TMI Tax Updates - e-Newsletter
May 16, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
GST
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The Allahabad High Court addressed the denial of a personal hearing in a tax assessment case, emphasizing the mandatory nature of such hearings u/s 75(4) of the U.P. GST Act, 2017. The Court reiterated that principles of natural justice necessitate providing an opportunity for a personal hearing before passing adverse orders. The Court set aside the impugned order and remitted the case for fresh proceedings, ensuring the petitioner's right to a fair hearing.
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Levy of penalty u/s 129(3) subsequent to the search and seizure action - In light of the judicial interpretations, the High Court found the penalty proceedings initiated against the petitioner unjustified. The impugned orders, were deemed unsustainable and were consequently quashed and set aside.
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Rejection of refund claim - The notices issued in this case were found to be vague and did not provide any substantial reasons for the proposed rejection, thus violating the principles of natural justice. - The court emphasized that u/r 92(3) of the CGST Rules, 2017, the proper officer must provide reasons for rejecting a refund claim in the show cause notice. This requirement ensures that the applicant understands the grounds for rejection and can respond appropriately.
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Re-Determination of refund and interest thereon - Subsequent to the direction of the High Court, revised assessment order was passed, refund and interest amount was re-determined - The High Court noted that despite initial directions from the court to refund the excess amount with interest, the petitioner failed to comply with notices, resulting in revised and rectified assessments. The court ultimately dismissed the writ petition. The petitioner was advised to pursue remedies available under the statute, and the court clarified its limited role in adjudicating such disputes.
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Cancellation of GST registration of the petitioner - service of SCN - The High court found discrepancies in the record regarding the petitioner's participation and noted the petitioner's claim of not receiving the report referenced in the show cause notice. While the respondent argued procedural compliance and jurisdictional legitimacy, the court underscored the need for procedural fairness. Ultimately, the court quashed the impugned order of cancellation, remanding the matter to the 1st respondent for reconsideration.
Income Tax
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Validity of Ex-parte assessment order passed u/s 144B - The High Court acknowledged the petitioner's arguments and found gross violations of essential principles of natural justice by the assessing authority. It noted that no real opportunity of hearing was granted to the petitioner, and the order was passed without conducting any proceedings involving them. Therefore, the Court set aside the assessment order. - The Court directed the petitioner to treat the order as a final show-cause notice and submit their reply within one week. If the Assessing Officer accepts the petitioner's explanation, the consequential order may be passed without fixing any further date for hearing.
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Addition u/s 68 - shares of the assessee companies issued at huge premiums - The Calcutta High Court upheld the Tribunal's decision, rejecting the appeal filed by the assessee. The key issues revolved around the principles of natural justice, the examination of new issues, and the genuineness of share transactions. The Court affirmed that the Tribunal acted within its jurisdiction and adhered to the principles of natural justice. The assessee failed to establish the identity, creditworthiness, and genuineness of the share subscribers. The Tribunal's findings were based on factual and legal grounds, including the significant share premium without a corresponding business justification.
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Validity of search and seizure u/s 132 - The Bombay High Court quashed the search and seizure actions conducted by the Income Tax Department u/s 132 of the Income Tax Act, 1961. The court found that the authorization for the search was based on unverified and irrelevant information, failing to meet the statutory requirements. Procedural safeguards outlined in section 132 were not observed, rendering the search illegal. The court emphasized the importance of adhering to procedural requirements to ensure the legitimacy of such invasive actions. Despite invalidating the search, the court allowed the revenue to use any information obtained during the search in subsequent proceedings.
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Power of CIT to cancel or withdraw registration invoking Section 12AA(3) - The High Court dismissed the appeals filed by the Revenue and upheld the ITAT's orders restoring the registrations of the educational trusts. The court held that the Commissioner did not have the authority to cancel registrations granted u/s 12A before the amendment in 2010. The court emphasized that generating a surplus in educational activities does not imply a profit motive if the surplus is used for charitable purposes.
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Review petition - Validity of reopening of assessment - The High Court dismissed the review petitions seeking to challenge a common order dated 04.11.2022, which set aside assessment orders but remanded the matters back to the assessing officer. The petitioners argued errors in this remand and the absence of reasons for reopening assessments. However, the court found no merit in these arguments. It held that the circumstances of the case did not align with cited legal precedents and that the failure to furnish reasons did not invalidate the reassessment process due to a recognized technical glitch. Therefore, the court upheld the original order, dismissing the review petitions.
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Reopening of assessment u/s 147 - The High Court dismissed the appeal filed by the revenue, affirming the decision of the Income Tax Appellate Tribunal (ITAT) that quashed the reassessment proceedings u/s 147 of the Income Tax Act, 1961. The court held that the reassessment proceedings were initiated based on a mere change of opinion and not on any new tangible material. The original assessment had already considered and decided on the nature of the interest paid and received, and the reassessment sought to reclassify these without any fresh evidence or rationale.
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Demand of additional tax on simple processing of income - Applicability of provision of Section 143(1A) where assessment may have been completed u/s 143(3) - The High Court clarified that Section 143(1A) applies only to cases arising from processing under Section 143(1)(a) and does not extend to scrutiny assessments conducted u/s 143(3). It emphasized that once scrutiny assessment proceedings are initiated, the imposition of additional tax u/s 143(1A) is not contemplated by the legislature. - The Court underscored the fundamental principle that there can only be one assessment order for one assessment year, and once scrutiny assessment is completed, any earlier intimation loses its effect.
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Special audit u/s 142(2A) - Complexity and Volume of Transactions - Reasonable Opportunity to be Heard - Despite recognizing a breach of natural justice due to the insufficient response time, the High Court ruled that this breach did not cause substantial prejudice to the petitioner. The court emphasized the importance of a prima facie assessment for special audits and supported the Assessing Officer's discretion in such matters. Consequently, the court extended the audit report submission deadline and limited the audit scope, ensuring the petitioner's rights were protected while upholding the Revenue's interests.
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Interest payable to petitioner u/s 244A - Failure on the part of AO to comply with the decisions / principles given by the ITAT and High Court - The Court emphasized that the Assessing Officer's role was to implement the directions of the Tribunal, not to question or dissect them. Mr. Singhania's actions went beyond his jurisdiction, leading to incorrect conclusions regarding the payment of interest under Section 244A.
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Rejection of Application for Final Approval u/s 80G(5)(iii) - The Tribunal observed that the CBDT Circular extending the date for final applications did not apply to institutions filing under Clause (iv) to First Proviso to section 80G(5) of the Act. It ruled that the appellant's application for final approval was within the limitation period and directed the CIT(Exemption) to grant provisional approval if the appellant met eligibility criteria. Additionally, the Tribunal clarified that if final approval was granted, the benefit of approval under section 80G of the Act would be deemed to continue without break.
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LTCG - deduction u/s 54 new residential premises - Relevance of date of possession or date of agreement - Regarding the determination of the date of acquisition for the new property, the Tribunal emphasized that the essence of the transaction should be considered. It noted that the appellants had acquired the right to purchase the property through an agreement while it was still under construction. Therefore, the Tribunal concluded that the date of possession, when the property became inhabitable, should be considered as the date of acquisition.
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Correct head of income - transactions of dealing in shares - The Appellate Tribunal upheld the Commissioner of Income-tax (Appeals)'s decision regarding two key issues. Firstly, it affirmed that the income earned from trading in shares should be treated as Short Term Capital Gains, not business income, based on the intention of the assessee and the nature of transactions. Secondly, it supported the allowance of exemption claimed by the assessee under section 54F of the Income-tax Act, noting that the basic condition of investment within the prescribed period was fulfilled, even though a portion of the investment was made after the due date of filing the return of income.
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Nature of land sold - agricultural land - distance between two physical points on the surface of earth from local limits of the Municipality - Distance Measurement - The Tribunal observed that the adjudication by the CIT(A) lacked thoroughness as it favored the evidence relied upon by the assessee without adequately addressing the evidence presented by the Revenue. Both parties relied on satellite mapping technology to determine the distance, with conflicting results. The Tribunal emphasized the importance of reconciling the differences in measurements and noted the lack of contemporaneous evidence provided by the assessee during the assessment proceedings. The Tribunal concluded that the matter required a precise measurement and instructed the Assessing Officer (AO) to obtain coordinates from both the subject land and the local limits of the Municipality as of the transfer date.
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Addition made u/s 68 - Bogus LTCG - unexplained cash credits - suspicious transactions in shares - penny stock - The Tribunal ultimately upheld the AO's decision to disallow the LTCG claimed by the assessee, emphasizing that the transactions lacked genuineness despite the documentation provided. The Tribunal concluded that the exemption claimed under Section 10(38) was a façade to conceal the true nature of the transactions, affirming the addition made by the AO.
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The tribunal affirmed the decision of the CIT(A) to admit additional evidence under Rule 46A, leading to the deletion of disallowance on depreciation claims. Additionally, they upheld the deletion of addition on berth hire income, as it had already been accounted for by the assessee. Furthermore, the Tribunal dismissed the Revenue's appeal regarding the disallowance of depreciation claim for another assessment year, emphasizing the lack of sufficient basis for the ad-hoc disallowance on CSR expenses.
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LTCG - deduction u/s 54F - as pursuant to the JDA, assessee had received multiple residential units and not a single residential unit - The Tribunal observed that prior to the amendment to section 54F of the Act, various judicial pronouncements had interpreted the term "a residential house" to include multiple residential units. Citing legal principles, the Tribunal highlighted that decisions interpreting statutory provisions form binding precedents. It reiterated that the interpretation of "a residential house" as including multiple units, upheld by various High Courts, including the Karnataka High Court, was binding. - the Tribunal concluded that the assessee is entitled to the benefit of section 54F of the Act for all the units received under the JDA, as the relevant assessment year predates the amendment. Therefore, the appeal filed by the Revenue was dismissed.
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Disallowance of interest u/s 36(1)(iii) - Advance given to Individual for purchase of property - The CIT(A) found that the advance was for purchasing a property intended for business use, as the property had been on lease to the assessee since 2007 and continued to be used as the corporate office. The Tribunal upheld the CIT(A)'s decision, noting that the Department could not present new evidence to counter the CIT(A)'s findings. The disallowance was deemed incorrect as the advance was eventually recovered, demonstrating its business nature.
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Income taxable in India - payments received from its India customers on account of Centralized Services - Fee for Technical Services - Fee for included services - The Tribunal, after examining the agreements and services provided, concluded that the services were related to publicity, marketing, and advertisement, not technical or consultancy services. Therefore, they did not fall under the definition of FIS as per Article 12(4)(a) or (b) of the DTAA. - The Tribunal reaffirmed that the services provided were not ancillary or subsidiary to the application or enjoyment of any right, property, or information for which a royalty payment was made, thus not qualifying as FIS under Article 12(4)(a).
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Nature of land sold - Gain earned on sale of land/acquisition - the Tribunal held that since the land was rural agricultural land compulsorily acquired by the government, the capital gains earned from its sale were exempt under Section 10(37) of the Act. Therefore, the addition made by the Assessing Officer was not sustainable.
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Income tax proceedings against company in Liquidation/dissolved The Tribunal noted that once a resolution plan is duly approved by the Adjudicating Authority under section 31 of the Code, the claims provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its stakeholders. The Tribunal observed that the continuance of pending proceedings is prohibited once proceedings have commenced under the Code. Upon approval of the resolution plan, all claims not part of the plan shall stand extinguished. The Tribunal concluded that as the claims subject to appeal were not part of the resolution plan, the appeals lacked merit. Therefore, the appeals were dismissed.
Customs
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Levy of Penalty while waiver of customs duty - Foreign Trade (Development and Regulation) Act, 1992 (FT Act) - While the rehabilitation scheme sanctioned by BIFR provided for a waiver of customs duty and interest, the penalty was specifically imposed under Section 11(2) of the FT Act for non-fulfillment of export obligations - The court scrutinized the language of Section 11(2) and emphasized that it applies when there is a contravention of the provisions of the FT Act, rules, or foreign trade policy. In this case, the failure to fulfill the export obligation did not amount to a contravention under Section 11(2). As such, the imposition of the penalty was deemed unjustified.
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Anti-Dumping Duty - Undervaluation of imported Flax yarn from sister companies / concerns - re-determined assessable value - The tribunal upheld the appellants' preliminary objection that the case was not decided within the time-frame stipulated in Section 28(9) of the Customs Act, and no extension was granted by a senior officer, rendering the order unsustainable. The tribunal found that the differential ADD demand was based on unreliable evidence, including a dubious letter from Tung Ga. The tribunal held that the invoices submitted by the appellants were genuine, and the demand was set aside. The tribunal rejected the undervaluation allegation, finding that it was based on fabricated and uncertified emails from a trade rival. The original transaction values declared by the appellants were upheld.
Corporate Law
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Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings - The Supreme Court clarified that statutory provisions prevailed over contractual clauses, ensuring timely payments to protect small-scale industries. It ruled that the proviso to Section 3 applied prospectively, maintaining the validity of pre-existing contractual agreements. Detailed examination of facts was mandated to determine interest liability accurately. Additionally, the treatment of compounded interest under Section 5 required further consideration for proper adjudication. In conclusion, the Court dismissed the appeal, emphasizing adherence to statutory provisions and equitable resolution of disputes.
Indian Laws
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Dishonour of Cheque - The Supreme Court judgment in this case revolves around the dishonour of cheques allegedly issued by the respondent to the petitioner. The petitioner claimed the cheques were issued to discharge a debt, while the respondent argued they were related to stock market transactions. Both the First Appellate Court and the High Court found in favour of the respondent, noting the petitioner's failure to prove the existence of a debt and the respondent's successful rebuttal of the presumption under Sections 118 and 139 of the Negotiable Instruments Act. The Supreme Court, after reviewing the evidence and legal arguments, upheld these findings and dismissed the petitions.
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Restoration of securities held by the appellant which were allegedly illegally sold by the respondent-firm - The Supreme Court adjudicated a complex arbitration dispute concerning unauthorized sale of securities. The case traversed multiple judicial forums, including arbitral tribunals, district courts, and high courts. The pivotal issues involved unauthorized sale, interest on awarded sums, and compensation for the petitioner. The Supreme Court, exercising its extraordinary jurisdiction, directed the respondent to pay the awarded amount of ₹21,70,143 with 12% simple interest per annum from 27th September 2013. This decision aimed to conclude the protracted litigation fairly, ensuring justice for the elderly petitioner.
IBC
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Entitlement to file an appeal as an Independent Director in the Corporate Debtor - The appellant, an erstwhile director of the corporate debtor, challenged the admission of the claim, citing a One Time Settlement (OTS) agreement from 2008. However, the Appellate Tribunal found that the appellant lacked the legal standing to challenge the claim admission. It affirmed the Resolution Professional's decision, which was based on the terms of the OTS and subsequent revocation by the financial creditor. The Tribunal dismissed the appeal, imposing a cost on the appellant for what it deemed as an attempt to delay the resolution process.
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Admission of Section 95 application filed by the Financial Creditor - Personal Guarantor of the Corporate Debtor - date of default - Assignment of debt - unstamped document - The tribunal found that the Declaration-cum-Undertaking issued by the appellant on 29.01.2018 constituted an acknowledgment of debt, extending the limitation period by three years from that date. Consequently, the application filed on 10.08.2021 was within the limitation period when considering the Supreme Court's exclusion of the period from 15.03.2020 to 28.02.2022. The tribunal determined that the assignment of the debt from Dena Bank to the financial creditor was valid. The status of the financial creditor as an assignee was previously accepted in the Section 7 proceeding against the corporate debtor. Hence, the assignment could not be challenged by the appellant in the current proceeding.
PMLA
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Seeking grant of Interim bail - challenge to arrest of Arvind Kejriwal by the Directorate of Enforcement - The case involved significant procedural developments, including the filing of multiple prosecution complaints and chargesheets. The Court highlighted the importance of the ongoing Lok Sabha General Elections and the necessity of a holistic view given the unique circumstances. The Court granted interim bail to the petitioner with strict conditions to ensure compliance and prevent any potential interference with the case, while emphasizing that this decision does not reflect on the merits of the ongoing criminal appeal.
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Money Laundering - Seeking quashing and setting aside of the Look Out Circular (LOC) - The Bombay High Court quashed the LOC issued by the ED against the petitioner, highlighting procedural lapses and the absence of material evidence. The court emphasized the petitioner's compliance with the investigation despite travel restrictions due to the COVID-19 pandemic. The judgment underscores the necessity for adherence to procedural guidelines in issuing LOCs and protecting individuals' rights against arbitrary detention. The court provided clear directives to ensure the petitioner's continued cooperation with the investigation while safeguarding his right to livelihood.
