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Showing 301 to 320 of 1551 Records
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2024 (2) TMI 1251
Seeking permission to withdraw the present appeal - Cum-duty benefit - it was held by High Court that Since the taxes were paid by the respondent-assessee on the goods as per the explanation to Section 4(1), the assessee was entitled to cum-duty benefit - HELD THAT:- The Civil Appeal is dismissed as withdrawn.
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2024 (2) TMI 1250
Maintainability of appeal - Appellate jurisdiction - HELD THAT:- This appeal can be disposed of on the short ground that the Custom, Excise and Service Tax Appellate Tribunal (the CESTAT) in exercise of its appellate jurisdiction has allowed the appeal filed by the Department without giving any reason whatsoever. For the reason that the decision is not accompanied by reasons, the judgment and order passed by the CESTAT is set aside and matter remanded back for consideration and passing appropriate orders giving reasons for its order.
Appeal disposed off.
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2024 (2) TMI 1249
Principles of unjust enrichment - Refund amount ordered to be credited to the Consumer Welfare Fund instead of being paid to the appellant - HELD THAT:- The appellant paid the disputed amount as differential duty after the SCN was issued and it was not paid at the time of clearance of the goods nor was an invoice raised for this amount at that time. It is also an admitted fact that the appellant had attempted to recover the differential duty from its customers M/s Bharat Broadband Network Ltd. by issuing a supplementary invoice, but the customer refused to pay it on the ground that central excise duty @ 10.3% was already paid as per the purchase order and the differential duty paid after calculating excise duty at the higher rate of 12.36% was not required to be paid by it.
The appellant had borne the burden of the differential duty and had not passed it on to its customer or to anyone. Thus, the appellant’s case falls squarely under Clause (e) of the third proviso to section 11B of the Central Excise Act, 19445, i.e., the duty of excise and interest paid on such duty were borne by the appellant manufacturer and it had not passed on the incidence of such duty and interest to any other person.
The appellant is entitled to the refund of the amount sanctioned which should be paid to it instead of it being credited to the Consumer Welfare Fund. Needless to say the consequential interest must also be paid as per section 11BB.
The refund amount along with interest under section 11BB should be paid to the appellant instead of being credited to the Consumer Welfare Fund - the impugned order is set aside - appeal allowed.
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2024 (2) TMI 1248
CENVAT Credit - common inputs/input services used for manufacture of stock transferred exempted goods (lime stone) and dutiable products (Cement/Clinker) - non-maintenance of separate accounts as required under Rule 6(2) of Cenvat Credit Rules, 2004 - liability to pay an amount of 5%/6% of the value of exempted goods (stock transferred lime stone) as under Rule 6(3)(i) of Cenvat Credit Rules, 2004 - Time Limitation - HELD THAT:- The lime stone stock transferred being exempted product there is no question of payment of duty or consequent availment of credit by receiving unit. When appellant has used common inputs/input services for stock transferred limestone, appellant has to maintain separate accounts. The appellant not having maintained separate accounts and not having exercised any option under Rule 6(3), the demand raised invoking Rule 6(3)(i) is legal and proper.
The decision of the Hon’ble Apex Court in the case of JAYPEE REWA CEMENT VERSUS COMMISSIONER OF CENTRAL EXCISE, MP [2001 (8) TMI 1332 - SUPREME COURT] is referred by Ld. Consultant to argue that lime stone is only an intermediate product and cannot be considered as a final product. The issue that was considered in the said case was whether Modvat credit is eligible on explosives used for extraction of limestone which is the raw material used in manufacture of cement. The Hon’ble Court was considering the applicability of Rule 57A of erstwhile Central Excise Rules, 1944. The assesse therein contended that explosives used in the mining operation must be regarded as inputs. The Tribunal came to the conclusion that as the inputs (explosives) had not been brought into the factory and had been used in the mines outside the factory are not eligible for credit. The Hon’ble Apex Court held that even in respect of inputs used in the manufacture of intermediate product, which product is then used for manufacture of a final product (Cement) the credit is eligible. The issue in the case on hand is not on the eligibility of credit on explosives, and not applicable.
In the case of VIKRAM CEMENT VERSUS COMMISSIONER OF CENTRAL EXCISE, INDORE [2006 (1) TMI 130 - SUPREME COURT] the question that was considered was again the eligibility of credit on explosives used in captive mines. The Hon’ble Apex Court held that the credit would be eligible and that the decision in the case of M/s.Jaypee Rewa Cement would apply. It was also held that CENVAT Rules in effect substituted the Modvat Rules. The issue on hand is not eligibility of credit on explosives used in captive mines, and therefore not applicable.
Time Limitation - Penalty - HELD THAT:- The appellant had periodically filed returns and disclosed the credit availed by them. Further, the demand has been raised on the basis of the accounts maintained by the appellant. The appellant has maintained proper delivery challans and documents for the amount of lime stone stock transferred. There is no positive act of suppression established by the department. Further, the department for the period 1/2017 to 6/2017 has set aside the demand interpreting the issue in favour of appellant - there are no grounds for invoking the extended period. The issue on limitation is answered in favour of appellant and against the Revenue - Being stock transfer of limestone to appellant’s own units, and also of interpretational nature, the penalties are to be set aside entirely. The appellant is liable to pay duty along with interest for the normal period.
