also the terms and conditions of the exemption Notifications the Advance Licenses were dealt with contrary to their express conditions, which have been reproduced in the preceding paragraphs and its impact on the Order passed by the said Authority as regards confiscation, duty liability, penalty and liability as regards interest in the backdrop of the judicial precedents relied upon by the said authority. The matter remanded to the Tribunal for passing Orders afresh within a period of four months.
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2022 (9) TMI 326
Revocation of Customs Broker License - Period of limitation - relevant date for issuing SCN after the offence report - illegal withdrawal of Duty Drawback by filing export documents on behalf of six non-existent firms - aiding the export of overvalued Floor Coverings - opportunity to customs broker to cross examine the persons examined in support of the grounds forming the basis of proceedings - HELD THAT:- The records indicate that earlier the license of the appellant was suspended on 24.02.2015, which order was confirmed on 23.03.2015. This suspension order was challenged by the appellant before the Delhi High Court on the ground that though the offence report was submitted on 16.02.2015, the show cause notice was issued on 24.09.2015 much beyond the statutory period of ninety days contemplated under regulation 20(1) of the 2013 Regulations. The department issue another show cause notice dated 22.10.2019 proposing penalty for the past exports against the same exporters. The appellant alleges that the show cause notice dated 22.10.2019 was issued on the basis of the earlier investigation carried out against 21 non-existent exporters for availing ineligible duty drawback and the report of said offense had earlier been forwarded by a letter dated 16.02.2015. A show cause notice dated 24.01.2020 was then issued to the appellant proposing to revoke the Customs Broker License of the appellant by considering the show cause notice dated 22.10.2019 issued under the provisions of the Customs Act as the offence report - The Department clearly committed an error in initiating proceedings for revocation of the Customs Broker License of the appellant by issuing the show cause notice dated 24.01.2020 treating the show cause notice dated 22.10.2019 as the offence report. The show cause notice dated 24.01.2020 proceeding to revoke the license of the appellant could not have treated the show cause notice dated 22.10.2019 as the offence report because the said show cause notice dated 22.10.2019 arises out of the offence report dated 16.02.2015. The impugned order dated 30.09.2022 passed by the Commissioner, therefore, cannot be sustained and is set aside - Appeal allowed.
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2022 (9) TMI 325
Classification of imported goods - TV tuners - to be classified under tariff item 8473 3099 of First Schedule to Customs Tariff Act, 1975 or under tariff item 8528 7100 of First Schedule to the Customs Tariff Act, 1975 - confiscation - redemption fine - penalty - HELD THAT:- There is no doubt that the Central Board of Excise Customs is empowered to issue circulars under the authority of section 151A for the purpose of uniformity in the classification of goods or with respect to levy of duty thereon. However, the said authority is circumscribed by proviso which debars directing of officers of customs to make a particular assessment or to dispose off a particular case in a particular manner. Furthermore, there is also an embargo on instructions which have the effect of interference with the discretion of Commissioner of Customs (Appeals) in the exercise of appellate function. Thus the said circular has the effect of binding the original authorities while permitting the appellate authorities under the administrative control of Central Board of Excise Customs to take varying stands. The decision in COMPUAGE INFOCOM LTD. VERSUS COMMISSIONER OF CUSTOMS (SEAPORT-IMPORT) CHENNAI [ 2017 (11) TMI 1439 - CESTAT CHENNAI] laid down the principle that parts which are to be used principally with computers should rightly be classified under the appropriate tariff item within heading 8473 of the First Schedule to the Customs Tariff Act, 1975. Appeal allowed - decided in favor of appellant-assessee.
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Insolvency & Bankruptcy
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2022 (9) TMI 324
Initiation of CIRP - Corporate Guarantor being a Company - The Company stood guarantor for the loans availed by the three borrowers which are partnership firm and / or proprietary concerns - HELD THAT:- Under Section 7 of the IBC, CIRP can be initiated against a Corporate entity who has given a guarantee to secure the dues of a non-corporate entity as a financial debt accrues to the corporate person, in respect of the guarantee given by it, once the borrower commits default. The guarantor is then, the Corporate Debtor. The issue of whether CIRP can be initiated against the Corporate Guarantor without proceeding against the principal borrower has been answered by this Court in Laxmi Pat Surana [ 2021 (3) TMI 1179 - SUPREME COURT] where it was held that the liability of the guarantor is co-extensive with that of the Principal Borrower. The judgment in Laxmi Pat Surana, rendered by a three-Judge Bench of this Court is binding on this Bench. It was open to the Financial Creditor to proceed against the guarantor without first suing the Principal Borrower. There are no ground to interfere with the concurrent findings of the Adjudicating Authority (NCLT) and the Appellate Authority (NCLAT) - appeal dismissed.