Central Excise
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Liability to pay fine and penalty - The Punjab & Haryana High Court allowed the appeal, quashing the impugned order. The Court emphasized the necessity of proving mens rea for imposing penalties under Section 11AC and ruled that proper reconciliation of records with valid invoices negated the presumption of intent to evade duty. The decision reaffirms the importance of adherence to procedural and evidentiary standards in the imposition of statutory penalties.
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2024 (5) TMI 719
Violation of principles of natural justice - complete denial of opportunity of oral hearing before the Assessing Authority - petitioner contend that the petitioner was denied opportunity of hearing because he had tick marked the option 'No' against the option for personal hearing (in the reply to the show-cause-notice), submitted through online mode - HELD THAT:- There are complete agreement with the view taken by the coordinate bench in BHARAT MINT AND ALLIED CHEMICALS VERSUS COMMISSIONER COMMERCIAL TAX AND 2 OTHERS [ 2022 (3) TMI 492 - ALLAHABAD HIGH COURT] . Once it has been laid down by way of a principle of law that a person/assessee is not required to request for opportunity of personal hearing and it remained mandatory upon the Assessing Authority to afford such opportunity before passing an adverse order, the fact that the petitioner may have signified 'No' in the column meant to mark the assessee's choice to avail personal hearing, would bear no legal consequence. Even otherwise in the context of an assessment order creating heavy civil liability, observing such minimal opportunity of hearing is a must. Principle of natural justice would commend to this Court to bind the authorities to always ensure to provide such opportunity of hearing - Not only such opportunity would ensure observance of rules of natural of justice but it would allow the authority to pass appropriate and reasoned order as may serve the interest of justice and allow a better appreciation to arise at the next/appeal stage, if required. The matter is remitted to the respondent no.2/Assistant Commissioner, Sector-2, Pratapgarh, Prayagraj who may issue a fresh notice to the petitioner within a period of two weeks from today - petition allowed by way of remand.
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2024 (5) TMI 718
Levy of penalty u/s 129(3) subsequent to the search and seizure action - HELD THAT:- It has been categorically held by a coordinate Bench of this Court in Mahavir Polyplast Pvt. Ltd. Vs. State of U.P. and 2 others [ 2022 (8) TMI 410 - ALLAHABAD HIGH COURT ] and judgment of this Court in Poddar Trading Company vs. Commissioner, Commercial Tax, U.P. [ 2024 (3) TMI 785 - ALLAHABAD HIGH COURT ] that search and seizure of the godown cannot result in penalty proceedings under Section 129 of the Act. The present proceedings are not justified, and accordingly, the impugned orders dated June 18, 2018 and June 14, 2019 are quashed and set aside. Petition allowed.
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2024 (5) TMI 717
Rejection of refund claim - Violation of principles of natural justice - notices issued to the petitioner did not comply with the mandate of law - HELD THAT:- A fair, logical and rational interpretation of the aforesaid provision would be that in case proper officer is satisfied that claim for refund is not admissible either wholly or in part or in a case where it is found to be not payable for some other reasons, then it is required to issue a notice in FORM GST-RFD-08 to the applicant requiring him to furnish a reply in FORM GST-RFD-09 within a stipulated period. The Rule making authority in its wisdom has laid down that whenever there is a satisfaction arrived at to reject wholly or in part the claim for refund, a notice is required to be mandatorily issued clearly stating the reasons for such satisfaction arrived at by the proper officer. This provision has been included in the Rules of 2017 to ensure that before rejection of the claim, the applicant comes to know why his application is being rejected so that he could get an opportunity to satisfy the authority that the tentative reason/satisfaction is not correct. The object and purpose seems to minimise the error in the decision making process. If what has been stated in the GST-RFD-08 notice with regard to reasons is juxtaposed with the reasons which have been assigned in the impugned order to reject the claim of refund, it would be clear that what was stated in the impugned order to reject claim for refund was not at all stated, even briefly, in the show cause notice issued under Rule 92(3) of the Rules of 2017. It is, thus, apparent that the issuance of show cause notice was a farce and an empty formality by the authority rather than making it a meaningful exercise requiring the assessee to offer its application for claim of refund - The provisions contained in Rule 92(3) of the Rules of 2017 incorporate the principles of natural justice as it mandates and obligates the proper officer to disclose to the applicant the reason for his tentative decision to reject refund application with an object to invite response, consider the same and pass the order. Therefore, there is apparent violation of statutory provisions incorporating principles of natural justice. The provisions contained in Rule 92(3) of the Rules of 2017 incorporating principles of natural justice were completely violated. If that be so, the objection to the maintainability of the petition on the ground of alternative remedy would not hold water. The said objection is accordingly rejected. The petition is allowed.
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2024 (5) TMI 716
Re-Determination of refund and interest thereon - Subsequent to the direction of the High Court, revised assessment order was passed, refund and interest amount was re-determined - Cancellation of assessment order - Refund claim alongwith interest - HELD THAT:- As the petitioner did not produce the documents and not filed reply to the notice, an ex-parte order of the assessment for the year 2012-2013 was passed, in which it was held that an amount of Rs. 19,47,790/- was found due after adjusting the refund amount of Rs. 23,52,998/- for the year 2011-2012. Since the amount to be refunded for the year 2011-2012 with interest was given credit for the year 2012-2013, the direction of the High Court in its judgment N.R. PATEL AND COMPANY VERSUS ASSISTANT COMMISSIONER OF WORKS CONTRACT COMMERCIAL TAXES, STATE OF KERALA, THIRUVANANTHAPURAM [ 2015 (3) TMI 1436 - KERALA HIGH COURT] was complied with in respect of the assessment year 2011-2012. Later on, it was found that some mistake in calculating the interest on refund had occurred for the assessment year 2011-12 and therefore, the order for the assessment year 2012-13 was rectified by which an amount of Rs. 21,51,887/- was given credit and balance amount of Rs. 22,18,689/- was found due for the year 2012-13 as per the rectified order dated 16.10.2015. The appellate authority has modified the assessment order vide order dated 20.06.2022 for the Assessment year 2011-12 by Ext. P-15 and P-16 separate orders. Subsequently, the refund has been ordered as Ext. P-17 granting an amount of Rs. 90,29,252/-. On further verification, it came to light that there was some error in the calculation of the interest portion. Hence, Ext. P-18 notice was issued under Section 56 on 29.07.2023. After hearing the petitioner, a fresh order on Ext. P-20 was issued on 21.01.2023 directing the assessing authority to re-work the interest applicable as per the Statute. Subsequently, after issuing Ext. P-21 notice and considering the aforesaid reply filed by the petitioner in Ext. P-23 order dated 04.09.2023 was issued and an order of refund was limited to Rs. 49,96,500/-. If the petitioner is aggrieved by the said order, the remedy lies elsewhere under the Statute itself. This Court cannot enter into the factual dispute as it is for the petitioner to approach the Appellate Authority against the said order if he is not satisfied with the order passed for refund in the impugned order. This court is not an appellate authority under the provisions of the KGST Act to examine the merit of the assessment/refund order. There are no substance in this writ petition which is hereby dismissed.
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2024 (5) TMI 715
Levy of GST under the reverse charge mechanism on the seigniorage paid by the petitioner to the Government - HELD THAT:- Reliance placed in TVL. A. VENKATACHALAM VERSUS THE ASSISTANT COMMISSIONER (ST) [ 2024 (2) TMI 488 - MADRAS HIGH COURT] where it was held that ' It is made clear that there shall be no recovery of GST on royalty until the Nine Judge Constitution Bench takes a decision.' This petition is liable to be disposed of on the same terms.
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2024 (5) TMI 714
Cancellation of GST registration of the petitioner - service of SCN - allegation is that the petitioner did not appear in person or through an authorised representative upon receipt of the show cause notice - no reply to SCN - HELD THAT:- From the show cause notice, it appears that the proposed cancellation was on the basis of a report from the State Tax Officer, Investigation Survey Unit-I, Erode Division to the effect that the petitioner was not carrying on business activities at the registered place of business. The impugned order records that the petitioner did not appear in person or through an authorised representative upon receipt of the show cause notice. It also records that the petitioner did not reply to the show cause notice. Thus, the statement recorded in the impugned order of cancellation is not in consonance with the submission of learned Government Advocate on instructions. The petitioner should be provided an opportunity to contest the cancellation of registration. Solely for this reason, the impugned order of cancellation is interfered with by quashing the same - the matter is remanded to the 1st respondent for re-consideration, and the petitioner is permitted to file a reply to the show cause notice within a maximum period of two weeks from the date of receipt of a copy of this order - Petition disposed off by way of remand.
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Income Tax
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2024 (5) TMI 713
Delay filling appeal before supreme court - Bogus loss incurred in penny stock - transaction was pre-arranged as well as sham and was carried out through penny script company/paper company - As decided by HC [ 2023 (6) TMI 837 - GUJARAT HIGH COURT] entire transaction of purchase and sale of the scripts was through National Stock Exchange or Bombay Stock Exchange and that also through the authorized brokers and tribunal correctly opined that merely on the conjecture and surmises, the Assessing Officer cannot make disallowance - HELD THAT:- There is gross delay of 224 days in filing this special leave petition. The reasons assigned for condonation of delay in our view are not sufficient. Hence, the application seeking condonation of delay is dismissed. Consequently, the special leave petition stands dismissed.
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2024 (5) TMI 712
Nature of expenditure - expenditure claimed by assessee as salaries and marketing expenditure for development of new software platform - revenue or capital expenditure - ITAT held such expenditure claimed as Revenue expenditure - As decided by HC [ 2024 (5) TMI 659 - KARNATAKA HIGH COURT] Assessee has incurred expenditure in these two years to develop a software but due to change in technology, it had to abandoned the product, it had lost money spent on this product. The product having been abandoned, the Assessee shall not get any endure in benefit. The ITAT, in our considered opinion has correctly decided in favour of assessee. HELD THAT:- We are not inclined to interfere with the impugned judgment and order passed by the High Court. Hence, the Special Leave Petition is dismissed.
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2024 (5) TMI 711
Ex parte assessment order passed u/s 144B - violation of essential principles of natural justice - HELD THAT:- According to the revenue itself, in the first place no proceeding took place on 22.03.2024. Second, no order came to be passed on that date, nor any further date was fixed in the proceedings. Thereafter, the proceeding continued wholly ex parte to the extent a draft order was prepared and finalised. Even in those proceedings no opportunity of hearing was given to the assessee to furnish any response. Thus, on the own showing of the revenue authorities, wholly ex parte assessment order came to be passed for no fault of the assessee. In the first place, wholly inadequate two day time was granted to the assessee to furnish reply to the notice dated 19.03.2024 and second without conducting any proceeding on the date fixed, ex parte assessment order has been passed. As gross violation of essential principles of natural justice has been committed by the assessing authority. No real opportunity of hearing was granted to the assessee for the date 22.03.2024. In any case, even if the assessee had failed to avail that opportunity and failed to apply for adjournment on that date, it never became to the assessing authority to then pass no order on the date 22.03.2024 and to proceed against the assessee wholly ex parte , thereafter. The assessment order dated 28.03.2024 has been passed five days after the last date fixed that too without conducting any proceeding involving the assessee. Neither on 22.03.2024 nor on subsequent dates there is record of any proceeding or any other date fixed. Accordingly, the order passed is set aside. The petitioner may treat that order as final show-cause notice and submit its reply thereto within a period of one week and not later. Thus, written reply, if any, may be filed by the petitioner by 20.05.2024. If the AO is inclined to accept the explanation furnished by the assessee, in entirety, he may pass the consequential order without fixing any further date for hearing as the petitioner has not requested for the same.
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2024 (5) TMI 710
Addition u/s 68 - shares of the assessee companies issued at huge premiums - reliance on documentation between the five individuals who are allotted shares without premium and the assessee company - whether the summons issued under Section 131 were served/received by the assessee? - HELD THAT:- The assessee has not taken a definite stand on the said issue as before the CIT(A), the assessee contended that the notice was received after receiving the assessment order. The said averments is absolutely vague since the assessee has not given the date on which they had received the notice nor the date they received the assessment order dated 23.03.2015. In the supplementary affidavit in paragraph 4 the assessee would state that the notice dated March 03, 2015 issued under Section 131 of the Act was never served on the assessee company and as such no compliance could be made on the same. This appears to be a contrary stand taken by the assessee to that of the stand taken by the CIT(A). In any event, the averment made by the assessee, before the CIT(A) at the first instance, stating that the notice was received after receiving the assessment order is a vague statement and appears to have not been established by producing documents before the CIT(A). Therefore, we have to necessary hold that there has been noncompliance of the summons issued under Section 131 of the Act. How the valuation was arrived at for charging a premium of Rs. 4990/- per share ? - The CIT(A) while examining the case of the assessee took note of the factual position which is not in dispute namely the assessee was a newly incorporated company and it was in the first year of its operation that to a broken year. The CIT(A) on examining the facts found that the assessee company had no track record or asset base for demanding astronomical high premium per share at Rs. 4990/- defying all commercial and financial prudence and logic. Further the CIT(A) on facts found that there was no noticeable business activity or book value/earnings per share which can justify the very high share premium. The assessee made investments in land by raising share capital for which the cost of land was very low and would fetch good sale price at high profits after its development. The learned tribunal referred to the objects of the companies as contained in the Memorandum of Association and found that there is no reference to the activities of development of land or dealing in land as claimed by the assessee and the main object is dealing with merchandise and articles of all kinds with no reference to dealing or development of the land. As five individuals referred to the agreement for sale as could be seen from the covenants therein a part payment of Rs. 10,911/- alone has been paid as against the sale consideration which was fixed at Rs. 14,50,911/-. The agreement does not appear to give any right nor the five individuals were put in possession of the land in question as the seller agreed to put the five individuals in possession after executing the sale deed and registering the sale in jurisdictional Sub Registrar s office. The sale transaction between the five individuals and the alleged land owners appears to have not taken place and out of the land owners who have stated to have signed the agreements for sale dated 22.07.2011, two of them are stated to have executed to a deed of conveyance in favour of the assessee dated 28.04.2014. In the Memorandum of Understanding dated 28.02.2012 which precedes the deed of conveyance, it is stated that the assessee will allot pari passu shares of Rs. 10/- each at par to the parties of the first part who are the five individuals which shall be in turn deemed to be the consideration to acquire the said interest in the land parcels. The effects of these documents were considered by the tribunal and it was not satisfied with the genuineness of the transaction more importantly noting that the assessee itself has claimed that there is no noticeable business activity during the year. Thus, the tribunal ultimately concluded that the assessee has failed to establish the basic ingredients required to be established under Section 68 of the Act. Decided against assessee.
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2024 (5) TMI 709
Validity of search and seizure u/s 132 - Information and material enough to indicate a reason to believe or not? - Whether reasonable belief founded to initiate search proceedings? - HELD THAT:- Authority must have information in his possession on the basis of which a reasonable belief can be founded that the person concerned has omitted or failed to produce the books of accounts or other documents for production of which summons or notice has been issued or such person will not produce such books of accounts or other documents even if summons of notice is issued to him, or such person is in possession of any money, bullion or other valuable articles which represents either wholly or partly income or property which has not been or would not be disclosed, is the foundation to exercise the power under Section 132 of the said Act. The Apex Court in Laljibhai Kanjibhai Mandalia [ 2022 (7) TMI 639 - SUPREME COURT] and in Spacewood Furnishers Pvt Ltd. [ 2011 (12) TMI 59 - BOMBAY HIGH COURT] has specifically held that such reasons may have to be placed before the High Court in the event of a challenge to formation of the belief of the Competent Authority in which event the Court would be entitled to examine the reasons for formation of the belief, though not the sufficiency or adequacy thereof. It is also necessary to note that no notice or summons have been issued to petitioners calling for any information from them at any point of time earlier to the action under Section 132 (1) of the Act to give rise to an apprehension of non-compliance by petitioners justifying action under Section 132 (1) of the Act. Therefore, no reasonable belief can be formed that the person concerned has omitted or failed to produce books of accounts or other documents for production of which summons or notice had been issued, or that such person will not produce such books of accounts or other documents even if summons or notice is issued to him. We agree with the view expressed in Balkrushma Gopalrao Buty [ 2024 (5) TMI 609 - BOMBAY HIGH COURT] that respondents cannot rely upon what has been unearthed pursuant to the search and seizure action as the information giving a reason to believe as contemplated under Section 132 (1) of the said Act must be prior to such seizure. We have read the contents of the file of the department given to us in a sealed envelope by counsel for respondents, it does not disclose any information which would lead the Authorities to have a reason to believe that any of the contingencies as contemplated by Section 132 (1)(a) to (c) of the said Act are satisfied. The reasons recorded, in our view, only indicates a mere pretence. The material considered is irrelevant and unrelated. We are unable to sustain the action of respondents taken u/s 132 (1) of the Act. The same is, therefore, quashed and set aside. As a result, all consequent actions and notices cannot be sustained and accordingly quashed and set aside. Decided in favour of assessee.