The impugned order is modified to the extent of upholding the demand and interest for the normal period only. The penalties for normal period is set aside - The appeal is partly allowed.
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2024 (2) TMI 1247
Classification of goods - Ujala Supreme - classifiable under Entry No. No.54 (113) of Schedule-A, Part II-A of H.P. VAT Act, 2005 as ‘synthetic organic colouring matter’ or not? - It was held by High Court that The product ‘Ujala Supreme’ is held liable for VAT under H.P. VAT Act at the rate which is applicable for items against Entry 54(113) of the Part-II of Schedule-A of H.P. VAT Act - HELD THAT:- It is not required to interfere in the matter(s) - SLP dismissed.
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2024 (2) TMI 1246
Maintainability of petition - Jurisdiction - powers of AO to re-assess the escape turnover - Power of suo moto revision.
Maintainability of petition - HELD THAT:- The Supreme Court of India in the case of Godrej Sara Lee Limited Vs. Excise and Taxation Officers-cum-Assessing Authority and Others [2023 (2) TMI 64 - SUPREME COURT] has observed that the power to issue prerogative writs under Article 226 of the Constitution of India is plenary in nature and the Article 226 does not, in terms, impose any limitation or restraint on the exercise of powers to issue writs. Mere existence of an alternative statutory remedy would not oust the jurisdiction of this court to entertain writ petitions and to issue prerogative writs under Article 226 of the Constitution of India, if the case of the petitioner falls within any of the exceptions carved out in the case of Whirlpool Corporation Vs. Registrar of Trade Marks, Mumbai [1998 (10) TMI 510 - SUPREME COURT].
There appears to be no dispute at bar that the power of assessment under Section 14 of the Nagaland (Sales of Petroleum and Petroleum Products, including Motor Spirit and Lubricants) Taxation Act, 1967 has been delegated to the Superintendent of Taxes by the Commissioner of Taxes under Section 45 of the said Act. In the instant case also, in all the writ petitions, the original assessment orders were passed by the Superintendent of Taxes.
The petitioner’s contention, in all three writ petitions, is that the powers to re-assess the escape turnover is primarily vested by Section 14 on the Assessing Officer and same is to be exercised subject to certain limitations and that in exercise of power under Section 20(1) of the Act, the Additional Commissioner does not have the power to re-assess the escape turnover which is outside the purview of the powers of suo-motu revision conferred on the Additional Commissioner. In the present bunch of writ petitions, the petitioner has challenged the very jurisdiction of the respondent authorities to issue impugned show cause notices as well as to pass impugned order.
From a reading of subsection (1) of Section 20, it is clear that the power of suo-moto revision can be exercised by the Commissioner only if, on examination of the records of any proceeding under this Act, he considers that any order passed therein by the person appointed to assist him is “erroneous in so far as it is prejudicial to the interest of revenue” - The Commissioner cannot initiate proceedings with a view to starting fishing and roving inquiries into matters or orders which are already concluded. Such actions will be against the well accepted policy of law, and there must be a point of finality in all legal proceedings. That stale issue should not be re-activated beyond a particular stage, and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must be in other spheres of human activity.
For exercising powers under Section 20 of the Nagaland (Sales of Petroleum and Petroleum Products, including Motor Spirit and Lubricants) Taxation Act, 1967, the Commissioner must come to a conclusion that the orders passed by the person appointed under Section 5 of the Act to assist him is erroneous, however, in the instant case, bare perusal of the orders dated 09.09.2020 passed in connection with the Assessment year 2014-2015, 2012-2013 and 2013-2014, it appears that though it is observed therein that the assessment orders are erroneous so far as it is prejudicial to interest of revenue, however, it is also mentioned therein that it requires further inquiry and verification, which itself shows that the respondent No. 3 had not arrive at a conclusion that the order of assessment passed by the Assessing Officer were erroneous, rather, it appears that the respondent No. 3 had embarked upon reverification and recalculation of the assessment proceedings which were already examined by the assessing authority at the time of completion of the original assessment - The finding that the assessment orders are erroneous and prejudicial to the interest of revenue must be based on the materials available from records called for by the Commissioner and for arriving at the said conclusion, he cannot call for the documents from the assessee himself as it would amount to reexamination and reverification of the returns filed by the assessee.
The respondent No. 3 cannot initiate proceedings with a view to start a fishing and roving inquiry in matters or orders which are already concluded unless there are materials available on records called for by him from which he arrives at a conclusion that the assessment orders are erroneous and prejudicial to the interest of revenue - the power under Section 20 of the Act cannot be exercised by the Commissioner without satisfying the two components mentioned in the Section 20(1) of the Act, the Commissioner does not have the power to reexamine the accounts and determine the turnover himself at a higher figure merely because he is of the opinion that the estimate made by the assessing authority was on the lower side.
This Court is of considered opinion that the respondent No. 3 acted beyond jurisdiction in issuing show cause notices dated 28.04.2020 to the petitioner for the assessment years mentioned therein and also in issuing orders by which the assessment for the years 2012-2013, 2013-2014 and 2014-2015 were revised and turnover escaped assessment and short payment of notice taxes were determined. The respondent No. 4 has also acted beyond jurisdiction in issuing demand notices dated 09.09.2020 on the basis of orders passed by respondent No. 3 - The proceeding for suo-motu revisions under Section 20 (1) of the Act in all three cases pending before the Additional Commissioner of Taxes are hereby quashed.