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2022 (9) TMI 323
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- Mere denial of payment by the Corporate Debtor without communicating the existence of dispute as to quality of goods supplied cannot be considered as Dispute within the meaning of Section 5(6) of the Code. If bare denial of claim is labelled as dispute then Sections 8 9 of the Code would become redundant, which was not the intent of the legislature. With respect to the pre-existing dispute, the Corporate Debtor had sent an email which has been addressed to Mr. Kailash Garg on 11 February 2015 about the quality of products and that the claim was settled in half, and on 28.02.2015 wherein a calculation chart has been given for the deductions made for transportation and weight shortages. Thereafter, the Corporate Debtor has made payments to the Operational Creditor through RTGS and cheques as is evident from the emails correspondences that have been filed by the Operational Creditor - there were pre-existing disputes with regard to the quality and weight of Soya DOC provided. The Corporate Debtor has filed another series of emails from 05.092016 to 26.09.2016 wherein the Operational Creditor has requested the Corporate Debtor to pay the outstanding amount and the Corporate Debtor has time and again reiterated that all the dues have been paid, in these emails the Operational Creditor has not mentioned the amount due or given a statement but has rather asked the Corporate Debtor to look into its accounts. There is existence of pre-existing dispute hence, the Company Petition is liable to be rejected - Petition dismissed.
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2022 (9) TMI 322
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - service of demand notice - whether the demand notice in Form 3 dated 26.11.2019 was properly served? - HELD THAT:- The petitioner has placed copies of the registered postal receipts, and tracking reports which reflects that the same was delivered at the Chennai office of the corporate debtor. Whether the operational debt was disputed by the corporate debtor? - HELD THAT:- The petitioner/operational creditor has filed a separate affidavit wherein it has been deposed that the respondent/corporate debtor failed to bring to notice an existence of a dispute or a pendency of a suit or arbitration proceedings filed before the service of the demand notice. Further, it has been deposed that the petitioner/operational creditor did not receive any payment or notice of dispute regarding the pending amount from the respondent/corporate debtor. Thus, there is no pre-existing dispute between the parties - the respondent/corporate debtor has categorically admitted its liability and has not disputed any of the claim made by the petitioner/operational creditor. Rather the corporate debtor by admitting the default on its part has itself prayed that in the best interest of all stakeholders, CIRP proceedings be initiated against it. Whether this application was filed within limitation? - HELD THAT:- A perusal of the case file shows that this application was filed vide Diary No.7395 on 24.12.2019, whereas the date of default is 01.11.2017, therefore, this Adjudicating Authority finds that this application has been filed within limitation. The corporate debtor has failed to make payment of the amount due as mentioned in the statutory notice till date. Thus, the conditions under Section 9 of the Code stand satisfied. It is evident from the facts that the liability of the corporate debtor is undisputed. Accordingly, the petitioner proved the debt and the default which is above threshold limit. In the present petition, all the requirements have been satisfied. It is seen that the petition preferred by the petitioner is complete in all respects. The material on record clearly goes to show that the respondent committed default in payment of the claimed operational debt even after demand made by the petitioner. In view of the satisfaction of the conditions provided for in Section 9(5)(i) of the Code, the petition is admitted. Petition admitted - moratorium declared.
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2022 (9) TMI 321
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Personal Guarantor - Non-performing assets - existence of debt and dispute or not - Respondent neither entered appearance nor filed any reply/written submissions, despite two notices served - HELD THAT:- From the records of the Petition, it is observed that the Corporate Debtor availed the Overdraft Loan facility and executed the Loan Application Form dated 18.02.2019 and further executed Loan Agreement, Documentation and Security Kit on behalf of the Corporate Debtor on 06.03.2019. Consequently, Rs. 69,00,000/- were sanctioned and disbursed. It is further observed that Mr. Vivek Prakash executed his personal guarantee against the said Overdraft Loan. Due to continuous defaults by the Corporate Debtor, the loan account became Non-Performing Asset on 31.07.2019. Further, CIRP was initiated against the Corporate Debtor vide order dated 10.02.2020 and further into liquidation vide order dated 16.02.2021. The Demand Notice dated 10.11.2021 in Form B was sent to the Personal Guarantor for payment of total outstanding net balance dues of Rs. 1,03,69,628/-. Neither any reply nor any payment was issued. It is also observed that notice was served to the Respondent vide order dated 04.02.2022 and again vide order dated 05.07.2022. Despite the opportunity, the Respondent neither entered appearance nor filed any reply/written submissions. The Petition filed under the provisions of Section 95 of the Code, is hereby admitted in terms of Section 100 of the Code. The Insolvency Resolution Process is initiated against the Personal Guarantor and the moratorium is declared, which begins with the date of admission of the Petition - Petition admitted.