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2024 (5) TMI 708
Power of Commissioner to cancel or withdraw registration invoking Section 12AA (3) - HELD THAT:- ITAT has held the order passed by the CIT cancelling the registration on 02.03.2010 to be without jurisdiction and without authority in law. It has stated so as the amendment was made in Section 12AA (3) by the Finance Act of 2010 empowering the Commissioner to cancel the registration granted u/s 12A where it reaches to a conclusion that the activities of the such trust are not genuine and not being carried out in accordance with the objects of the trust or institution. The power was, therefore, not available as on the day when the CIT cancelled the registration i.e. on 02.03.2010. We find that the facts were almost similar to the facts of the present case as in the aforesaid case Industrial Infrastructure Development Corporation (Gwalior) M.P. Limited s case [ 2018 (2) TMI 1220 - SUPREME COURT] the Commission had cancelled the registration u/s 12A dated 13.04.1991 by its order dated 29.04.2002 and on 29.04.2002 the Commissioner was not empowered to cancel such registration. In view thereof, the questions answered in favour of the assessee. Power of cancellation of registration granted u/s 12A is required to be examined in law of the recent judgment in New Noble Educational Society [ 2022 (10) TMI 855 - SUPREME COURT] After having considered the entire law with reference to Section 10 (23C)(vi) of the Act as well as Section 11 (4A) of the Act and the law as examined in Pinegrove [ 2010 (1) TMI 49 - HIGH COURT OF PUNJAB AND HARYANA AT] and Queen s Educational Society s cases [ 2015 (3) TMI 619 - SUPREME COURT] - We find that the Commissioner was required to examine the aforesaid factors while granting approval of registration u/s 10(23C) - In the opinion of this Court, the same factors would also be required to be considered for the cancellation of registration already granted to the educational institutions, while examining the case u/s 12AA, of course, taking into consideration the conditions provided therein also.
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2024 (5) TMI 707
Review petition - Validity of reopening of assessment - scope of new regime u/s 148A - procedure to be followed by the Revenue for assessment years prior to the amendment of the Act - due to a technical glitch in the portal of the department, whereby the return of income filed by the Petitioner and the request for the reasons for reopening assessment were not seen by the Assessment Officer - Whether the order suffer from an error apparent on the face of the record, the error being that the same are passed contrary to the binding precedent in Ashish Agarwal [ 2022 (5) TMI 240 - SUPREME COURT] and G.K.N. Driveshafts [ 2002 (11) TMI 7 - SUPREME COURT] ? - HELD THAT:- As considering the judgment of the Supreme Court in Ashish Agarwal (supra), what has been clearly laid down therein is the procedure to be followed by the Revenue for assessment years prior to the amendment of the Act, if a notice under Section 148 is issued on or after 01.04.2021, the same shall be treated and deemed to be a notice issued in terms of new Section 148A under the amended provision. Ashish Agarwal (supra) does not cover situations where the notice under Section 148 of the unamended Act was sent to the assessee prior to 01.04.2021, i.e. in the present case sent on 31.03.2021 and the Return filed and application seeking reasons for reopening was requested after 01.04.2021. Thus, in our opinion, in the facts of this case, the law laid down in Ashish Agarwal (supra) would not apply and come to the aid of the Petitioner in seeking review of the order. G.K.N. Driveshafts (supra) laid down that, when a notice under Section 148 of the Act is issued, the assessee is required to file a Return, and if he so desires, seeks reasons for issuing the notice. It further holds that, if the assessee takes this course, the AO is bound to furnish reasons within a reasonable time and on receipt of the reasons, the assessee is entitled to file objections, which are required to be heard and disposed of with a speaking order, before proceeding with the assessment. In G.K.N. Driveshafts (supra), the notices under Section 148 were challenged before the High Court which, whilst dismissing the petition, took a view that all objections to that notice could have been taken up before the AO and the petition was premature. Upholding this view, the Supreme Court has only set down a procedure of how the AO should deal with the matter before an assessment order is passed. In our opinion, G.K.N. Driveshafts (supra) does not lay down the proposition that the passing of an assessment order which is, as in this case on the bona fide mistake due to a system glitch of not realising that the Return had been in fact uploaded along with a request for reasons, results in the entire proceeding under Section 148 being rendered illegal and a non-est. In the facts of the present case, G.K.N. Driveshafts (supra) would not apply and a view was taken in this Court s order dated 04.11.2022 based upon the statement in the affidavit in reply. We therefore opine that on the first question, the common order in question is not open to review, as there is no error apparent on the face of the record on the ground of non-consideration of a binding precedent. Whether there is an error apparent on the face of the record of the facts stated in the petitions and affidavit in reply, necessitating a review of the order passed in the petitions? - As we have gone through the entire record, including the Affidavit in reply and a view having been taken by this Court to set aside the impugned common Order and grant the Petitioner with an opportunity to receiving the reasons for reopening of assessment and a hearing before any orders are passed for reassessment, in line with the procedure laid down in G.K.N. Driveshafts (supra) and are of the opinion that there is no ground made out for review of the common order. The submissions made are more in the nature of seeking reappreciation of the entire matter on its merits, which is impermissible in review jurisdiction. No grounds calling for review of common Order [ 2022 (11) TMI 1478 - BOMBAY HIGH COURT] .
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2024 (5) TMI 706
Reopening of assessment u/s 147 - reason to believe - taxation the interest receipt - assessee submits that the Assessing Officer while quashing the original assessment order has consciously applied his mind on all facts relating to interest paid and interest received, which were claimed by the assessee as revenue expenditure and revenue receipt but he treated it as capital expenditure and capital receipt - revenue submits that although the facts and figures relating to interest was well before the assessing officer but, he did not add it in the income of the assessee while passing the original assessment order due to non application of mind, thus AO was justified to initiate proceedings u/s 147 HELD THAT:- Since there was full disclosure of interest by the assessee and the Assessing Officer while passing the original assessment order, after discussion, had formed opinion that the interest paid and interest received are not revenue items but capital item, therefore, the subsequent attempt of the Assessing Officer to tax the interest receipt as revenue receipt is clearly based on change of opinion. Since proceedings under Section 147 initiated by the AO against the respondent/assessee is based on change of opinion, therefore, the tribunal has not committed any manifest error of law to set aside the re-assessment proceedings. Thus, we find that once the AO has consciously applied his mind for not treating the interest paid and the interest received as revenue item and instead he treated it as capital item, subsequent proceedings under Section 147 was clearly based on change of opinion. Decided in favour of the assessee.
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2024 (5) TMI 705
Demand of additional tax on simple processing of income - Applicability of provision of Section 143(1A) where assessment may have been completed u/s 143(3) - HELD THAT:- The opening words of Section 143(1A) are unequivocally clear. The legislature clearly intended to apply that provision of law to a case where a loss declared in the return is reduced or converted to income as a result of adjustments made u/s 143(1)(a) only. Therefore, by necessary implication the said provision would not apply to a case where such adjustment may be made as a result of scrutiny assessment made u/s 143(3) of the Act. As to the submission that the non-compliance made by the assessee would survive for consideration despite subsequent assessment made, we are unable to accept the submission being advanced by learned counsel for the revenue. It is a sine qua non under the Act, that an assessee may be assessed only once. Summary assessment may arise and survive and the consequence of its non-compliance noted u/s 143(1)(a) of the Act may also survive for consideration for the purpose of invocation of Section 143(1A), in a case where the intimation issued u/s 143(1)(a) may not have been set aside. Those would be cases where despite issuance of intimation u/s 143(1)(a) of the Act, notice may be issued to an assessee in terms of Section 143(2) of the Act. If assessment proceeding had thus arisen in linear progression of the assessment proceedings, different considerations would arise. However, in these facts, material difference had arisen. Here, intimation issued u/s 143(1)(a) itself was set aside by the C.I.T. (A). Once the intimation stood set aside, it could never be said with any conviction that any adjustment made under Clause a(1) of section 143 survived. Once the object i.e. the intimation stood removed, its shadow i.e. the consequence could not survive. In view of the surviving limitation to file a revised return, the assessee was within its rights to file the revised return on 06.09.1996. It would also have been another case, where that Assessing Officer may have chosen to still process the return. However, the AO chose to initiate scrutiny assessment proceeding under Section 143(3) of the Act. That course adopted by the Assessing Authority itself destroyed completely, the basis to invoke section 143(1A), in the present facts. On general principle, it is fundamental to the scheme of the Act, that there may only arise one assessment order for one assessment year in the case of any assessee. Once that assessment order came to be passed under Section 143(3) of the Act, it is the only that assessment order that may be enforced against the assessee. The intimation issued under Section 143(1) (a) of the Act, prior in time, lost its effect and stood subsumed in the subsequent scrutiny assessment order. Therefore, it could never be looked at independently for the purpose of imposition of demand of additional tax. As noted above, processing of a return u/s 143(1)(a) of the Act is not an assessment order. Decided in favour of the assessee and against the revenue.
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2024 (5) TMI 704
Validity of assessment order passed u/s 144B - petitioner contended that time granted for submitting reply to the show-cause notice of a period less than four days - as submitted petitioner was ready with the reply and had filed the same on the same day at 11:39 p.m. through the NFAC, but in view of the fact the AO had closed the e-filing portal by then on the ground that the petitioner had not submitted the reply by 15:45 p.m. on 24.04.2023, the same could not be uploaded - HELD THAT:- This Court is of the opinion that the time granted for submitting reply to the petitioner is extremely short, and when there was no undue delay on the part of the petitioner in submitting the reply and it had submitted the reply on the date fixed i.e. 24.03.2024, though sometime after 15:45 p.m. the same ought not to have been ignored by respondent no. 2 and, the impugned order could not have been passed by him. Therefore, the counsel for the Department was asked to ascertain response of respondent no. 2 and matter was posted for today. Thus matter is remitted back to respondent no. 2 to consider the reply submitted by the petitioner on 24.03.2024 and 25.03.2024 to the show-cause notice dt. 20.03.2024 and then pass a reasoned order in accordance with law and communicate the same to the petitioner.
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2024 (5) TMI 703
Approval u/s 10(23C) and 11 - requirement of the charitable institution, society or trust etc., to solely engage itself in education or educational activities, and not engage in any activity of profit - reference to business and profits in the seventh proviso to Section 10(23C) and Section 11(4A) - HELD THAT:- In view of the fact that the Assessing Officer in his order reached to the conclusion that the Trust had claimed exemptions under Sections 10(23C)(iiiab) of the Income Tax Act, 1961 as it is substantially financed by the Government receiving grant of Rs. 89,19,294/- against gross receipts of Rs.2,66,32,390/- which is more that 20%, and the expenditure of Rs.2,56,60,780/- had been incurred by the Trust towards its aims and objects in carrying out activities in the field of education, and the expenditures having been incurred with respect to that alone, the exemptions were rightly granted. Thus, we find that the order passed by the ITAT as well as the assessing officer do not require to be interfered with keeping in view the observations and directions passed by Hon ble the Supreme Court in New Noble Educational Society s case [ 2022 (10) TMI 855 - SUPREME COURT ] - Thus no substantial question of law arises in the present case.
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2024 (5) TMI 702
Special audit u/s 142(2A) - Complexity and Volume of Transactions - Reasonable Opportunity to be Heard - materials for arriving at satisfaction for the special audit - HELD THAT:- The satisfaction indicated u/ss (2-A) for forming an opinion by the Assessing Officer shall not be open to judicial scrutiny and wherever it is shown to the Court that there are materials for arriving at satisfaction for the special audit of the accounts of an assessee by an Accountant as defined in explanation to sub-section (2) of section 288, the writ Court shall be denuded of its power of judicial review under Article 226 of the Constitution of India. The submission that by passing an order under sub-section (2A) the period of limitation which shall be expiring on 31st day of March 2024 would be extended by six months and thereby cause prejudice to the assessee cannot be countenanced in law. Unless it is demonstrated by producing materials to the satisfaction of the Court that the exercise of powers under sub-section (2-A) by the AO is with mala fide intention, the writ Court shall not exercise its powers under Article 226 of the Constitution. In the opinion of this Court, the Assessing Officer for valid and justifiable reasons may exercise the powers under sub-section (2-A) till the last date of the financial year. Having regard to the initial stage of inquiry, we shall be careful to see that no prejudice is caused to the assessee and would therefore simply indicate that (i) there are certainly doubts about the correctness of the accounts (ii) multiplicity of transactions is apparent (iii) Hawala transactions are like specialized transactions and (iv) the accounts are complex and certainly voluminous. The order granting approval dated 20th March 2024 for special audit under section 142 (2-A) of the Income Tax Act takes note of every detail of the case. This would evince no doubt that at this stage, the statutory Authority is required to form a prima facie opinion and not to render a conclusive finding. The Latin word prima facie which means at first glance shall refer to materials based on which the statutory Authority shall form an opinion. To a limited extent, we may agree with the learned counsel for the petitioner-Company that five days to respond to the notice under section 142 (2-A) was not sufficient and the Assessing Officer passed the order without looking at the objections raised by the petitioner-Company. Even so, there is no law of universal application that every order passed in breach of natural justice must be interfered by the Court. The requirement in law that every order that ensues civil consequence must be passed following the rules of natural justice shall vary from case to case and no strait-jacket formula can be prescribed. We are not in agreement with the learned counsel for the petitioner-Company that serious prejudice has been caused to the petitioner-Company on account of violation of the rules of natural justice. We are not inclined to interfere with the order but time indicated in the order for submission of report by the nominated Auditor is extended by a further three months. The nominated Auditor shall confine the inquiry to the matters indicated herewith.
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2024 (5) TMI 701
Interest payable to petitioner u/s 244A - Failure on the part of AO to comply with the decisions / principles given by the ITAT and High Court - HELD THAT:- As decided in TATA COMMUNICATIONS LIMITED case [ 2019 (7) TMI 32 - BOMBAY HIGH COURT] AO was required to compute the interest under section 244A of the Act following the principles laid down in case of India Trade Promotion Organisation [ 2013 (9) TMI 451 - DELHI HIGH COURT] It was not open for the Assessing Officer thereafter to dissect the ratio of the decision of the Delhi High court in case of India Trade Promotion Organisation and came to the conclusion that further interest under Section 244A is not payable. His role was limited to giving effect to the directions of the Tribunal. The question whether the interest is or is not payable was already decided by the Tribunal. We are satisfied that it has not been passed by applying the principles laid down in the case of India Trade Promotion Organisation V/s. [ 2013 (9) TMI 451 - DELHI HIGH COURT] Therefore, we hereby quash and set aside the order dated 26th August 2019. The matter is remanded to an AO, who shall compute interest payable to petitioner u/s 244A of the Income Tax Act, 1961 by strictly applying the principles laid down in India Trade Promotion Organisation [ 2013 (9) TMI 451 - DELHI HIGH COURT] as directed by ITAT and by this Court. Therefore, though one may call it as interest on interest, in reality payment of interest on the unpaid amount occurs because of non-payment of the total amount refundable, which is due and payable to the assessee consisting of the tax, which had to be refunded and the interest accrued on the delayed refund of the tax. The principal amount and the interest due to be added and treated as primary amount and interest becomes due and payable on this primary amount. It will be incorrect to treat it as compounding of interest. If this interpretation or approach is taken it would ensure that the AO/Revenue refund the entire amount, which is due and payable, including interest payable u/s 244A.