Petition allowed.
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2024 (2) TMI 1245
Dishonour of Cheque - Proviso (b) to Section 138 of the NI Act not complied - notice of demand dated 08.06.2012 demanded Rs. 2 crores from the accused instead of the cheque amount of Rs. 1 crore - no reason given for excess demand - typographical error or not - HELD THAT:- In view of the Proviso (b) to Section 138 of the NI Act, therefore, the cause of action for filing of the complaint would interalia accrue to the complainant only where the complainant makes a demand for the payment of the “said amount of money” by giving a notice in writing to the drawer of the cheque within 30 days of the receipt of the information by the complainant from the bank regarding the return of the cheque as unpaid.
In the present case, admittedly, the notice of demand dated 08.06.2012 demanded Rs. 2 crores from the accused instead of the cheque amount of Rs. 1 crore. It also did not specify the reason for demanding the amount in excess. Therefore, the notice was not in compliance with Proviso (b) to Section 138 of the NI Act.
The plea of the respondent of there being a typographical error in the notice, even if accepted on facts, cannot be accepted in law to give rise to a cause of action to the respondent to maintain the complaint under Section 138 of the NI Act. The notice being defective, the cause of action for filing of the complaint under Section 138 of the NI Act did not accrue in favour of the respondent.
The plea of the respondent that since the complaint has been pending for long, this Court should not exercise its power under Section 482 of Cr. P.C. to quash the complaint, also cannot be accepted. The petitioner cannot be made to suffer the agony of defending a complaint, which on the face of it is not maintainable.
Petition allowed.
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2024 (2) TMI 1244
Dishonour of Cheque - Rule of evidence - acquittal of accused - Proof of liability - service of demand notice - complainant company has proved their representative C.W. No. 1 was authorised by them to give evidence before the court or not - trial court has committed wrong in discarding the oral and documentary evidence or not - HELD THAT:- It is a rule of evidence that a document has to be proved by producing the original that is primary evidence. It is also true that a document can be proved by way of secondary evidence. There are rules for producing a secondary evidence. It is laid down in Section 65 of the Indian Evidence Act. If the conditions therein are fulfilled the party can rely upon secondary evidence. So can it be said that the complainant was justified in relying upon certified true copy of board resolution instead of producing the original minutes book?
When the complainant has averred in the affidavit about production of the original and prayed for return of document, I think the complainant has fulfilled its responsibilities of proving the same - it was necessary for the accused at least to point out during the cross-examination that their originals are not produced. He need not call upon the complainant’s witness to produce their original, he could have certainly asked the complainant’s witness that the original minutes book is not produced. This was not put during the cross-examination. So that was the best opportunity for the accused to point out that lacuna. In fact, he allowed the complainant to go on with the case on the basis of the line of cross-examination he has adopted.
Ultimately, the trial is conducted on the basis of what case you are putting. When it comes to the accused it is by way of cross-examination. When these questions were not put to complainant at a subsequent stage, you cannot put him to surprise by raising that plea subsequently at the time or arguments. This objection is not of such a kind which goes to the root of the matter. This objection is about mode of proof of the document. By way of his conduct, the Respondent – Accused was not justified in raising this plea at subsequent stage.
Certainly, the findings can be considered as perverse. Because the trial court has unnecessarily observed about non-production of the original minutes book while writing the judgment. The observation is erroneous and unwarranted in the set of facts and circumstances mentioned above. When the witness has produced the original at some point of time, it was not objected throughout the trial, then the learned trial judge was wrong in discarding the true copy of the resolution simply for the reason that original minutes book is not produced. This is hyper-technical view and needs to be corrected.
Thus, it is held that the complainant has proved that the Respondent – Accused has committed an offence punishable under Section 138 of the Negotiable Instruments Act. Hence, judgment of acquittal needs to be set aside and Respondent – Accused needs to be convicted for offence under Section 138 of the Negotiable Instruments Act - Respondent – Accused is sentenced to pay a fine of Rs. 1,00,00,000/-.
Appeal allowed.
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2024 (2) TMI 1243
Customs officials claim to have received illicit gratification - Clearance of restricted goods without following proper procedures - improper finalization of provisional assessment - For clearance of goods belonging to the ‘syndicate’ - cross-fire between importers of ‘mixed hydrocarbon oil’ and customs administration - Imposition of penalty - confiscation - disciplinary proceedings tantamount to double jeopardy - HELD THAT:- we find that the case for confiscation of the imported goods rests upon ‘mixed hydrocarbon oil’ having been ‘high speed oil’ and, it being nobody’s case that substitution had taken place at some stage after arrival in India, the finding of the adjudicating authority that the goods were, indeed, ‘high speed diesel’ would attend upon the goods from the moment of import; consequently, the cause for liability to confiscate was present even upon declaration in the bill of entry that ‘mixed hydrocarbon oil’ had been imported – well before any act, if any, on the bills of entry and assessment thereto by customs officials.