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Service Tax
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2022 (9) TMI 320
Refund of service tax paid - specified services used for export of goods - individual shipping bills have to be considered or not - N/N. 41/2012-ST dated 29th June 2012 - HELD THAT:- On perusal of Para 1(c) of Notification, a claim may contain one shipping bill or more than one shipping bill, however, no restriction has been imposed on the number of shipping bills to be covered in each claim. The only requirement is that the details of shipping bills vis-a-vis the details of goods exported and details of specified services used for such export have to be furnished - Para 3 of the Notification does not impose any condition which requires the claims to be filed shipping bill wise. Further, the total amount of service tax paid which is claimed as rebate has to be shown in figure and as a percentage of total FOB value in shipping bill. This goes on to show that it is not shipping bill specific when more than one shipping bills are involved in a claim. Therefore, there is no requirement to determine FOB value shipping bill wise to determine the formula under Para 1(c) or Para 3 of the Notification. On reading Para 1 in conjunction with para 3, it is evident that rebate under Para 3 may be claimed for more than one shipping bill in a single claim without going for filing separate claim for each shipping bill - decided in favour of the Appellants. Refund also denied on the ground that the refund claim which was less than Rs. 500/- could not be allowed as per Paragraph 3(j) of the Notification - HELD THAT:- The Ld. Commissioner (Appeals) have rightly interpreted the condition under Paragraph 3(j) of the Notification and hence, this issue is decided in favour of the Revenue. Allegation is also that the pre-inspection of excisable goods had been undertaken inside the manufacturer s plant and such service had not been provided beyond the Place of Removal and was therefore, in violation of Circular No. 999/6/2015-CX dated 28th February 2015 - HELD THAT:- On perusal of Notification No. 41/2012-ST dated 29th June 2012 as amended by Notification No. 01/2016-ST dated 03rd February 2016, it is found that specified services means taxable services that have been used beyond the factory or any other place or premises of production or manufacture of the said goods and refund of service tax paid on such specified services are eligible - decided in favour of the Appellants. Appeal allowed - decided in favor of appellant.
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2022 (9) TMI 319
Ex-party order - Validity of rejection of appeal by the CESTAT - Assessee / Petitioner could not appear due to non-receipt of notice - Refund of service tax - refund was rejected on the ground that the Petitioner, having opted to discharge Service Tax liability through a challan, should not have debited the same amount from its CENVAT Credit Account - Section 11B of the Central Excise Act, 1944 - HELD THAT:- In the Balaji Steel Case [ 2014 (11) TMI 531 - SUPREME COURT] , it has been held that in an Appeal filed under Section 35 C (1) of the CE Act, the use of the words pass such orders thereon as it thinks fit as appearing in the provision, enjoins the Tribunal to pass an Order on the Appeal confirming, modifying or setting aside the decision or order appealed against or it may remand the matter. It does not give any power to the Tribunal to dismiss the Appeal in default or for want of prosecution if the appellant is not present when the Appeal is taken up for hearing. Admittedly the CESTAT while passing the Final Order and even the Restoration-Dismissal Order erred in law in not hearing the matter on merits. In the Final Order, the CESTAT dismissed the Appeal for non-prosecution. When the Restoration Application was filed by the Petitioner, it was incumbent on the CESTAT to at least ensure that the Petitioner is served the notice to appear, at the correct address especially in view of the fact that the Petitioner s Appeal has dismissed for non-prosecution. However, it is apparent that there was once again non-application of mind by the learned CESTAT. The Petitioner is not a small individual trader who is operating out of a premises that is not locatable. The Petitioner is the Delhi International Airport Limited whose addresses and contact details in addition to being available online, could have easily been ascertained by the CESTAT. Petition allowed.