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2024 (5) TMI 700
Rejection of application for registration u/s 12AA(1)(ac)(iii) - provisional registration date - Period of limitation - CIT(Exemptions) observed that the assessee earlier was granted provisional registration in Form 10AC which was valid for 5 years i.e. from A.Y 2022-23 to 2026-27, therefore, held that the present application of the assessee being premature was not maintainable and rejected the same - HELD THAT:- Provisions of section 12A(1)(ac)(iii) of the Act would reveal that where the trust or the institution was provisionally registered u/s 12AB of the Act, the application for final registration can be made at least six months prior to the expiry of the period of provisional registration or within six months of the commencement of its activity, whichever is earlier, which means that the application for final registration has to be made at the earliest possible event i.e. either within six months of the commencement of the activities or at least six months prior to the expiry of the provisional registration. The aforesaid provision does not mean that there is any bar on the applicant to move an application before the period of six months from the expiry of the provisional registration. What has been provided is that the application must be made before the expiry of six months from the date of expiry of final registration. There is no bar in moving the application at the earliest possible event, rather, it is expected from the assessee-trust to do so. In view of this, the impugned order of the ld. CIT(Exemptions) is set aside and the matter is restored to the ld. CIT(Exemptions) to consider the application of the assessee for final registration and grant the same if the same is otherwise so admissible to the assessee. Final approval as per the provisions of section 80G(5)(iii) - CIT (Exemption) rejected the application of the assessee observing that the time limit prescribed for making an application for final approval u/s 80G was at least six months prior to the expiry of the period of the provisional approval or within six months of the commencement of its activities, whichever is earlier - HELD THAT:- As decided in TOMORROW S FOUNDATION VERSUS CIT (EXEMPTION) , KOLKATA [ 2024 (3) TMI 941 - ITAT KOLKATA] the assessee admittedly has applied for final registration after grant of provisional registration under Clause (iv) to First Proviso to section 80G(5) of the Act and therefore, the application filed by the assessee is within limitation period. The issue is otherwise squarely covered by the decision of Vivekananda Mission Asram [ 2023 (12) TMI 1298 - ITAT KOLKATA] and in the case of West Bengal Welfare Society [ 2023 (9) TMI 1422 - ITAT KOLKATA] and further Sri Aurobindo Bhawan Trust, Krishnagar [ 2024 (3) TMI 839 - ITAT KOLKATA] . Therefore, the impugned order of the CIT(Exemption) is set aside and the ld. CIT(Exemption) is directed to grant provisional approval to the assessee under Clause (iii) to First Proviso to section 80G(5) of the Act, if the assessee is otherwise found eligible. The ld. CIT(A) will decide the application for final registration within three months of the receipt of copy of this order. Thus the appeal of the assessee is allowed accordingly and the ld. CIT(Exemption) is directed to grant provisional approval to the assessee under Clause (iii) to First Proviso to section 80G(5) of the Act, if the assessee is otherwise found eligible. As directed that the ld. CIT(E) will decide the application of the assessee for final approval as expeditiously as possible but not later than two months from the receipt of this order. It is further directed that, if the assessee is granted final approval by the ld. CIT(E) then, the benefit of approval u/s 80G of the Act, available to the assessee prior to the Amendment brought vide Amending Act of 2020, will be deemed to be continued without any break. The assessee will not be deprived of the benefit during the time period falling between 31/03/2021 and the date of grant of provisional approval under clause (iv) i.e., 02/10/2021, due to technical errors occurred in making the application under the relevant provisions of the Act because of the confusion and misunderstanding on part of the assessee as well as on part of the ld. CIT(E) in properly interpreting the relevant provisions. Appeals of the assessee are treated as allowed for statistical purposes.
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2024 (5) TMI 699
LTCG - deduction u/s 54 - window available for the assessee being one year prior the date of sale of the property - Relevance of date of possession or date of agreement - deduction denied as date of possession of the new residential premises exceeded one year window - HELD THAT:- According to section 54 deduction is allowable if assessee purchases the property. In this case by agreement dated 25/07/2009, assessee acquired right to purchase a house which was under construction, on 2/2/2011, when house was handed over to the assessee, when it was inhabitable , assessee purchased house. In Akshay sobti ors. [ 2020 (1) TMI 407 - DELHI HIGH COURT ] as held that the provision in question is a beneficial provision for assessee s, who replace the original long-term capital asset with a new one - further held that booking of bare shell of a flat is a construction of house property and not purchase, therefore, the date of completion of construction is to be looked into which is as per provision of section 54 of the IT. Act. In this case also assessee has booked an under construction flat and same was handed over to the assessee on completion of construction. Further Coordinate bench in Bastimal K jain [ 2016 (6) TMI 1243 - ITAT MUMBAI ] has also held that he assessee's claim of deduction under section 54 was to be reckoned from the date of handing over of the possession of the flat by the builder to the assessee i.e. 11-9-2009, and if one took that date, the assessee was entitled to deduction under section 54 because the assessee had sold his residential flat on 24-2-2010. All other decisions relied on by the assessee also held that date of possession of new property should be considered as the date of acquisition of the property. In the assessee s own case while computing capital gain ld. AO has taken date of allotment as the date of acquisition of the property. Hence, we hold that assessee is entitled to deduction u/s 54 of the act on purchase of new property considering the date of possession , when it is completed, as the date of purchase of property as agreement to purchase the property was for under construction property. By entering into an Agreement to purchase assessee has acquired right to purchase the property and did not purchased the property as same was under construction. Section requires Purchase of property. Assessee appeal allowed.
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2024 (5) TMI 698
GP estimation - estimation for want of details of assessee firm s diamond stock piece wise, color wise, data wise and carat wise, and grade wise - CIT(A) estimated an increase of GP @ 5.12% on the basis of GP shown by the appellant in last 5 years against the GP estimates made by AO @ 5.55% (4.05% shown by the appellant plus increase of 1.5% made by the AO) - Whether the maintenance of assessee s books of accounts for the relevant Assessment Year 2017-18, is in accordance with the provision of the Act? HELD THAT:- As assessee has filed stock book of polished diamonds-date wise and carat wise. Details of sale/purchase and the reconciliation with trading account and sample invoices for agency commission along with the invoices in respect of import of the purchases, have also been filed with the assessee's paper book. Audit report also does not disclose any defect in such maintenance of books of accounts by the assessee. The gross profit can easily be ascertained on the basis of the aforesaid documents filed by the appellant. This apart, the AO has accepted the similar explanation of the appellant assessee for the assessment year 2018-19 after issuing the similar show-cause notices with the draft of rejection of books of accounts. Also undisputed fact that the revenue department has been accepting assessee firm's method of accounting in earlier years as well. It is also pertinent to mention that the AO has not brought on record any other comparable case. The assessee has maintained quantitative details of diamonds. The facts of the present case are similar to the facts of M/s Nevils Gems [ 015 (12) TMI 989 - ITAT AHMEDABAD ] We, therefore hold that the qualitative details of stock of diamonds piece wise, color wise, data wise and carat wise are not required to be maintained under the Act and rule as referred by the coordinate bench of this tribunal. The facts of Kanchwala Gems [ 2006 (12) TMI 83 - SUPREME COURT ] are in respect of bogus purchases and non maintenance of quantitative details of stock. The facts of Oopal Diamonds [ 2022 (11) TMI 620 - ITAT MUMBAI ] are related to the purchases of diamonds from certain tainted dealers, thus the facts of both the cases referred by Ld. DR are not identical to the facts of the present case, hence for no avail to the department. We hold that the learned CIT(A) has failed to appreciate the facts in the light of relevant law. Aforesaid both the issues are thus decided is positive in favor of the appellant/assessee and against the firm.
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2024 (5) TMI 697
Determine the head of income - survey u/s 133A - difference in stock as offered to tax by the assessee in statement recorded during survey - 'Business Income' Or 'Unexplained investment' - as per DR excess sock was an investment which was not fully explained, therefore, the aforesaid income was to be assessed u/s 69B which would be subjected to special higher rate of tax u/s 115BBE - HELD THAT:- AO has disturbed the closing stock of earlier year or opening stock of this year by adopting GP rate of 7% on sales. The computation of differential in stock is based on mathematical formula only. However, no discrepancy in the physical stock vis- -vis book quantities has been noted by Ld. AO. The assessee has merely accepted the computations made by AO and voluntarily agreed to increase the closing stock of earlier years by way of credit to Profit Loss Account. All the sales and purchase, as per admission, have taken place through bank transfers only. Unless, discrepancy is pointed out in the physical quantities, no case of unexplained investment, in our considered opinion, could be made out against the assessee. As undisputed fact that the assessee is assessed to tax for past several years and its only source of income is Business income only. In such a case, whatever discrepancies are noted, the same would be part and parcel of business operations and could be considered to be Business income only and not from any other sources. It could very well be said that entire stock was accumulated out of income from business and the undisclosed business income, if any, was ploughed back into business to acquire further stock. In such a case, the excess stock could be said to have arisen out of normal business activity only and therefore, the same would be assessable as business income only in terms of decision of Chennai Tribunal in M/s Mookambika Impex [ 2023 (7) TMI 1159 - ITAT CHENNAI] We would hold that the impugned additions have to be assessed as Business Income only . The provisions of Sec.69B r.w.s. 115BBE would have no application. AO is directed to recompute the tax payable by the assessee. Assessee appeal allowed.
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2024 (5) TMI 696
Validity of Revision u/s 263 - receipt of share application money/share premium - as per CIT AO should have made more enquiries and verifications - HELD THAT:- In this case the ld. Pr. CIT, taking shelter in Explanation 2 to Section 263(1) of the Act, held that the order of the AO was erroneous and prejudicial to the interest of the revenue on the ground of lack of enquiry. As observed above has demonstrated from the records that all the discrepancies pointed out by the Ld. PCIT regarding lack of enquiries, were factually incorrect. Counsel has demonstrated that all the points regarding which the PCIT has mentioned that the AO should have made enquiry, were duly enquired into by the AO. The observations of the PCIT, therefore, were a general observation and no specific observation has been made in respect of any of the details or evidence furnished by the assessee and as to why the ld. Pr. CIT was not satisfied about such details/replies furnished by the assessee. Simply because the ld. Pr. CIT felt that the Assessing Officer should have made further enquiries on the same issue or that the case was to be examined from some another angle, the same, in our view, cannot be a valid ground to set aside the assessment order. If such an action is allowed by the CIT in revision jurisdiction, then there would be no end to litigation and there would not be any finality to the assessment. The Explanation 2 to Section 263(1) of the Act does not give unbridled powers to the ld. PCIT to simply set aside the assessment order by saying that the AO was required to make further enquiries without pointing out as to what was lacking in the enquiries made by the Assessing Officer and why the ld. Pr. CIT was not satisfied with the reply and evidence furnished by the assessee. The Coordinate Mumbai Bench of the Tribunal in the case of Narayan Tatu Rane [ 2016 (5) TMI 1162 - ITAT MUMBAI] has held that Explanation 2(a) to section 263 of the Act does not authorise or give unfettered power and to revise each and every order on the ground that the Assessing Officer should have made more enquiries and verifications. The impugned order of the ld. Pr. CIT is set aside and the appeal of the assessee is allowed.
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2024 (5) TMI 695
Correct head of income - transactions of dealing in shares - Short Term Capital Gain or business income - magnitude of transaction - HELD THAT:- DR was unable to controvert the findings of the ld. CIT(A) that similar transactions in shares in earlier years was identically returned by the assessee as income from capital gains and accepted by the Department also, except for the immediately preceding year. He was unable to controvert the factual findings of the ld. CIT(A) that the assessee had shown all investments in shares under the head investments and not as stock-in-trade . It is also an admitted fact on record that the AO s findings treating the income earned as income from business was based merely on the fact that in the immediately preceding year, the assessee had returned the said income under the head business income and also on the basis of nomenclature given by the assessee in its books of accounts. We are in complete agreement with the CIT(A) that the above two cannot be the basis for determining the character of the income earned by the assessee - whether business or income from capital gains; and considering the fact noted by the ld. CIT(A) that the assessee had consistently from year to year shown shares as investments and not stock-in-trade in its books and returned income therefrom under the head income from capital gains , we are in complete agreement with the ld. CIT(A) that the income earned therefrom had been rightly returned by the assessee under the head capital gains , and there was no case with the AO for treating the same as income from business and profession. Decided in favour of assessee. LTCG - Exemption u/s 54F - investment of the capital gains in a residential house property - claim denied by AO as investment was not made within the time limit prescribed - CIT(A) deleted disallowance - HELD THAT:-By requiring the assessee to claim deduction in the year of earning capital gain, by either investing the entire amount of net consideration in a new asset before the due date of filing of return of income or otherwise depositing the balance unutilized amount in the Capital Gains Accounts Scheme of the prescribed bank, the purpose is only to ensure that the net consideration so deposited is utilized for the purpose of investing in a new asset. As long as the basic criteria for claiming exemption of having invested in a new asset within the prescribed time is fulfilled, there can be no case for denying exemption merely for not having put aside the amount unutilized in the impugned year, for utilization subsequently. At the end of the prescribed time, when the assessee is found to have fulfilled the condition, the assessee admittedly is entitled to exemption. There cannot, therefore, be denial of exemption therefore merely for not having put aside the unutilized amount of capital gain in the Capital Gain account scheme of bank. CIT(A), we find, has followed the decision of Ramaiah Dorairaj ( 2020 (12) TMI 597 - ITAT BANGALORE] and Smt M.K. Vithya ( 2018 (1) TMI 1738 - ITAT CHENNAI ) while allowing assessee s claim of exemption u/s 54F of the Act on the aforestated reasoning. The ld. DR was unable to distinguish the said case before us - order of the CIT(A), deleting the disallowance of deduction/exemption claimed u/s 54F confirmed - Decided against revenue.
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2024 (5) TMI 694
Disallowance u/s 14A - What material to establish the direct nexus between the expenditure incurred and the income not forming part of total income? - HELD THAT:- As noticed that the assessee has not received any tax free income during this year. There are plethoras of decisions in which the addition cannot be made u/s 14A when there is no exempt income earned by the assessee. In this case also, the assessee has not earned any exempt income. Therefore, the issue raised by the revenue in this regard is dismissed. Addition u/s 68 - assessee has not been able to explain the source of source - as alleged assessee has received accommodation entry by way of share capital and share premium from the overseas entity - HELD THAT:- Assessee has issued the shares with premium and submitted the relevant information before the AO to prove the onus on it towards the identity, capacity and genuineness of the transaction. There is no red flag raised by any other authorities including the RBI and all the approvals are obtained within the norms of FDI. Further at that point of time, there was no requirement for the assessee to prove the source of source, the relevant amendment was came into effect from AY 2013-14. Similarly the issue of restriction on issue of share premium also came into books on the insertion of section 56(2) of the Act effective from AY 2013-14. There was no such prohibition in the impugned assessment year under consideration. Therefore, after considering the findings of the Ld CIT(A), we do not see any reasons to disturb the same. The above views are supported by the decision of Apeak Infotech [ 2017 (9) TMI 1590 - BOMBAY HIGH COURT] - Accordingly the grounds raised by the revenue in this regard are dismissed.
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2024 (5) TMI 693
Nature of land sold - capital gain on sale of land or exempt as agricultural land - distance between two physical points on the surface of earth from local limits of the Municipality - as per assessee distance of the subject land from the local limits of the Angamally Municipality to be more than 2 kms, and which had formed the basis of his regarding it as agricultural land HELD THAT:- The land mass stretching over an area, and the limits of the Municipality being not being linear, the distance would have to be worked from multiple points as even if one distance falls within the limit of 2 km., it would oust the assessee s case. Distance measured w.r.t. the longitude and latitude coordinates of the subject land, as well as the extant local limits of the Angamally Municipality, would only be regarded as valid. If the land is contiguous, as appears to be the case, and the share of the assessee and his daughter therein are not demarcated, it shall, as observed earlier, be on the basis of the boundary that the distance shall be taken into account. Where, though unlikely, the subject land is not contiguous, but segregated, each part would have to be reckoned separately, so that it may well be that a part of it is found agricultural, and a part not. AO shall, after hearing the assessee in the matter, forward the coordinates of the said land, identified by survey numbers, as well as of the local limits of the Municipality as on 16.02.2015, to KSREC, which shall report thereto, based on which he shall decide the matter. The burden to provide the primary information is on the assessee, which though the AO has the right to verify, and be satisfied with. Where not, he shall, state his reasons for the same, i.e., for not agreeing with that advanced by the assessee, forward both the set of coordinates, along with reasons, to KSREC, seeking it s opinion in the matter, and shall decide on the basis of it s report, unless of course the AO effectively rebuts it with an expert opinion, duly confronting the assessee therewith. As afore-noted, the matter warrants and, in fact, admits of a precise measurement, and the scope for an opinion in the matter is extremely limited. The AO s right to take a different view, which though cannot, inasmuch as he is to abide by law, be excluded, is to, for it to be judicially sustainable, be reasoned and supported by credible evidence. Revenue s appeal is allowed.