In the light of intent of section 112 of Customs Act, 1962, the respondents could not have been charged with contributing, by act of omission or commission, to confiscation of the impugned goods owing to crystallization of liability on the goods with the declaration. As the finding of the adjudicating authority remains unchallenged except to the extent that review has contended that ‘illicit gratification’ should have sufficed as reason enough to fasten the finding of abetment, we turn to that aspect first.
We have perused the relevant portions of the show cause notice comprising the depositions of Mr Kishan Pote and Mr Manish Thakkar, who did admit to some payment having been made over for each container to different levels in the customs hierarchy, but these are general allegations which do not name the respondent-officials as recipients. The other statements, too, are as deficient in specifics though it does appear that payment, if at all, was not made for finalization of provisional assessment. The appeal of the Principal Commissioner of Customs deputed for the purpose by the review committee is glaringly deficient in any factual submission that links the general averments in the depositions to the respondent-officials. The ground now pleaded does not add to the available records but seeks to widen the charge framed in the notice issued to the respondent-individuals.
We, therefore, are in full accord with the findings of the adjudicating authority that there is no evidence of any ‘illicit gratification’ having been received by the respondent-officials for any decision of theirs. We also hold that the attempt to insinuate padding, by invoking of appellate remedies, to a failed proposal is neither legally condonable nor procedurally validated.
We do believe that the notice issuing authority would not have been callow enough to confuse section 110A of Customs Act, 1962, operating to enable conditions that permit imposition of redemption fine, with section 18 of Customs Act, 1962 that operates to remove goods from reach of availability for confiscation at the stage of provisional assessment. Therefore, we fail to see any role of the respondent-officials in not retaining the goods to enable collection of redemption fine; the law had already operated to alienate physical confiscation. It does not surprise us that the adjudicating authority found even less cause to consider imposition of penalty on the respondent-officials from such flimsy, and superficial, proposition in the show cause notice.
The plea of protection of section 155 of Customs Act, 1962 and ‘double jeopardy’ had been raised by the officials in their response to the notice and it was incumbent on an adjudicating authority to dispose of all pleas. That he did so is not a fault. That he did so in a manner which has aggrieved the committee of review sufficiently to plead for re-determination in remand proceedings is to accord it gravity beyond that evident from a reading of that portion of the impugned order.
The adjudicating authority has not decided on the outcome on such preferential progression and has not concluded therefrom that only this would suffice for dropping of proceedings. As we have premised in relation to plea for statutory protection, the adjudicating authority was obliged to dispose of this plea too. That such disposal may have evinced his sympathy over the initiation of multiple proceedings, or even his conviction that they should not have been, does not alter the lack of any effect on the findings on merit that remain unimpeached for reason of absence of valid challenge in appeal and our own observations supra on the deficiencies in the notice issued to respondent-officials. That the impugned order referred to, and held forth, on the plea of ‘double jeopardy’ claimed by the respondent-officials without acting upon it is not the deficiency, of not being ‘legal and proper’, contemplated in section 129A of Customs Act, 1962 warranting remedial action.
Thus , we find no reason to accede to the prayer for the notice to be re-determined in remand proceedings. We also do not find any reasons in the grounds of appeal to modify the order of the adjudicating authority. Appeals are dismissed.
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2024 (2) TMI 1242
Validity of assessment order - non GST supply - alleged mismatch between the GSTR-3B and GSTR-1 returns - indirect income - rent for commercial purposes.
Alleged mismatch between GSTR-3B and GSTR-1 returns - HELD THAT:- It is evident that the assessing officer accepted the explanation of the petitioner that there was no mismatch. The finding recorded thereafter that there was short payment of tax under IGST cannot be countenanced on account of the fact that this issue was not raised in the show cause notice pursuant to which the assessment order was issued. As regards this head of liability, it becomes necessary for the assessing officer to issue a fresh show cause notice.
Non GST supply - HELD THAT:- The assessing officer recorded that relevant documentary evidence such as invoices, ledger copy, agreement and debit notes were not produced. It is further recorded therein that the taxpayer had wrongly reported the claim under exempted category instead of non GST supplies. Tax liability with interest thereon and penalty should not have been imposed in these circumstances and, if necessary, the petitioner should have been called upon to produce additional documents to establish that it is a non GST supply.
Indirect income - HELD THAT:- The last relevant discrepancy relates to payment of rent for commercial purpose. The impugned order records the reply of the taxpayer that tax liability on rental payment to unregistered persons was duly discharged. In light of this submission, the assessing officer should have called for relevant documents before concluding that the petitioner had not discharged tax liability in such regard.
Rent for commercial purposes - HELD THAT:- The petitioner is permitted to submit any additional documents within a maximum period of two weeks from the date of receipt of a copy of this order. Upon receipt thereof, the assessing officer is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh assessment order within a maximum period of two months thereafter.
The impugned order is quashed and the matter is remanded for re-consideration.
