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TMI Blog2022 (1) TMI 1031X X X X Extracts X X X X X X X X Extracts X X X X ..... hases which is not possible. As per the learned Principal CIT, this fact has not been verified during the assessment proceedings. Thus the order passed by the AO is erroneous insofar prejudicial to the interest of revenue. Assessee has claimed the benefit of input VAT in the VAT return on the deemed import. The copies of the invoices on sample basis are placed on record. On perusal of the details filed by the assessee, we note that the assessee has incurred VAT expenses on the deemed import which are eligible to be set off against the VAT output. Thus the finding of the learned principal CIT that there was no VAT input available to the assessee on the deemed import appears to be incorrect. Whether the assessee has claimed VAT inpu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of revenue. 3. The facts in brief are that the assessee in the present case is a private limited company and engaged in the business of trading of Unrefined Sulphur. The case of the assessee was selected under scrutiny and therefore the assessment was made under section 143(3) of the Act dated 7th September 2016 at ₹ 28,64,460/- under normal computation of income and at ₹ 28,27,027/- under MAT provisions. 3.1 Subsequently, the learned PCIT on the verification of assessment records found that the assessee has shown purchases from the following parties: i) Essar Oil Ltd. ₹ 10,82,88,782/- ii) Kiri Industrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the VAT return which implies that all the purchases shown by the assessee are in domestic purchases. Thus, there was no occasion for the assessee for claiming the import duty as shown in the profit and loss account along with the purchases. But this fact has not been verified by the AO during the assessment proceedings. Accordingly, the learned Principal CIT proposed to hold the order of the AO as erroneous insofar prejudicial to the interest of revenue vide notice dated 15th January 2019. 3.6 The assessee in response to such notice vide letter dated 23rd January 2019 submitted that the variation between the purchases shown in the profit and loss account and VAT return is arising for the reason that the amount of custom duty was not s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned Principal CIT disregarded the contention of the assessee by observing that the assessee has claimed the credit of input tax on all the purchases including the purchases from Reliance Industries Ltd SEZ. As per the learned PCIT the assessee has not disclosed any information in VAT return about the purchases representing the deemed import. This fact has not been verified by the AO during the assessment proceedings. Accordingly, the learned principal CIT concluded that the assessment framed under section 143(3) of the Act is erroneous insofar prejudicial to the interest of Revenue on account of non-verification. Thus the learned PCIT set aside the assessment order with the direction to the AO to frame the fresh assessment after making th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed before us not to sustain the order of learned PCIT. 6. On the contrary, the learned DR vehemently supported the order of the authorities below. 7. We have heard the rival contentions of both the parties and perused the materials available on record. There is no dispute to the fact that the assessee has shown purchases from Reliance Industries Ltd. SEZ amounting to ₹ 7,53,40,823/ which is the deemed import. The assessee on such purchases has claimed to have paid custom duty of ₹ 1,15,01,177/- only which was shown along with the purchases. 7.1 The Principal CIT was of the view that in case of deemed import, there is no VAT liability and therefore the question of claiming the VAT input on such purchases does not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.3 On perusal of the details filed by the assessee, we note that the assessee has incurred VAT expenses on the deemed import which are eligible to be set off against the VAT output. Thus the finding of the learned principal CIT that there was no VAT input available to the assessee on the deemed import appears to be incorrect. 7.3 But the question arises whether the assessee has claimed VAT input on the deemed import as an expense in the profit and loss account. This fact, to our understanding, has not been verified by the AO. At the time of hearing the learned AR has also not brought anything on record suggesting that the assessee has not claimed VAT input on the deemed import as an expense in the profit and loss account. Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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