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2024 (5) TMI 692
Addition made u/s 68 - Bogus LTCG - unexplained cash credits - suspicious transactions in shares - bogus capital gain generated in penny stock - HELD THAT:- The discrepancies and adverse evidence collected by the AO in the course of assessment were not explained by the assessee and the thrust was always on the documentary evidence of the transactions. As already discussed earlier, the documentary evidences cannot be relied upon and treated as conclusive in view of various unanswered questions as already discussed earlier and the dubious nature of transactions. The surrounding circumstances of the transactions establish that the transactions entered into by the assessee was not genuine. Assessee had not discharged her onus against the overwhelming adverse evidences that has been brought on record by the Revenue authorities. We are of the considered opinion that the transactions entered into by the assessee are not genuine. From the purchase of shares of M/s. Basukinath Real Estate Pvt. Ltd. to the sale of shares of M/s. Unno Industries Ltd., the assessee has not discharged her onus against the adverse evidences brought on record by the AO and no satisfactory reply was given to explain the same. The approach of the CIT(A) to allow the appeal of the assessee without considering the facts and the surrounding circumstances was fallacious and cannot be upheld. CIT(A) did not consider the attending facts and circumstances of the case at all and the transactions cannot be held as genuine only on the basis of documentary evidence of sale consideration and payment of the STT thereon. The unusual sequence in the purchase transactions, the preponderance of probabilities and the surrounding circumstances as discussed above, are heavily loaded against the genuineness of the transactions and, therefore, we have no hesitation in reversing the findings of the CIT(A). As the Revenue had invoked the provisions of Section 68, the onus was squarely on the assessee to prove the genuineness of the credit transaction, which has not been discharged. Revenue has brought enough materials on record to exhibit the transactions as sham or bogus and the assessee has miserably failed to establish the genuineness of the impugned credit entry appearing in the accounts. Since the exempted LTCG claim of the assessee was only a fa ade created to conceal the true nature of the credit entry appearing in the accounts, the addition as made by the AO is confirmed. Decided in favour of revenue.
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2024 (5) TMI 691
Validity of final order passed u/s 144C(13) - Delay of 5 days in filing objections before DRP - DRP dismissed the objections on the ground that objections were not filed within 30 days time limit - Computation of time limit of 30 days which start from the date of receipt of the draft assessment order - HELD THAT:- When these facts were confronted to CIT-DR, he could not controvert the fact as regards to receipt of order after 30 days from the date of draft assessment order, as contended by assessee. Even it was not contested by ld.CIT-DR that these details are not with either the AO or the DRP. Even the details are filed with the Tribunal now in assessee s paper-book and the ld.counsel pointed out the details and tried to make out a prima facie case. Without going into the merits and without deliberating anything on merits, in the given facts and circumstances, we restore this matter back to the file of the AO for fresh adjudication as per law. Accordingly, the order of AO and that of the DRP both are set aside and appeal restored back to the file of the AO for fresh adjudication. The appeal of the assessee is allowed for statistical purposes.
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2024 (5) TMI 690
Admissibility of additional evidence by the CIT(A) invoking Rule 46A of the Income-tax Rules, 1962 - assessee submitted that due to time taken for photocopying of voluminous records of bills and vouchers containing 13 box files, same could not be produced during the course of the assessment proceedings, however, same were produced before the CIT(A) - HELD THAT:- The rule 46A(1)(d) of the Rules take care of such a situation and therefore, CIT(A) is justified in admitting the evidences. We are of the opinion that when the Assessing Officer himself as verified those bills and vouchers and found to be correct, in the interest of substantial justice objection to additional evidence is not as per terms of Rule 46A. Therefore, no infirmity in the order of the Ld. CIT(A) on the issue in dispute and accordingly, we uphold the same. The ground of the appeal of the Revenue dismissed. Addition of birth hire income - income earned during the course of the trial run and which was adjusted against trial run expenditure or netted against entire cost of fixed assets/capital work in progress - Addition deleted by CIT(A) holding that the birth hire charges during the trial run operation has already been offered by the assessee - HELD THAT:- We agree with the finding of the CIT(A) and do not find any infirmity in the same as the income during the trial run has gone to reduce the cost of the assets and thus directly income stand offered to tax. The ground No. 3 of the appeal of the Revenue is accordingly dismissed. Disallowance of 10% of CSR expenses - AO made addition on the ground that it was not possible to ascertain whether the entire amount had been expanded towards Corporate Social Responsibility expenses - CIT(A) deleted addition - HELD THAT:- Under the scrutiny process, it is the responsibility of the Assessing Officer to verify the bills and vouchers of the expenses if he was having any doubt, but he cannot be permitted to make ad-hoc disallowance without verifying the genuineness of the expenses. CIT(A) is justified in deleting the said ad-hoc disallowance. No infirmity in the order of the CIT(A) in deleting the disallowance following the binding precedent on the issue in dispute. Appeal of revenue dismissed.
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2024 (5) TMI 689
LTCG - deduction u/s 54F - as pursuant to the JDA, assessee had received multiple residential units and not a single residential unit - Scope of amendment - AO disallowed the claim of deduction in respect of 14 apartment units and allowed the benefit of investment only on one apartment unit by interpreting as a residential house - HELD THAT:- The provisions of section 54F of the Act was amended vide Finance (No.2) Act, 2014 with effect from 01.04.2015 and has withdrawn deduction for more than one residential unit with effect from 01.04.2015 by replacing word a with one . In this context, it is relevant to mention that the Hon'ble jurisdictional High Court, prior to the amendment, in the case of CIT v. Smt. K. G. Rukminiamma [ 2010 (8) TMI 482 - KARNATAKA HIGH COURT] had held that residential unit house , used in section 54 makes it clear that it was not the intention of the legislature to convey the meaning that it refers to a single residential house. It was held by the Hon'ble High Court that if that was the intention, they would have used the word one .Therefore, the letter a in the context it is used should not be construed as meaning single . It was concluded by the Hon'ble High Court that, being an indefinite article, the said expression should be read in consonance with the other words buildings and lands and, therefore, the singular a residential house also permits use of plural by virtue of section 13(2) of the General Clauses Act The Hon ble Madras High Court in the case of CIT Vs. Smt. V. R. Karpagam [ 2014 (8) TMI 899 - MADRAS HIGH COURT] had categorically held that the principles mentioned in section 54 of the Act is to be applied paripassu to section 54F of the Act. In view of the aforesaid judicial pronouncement, we hold that assessee is entitled to the benefit of section 54F of the Act in respect of all the units received by the assessee pursuant to the JDA, since the relevant Assessment year is prior to the amendment to section 54F of the Act (i.e., 01.04.2015). It is ordered accordingly.
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2024 (5) TMI 688
Disallowance of interest u/s 36(1)(iii) - The AO disallowed interest on the grounds that the advance given to an individual was not for business purposes. - Advance made against the intended purchase of property for corporate office of the assessee company - CIT(A) deleted the disallowance - HELD THAT:- CIT(A) observed that he found that the AO s contention that the assessee company never had any intention to purchase the premises and that the Sale Agreement was executed merely as a tool to divert interest-free funds to Smt. Poonam Gupta, was based merely on presumptions and surmises; that Smt. Poonam Gupta was not related to the Directors of the company, or their relatives; that in fact, the assessee was a lessee of the premises, which the assessee company had hired for use as office premises; that thus, there was a preexisting business relationship between the assessee and Smt. Poonam Gupta; that the business purpose for seeking to acquire the said property, which was held for use on lease rent basis, also could not be doubted, particularly when a written agreement had been entered into between the assessee and Smt. Poonam Gupta for the purpose. Advance amount as per the agreement had been paid through bank cheques, and the bonafides of the purchaser s and the seller s intention also stood established by the fact that the required No Objection Certificate had duly been obtained from the Government Authorities; that thus, CIT(A) found that there was a nexus between the advance made and the business purpose of acquiring a property for the office of the assessee company in Delhi - suspicion, however strong could not take the place of evidence or proof; that the addition had been made by the AO on the presumption that the advance was extended for the personal use of Smt. Poonam Gupta, which presumption did not stand borne out by the entirety of the facts, or by any material placed on record by the AO - business expediency of the advance given and the intention of the assessee to purchase the premises could not be doubted in view of the facts on record; that the adverse inference drawn by the AO on account of the assessee having made investments in other fixed assets to improve its manufacturing operations, and, on account of the assessee allegedly showing lack of urgency to get the Sale Deed registered, was also misplaced, because the Revenue cannot assume the role of the Board of Directors of the company and decide as to how the business decisions are to be taken - no disallowance u/s 36(1)(iii) of the Act was called for on the account of the advance of Rs. 90 lacs made against the intended purchase of property for corporate office of the assessee company. Decided in favour of assessee. Higher deduction u/s 80IC - as per AO Assessee devised a colorful mechanism to divert its profit to subsidiary entity for claiming a higher deduction - CIT(A) explained that the Assessee has successfully explained the fall in GP rate - HELD THAT:- In this Guidance Note, it has been stated that Rule 9 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 deals with sales of a related person; that related person has been defined in Section 4(3)(b) of the Excise Act; that if a manufacturer sells goods to any related person, it will be treated as goods sold to a related person; that Rule 9 specifies that the goods can be sold to a related person for two purposes, one for onward sales when the related person is a dealer/distributor of the assessee and, second, where the related person buys goods from the assessee for consumption in the production or manufacture of the articles, the value shall be determined in the manner specified in Rule 8, i.e., assessable value to be 110% cost of production as per the proviso to Rule 9. Further, it was also brought on record that the assessee company has been obtaining certificates from the qualified Cost Accountants regularly/periodically for valuation as per the Excise Rules, for fixing the rates to be charged on the cost plus 10% margin method for semi-finished goods sold to M/s Jai Suspension Systems LLP. Copies of such certificates were also placed on record before the AO vide Note alongwith letter dated 03.03.2015. The adopting of the aforesaid method by the assessee stands duly accepted by the Department consistently over the years, under scrutiny assessment and no addition with reference thereto has been made. The documentary evidence furnished by the assessee in this regard stands tabulated in the written submissions filed by the assessee before the ld. CIT(A), as reproduced. It is also not the case of the Department that there has been any change in the facts and circumstances of the case for the year under consideration vis- -vis the said earlier assessment years. It being so, there was no occasion for the AO for taking a divergent view from that taken by the Department in the earlier years in not making any deduction in this regard. CIT(A), it is seen, has duly taken into consideration all the above factors and has recorded elaborate findings of fact with regard thereto, and it is on the basis of thereof that the ld. CIT(A) has, and, in our considered opinion, rightly so, deleted the addition made by the AO wrongly. It is, therefore, that we find that the deletion ordered by the ld. CIT(A) requires no interference at our hands. Then, the order of the Tribunal on this issue, for A.Y. 2009-10, under exactly similar facts and circumstances as present for the year under consideration, stands confirmed by the Hon'ble High Court, vide its order [ 2023 (10) TMI 1143 - PUNJAB AND HARYANA HIGH COURT] passed during the pendency of the present appeal before us. The said order of the Hon'ble High Court has not been shown to have been reversed, or even stayed, on appeal, or otherwise. Decided against revenue.
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2024 (5) TMI 687
Income taxable in India - payments received by the assessee from its India customers on account of Centralized Services - Fee for Technical Services as defined u/s 9(1)(vii) or Fee for included services as defined under Article 12(4)(a) of the Indo-US DTAA - HELD THAT:- We find that this Tribunal in assessee s own case [ 2023 (9) TMI 1470 - ITAT DELHI] for Assessment Year 2018-19 and for Assessment Year 2019-20 has decided the issue in favour as finding no reason to interfere with the decision of learned first appellate authority in declaring the receipts from centralized services to be not in the nature of FTS/FIS - Decided in favour of assessee.
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2024 (5) TMI 686
Condonation of delay in filing appeal before CIT(A) - delay of 170 days - advice on Tax Consultant leads to delay - HELD THAT:- Hon'ble Apex Court in the case of Concord of India Insurance Co. Ltd. Vs Smt. Nirmala Devi [ 1979 (4) TMI 29 - SUPREME COURT] held that legal advice tendered by a professional and the litigant acting upon it one way or the other could be a sufficient cause to seek condonation of delay and coupled with the other circumstances and factors for applying liberal principles and then said delay can be condoned - an overall view in the larger interest of justice has to be taken. None should be deprived of an adjudication on merits unless the Court of law or the Tribunal/Appellate Authority finds that the litigant has deliberately and intentionally delayed in filing of the appeal. Thus we find that the assessee in the present appeal was also acting on the legal advice of consultant. However, on coming to know of addition, filed appeal before the ld. CIT(A), thus, find that there was a reasonable cause for condonation of delay in filing appeal before the ld. CIT(A). Thus, the order of ld. CIT(A) in not condoning the delay is set aside. Nature of land sold - Gain earned on sale of land/acquisition - land of assessee was rural agricultural land and compulsorily acquired by State Government under settlement - HELD THAT:- Similar case of Hazira land as well as land in Village Mora, wherein the land was compulsorily acquired by State Government under settlement, the Division Bench of Surat Tribunal [ 2022 (5) TMI 1403 - ITAT SURAT] has held that the land situated in Hazira notified area is not situated within Municipal limit and / or Hazira Notified area is not deemed municipality and held that such land was rural agricultural land and compensation/consideration received thereon is not taxable being exempt under Section 10(37) of the Act - Thus the capital gain earned on sale of land/acquisition is not taxable under capital gain. In the result, the ground No1 of appeal of assessee in quantum assessment is allowed. Penalty levied u/s 271(1)(c) - Once the assessee succeeded in quantum assessment wherein it has been held that no capital gain is to be taxed in the hands of assessee, therefore, the penalty levied under section 271(1)(c) will not survive. Penalty u/s 271F - Assessee has no other source of income except the capital gain earned during the impugned assessment year, the assessing officer has not taxed any other income except impugned capital gain earned on transferred of land at More village, thus, the assessee was not under obligation to file return of income, therefore, the assessee has shown sufficient cause for not filing return of income, hence, both the penalties i.e. penalty under Section 271(1)(c) and 271F of the Act are also deleted. Appeals of assessee allowed.
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2024 (5) TMI 685
Income tax proceedings against company in Liquidation/dissolved - initiate or continue any proceedings in respect to a claim, which is not a part of the resolution plan - Corporate Insolvency Resolution Proceedings (CIRP) are pending against the assessee and as of now, Hon'ble National Company Law Appellate Tribunal (NCLAT) is seized with the jurisdiction - HELD THAT:- A reading of the provisions under section 13 and 14 of the Code along with the decision in Ghanashyam Mishra And Sons [ 2021 (4) TMI 613 - SUPREME COURT ] clearly shows that once the proceedings have commenced by institution of application under section 7 or 9 or 10 of the Code, the continuance of the pending proceedings is prohibited and when once they reach the logical conclusion with due approval of the resolution plan by the Adjudicating Authority u/sub section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. At any rate, for the time being, this appeal cannot be proceeded with during the continuance of the proceedings under the Code. Depending upon the result of such proceedings before the adjudicating authority in respect of the corporate debtor, appropriate steps if any, may be taken by the appellant/respondent. We, therefore, granting leave to the appellant in this appeal to seek the restoration of the appeal, if necessitated by the orders in the Corporate Insolvency Resolution Proceedings, dismiss the appeal in limine. Also decided in Murli Industries Limited [ 2021 (12) TMI 1182 - BOMBAY HIGH COURT ] on the date of approval of the resolution plan by the Adjudicating Authority, all such claims which are not a part of the resolution plan, shall stand extinguished and no personnel shall be entitled to initiate or continue any proceedings in respect to a claim, which is not a part of the resolution plan. In the present case also, it is not a case of the Department that the claims which are part of subject matter of appeal are part of the resolution plan - Thus, we do not find any merit in the appeal filed by the assessee and hence stands dismissed as not maintainable.
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2024 (5) TMI 659
Nature of expenditure - expenditure claimed by assessee as salaries and marketing expenditure for development of new software platform - revenue or capital expenditure - ITAT held such expenditure claimed as Revenue expenditure - HELD THAT:- It is not disputed that the Assessee had invested money to develop a software platform for the Desktops. It is also not disputed that due to rapid change in the technology, the application sought to be developed by Assessee had become obsolete and the Assessee abandoned further development. In substance, Assessee has incurred expenditure in these two years to develop a software but due to change in technology, it had to abandoned the product. In effect, it had lost money spent on this product. The product having been abandoned, the Assessee shall not get any endure in benefit. The ITAT, in our considered opinion has correctly analised the facts in para No.10 of the impugned judgment and allowed the appeals. Decided in favour of assessee.