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2024 (2) TMI 1241
Addition u/s 69A r.w.s. 115BBE - Assessment of trust - ‘unexplained money' - Income consists of voluntary contributions from devotees and followers - Assessee admittedly is a charitable organization under Section 12A and runs a temple and community hall at Bangur Nagar, Goregaon, Mumbai -- ITAT accepted the plea of Petitioner that for assessment year in question Petitioner’s total income should be computed as ‘Nil’ as against amount assessed by the AO
HELD THAT:- ITAT has also correctly recorded that Section 69A of the Act was not applicable to the facts and circumstances of this case. So also, the provisions of Section 115BBC of the Act because Sub-section (1) of Section 115BBC will not apply to donations like that has been received by Petitioner in donation boxes from numerous devotees, who have offered the offerings on account of respect, esteem, regard, reverence and their prayer for their deity/siddha peeth.
Therefore, the only task that was left for the AO, was to give the refund of the taxes paid. This is because the ITAT has held that there was no income chargeable to tax. We should also observe that it has not been even argued before the ITAT that Section 44AB of the Act was applicable or that the Form 10B was filed after the due date because we do not find any such submissions recorded in the order of ITAT. Notwithstanding this, the AO once again called upon Petitioner to furnish complete set of Form 10B and also to justify why the claim of exemption under Section 11 of the Act be allowed.
Strangely, the AO, one Mr. Meet Kumar, who has also filed the affidavit-in-reply, has stressed upon the time limit specified under Section 44AB of the Act ignoring the fact that it was not even argued before the ITAT and it had already been accepted in the original assessment order dated 26th December 2019 that Petitioner was entitled to deductions/ exemptions under Section 11 of the Act. We find it rather unacceptable that the officer has tried to take shelter under a paragraph of the order of ITAT where the Tribunal has only narrated what was the order passed by the CIT(A). Though we would have wanted to make observations against the said officer, we exercised restraint in view of the request made by Department
ITAT having accepted Petitioner’s plea that for the assessment year in question, Petitioner’s total income should be computed as ‘Nil’, the only task before the AO was to issue refund to Petitioner of all taxes paid or recovered from Petitioner for AY 2017-2018. Since before the Hon’ble ITAT there was no controversy as regards the date of filing of return by Petitioner or Form 10B, the AO cannot, in the garb of giving effect to the order of ITAT, initiate a new controversy.
The order giving effect dated 30th November 2023 (impugned in the petition) has to be quashed and set aside. - Decided in favor of assessee.
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2024 (2) TMI 1240
“Principal Officer” of the company for the purposes of initiating prosecution u/s 276B - default by the company to deposit TDS within the stipulated statutory period - HELD THAT:- As per Section 2(35) of IT Act clause (a), insofar as a company is concerned provides that the Secretary, Treasurer, Manager, or Agent thereof would be liable to be treated as the “Principal Officer”. Clause (b), however, speaks of a person connected with the management or administration of the company being liable to be treated as the “Principal Officer”.
In our considered opinion merely because a person holds an office in a corporate entity would not be sufficient to place that individual in clause (b). The intention of the respondent to treat an individual as the “Principal Officer” must be based on it being satisfied that the person was connected with the management or administration of the company.
While the respondents have referred to additional material in the counter affidavit and which clearly does not find notice or mention in the impugned orders in support of their contention that the petitioner was correctly identified as the “Principal Officer”, we find that those averments and assertions clearly travel far beyond what was alleged and asserted in the notices issued originally.
Thus for the purposes of an individual being tried, it is mandatory for the respondents to establish that the person was in fact connected with the management and administration of the company.
Thus we find ourselves unable to sustain the view as expressed by the respondents in the impugned order - respondents would have to examine the issue afresh bearing in mind the response which had been submitted by the petitioner and upon due inquiry being made with respect to whether the petitioner could be said to be a person connected with the management or administration of the company in question. The answer to the question which stands posited in the backdrop of Section 2(35) would have to be examined afresh and in light of the observations appearing hereinabove.
Allow the instant with petition and set aside the impugned order.
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2024 (2) TMI 1239
Settlement application u/s 245C - Disclosure of full and true particulars of the income - Apportioning the undisclosed income in the hands of the petitioner and the Company - Commission, while rejecting the application of the petitioner, has held that the petitioner is the Director and Promotor/ Proprietor and Partner in multiple companies - During the course of search and seizure u/s 132, in the case of the petitioner/group, incriminating material evidencing unaccounted sales by the under-invoicing of sales receipts and collecting a part in cash was found -
Commission was of the view that the petitioner had not adduced any reason or basis for apportioning the undisclosed income in the hands of the petitioner and the Company M/s Hailstone Innovations Private Limited during the course of the hearing, and no explanation came forward to explain the difference between the unaccounted sales calculated by the Principal Commissioner of Income Tax on the basis of the seized material and the unaccounted sale computed by the petitioner - Commission concluded that the petitioner had not come before the Board with clean hands and had not offered full and true particulars of his income.
HELD THAT:- Section 245C(1) provides disclosure of full and true particulars of the income and the manner in which that income had been derived and apportioned in order to get the settlement. As the conditions prescribed in the provisions of Section 245C(1) have not been fulfilled in the case, the application was rejected by the impugned order.
As petitioner submits that the petitioner had filed an objection to the report, and it was not considered by the Settlement Commission. The detailed reply has been placed on record. This Court has gone through the reply, but this Court has been unable to discern the basis for apportionment of unaccounted sales, unaccounted expenditures and unaccounted income between the petitioner and the Company.