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Central Excise
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2022 (9) TMI 318
Adjudication of SCN within a time limitation - recovery of Central Excise Duty alongwith interest and penalty - HELD THAT:- Even where the statue does not prescribe a time limit for adjudication, a show cause notice must be adjudicated upon within a reasonable time - Though reasonable time is flexible and would depend upon the facts and circumstances of each case, since the object of issuing a show cause notice is to secure and recover public revenue, larger public interest requires that revenue authorities act diligently and expeditiously when adjudicating the same. Adjudication proceedings, delayed for more than a decade (for no fault of answering party and without putting answering party on notice for the reason of delay), defeats the very purpose of issuing show cause notice/s and such delayed adjudication is bad in law - An answering party who does not hear from the authorities for more than 10 years after issuance of show cause notice and submission of reply thereto is justified in taking the view that the reply had been accepted and the authorities had given a quietus to the matter. Maintainability of petition - availability of alternative remedy - HELD THAT:- Even though the remedy of Appeal is available, Petitioner is not required to exercise this alternate remedy in the facts and circumstances of the present case. The present Writ Petition is maintainable as the challenge in the present Writ Petition arises on account of the contravention of the rules of procedural fairness by Respondent. This conduct of Respondent as already held by us has resulted in grave prejudice being caused to Petitioner and amounts to a violation of the principles of natural justice. Thus, the present Writ Petition is squarely maintainable and Petitioner does not have to be relegated to the remedy of Appeal even though available. Petition allowed.
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CST, VAT & Sales Tax
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2022 (9) TMI 317
Recovery of dues - priority of settlement of dues - Government can claim first charge over the property of the Corporate Debtor or not - whether Section 48 of the Gujarat Value Added Tax, 2003 can prevail over Section 53 of the IBC or not - HELD THAT:- Section 31 of the IBC which provides for approval of a Resolution Plan by the Adjudicating Authority makes it clear that the Adjudicating Authority can approve the Resolution Plan only upon satisfaction that the Resolution Plan, as approved by the Committee of Creditors (CoC), meets the requirements of Section 30(2) of the IBC. When the Resolution Plan does not meet the requirements of Section 30(2), the same cannot be approved. There can be no question of acceptance of a Resolution Plan that is not in conformity with the statutory provisions of Section 31(2) of the IBC. Section 30(2) (b) of the IBC, casts an obligation on the Resolution Professional to examine each resolution plan received by him and to confirm that such resolution plan provides for the payment of dues of operational creditors, as specified by the Board, which shall not be less than the amount to be paid to such creditors, in the event of liquidation of the Corporate Debtor under Section 53, or the amount that would have been paid to such operational creditors, if the amount to be distributed under the resolution plan had been distributed in accordance with the order of priority in Sub-section 2 of Section 53, whichever was higher, and provided for the payment of debts of financial creditors, who did not vote in favour of the resolution plan, in such manner as might be specified by the Board. Under Section 31 of the IBC, a resolution plan as approved by the Committee of Creditors under Sub-Section (4) of Section 30 might be approved by the Adjudicating Authority only if the Adjudicating Authority is satisfied that the resolution plan as approved by the Committee of Creditors meets the requirements as referred to in Sub- Section (2) of Section 30 of the IBC. The condition precedent for approval of a resolution plan is that the resolution plan should meet the requirements of Sub-Section (2) of Section 30 of the IBC. If the Resolution Plan ignores the statutory demands payable to any State Government or a legal authority, altogether, the Adjudicating Authority is bound to reject the Resolution Plan - if a company is unable to pay its debts, which should include its statutory dues to the Government and/or other authorities and there is no plan which contemplates dissipation of those debts in a phased manner, uniform proportional reduction, the company would necessarily have to be liquidated and its assets sold and distributed in the manner stipulated in Section 53 of the IBC. The State is a secured creditor under the GVAT Act. Section 3(30) of the IBC defines secured creditor to mean a creditor in favour of whom security interest is credited. Such security interest could be created by operation of law. The definition of secured creditor in the IBC does not exclude any Government or Governmental Authority. The Resolution plan approved by the CoC is also set aside - Appeal allowed.
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Indian Laws
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2022 (9) TMI 316
Dishonor of Cheque - legally subsisting debt as on the date of deposit of the cheques in question or not - opportunity to cross-examine - HELD THAT:- The question of examining the witness on Commission arises in the case where such a witness is disabled to attend the Court due to old age or hazardous condition of her health, not in a position to move about or the witness is incapable of attending the Court for any other reason. In such cases, the Court has to exercise its power to examine the witness to see that no such miscarriage of justice does takes place. A reading of Section 284 CrPC makes clear that where a witness could not be procured before the Court and that it is so essential to meet the ends of justice, such witness can be examined through a Commissioner. The learned Trial Court will be at liberty to examine the fact as to whether the SPA filed by the SPA holder is as per law at the appropriate stage as deemed fit by it. The SPA holder is allowed to continue with the trial, as already held by the learned Trial Court - the learned Trial Court is requested to expeditiously conclude the trial and decide the case. Petition disposed off.
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