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Customs
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2024 (5) TMI 684
Levy of Penalty while waiver of customs duty - While the rehabilitation scheme sanctioned by BIFR provided for a waiver of customs duty and interest, the penalty was specifically imposed under Section 11(2) of the FT Act for non-fulfillment of export obligations - Import of capital equipment at a concessional rate - demand notice - HELD THAT:- The Order-in-Original records that Karnataka Biotics did not comply with the export obligation under the license granted under the FT Act. Therefore, the penalty was imposed specifically u/s 11(2). Thus, the waiver granted under the rehabilitation scheme is of no assistance to the appellant as it was only of the customs duty. There is no allegation made by the respondents against the appellant's predecessor of making or attempting to make any export or import in contravention of the FT Act, any Rules or orders made thereunder, or the foreign trade policy. Under the license granted to the appellant s predecessor, there was an obligation to export finished goods by earning foreign exchange equivalent to USD 2,59,948 within a period of five years. The allegation is of the failure to abide by the obligation to export the finished goods within a period of five years. So, there is no allegation of attempting to make an export or import, which is covered by Section 11 (2). Section 11 (2) is a penal provision. It must be strictly construed. Thus, the demand for penalty cannot be sustained. Hence, we set aside the impugned judgments and orders of the learned Single Judge and Division Bench. We also set aside the Order-in-Original by which the impugned penalty was imposed. Accordingly, the appeal is allowed with no orders as to costs.
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2024 (5) TMI 683
Maintainability of the impugned order - Anti-Dumping Duty - Undervaluation of imported Flax yarn from sister companies / concerns - re-determined assessable value - Demand of duty - Penalty - Liability to pay differential Anti-Dumping Duty in respect of the 7 Bills-of-Entry - imposition of ADD - genuineness of the invoices - Whether the values declared by the appellants in all the 26 Bills-of-Entry is liable to be rejected and the values re-determined by the ld. adjudicating authority in the impugned order based on the price available of similar goods in the NIDB data is acceptable in the facts and circumstances of the case or not - HELD THAT:- We do not agree with the submission of the Ld. DR that adjudication of the case by an officer senior to proper officer would amount to granting of deemed extension. We observe that the proviso to Section 28(9) clearly stipulates that in case the adjudication is not done within the time limit stipulated, then the Officer senior in rank to the Proper Officer must grant extension in such cases. Even if an Officer senior to the Proper Officer adjudicates the case, a formal extension must be obtained as mandated in Section 28(9) of the Act, which has not been done in the instant case. Accordingly, we find merit in the contention of the appellants that the impugned order is liable to be set aside on this ground alone. Differential Anti-Dumping Duty - Since the letter dated 29.03.2019 contains information on invoices issued in the months of September 2019 and November 2019, we agree with the contention raised by the appellants that there is suspicion about the genuineness and veracity of the said letter. Accordingly, we hold that the demand cannot be raised on the basis of the letter dated 29.03.2019 or the documents said to have been attached along with the said letter. When there is a confirmation about the genuineness of invoices from the representative of the manufacturer, there is no reason to reject the same. Accordingly, we hold that the invoices filed by the appellant along with the 5 Bills-of-Entry are genuine. Hence, the ADD paid by them in respect of the 5 Bills-of-Entry at the rate of 0.50 USD per kg. is in order. Thus, we hold that the differential ADD confirmed in respect of the 5 Bills-of-Entry in the impugned order is not sustainable. In respect of the remaining 2 Bills-of-Entry - The demand, if any, for the short-paid ADD could have been issued within a period of one year from the date of payment of ADD. However, in this case, the Notice has been issued on 22.11.2021 which is much beyond the normal period of limitation. As no suppression of fact with intent to evade payment of duty exists in this case, we hold that the demand of ADD by invoking the extended period of limitation is not sustainable. Accordingly, we hold that the ADD demanded in respect of the 2 Bills-of-Entry is also not sustainable, on the ground of limitation. Thus, we hold that the differential ADD confirmed in the impugned order in respect of all the 7 Bills of Entry are not sustainable and accordingly, we set aside the same. Since the demand of differential ADD is not sustainable, the question of demanding interest and imposing penalty on the same does not arise. Whether the values declared by the appellants in all the 26 Bills-of-Entry is liable to be rejected and the values re-determined by the ld. adjudicating authority in the impugned order based on the price available of similar goods in the NIDB data is acceptable in the facts and circumstances of the case or not - We observe that the said email is dated 20th May, 2019 and the details of the two invoices pertain to the dates 26th July and 27th September, 2019 are furnished therein. This clearly establish that the e-mail was not sent on 20th May. The appellants submit that they asked for the IP address from where the e-mail has been sent, but it was not furnished. Thus, we observe that there is merit in the contention of the appellants that the emails are fabricated. Accordingly, we hold that the attachments therein cannot be relied upon to reject the value declared by the appellants in the Bills-of-Entry. Accordingly, we hold that the allegation of undervaluation in respect of all the 26 Bills of Entry are not established. Hence, the demand of differential customs duty confirmed in the impugned order on account of undervaluation is not sustainable and hence we set aside the same. There is no evidence available on the record to reject the genuineness of the invoices submitted by the appellants. The value declared by the importers in other Bills-of-Entry are not comparable as the quantity of goods or quality of goods imported cannot be ascertained to conclude as to whether the comparable import qualifies as identical goods or not. Accordingly, we hold that the transaction value declared by other importers cannot be treated as the correct transaction value in respect of the goods imported by the appellants herein. The transaction value declared by the appellants cannot be rejected on the basis of a mere allegation by a third-party on the ground that the format of the invoice is not similar to theirs or other invoices issued by the manufacturer. Hence, we hold that the transaction value declared by the appellants in respect of the 26 Bills-of-Entry cannot be rejected and the assessable value re-determined by the Department in the impugned order is not based on any documentary evidence. Thus, we hold that the assessable values declared by the appellants in the 26 Bills of Entry cannot be rejected. Accordingly, we hold that the differential duty confirmed on the basis of the re-determined assessable value is not sustainable. Penalty - Since the demand of ADD and Differential customs duty is not sustainable, the question of demanding interest or imposing penalty on the appellant importers does not arise. Penalty on the common Director - We observe that his involvement in the alleged offence was established on the basis of the statement given by him on 9th July, 2019. We observe that he has retracted his statement dated 9th July by letter dated 10th July 2019 which was not responded to by the authorities concerned. As the department has not responded to the retraction made by Mr. Aditya Sarda on 10th July 2019 addressed to the Director General of DRI, Delhi, the purported statement dated 9th July 2019 cannot be relied upon to penalize him. Further, as discussed, the alleged offence of short payment of ADD and short payment of customs duty on account of undervaluation has not been established. Accordingly, we hold that the penalty imposed on the Director Shri. Aditya Sarda is not sustainable. In the result, the appeals filed by all the four appellants are allowed, with consequential relief, if any, as per law.
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Corporate Laws
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2024 (5) TMI 682
Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings - HELD THAT:- The contract postulated and the parties had agreed that MSSIDCL would be liable to pay SSPL only after the goods are delivered and accepted by the consignee, namely, Maharashtra State Electricity Board (MSEB) and on the payment being received by MSSIDCL from the MSEB. If the proviso to Section 3 applies, this contractual clause will get modified in terms of the proviso to Section 3, which has fixed the upper time limit for payment to 120 days from the day of acceptance or the day of deemed acceptance. However, the question would arise as to whether the said proviso would be applicable to the agreement in question, which was entered into between the parties on 30.03.1995, albeit the proviso was enacted and enforced with effect from 10.08.1998. There are no good ground and reason to interfere with the conclusion in the impugned judgment passed by the Division Bench of the High Court, setting aside the arbitral award dated 30.06.2003 - appeal dismissed.
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2024 (5) TMI 681
Professional misconduct - Role of NFRA V/s ICAI on disciplinary matters of Chartered Accountants - Retrospective V/s prospective applicability of provisions as contained in Section 132 of Companies Act, 2013 as well as NFRA Rules, 2018 - Violation of Principle of natural justice w.r.t. separate division of NFRA - Role of Statutory Auditors of the Company V/s Statutory Auditors of the Branches of the company - Are Standards of Auditing (SA) mandatory or Advisory or to be treated as guidance notes to Auditors - it was held by NCLAT that 'It is of utmost importance that Auditors realise their responsibilities which is necessary not only to the company but also to the public. In view thereof, giving effect to the Impugned Orders which highlights the professional misconduct and other misconduct on the part of the appellant vis- -vis a public listed company become quintessential so as to make public aware and enable them to make informed and sound financial decisions and investments. Any deviation to this will only result is catastrophic effect on economy of the nation and cause immense prejudice and harm to the public, shareholders and various stakeholders such as banks, lenders, and creditors.' HELD THAT:- There are no reason to interfere with the order of the National Company Law Appellate Tribunal - appeal dismissed.
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2024 (5) TMI 680
Restoration of name of the company in the records of the Registrar of Companies - HELD THAT:- Section 252(1) of the Act states that any person aggrieved by an order of the Registrar, notifying a company as dissolved under Section 248, may file an appeal to the Tribunal within a period of three years from the date of the order of the Registrar. The Tribunal can direct the restoration of the name, if it is satisfied that the removal of the name of the company from the register of the companies, is not justified in view of the absence of any of the grounds on which the order was passed by the Registrar. In the present case, the order passed by the Registrar of Companies dated 21.08.2017, directed the removal of name of the appellant/company R.P. Casting Private Limited from the register of companies. The appeal was preferred within time. A practical rather than a technical view should be taken, while putting the appellants to terms on account of their lapses. The company/appellant R.P. Casting Private Limited was in existence and even operative during the relevant time. The Directors of the company/appellant R.P. Casting Private Limited were negligent in not complying with the requirements of the Companies Act, 2013 in filing annual accounts etc., and also in not responding to the notice under Section 248(1) of the Act - it is also directed that the appellant R.P. Casting Private Limited will pay a cost of Rs.5,00,000/- to the Registrar of Companies, within a period of 60 days from today, as they were at fault, and had not complied with the provisions of law. Restoration of name in the Registrar of Companies will be subject to payment of the costs. The impugned judgment is set aside - Appeal allowed.
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Insolvency & Bankruptcy
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2024 (5) TMI 679
Seeking directions to the Resolution professional to conduct Transaction Audit of the books of the Corporate Debtor appointing Mr Amit Khandelwal as an independent auditor - constitutionality of re-constitution of COC by RP without conducting the transaction audit - legality of approval of resolution plan by the illegally constituted COC - HELD THAT:- The impugned order being only interlocutory order and subsequently another order has been passed on 11.03.2024 all issues pertaining to the application are open and to be considered and decided by the Adjudicating Authority after hearing both the parties. Since the Adjudicating Authority in subsequent order makes it clear that the application may be decided afresh after hearing both the parties and considering the Reply, there are no reason to keep the appeal pending. Appeal disposed off.
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2024 (5) TMI 678
Initiation of CIRP - application barred by Section 10A of IBC - date of alleged default is mentioned as 08.08.2018 from which date three years period came to end on 08.08.2021 and thereafter petition was not filed within the time - HELD THAT:- The present is a case where admittedly default was committed by the Corporate Debtor much prior to 10A period i.e. 08.08.2018 as was claimed by the State Bank of India in its application. When default was committed by the Corporate Debtor prior to 10A period, it is not open for the Appellant to claim that application deserve to be rejected on the ground of Section 10A. There are two reasons for not accepting the submissions of the Appellant that the application under Section 7 was bared by Section 10A. Firstly, the default was committed by the Corporate Debtor prior to 10A period w.e.f. 08.08.2018, which was date of default mentioned in Section 7 application. When Section 7 application mentions date of default which default was committed prior to 10A period, application under Section 7 cannot be held to be barred by Section 10A. Further, although OTS was communicated by the Bank by letter dated 05.09.2020 but the OTS itself contemplates that parties shall jointly file an application before the DRT where original application filed by the Bank was pending and obtain the Consent Decree - The undertaking admittedly was issued on 11.05.2021. When the Joint Application was filed subsequent to 10A period and Consent Decree was obtained only on 26.04.2022, the submission of the Appellant that application under Section 7 was barred by 10A cannot be accepted. It is relevant to notice that the date of default was mentioned as 08.8.2018 and OTS proposals were given by the Corporate Debtor on 11.03.2020 and 05.05.2020. The application under Section 7 was filed by the Bank on 13.03.2023 i.e. well within three years from submission of OTS proposal. OTS proposal submitted by the Corporate Debtor was clearly acknowledgement of debt and the benefit of Section 18 of the Limitation Act shall be available to the Financial Creditor. Further, admittedly Consent Decree was passed by Debts Recovery Tribunal on 26.04.2022 and from the date of decree of the DRT, there shall be further period of three years for filing application. There are no grounds have been made out in this appeal to interfere with the impugned order admitting Section 7 application. There is no merit in the Appeal - Appeal is dismissed.
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2024 (5) TMI 677
Entitlement to file an appeal as an Independent Director in the Corporate Debtor - aggrieved person regarding acceptance of claim of the financial creditor or the quantum of financial credit admitted or not - HELD THAT:- It is apparent that the OTS of 2008 was revoked and that the claim made by Respondent No. 2 was filed ignoring the said revoked OTS. The appellant s submission that the OTS was not revoked is not borne out from the documents.. The admission of claim of Respondent No. 2 is in accordance with the application and order of admission under Section 7 of IBC, 2016, the correspondence between the financial creditor and corporate debtor and other records of the Corporate Debtor. The claim, as well as constitution of CoC with voting share as per claim, was in the knowledge of appellant from the very beginning. There are no fault in the RP s admission of claim of Respondent No. 2. There are no merit in this Appeal. The Appeal is accordingly dismissed.
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2024 (5) TMI 676
Admission of Section 95 application filed by the Financial Creditor - Personal Guarantor of the Corporate Debtor - date of default - time limitation - Insolvency petition which has been filed by the Financial Creditor has been signed by Resolution Professional who was not the authorized officer of Respondent No.1 - Personal Guarantee dated 25.07.2012 executed by the Appellant in favour of Dena Bank is an unstamped document. Time limitation - Submission of the Appellant is that the Deed of Guarantee dated 25.07.2012 was invoked by Recall Notice dated 04.03.2016, hence, three years period of limitation ended on 04.03.2019 and application filed by the Financial Creditor on 10.08.2021 was barred by time - HELD THAT:- On looking into the Declaration cum Undertaking, which was issued by the Appellant, it is clear that said declaration contained the acknowledgement of debt of the company towards the Financial Creditor. The acknowledgment of debt in writing is sufficient to extend the period of limitation as per Section 18 of the Limitation Act. Thus, the said Declaration cum Undertaking will extend further period of three years from date of undertaking and the application under Section 95 which was filed on 10.08.2021 cannot be said to be barred by time. The Hon ble Supreme Court by Suo Motu Writ Petition (Civil) No. 03 of 2020 [ 2021 (3) TMI 497 - SC ORDER ] has excluded the period from 15.03.2020 to 28.02.2022 and in the present case the application was filed on 10.08.2021 i.e. during the aforesaid period. The three years period from date of Declaration cum Undertaking came to an end on 28.01.2021 i.e. within the period which as excluded by the Hon ble Supreme Court - thus, the application cannot be said to be barred by time. Insolvency petition which has been filed by the Financial Creditor has been signed by Resolution Professional who was not the authorized officer of Respondent No.1 - HELD THAT:- Section 95(1) permits a creditor to file an application through a Resolution Professional for initiating the insolvency resolution process. Thus, the submission of application by the Financial Creditor through Resolution Professional is clearly permitted by Section 95(1) - there are no defect in the application which warrants dismissal of application on this ground. No defect was pointed out by the Adjudicating Authority to the Financial Creditor, which fact is undisputed. Personal Guarantee dated 25.07.2012 executed by the Appellant in favour of Dena Bank is an unstamped document - HELD THAT:- The Application under Section 7 was filed by the Financial Creditor against the Corporate Debtor with regard to same loan facility, which was admitted by the Adjudicating Authority vide its order dated 19.02.2020. Thus, when Financial Creditor s status was accepted in Section 7 proceeding and the application under Section 7 was admitted against the Corporate Debtor, the status of Financial Creditor as Assignee of the Bank cannot be questioned by the Appellant in this proceeding. We do not find any substance in the submission of the Appellant. There are no error in the order passed by the Adjudicating Authority admitting Section 95 application. There is no merit in the appeal - appeal dismissed.