Thus the petitioner has not approached the Settlement Commission, with his application under Section 245-C, with clean hands and has failed to disclose true and correct facts.
The provisions of Chapter XIX-A of the Income Tax Act 1961 are elaborate and provide a detailed mechanism for filing the application for settlement and its disclosure. The assessee is required to file an application under Section 245-C for settlement of disputes by the Income Tax Settlement Commission.
Every order of settlement passed under sub-section (4) of section 245-D is conclusive as to the matters stated therein and no matter covered by such order shall, save as otherwise provided in Chapter XIX-A, be re-opened in any proceedings under the Act or under any other law for the time being in force. Section 245-L declares that any proceedings under Chapter XIX-A before the Settlement Commission shall be deemed to be a judicial proceeding within the meaning of Sections 193 and 228 for the purposes of Section 196 of the Indian Penal Code. Thus, Section 245 provides a complete code and prescribes finality in the orders passed by the Settlement Commission.
As incumbent upon the assessee to approach the Settlement Commission with true and full disclosure of income and its sources. PCIT, in his report, has held that the petitioner did not have any basis for apportionment of expenditure and undisclosed income between him and the Company. Despite the opportunity having been granted to the petitioner during the hearing, the petitioner did not explain the basis for apportionment of unaccounted sales, expenditure and income between the petitioner and the Company.
Commission has taken a correct view that the petitioner failed to disclose true and correct facts before the Commission in his application and did not approach the Commission with clean hands. No grounds to interfere with the reasoned order of the Commission.
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2024 (2) TMI 1238
TDS u/s 195 - payment for time charter higher charges are Royalty u/s 9(1)(vi) - Non deduction of TDS - CIT(A) held that payments made by the assessee qualified as “royalty” within the meaning of Section 9(1)(vi) and the assessee was under an obligation to deduct tax at source on such royalty payments - HELD THAT:- The criterion for determining “Royalty” under the said provision is that the resident should have control and have physical possession over the equipment. The equipment should be under the exclusive possession and control of the resident, in exclusion to others. In the instant case, the assessee has full control over the dredger and the staff and operation of the equipment.
From the facts produced we are of the considered view that the right to use the dredger has been transferred to the assessee for the period of lease. The Captain of the ship although appointed by the owners shall work under the orders and directions of the assessee. Once the hired dredger is placed at the disposal of the assessee, the payment to the lessor does not depend on the dredging activity undertaken. Even if the dredger does not work for a single hour, the payment to the lessor would remain constant. Further, the dredger has been given only to the assessee for his exclusive use. Accordingly, the assessee is in effective control of the equipment.
As in the case of West Asia Maritime Ltd. [2006 (5) TMI 152 - ITAT MADRAS-B] ITAT held that ship being an “equipment” under Article 12, hire charges for user of ship partook the character of royalty for use of equipment under provisions of Section 9(1)(vi) and, hence, exigible to tax in India.
We are unable to accept the argument of the assessee that the assessee company merely availed the facility of dredger without exercising any possessory rights over it. The assessee has placed reliance on various cases, however, the same are distinguishable on facts and the aforesaid cases as cited read with the plain language of the Statute are clearly applicable to the assessee facts.
Thus the payments made by the assessee to M/s. Miller Dredging Company Inc. qualify as “Royalty” for use of “equipments” under Section 9(1)(vi) of the Act and the assessee was under an obligation to deduct tax at source as royalty payments at the time of making payments to the non-resident payee.
Validity of Order passed u/s 201(1) and Section 201(1A) as barred by limitation - HELD THAT:- In the instant case, the assessee had chosen not to furnish the correct details of the recipient entity (regarding the residential status of the non-resident recipient) and had also not approached the Tax Officer for determination of the correct amount of TDS u/s 195 / 197 of the Act and the assessee had taken the suo moto decision not to withhold taxes on continuous payments being made to the non-resident recipient entity M/s. Miller Dredging Company Inc., being a resident of British Virgin Islands, with whom India does not have a Tax Treaty, without deduction of tax at source for a period spanning over 10 years.
We observe that notices under Section 201(1) and 201(1A) of the Act were issued by ADIT on the assessee, following survey proceedings in the case of the assessee. Accordingly, looking into the facts of the instant case and the conduct of the assessee as pointed out by the Ld. CIT(A) for not deducting tax at source on such payments, we are of the considered view that Ld. CIT(A) has correctly held that looking into the instant facts, the aforesaid proceedings are not barred by limitation.
Non-deduction of taxes at source were attributable to a bona fide belief on part of the assessee - There is no reason as to why and on what basis the assessee could have formed a bona fide belief that it was not liable to deduct tax at source on the aforesaid payments. This is further coupled with the fact that the assessee was governed by the provisions of the Income Tax Act since the recipient was a tax resident of Virgin Island, with which India did not have a tax treaty. Accordingly, the argument of the assessee that it was under a bona fide belief for non-deduction of tax at source is hereby rejected.
Assessee appeal dismised.
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2024 (2) TMI 1237
Revision u/s 263 against deceased assessee - HELD THAT:- Though the notice was served upon the assessee, since deceased, the order of assessment u/s 143(3) r.w.s. 263 of the Act was issued in the name of the deceased, knowing fully well that the assessee already died on 07.06.2017 fact of which was made known to the Ld. AO by and under letter enclosing death certificate of the assessee. The same is also annexed to the paper book filed before us.
When the assessee sought for adjournment on 29.09.2017 requesting for some time to represent the matter before the Ld. AO, the Ld. AO should have given further opportunity to bring on record the legal heir of the assessee and to proceed with the matter strictly in accordance with law. The duty incumbent upon the Ld. AO is evidently failed to have been performed in its proper perspective.
As the assessment order issued u/s 263 is found to have been issued in the name of the deceased assessee, it is non-est in the eye of law and, thus, liable to be quashed. See KRISHNAAWTAR KABRA L/H OF JAGANNATH RAMPAL KABRA [2022 (5) TMI 744 - GUJARAT HIGH COURT] - Decided in favour of assessee.
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2024 (2) TMI 1236
Depreciation on car purchased in the name of the Director - depreciation @15% claim has been disallowed as asset could not be said to be of the company - However, AO allowed deductions for interest on car loan and insurance expenses. - HELD THAT:- As the purchase of a car was made by the appellant company which is also reflected in the books of account of the appellant company and therefore it can be well said that the car is commercially used for the purpose of business of the company and the depreciation thereon cannot be denied; more so, the interest on car loan and car insurance was allowed by the department.
Thus, we find that the appellant’s case is squarely covered in the case of PCIT vs. Asian Mills (P.) Ltd. [2021 (12) TMI 365 - GUJARAT HIGH COURT] following the judgment passed in the case of Mysore Minerals Ltd [1999 (9) TMI 1 - SUPREME COURT] we allow depreciation in accordance with law. Appeal of assessee is allowed.
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2024 (2) TMI 1235
Enhanced loss not claimed through revised return of income - Increase in computation of capital loss, claimed at assessment stage only by way of filing a letter instead of revised return of income - HELD THAT:- Hon’ble Jurisdictional High Court in the case of Abhinitha Foundation Pvt. Ltd.,[2017 (6) TMI 604 - MADRAS HIGH COURT] has finally considered and held that, what emerges from a perusal of the ratio of the judgments cited above, in particular, the judgments rendered by the Supreme Court in the case of Goetze India Ltd. [2006 (3) TMI 75 - SUPREME COURT], and National Thermal Power Co. Ltd.'s [1996 (12) TMI 7 - SUPREME COURT] case, and those, rendered in Ramco Cements Ltd. [2008 (12) TMI 413 - PUNJAB AND HARYANA HIGH COURT] and CIT vs Malind Laboratories P. Ltd. [2014 (12) TMI 975 - MADRAS HIGH COURT] as also the judgments of Sam Global Securities Ltd.'s case [2013 (9) TMI 876 - DELHI HIGH COURT] and Jai Parabolic Springs Ltd.'s case [2008 (4) TMI 3 - DELHI HIGH COURT] that, even if, the claim made by the assessee company does not form part of the original return or even the revised return, it could still be considered, if, the relevant material was available on record, either by the appellate authorities, (which includes both the CIT (A) and the Tribunal) by themselves, or on remand, by the AO. In the instant case, the Tribunal, on perusal of the record, found that the relevant material qua the claim made by the assessee company u/s 80 IB (10) of the Act was placed on record by the assessee company during the assessment proceedings and therefore, it deemed it fit to direct its re-examination by the Assessing Officer.
We uphold the order of CIT(A) and dismiss this appeal of Revenue.
Validity of Reopening of assessment - notice beyond period of four years - CIT(A) quashing the reassessment proceedings as there was no omission on the part of the assessee to disclose any material fact necessary relating to the assessment of this assessment year during the original assessment proceedings completed u/s. 143(3) of the Act and assessee’s case was reopened after expiry of 4 years - HELD THAT:- AO has recorded the reason from verification of balance sheet and the profit declared from the profit & loss account, which was subject matter of original assessment proceedings u/s. 143(3) of the Act. From the reason, it is not coming out that what is the failure of the assessee to disclose fully and truly the material facts relating to this assessment year for assessment of the assessee’s income, which has escaped assessment.
From the reasons recorded in the present case, we could not comprehend what is the failure of the assessee, as there is no mention by the AO in the reasons recorded of any failure of the assessee to disclose fully and truly all material facts for framing of assessment for the relevant assessment year of escaped income. Once this is the position, we are of the view that the assessee’s case is fully covered by the proviso to section 147 of the Act and the decision of Hon’ble Supreme Court in the case of Foarmer France [2003 (1) TMI 101 - SC ORDER] squarely applies - Decided against revenue.
Addition of business income being advance and deposits written off - CIT(A) deleted addition accepting additional evidences - HELD THAT:- Firstly, this information is available before the AO there cannot be any violation of Rule 46A of the Rules. Secondly, it is a fact that this Rs. 2 crores received on account of capital receipt and it cannot be treated as business asset because the amount was received in connection with sale of hotel assets but inadvertently declared by assessee as business income. Since, such amount represents sale consideration against sale of capital asset, it should be adjusted against capital work in progress and it cannot be held as business income. The CIT(A) has rightly deleted the addition. Hence, we confirm the order of CIT(A) and accordingly, the appeal of Revenue is dismissed.