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PMLA
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2024 (5) TMI 675
Seeking grant of Interim bail - challenge to arrest of Arvind Kejriwal by the Directorate of Enforcement - scope and violation of Section 19 of the Prevention of Money Laundering Act, 2002 - HELD THAT:- Power to grant interim bail is commonly exercised in a number of cases. Interim bail is granted in the facts of each case. This case is not an exception. The prosecution has rightly pointed out that the appellant Arvind Kejriwal had failed to appear in spite of nine (9) notices/summons, first of which was issued in October 2023. This is a negative factor, but there are several other facets which we are required to take into consideration. The appellant Arvind Kejriwal is the Chief Minister of Delhi and a leader of one of the national parties. No doubt, serious accusations have been made, but he has not been convicted. He does not have any criminal antecedents. He is not a threat to the society. The investigation in the present case has remained pending since August 2022. Arvind Kejriwal was arrested, as noted above, on 21.03.2024. More importantly, legality and validity of the arrest itself is under challenge before this Court and we are yet to finally pronounce on the same. The fact situation cannot be compared with harvesting of crops or plea to look after business affairs. Once the matter is subjudice and the questions relating to legality of arrest are under consideration, a more holistic and libertarian view is justified, in the background that the 18th Lok Sabha General Elections are being held. A coordinate Bench of this Court in THE STATE OF ANDHRA PRADESH VERSUS NARA CHANDRA BABU NAIDU [ 2024 (5) TMI 611 - SC ORDER] , in an appeal filed by the State, by an interim order has deleted the condition restraining the respondent therein from organising or participating in public rallies and meetings, thereby permitting him to participate in the political process. This petition seeking special leave to appeal is still pending. The appellant Arvind Kejriwal will be released on interim bail till 1st of June 2024, that is, he will surrender on 2nd of June 2024 on fulfilment of conditions imposed - bail application allowed.
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2024 (5) TMI 674
Money Laundering - grant of Interim bail - HELD THAT:- After issuance of warrant, the petitioner surrendered and thereafter applied for bail. Even without surrendering also, the petitioner could have applied for cancellation of warrant by giving an undertaking to the Special Court to remain present on the dates fixed before the Special Court. The petitioner has undergone incarceration for a period of 1 year and 1 month. Considering these facts, the petitioner is entitled to be enlarged on interim bail. The documents annexed to the counter affidavit, create an impression that though a complaint under Section 44(1)(d) of the PMLA Act was filed, a separate charge-sheet was presented by the Assistant Director of Enforcement Directorate to the special public prosecutor Mr. Goel which was ordered to be registered as a Criminal Miscellaneous Case. It needs to be verified whether cognizance was taken on the basis of the charge-sheet. The learned Additional Solicitor General, on instructions, points out that in the State of Uttarakhand, a complaint is referred as a charge-sheet and in fact there was no such charge-sheet. Though there are no reason to disbelieve the responsible statement made by the learned Additional Solicitor General, the fact remains that page 96 mentions that there was a charge-sheet presented to the special public prosecutor. The Registry is directed to call for a soft copy of the entire record of Criminal Case No. 2 of 2021 from the Court of the learned Special Judge, PMLA, Dehradun, Uttarakhand - List on 10th May, 2024.
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2024 (5) TMI 673
Money Laundering - Seeking quashing and setting aside of the Look Out Circular (LOC) - detention on the ground of non-cooperation - HELD THAT:- It appears that the petitioner after completing his education moved to Bahrain and has been working in Bahrain, since then. It also appears that the petitioner was issued summons by the respondent No. 1-ED, pursuant to which, he replied to the said summons, however, he could not come to India due to Covid-19 pandemic. It is also not in dispute that subsequently, in November 2020 the petitioner came to India and that he had informed the ED office of his return to India. It is also not in dispute that the petitioner appeared before the respondent No. 1-ED on seven occasions commencing from 22nd December 2020. The petitioner was last summoned by the ED on 21st February 2023. It appears that thereafter, the petitioner has not been summoned by the respondent No. 1-ED. It is well settled that a person cannot be detained merely because he is not cooperating. Non-cooperation also can be a result of a person not having any information with respect to the case in question and as such there is no merit in the said submission. The ED has been investigating the case since 2019 and till date, despite the petitioner having appeared before the ED, the ED has not found any material qua the petitioner. The petitioner has been deprived of his livelihood since December 2020. The petitioner has been working in the Middle East for more than two decades, and as such, having regard to the fact, that the respondent No. 1-ED has not found any material, qua the petitioner till date, it would not be appropriate to detain the petitioner any further. The impugned LOC issued as against the petitioner on 17th January 2020 by the respondent No. 1-ED, is quashed and set aside - Petition allowed.
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Service Tax
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2024 (5) TMI 672
Levy of Service tax - Clearing and Forwarding Agent Service - place of provision of services - difference in expenses which has been incurred by the appellant - Department observed that freight income as being expenses incurred towards freight expenses were less than freight charged by the appellant from their customers - post negative period of service tax - HELD THAT:- The appellant would enter into an agreement with the carrier for transportation of cargo i.e. airline/shipping line. This service agreement would be on principal to principal basis and not as agent of said airline/shipping line. Therefore, applicant would be covered by the exclusion clause i.e. provides the main service- inbound and outbound shipment on his own account in terms of Rule 2(f) of POP Rules and thus not covered under Rule 9 (c) ibid as intermediary service. Therefore, place of provision of said service will not be location of service provider. Rule 10 of POP Rules will not be applicable in respect of the applicant. Applicant submits that said Rule 10 is wide to cover not only the actual transportation, but also a person who arranges for the transport, that this is expressly clear from the exclusion to mail or courier from Rule 10 of POP Rules; that proviso to Rule 10 suggests the place of provision of service in respect of goods transport agency (GTA); that but for said exclusion, courier or GTA would be covered by said Rule 10. It is reiterated that place of provision of service of transportation of goods shall be the place of destination of the goods, as per Rule 10 of POP Rules. In the case of outbound shipment, both by aircraft and vessel, destination of goods shall be outside India. Therefore, place of provision of service of outbound shipment shall be outside India, hence there will be no Service Tax on freight margin recovered by the applicant from the customer. The impugned order-in-appeal is without any merits and is set aside - appeal allowed.
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2024 (5) TMI 671
Nature of transaction - sale or service - Leviability of service tax on supply of ready mix concrete - demand confirmed on basis of difference of documents, without identifying the service. The case of Revenue is that the agreement reveals that appellant had to provide some services to M/s Signature Global (India) Pvt Ltd - appellant submits that they have only supplied the ready mix concrete which is an excisable product and has also paid VAT. HELD THAT:- The Department though alleges that the appellant has rendered some services to M/s Signature Global (India) Pvt Ltd, it has not been made clear what was the classification of the service and what was the consideration received for the same. In the absence of specific service being identified, it is not open for the Department to assume that some service was made and therefore service tax is payable. This approach is not legally sustainable; it is the responsibility of the person alleging to prove the allegation with evidence; the Department failed to do so; moreover, an attempt has been made to confirm the duty of service tax on the basis of discrepancy in various statements and figures. It has been held in number of cases that such confirmation of tax is not legally sustainable. This bench in the case of M/S INDIAN MACHINE TOOLS MANUFACTURERS ASSOCIATION VERSUS THE COMMISSIONER OF CENTRAL EXCISE, PANCHKULA [ 2023 (9) TMI 815 - CESTAT CHANDIGARH] has held 'It is a settled principle of law that service tax can be levied only when there is a clear identification of service provider, service recipient and consideration paid for the same. In the absence of any such evidence of the service recipient and the service provided, service tax cannot be demanded and confirmed.' Thus, demand of service tax cannot be confirmed without identifying the service and it cannot be confirmed on basis of difference of documents. Further, the issue of exigibility of supply of ready mix concrete to service tax has been decided in number of cases - the Tribunal in the case of GMK CONCRETE MIXING PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX, DELHI [ 2011 (11) TMI 425 - CESTAT, NEW DELHI] has observed ' Record does not reveal involvement of nay taxable service aspect in the entire supply of RMC. Rather the contract appears to be a sales contract instead of a service contract. In absence of cogent evidence to the effect of providing taxable service, primary and dominant object of the contract throws light that contract between the parties was to supply ready mix concrete but not to provide any taxable service. Finance Act, 1994 not being a law relating to commodity taxation but services are declared to be taxable under this law, the adjudication made under mistake of fact and law fails.' There are no merit in the impugned order; accordingly, the same is liable to be set aside - appeal allowed.
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2024 (5) TMI 670
Levy of penalty u/s 77 of the Finance Act, 1994 read with Rule 7C of the Service Tax Rules, 1994 - non-filing of returns - time limitation - HELD THAT:- The requirement to file the ST-3 Returns, as provided in Section 70 of the Finance Act, 1994, is only in the event where the services are provided. Once no service is provided, there is no liability to file the ST-3 Returns and in line thereto, the 3rd proviso to Rule 7C has been inserted that, where the service tax payable is nil, the central excise officer has been empowered to either reduce or waive the penalty, on being satisfied that there is sufficient reason. Time Limitation - SCN issued on 08.02.2019 is beyond the period of 5 years - HELD THAT:- The show cause notice issued on 08.02.2019 is beyond the period of 5 years and hence, the same is not sustainable - the demand set aside on the ground of limitation being beyond the period of 5 years. There are no merit in the impugned order and the same deserves to be set aside - appeal allowed.
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2024 (5) TMI 669
Exemption provided under Sl. No. 14 of N/N. 25/2012-ST dated 20.06.2012 - modification/renovation work undertaken for existing Railway lines - The contention of the Revenue is that the modification and renovation of existing Railway lines cannot be considered as 'Original Works' and hence the services rendered are not eligible for the exemption provided under Notification No. 25/2012-ST dated 20.06.2012. HELD THAT:- The 'Original Work' not only includes laying of new Railway lines, but also include all types of alterations to abandoned or damaged structures. On perusal of one of the work order No.RITES/RPO-KOL/WPDCL-STPS/Reno-P.Way/PKC-C/2014/1270 issued by RITES for renovation work, which reads as 'Renovation modification of existing Railway Track inside outside plant yard (excluding MGR Track) of Santaldih Thermal Power Station (STPS) of WBPDCL, Dist. Purulia, West Bengal . It is observed that this work squarely falls within the ambit of part (ii) of the definition of 'Original Work' which covers all types of additions and alterations to abandoned or damaged structures on land that are required to make them workable . Accordingly, the work contract service rendered by the assessee-appellant relating to new railway lines as well as modification/renovation work of existing railway lines, both fall within the ambit of 'Original Work' and both are eligible for the benefit of exemption as provided under Sl. No. 14 of Notification No. 25/2012-ST dated 20.06.2012. All the four contracts are related construction of new Railway lines or renovation/modification of existing Railway Lines either for the Government or private companies. As discussed, all these services fall within the ambit of 'Original Work and eligible for the benefit of exemption as provided under Sl. No. 14 of Notification No. 25/2012-ST dated 20.06.2012 - the demand of Service tax of Rs. 3,96,05,317/- confirmed in the impugned order relating to Works Contract Services rendered by the assessee in respect of Railways to M/s. Haldia Energy Limited and M/s. WBPDCL, is not sustainable and accordingly, the same is set aside. Demand of Service Tax of Rs. 3,27,841/- related to Work Order No. HEL:WO:1219 dated 16th May, 2015 - HELD THAT:- The said work order is for Transportation and Dumping of Ash Silo to Specified Areas Inside the Plant . The said activity is an essential part of the production process and the same is not a service activity as held by this Tribunal in the case of M/S MARSHALL CORPORATION LTD., VERSUS COMMISSIONER OF CGST CENTRAL EXCISE, KOLKATA. [ 2023 (7) TMI 766 - CESTAT KOLKATA] . Thus, the demand on this count is not sustainable. Service tax on activity of Transportation and Dumping of Ash Silo to Specified Areas Inside the Plant - HELD THAT:- It is observed that the appellant/assessee has collected service tax under the category of works contract service and availed 60% abatement. Later, they realized that their activity was not liable to service tax - the activity of Transportation and Dumping of Ash Silo to Specified Areas Inside the Plant is not liable to service tax. Thus, Service Tax of Rs. 3,27,841/-, confirmed in the impugned order is not sustainable and accordingly, the same is set aside. Demand related to addition of free issue materials in the assessable value for the purpose of demanding service tax - HELD THAT:- The ld. adjudicating authority has dropped the demand by relying upon the decision of the Hon'ble Supreme Court in the case of COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [ 2018 (2) TMI 1325 - SUPREME COURT] , wherein it has been held that the value of free supply materials is not includable in the gross value for the purpose of demanding service tax - the findings of the ld. adjudicating authority on this count is agreed upon and accordingly, the dropping of this demand in the impugned order is upheld. Availability of abatement @60% for some of the works contract services rendered by the assessee - HELD THAT:- During the course of hearing the assessee produced evidence to the effect that all these work orders are supplementary to earlier work orders. On perusal the evidence submitted by the assessee which clearly reveals that all these work orders are supplementary to earlier work orders. Accordingly, the ld. Adjudicating authority has rightly extended 60% abatement as provided under Rule 2A(ii) of Service Tax Determination of Value Rules) 2006. Thus, the dropping of the demand by the ld. adjudicating authority on this count is uphold. The demand of service tax of Rs. 3,99,33,158/- confirmed in the impugned order is set aside - Dropping of the demand of Rs.1,68,64,976/- by the ld. adjudicating authority is upheld - the appeal filed by the assessee is allowed and the appeal filed by the Department is rejected.
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2024 (5) TMI 668
Valuation of service - Clearing Forwarding Agency Service - inclusion of reimbursed freight charges in the taxable value of services for discharging service tax - Extended period of limitation - HELD THAT:- It is seen from the definition of Clearing Forwarding Agent that such Agent would require to undertake transportation of goods also. Undisputably, The amounts which are subject to levy of service of tax in the present case are reimbursements received by the appellant from M/s.ACCL The Department has been carried away by the freight charges received by appellant on consignment notes issued by appellant for transportation under Goods Transport Agency Agreement. The service tax on the freight charges received by the appellant from M/s.ACCL after issuing consignment notes has already been discharged by M/s.ACCL as the service recipient - it is very clear from the SCN that the demand has been made only in regard to reimbursable expenses received from M/s.ACCL as part of C F activity and not for the freight charges received with regard to GTA Agreement. The issue as to whether the reimbursable expenses is to be included in the taxable value for the period prior to 2015 is settled by the decision of Hon ble Delhi High Court in the case of INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. VERSUS UOI. ANR. [ 2012 (12) TMI 150 - DELHI HIGH COURT] as affirmed by the Hon ble Supreme Court in UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] where it was held that 'only with effect from May 14, 2015, by virtue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax.' Extended period of limitation - HELD THAT:- The demand has been raised on freight reimbursable expenses accounted by the appellant as per figures indicated in the books of accounts. The Department has not established any positive act of suppression on the part of the appellant. The issue as to whether the reimbursable expenses has to be included in the taxable value was under litigation and also put into a situation of bringing forth amendment under Section 67 of the Finance Act, 1994. Taking all these aspects into consideration, the issue is interpretational in nature and therefore the invocation of extended period cannot sustain. The issue on limitation is also answered in favour of the appellant. The impugned order is set aside - Appeal allowed.
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2024 (5) TMI 667
Non-payment of service tax - Works Contracts Service in respect of construction of residential complexes services - single residential complex - appellant had discharged service tax for the period upto 1.1.2009 under construction of residential complex services after availing the abatement - Works Contracts Service provided for construction of Engineering College to M/s.KTVR Siddhammal Charitable Trust - period April 2009 to February 2012 - extended period of limitation. Works Contracts Service in respect of construction of residential complexes services - HELD THAT:- The Tribunal in the case of M/S KRISHNA HOMES VERSUS CCE, BHOPAL AND CCE, BHOPAL VERSUS M/S RAJ HOMES [ 2014 (3) TMI 694 - CESTAT AHMEDABAD] had considered the very same issue and held that a promoter/developer/builder is not subject to levy of service tax upto 1.7.2010 in respect of construction of residential complex. For the period w.e.f. 1.7.2010, the appellant is liable to pay service tax under the construction of residential complexes. The appellant has discharged service tax after 1.7.2010 till February 2012. However, the demand has been raised in the SCN denying the abatement claimed by the appellant. It is not disputed that the appellant has used materials as well as services for construction of the residential complex - the discussions and the finding of adjudicating authority that the appellant is not eligible for abatement in respect of works contract service is not legal and proper and cannot be sustained. The appellant has paid a sum of Rs.32,15,158/- after 1.7.2010 upto February 2012 as disclosed in ST-3 returns. The demand under Works Contract Service for the disputed period on construction of RCS denying abatement cannot sustain and requires to be set aside - The amount of Rs.32,15,158/- paid by appellant is not disturbed. Demand under Works Contracts Service provided for construction of Engineering College to M/s.KTVR Siddhammal Charitable Trust - HELD THAT:- It is explained by the Board in CBEC Circular No.80/10/2004-ST dt. 17.09.2010 that, when the building is solely used for educational purposes, the levy of service tax is not attracted. It is found that the building having been used for educational purpose and being non-commercial purpose, the said construction activity cannot be subject to levy of service tax during the disputed period. Extended period of limitation - HELD THAT:- It has to be noted that the entire demand has been raised on the basis of figures taken from the accounts maintained by the appellant. There is no evidence of positive act of suppression of facts with intent to evade payment of service tax established against the appellant. Further, the appellant has been paying the service tax on RCS upto 2009 and had stopped paying service only in accordance to the clarification made by Board s circular. Thereafter, with effect from 1.7.2010 the appellant started paying service tax again. The Appellant had not discharged service tax with regard to the building constructed for Engineering College on the bonafide belief that the building being solely used for educational purpose would not fall within the levy of service tax liability, as clarified by the Board circular - the invocation of extended period is not legal and proper. The issue of limitation is also answered in favour of the appellant. The appeal is allowed.
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Central Excise
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2024 (5) TMI 666
Liability to pay fine and penalty under Rule 25(1)(b) of the Central Excise Rules, 2002 - Clandestine removal - Mens rea - existence of evidences or not - applicability of presumption of Section 11AC of CEA - HELD THAT:- Hon ble Supreme Court in the case of Commissioner of Central Excise, Chandigarh Vs. Pepsi Foods Limited [ 2010 (12) TMI 15 - SUPREME COURT] , held ' It is well settled that when the statutes create an offence and an ingredient of the offence is a deliberate attempt to evade duty either by fraud or misrepresentation, the statute requires mens rea as a necessary constituent of such an offence. But when factually no fraud or suppression or misstatement is alleged by the Revenue against the respondent in the show-cause notice the imposition of penalty under Section 11-AC is wholly impermissible.' In view of the above decision of Hon ble Apex Court mens rea will play important role while invoking the provisions of Section 11 AC of the Central Excise Act, 1944. In the present case, the record shows that all the goods were accounted for, since the invoices with regard to the raw material and finished goods were there on record - Tribunal has totally ignored the documents produced before the Commissioner Appeals. As per Section 11AC of the Act, 1944, there should be an intention to evade the payment of duty and in the present case intention to evade the payment of duty is not proved by the authorities while passing the order of penalty - A perusal of the record shows that there was no intention to evade duty, which is requisite of Section 11AC of the Act. And Rule 25 of the Rules 2002 is not an independent rule and cannot be invoked unless it covers the ingredients to impose penalty as imposed in Section 11AC of the Act. So far as Rule 25 is concerned, it starts as subject to the provisions of Section 11AC of the Act which shows that Rule 25 would be applicable only in cases where Section 11AC is invoked. The impugned order is set aside - appeal allowed.
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2024 (5) TMI 665
CENVAT Credit - inputs used in the manufacture of both e-bikes (exempt) and e-bikes parts (taxable) are common - applicability of Rule 6(3) of the Cenvat Credit Rules, 2004 or Rule 11(3) of the Cenvat Credit Rules, 2004 - HELD THAT:- This issue is no longer res integra being decided in favour of the appellant by this Bench of the Tribunal in M/S AVON CYCLES LIMITED AND M/S HERO CYCLES LIMITED VERSUS C.C.E, LUDHIANA [ 2016 (9) TMI 628 - CESTAT CHANDIGARH] where the appellant was manufacturing both exempted goods i.e. the e-bikes and dutiable goods i.e. the parts of e-bikes; it is not the case of the Department that the appellant is only manufacturing exempted goods and therefore, the contention of the appellant that they are following the provisions of Rule 6(3) of the Cenvat Credit Rules, 2004 is acceptable. There are no applicability of Rule 11(3) of the Cenvat Credit Rules, 2004 in the instant case. This bench of the Tribunal in M/S AVON CYCLES LIMITED AND M/S HERO CYCLES LIMITED held that ' As we hold that the provisions of Rule 6(3) are applicable to the facts of the present case. Therefore, we hold that provisions of Rule 11(3) of the Cenvat Credit Rules are not applicable to the facts of the present case.' The impugned order is not sustainable and requires to be set aside - appeal allowed.
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CST, VAT & Sales Tax
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2024 (5) TMI 664
Maintainability of petition - alternate and efficacious remedy of an appeal - Refusal to admit an appeal filed under Section 55 of the Goa Value Added Tax Act, 2005 after rejecting the Petitioner's application for condonation of delay in filing the appeal - HELD THAT:- The procedure to file an appeal is provided in Rule 33 of the VAT Rules which requires the memorandum of appeal to be accompanied by a certified copy of the order appealed against, whether in the case of a first appeal or a second appeal before the Tribunal. Sub-Section 1 of Section 35 however states that the appeal may be filed to the Appellate Authority prescribed under the Act within 60 days from the receipt of order. Reading the provisions of the Act, providing for filing of an appeal and of Rule 33 which provides for the procedure for filing the appeal, which is to be accompanied by a of the decision appealed against, it stands to reason that the original order served on the petitioner during assessment is to be retained by him, as his copy, and only if the person aggrieved and wanting to object to the whole or part of the decision desires to file an appeal, such appeal is required to be accompanied by a certified copy of the decision. In the present case, it appears that there was no such intimation given to the Petitioner of the specific date when the certified copy would be ready, nor has the Petitioner given any intimation on or after 14.11.2018 (the date endorsed on the certified copy to the office file, when the copy was ready) as to when it was required to collect the certified copy. Clearly from the facts of the case, the Appellate Authority was duty bound to examine all these aspects of the matter and to approach the question of limitation with a broader perspective. Instead, without examining whether the petitioner was intimated the date of collection of the certified copy or not, the Appellate Authority has, in a cursory manner and without even adverting to the provision of Rule 33 of the VAT Rules or for that matter considered the circumstances which were clearly set out in the application for condonation of delay dated 22.09.2020. Nothing prevented the Appellate Authority from enquiring into the circumstances in which no intimation was given to the Petitioner of the first certified copy and why such certified copy had not been issued to the Petitioner the first time and a different true copy had to be issued to him on 15.09.2022. The Appellate Authority has therefore failed to exercised jurisdiction vested in it by law and has wrongly passed the impugned order refusing to condone delay in filing the petitioner's appeal. The impugned order dated 09.08.2021 would have to be quashed and set aside, the delay in filing the appeal stands condoned for reasons stated above, and the application for condonation of delay dated 22.09.2020 stands allowed.
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2024 (5) TMI 663
Jurisdiction - power of revision under Section 32 (2) of the Andhra Pradesh Value Added Tax Act, 2005 - error apparent on the face of record or not - HELD THAT:- In Sanjay Kumar Agarwal v. State Tax Officer [ 2023 (11) TMI 54 - SUPREME COURT ] on considering various pronouncements on the subject, the Hon ble Apex Court summarized the gist on the scope of review, holding that ' An error which is not self-evident and has to be detected by a process of reasoning, can hardly be said to be an error apparent on the face of record justifying the court to exercise its power of review.' There are no apparent error in the Judgment under challenge in review petition. No case for review is made out - The Review Petition is dismissed.
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2024 (5) TMI 662
Exemption from tax - Levy of turnover tax under Section 5-A (vi) of the APGST Act - second sales of Pulp Moulded Egg Trays which fell under Item 19 of the First Schedule - G.O. Ms. No. 1091 dated 31.10.1994 under Section 9 (1) of the APGST Act, 1957 grants general exemption, from levy of turnover tax under Section 5A (1) 2nd proviso (vi) of the APGST Act, 1957 on the sales of Pulp Moulded Egg Trays manufactured by Small-Scale Industrial Units or not - exemption on the sale of Pulp Moulded Egg Trays manufactured by S.S.I is available to the manufacturing unit alone or it would also be available to the sales of such commodity by other Small-Scale Industrial Units - exemption from levy of tax under Section 8(2-A) of the Central Sales Tax Act 1956. Whether the G.O. Ms. No. 1091 dated 31.10.1994 under Section 9 (1) of the APGST Act, 1957 grants general exemption, from levy of turnover tax under Section 5A (1) 2nd proviso (vi) of the APGST Act, 1957 on the sales of Pulp Moulded Egg Trays manufactured by Small-Scale Industrial Units? - HELD THAT:- In exercise of the powers conferred by Section 9 (1) of the Andhra Pradesh General Sales Tax Act, 1957, the State Government issued Notification-I in G.O. Ms. No. 1091 dated 31.10.1994 granting exemption from the tax payable under A.P.G.S.T Act on the sale of Pulp Moulded Egg Trays manufactured by the Small-Scale Industries (SSI) - G.O. Ms. No. 1091 thus grants exemption on the sale of the Pulp Moulded Egg Trays manufactured by the Small-Scale industrial units. The Pulp Moulded Egg Trays which are manufactured by the Small-Scale industrial units, only, call for exemption. If not manufactured by the Small-Scale industrial units it would not be exempted. In THE STATE OF MAHARASHTRA VERSUS SHRI VILE PARLE KELVANI MANDAL ORS. [ 2022 (2) TMI 720 - SUPREME COURT ] , the question was whether the charitable educational institution was entitled to the exemption from payment of electricity duty post 01.09.2016 i.e. as per the provisions of the Maharashtra Electricity Duty Act, 2016? The Hon ble Apex Court while answering the aforesaid question/issue laid down as to how to interpret and/or consider the statutory provisions in the taxing statute and the exemption notifications - The Hon ble Apex Court held that it is for the assessee to show by construction of the exemption clause/notification that it comes within the purview of exemption. The assessee/citizen cannot rely on ambiguity or doubt to claim benefit of exemption. The rationale is not to widen the ambit at the stage of applicability. However, once the hurdle is crossed, the notification is constructed liberally. In GIRIDHAR G. YADALAM VERSUS COMMISSIONER OF WEALTH TAX AND ANR. [ 2016 (1) TMI 826 - SUPREME COURT ] it was held that in a taxing statute it is the plain language of the provision that has to be preferred where language is plain and is capable of one definite meaning. Purposive interpretation can be given only when there is some ambiguity in the language of the statutory provision or it leads to absurd results. In the present case, the G.O. Ms. No. 1091 dated 31.10.1994 is under consideration which was not under consideration in the aforesaid cited judgments. Therefore, whether the notification of G.O. Ms. No. 1091, issued under Section 9 (1) falls under the general exemption for the purposes of the APGST Act is to be considered, independently, applying the principle of law, the precedents in various judgments, depending inter alia upon the language of the Government Order as also other relevant factors. The question whether G.O. Ms. No. 1091 is a notification granting general exemption under Section 9 (1) for the purpose of the State tax is be construed from its language for the purpose of the A.P.G.S.T Act. But that would not mean that it is a notification granting general exemption also for the purpose of the C.S.T Act. Under C.S.T Act the word generally has been explained in Section 8(2A) of that Act, and for the G.O. Ms. No. 1091 to qualify for exemption to the assessee it will have to fulfill the requirements of Section 8(2A), which aspect would be considered shortly under Question C as framed. Whether the exemption from levy of tax under G.O. Ms. No. 1091 dated 31.10.1994 on the sale of Pulp Moulded Egg Trays manufactured by S.S.I is available to the manufacturing unit alone or it would also be available to the sales of such commodity by other Small-Scale Industrial Units? - HELD THAT:- In DELHI TRANSPORT CORPORATION VERSUS BALWAN SINGH AND ORS. [ 2019 (2) TMI 2105 - SUPREME COURT] the Hon ble Apex Court held that it is a well settled principle of interpretation that when the words of a statute are clear and unambiguous, there cannot be a recourse to any principle of interpretation other than the rule of literal construction. In Dr.(Major) Meeta Sahai v. State of Bihar [ 2019 (12) TMI 1672 - SUPREME COURT ] the Hon ble Apex Court held that it is a settled canon of statutory interpretation that as a first step, the Courts ought to interpret the text of the provision and construct it literally. Provisions in a statute must be read in their original grammatical meaning to give its words a common textual meaning. However, this tool of interpretation can only be applied in cases where the text of the enactment is susceptible to only one meaning. Nevertheless, in a situation where there is ambiguity in the meaning of the text, the Courts must also give due regard to the consequences of the interpretation taken. The notification in clear words grants exemption on the sale of Pulp Moulded Egg Trays which are manufactured by the Small-Scale industrial units. So the exemption is on the sale if the commodity is manufactured by Small-Scale industrial units. From the plain language of the notification it does not follow that the sale should also be by the Small-Scale industrial units alone, which has manufactured it - Since the respondent herein is the Small-Scale industrial unit, we are considering the sale by SSI only and not making any observation with respect to the sale by any other dealer/assessee. So far as the respondent assessee is concerned the sale by it of the kind of the commodity exempted under G.O. Ms. No. 1091, would be entitled for exemption. Whether the Respondent Assessee-Dealer is entitled for exemption from levy of tax under Section 8(2-A) of the Central Sales Tax Act 1956? - HELD THAT:- The Hon ble Apex Court in Pine Chemicals Ltd. [ 1994 (10) TMI 262 - SUPREME COURT ] observed that for attracting the exemption provided by the government order, it had to be established that (i) the goods, the sale or purchase of which is claimed to be exempt from tax, are manufactured by a large or medium scale industry and (ii) that the said goods are manufactured and sold within five years from the date the said industrial unit has gone into production - The Hon ble Apex Court held that the idea behind sub-section (2-A) of Section 8 of the Central Sales Tax Act was to exempt the sale or purchase of the goods from the Central Sales Tax where the sale or purchase of such goods was exempt generally under the State sales tax law. It was held that due regard must be given and due meaning to the expression generally which occur in sub-section (2-A) and which expression has been defined in the explanation. The Hon ble Apex Court observed that if the said expression had not been there, it could probably have been possible to argue that inasmuch as the goods sold by a particular manufacturer-dealer were exempt from the State tax in his hands, they must equally be exempt under the Central Act. G.O. Ms. No. 1091, dated 31.10.1994 grants exemption from the tax payable under Andhra Pradesh General Sales Tax Act on the sale of pulp moulded egg trays manufactured by the Small-Scale Industrial Units. On comparing G.O. Ms. No. 1091, dated 31.10.1994 with G.O. Ms. No. 159, dated 26.03.1971 of Jammu Kashmir as was involved in Pine Chemicals Ltd. what is found is that the pulp moulded egg trays is mentioned in G.O. Ms. No. 1091, whereas in G.O. No. 159 of Jammu Kashmir the goods were not mentioned. What was mentioned was with reference to the industrial unit, so long as it was (i) a large or medium scale industry, and (ii) it manufactured and sold goods within the five years of its going into production - the exemption vide G.O. Ms. No. 1091, dated 31.10.1994 is not a general exemption within the meaning of Section 8 (2A) of the Central Sales Tax Act. It cannot be covered under the expression generally under Section 8 (2A) read with its explanation. Exemption under G.O. Ms. No. 1091 may be available under the State Act, Section 5-A (i) (vi), but the same would not be available under the Central Sales Tax Act, Section 8 (2A), only because exemption is available under the State Act. All the Tax Revision Cases are dismissed.
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Indian Laws
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2024 (5) TMI 661
Dishonour of Cheque - insufficiency of funds - cheque issued in discharge of a debt or not - rebuttal of presumption in terms of Section 118 read with Section 139 of NI Act - HELD THAT:- The High Court found that the debt/liability, in discharge of which, according to the petitioner, the cheques were issued, did not reflect in the petitioner s balance-sheet. The other partners of the firm did not depose as prosecution witnesses to establish that the cheque-amounts were advanced to the accused as financial assistance. The respondent no.1/accused has put up a plausible defence as regards the reason for which the petitioner s funds had come to her account. Both the appellate fora, on going through the evidence did not find existence of any enforceable debt or other liability . This strikes at the root of the petitioner s case. As the impugned decision is primarily based on considering the evidences produced by the respective parties, it is not considered necessary to individually deal with the ratio of the respective decisions relied on by the learned senior counsel representing the parties. The principles emerging from these authorities have been applied in the judgment of the High Court. Petition dismissed.
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2024 (5) TMI 660
Restoration of securities held by the appellant which were allegedly illegally sold by the respondent-firm - HELD THAT:- The fact remains that as on 9th May, 2017, the respondent was liable to pay a sum of Rs.21,70,143/- which the respondent has not offered till date. In fact the liability of the respondent to pay the said amount of Rs.21,70,143/- was recognized by the Award made by the Appellate Arbitral Tribunal on 27th September, 2013. Therefore, to put an end to the litigation which started in 2012, considering the present age of the appellant, this is a fit case to exercise Extra Ordinary Jurisdiction of this Court under Article 142 of the Constitution of India. It is proposed to direct the respondent to pay simple interest at the rate of 12% per annum on the amount of Rs.21,70,143/- from 27th September, 2013 which is the date of the Award of the Appellate Arbitral Tribunal. The impugned judgment is modified and it is ordered by directing that the respondent shall pay a sum of Rs.21,70,143/- to the appellant along with simple interest thereon at the rate of 12% per annum with effect from 27th September, 2013 within a period of two months from today. Appeal allowed.
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