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2024 (2) TMI 1234
Addition of income declared by assessee under Voluntary Disclosure of Income Scheme, 1997 (VDIS, 1997’) - Relevant year of assessment - HELD THAT:- The fact that VDIS-97 of the assessee was not considered due to the fact that payment was made beyond the time limit prescribed under the scheme. Question in addition of the investment would arise the year of liability is to be determined included investments/purchases/ expenditure for the financial year 1997-98 relevant to assessment year 1998-99 for invoking the provisions of Section 68 of the Act.
We noted none of the authorities below have brought out anywhere in the orders that the investments are made in financial year 1997-98 relevant to assessment year 1998-99, whereas assessee has tried to establish the fact that the investments related to earlier assessment years i.e from 1991-92 to 1997-98.
We do not agree with the findings of the lower authorities that investments/ purchases/ expenditure were made in the financial year 1997-98 relevant to assessment year 1998-99 except amount declared under VDIS 97 on 26.12.1997. Assessee already tried to establish the fact that these investments were pertaining to previous assessments years 1991-92 to 1997-98. Hence, in our view addition made in the assessment year 1998- 1999 cannot be sustained and accordingly, we delete the addition. This issue of the assessee is allowed.
Assessment of income from house property - ALV determination - CIT(A) has given directions to the assessee as well as the AO to adopt annual letting value on the basis of Municipal valuation adopted by Chennai Corporation for rising the rental value - HELD THAT:- We find no infirmity in the findings of the ld. CIT(A) and further direct the AO to adopt the municipal value adopted by Chennai Corporation for assessing rental value. This issue raised by the assessee is dismissed as per above direction.
Charging of interest u/s. 234A, 234B and 234C - We find no infirmity in the order of the ld. CIT(A) and direct the AO to charge interest as per the provisions of the Act. This issue raised by the assessee stands dismissed.
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2024 (2) TMI 1233
Accrual of income in India - royalty income - taxability of income in India or not? - AO treated the supply of software as royalty for use of Industrial, commercial, scientific experience - assessee is a tax resident of China and does not have a PE in India - whether the impugned receipts in the hands of the assessee are in the nature of royalty and hence subject to tax in India or business income not taxable in India in the absence of a PE of the assessee in India?
HELD THAT:- MG India merely purchases the licensed software (Software) which are embedded in the head unit and fitted into cars for end use by the buyer of the car. In such cases, EULA is signed with the end user to restrict access to rights in the license. The end user signs EULA for use of the licensed software and has no right to copy (except as permitted by the licensed and the Usages Rules), reverse engineer, disassembled, attempt to derive the source code of, modify or create derivative works of the licensed software, any updates or any part thereof (as accepted and permitted by EULA). From the relevant clause of EULA extracted above, it is amply clear that the end user has limited right to use the application quite akin to use of licensed software. MG India merely purchases the Software and acts as a reseller and it is for this reason that it is not a party to EULA. This would not in our view characterize the impugned receipts from supply of Software as royalty income.
The payments received by the assessee is for the supply of Software which is a standardized / off the shelf software and not for the use of the copyright or imparting information concerning industrial, commercial or scientific experience and thus would not fall within the scope of Article 12(3) of the India-China DTAA to be taxed as royalty income. The impugned receipts would thus partake the character of business income in the hands of the assessee which is not taxable in India in the absence of PE of the assessee in India. Accordingly, ground decided in favour of the assessee.
Levy of Interest u/s 234A is levied only in cases where the assessee does not furnish its return of income or furnishes it after the due date prescribed under section 139 of the Act. The facts on record reveal that the assessee filed its return of income within the prescribed (extended) due date applicable to the relevant AY under consideration. Hence we deem it fit and proper to restore this issue to the file of the Ld. AO for verification as to the filing of date of return viz-a-viz the due date of filing of return for the AY 2020-21 in the light of the CBDT circular ( No. 93/2020/F. No. 370142/35/2020-TPL) and decide it afresh in accordance with law.
Levy of Interest u/s 234B - as submitted proviso inserted in section 209(1)(d) of the Act by the Finance Act, 2012 w.e.f. 01.04.2012 would apply only in a scenario where person responsible for deducting tax has paid or credited such income without deduction of tax - HELD THAT:- As relying on Amadeus case[2023 (10) TMI 1138 - ITAT DELHI] levy of interest under section 234B of the Act is not called for. Accordingly, interest levied under section 234B of the Act is hereby deleted.
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2024 (2) TMI 1232
Revision u/s 263 - Taxability of unit linked insurance redemption units - AO had re-opened the assessment on the basis that the assessee had claimed accretion amount on surrender of policy - HELD THAT:- Law is well settled that for invoking the provision of section 263, twin conditions are required to be satisfied i.e. that order should be erroneous and prejudicial to the interest of the Revenue. If AO adopts one of the plausible views, in that event, no prejudice would be caused.
In the present case, the assessee redeemed units of Bajaj Alliance and claimed it to be capital gain. A specific provision has been inserted in respect of unit linked insurance in section 45 of the Act, making it amenable to capital gain tax. Therefore, looking to the facts of the present case, no prejudice is caused to Revenue. We therefore, set aside the impugned order and restore the findings of AO. The grounds raised by the assessee in this appeal are allowed.
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