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Showing 401 to 420 of 1484 Records
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2025 (3) TMI 1084
Late deposit of employees' contribution to PF - HELD THAT:- We observed that the issue under consideration is against the assessee based on the decision of Checkmate Services Pvt. Ltd. [2022 (10) TMI 617 - SUPREME COURT]. Accordingly, first ground of appeal raised by the Department is allowed.
Disallowance of interest on unneeded loans - HELD THAT:- Just because assessee has not earned any income during the year, the AO proceeded to disallow the proportionate interest relating to the above said investment. After careful consideration, we are of the view that assessee has invested for exploration of Potash Project in Ethiopia. The assessee has invested 32.43% stake which in turn has invested 12.5 million USD in M/s. Ethiopotash B.V. company.
The controlling of the raw material supply is key to any organization and assessee has invested to control the supply of raw material from Ethiopia. Therefore, the investment made by the assessee is directly linked to the business of the assessee. Therefore, we do not see any reason to disturb the findings of the ld. CIT (A) and accordingly, ground no.2 raised by the Revenue is dismissed.
Rejection of books of account u/s 145(3) - AO relying on the variation in the GP recorded by the assessee in the past three years and in remand proceedings, the AO has accepted the various details submitted by the assessee and has not made any negative observations on the details furnished by the assessee - HELD THAT:-CIT (A) has elaborately discussed that AO has not made preliminary verification of the information submitted by the assessee and rejected the books of account and proceeded to estimate the income. After careful consideration of the findings of the CIT (A) and also remand proceedings submitted by the AO, we are inclined to agree with the findings of the ld. CIT (A). Accordingly, ground no.3 raised by the Revenue is dismissed.
Disallowance of depreciation - Since the assessee has carried out the business only for seven months, accordingly he disallowed the depreciation for the proportionate period in which the plant was not functional and treated the claim of the depreciation as excess claim - HELD THAT:- We observed that the assessee has claimed depreciation for the whole year based on the concept of wear and tear and in the similar situation, assessee has given lay off for the plant in the AY 2000-01 and the coordinate Bench has decided the issue in favour of the assessee. Respectfully following the above decision, we are inclined to allow the claim of the assessee in the year under consideration also. Accordingly, ground no.4 raised by the Revenue is dismissed.
Addition u/s 68 - bogus share application money - HELD THAT:- As assessee represented the case of the sister concern and filed the relevant information as called for. CIT (A) has appreciated the fact that both these companies are sister concerns of assessee company wherein common promoters were promoted these companies and the summons issued by the AO were complied through authorized representative.
CIT (A) appreciated the relevant documents submitted by the assessee during the assessment proceedings as well as during appellate proceedings and has found that the documents submitted by the assessee are proper and accordingly gave relief to the assessee. Considering the facts on record, we are inclined to dismiss the ground raised by the Revenue and we are inclined to agree with the findings of the ld. CIT (A). Accordingly, ground no.5 raised by the Revenue is dismissed.
Addition on account of unsecured loan - HELD THAT:- We observed that the assessee has submitted the details of taking unsecured loan - As submitted before the ld. CIT (A) that M/s. Maneesha Finlease Limited is a sister concern of the assessee company and being a sister concern, assessee has already proved identity and established creditworthiness. With regard to genuineness of the transaction, assessee has submitted relevant confirmation and actual transactions of receiving unsecured loan. We observed that AO has added the outstanding balance at the end of the year without properly verifying actual transactions during the year. - Ld. CIT (A) has appreciated the complete facts on record and found that the genuineness of the transaction was already proved by the assessee. - Ground no.6 raised by the Revenue dismissed.
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2025 (3) TMI 1083
Disallowance of u/s. 40(a)(ia) - As argued as per the provisions of Section 201(1) of the Act, when the recipient of income has paid tax on such income, the assessee cannot be treated as an assessee in default - As submitted that the assessee is willing to furnish a Chartered Accountant’s certificate in Form 26A to confirm that the interest income has been offered to tax by the recipient - HELD THAT:- In view of the above, the matter is restored to the AO for verification of Form 26A as per the provisions of Section 201(1) of the Act. If the assessee furnishes a valid Form 26A demonstrating that M/s H J Associates has paid tax on the interest received, the AO shall delete the disallowance made u/s 40(a)(ia) of the Act. Accordingly, this ground is allowed for statistical purposes.
Disallowance of interest Expenses - assessee failed to deduct TDS on these payments, as required u/s 194A - AR contended that all the lenders are agriculturalist having agricultural income and their other income is below taxable limit - DR contended that the interest is not paid and only credited to the account of parties from whom the amounts have been borrowed - HELD THAT:- As in the interest of justice, we deem it appropriate to restore the matter to the file of the AO for the limited purpose of verifying the validity and correctness of Form 26A and to examine whether the recipients have duly filed their returns of income, disclosing the interest income and paying tax thereon as per the provisions of Section 201(1) of the Act.
Addition u/s 43B - assessee had an outstanding VAT liability at the end of the financial year - AO held that the unpaid amount was outstanding as of the balance sheet date and was not cleared before the return filing due date, the disallowance u/s 43B of the Act was considered justified - HELD THAT:- Considering the submissions made and the decision of SDCE Projects Pvt. Ltd [2019 (10) TMI 309 - ITAT AHMEDABAD] we deem it appropriate to restore this issue to the file of the AO for verification. The AO is directed to examine whether the VAT liability was indeed reversed in the subsequent year and whether it was ever claimed as a deduction in the profit and loss account. AO shall verify to which account the VAT liability has been reversed and whether it has impacted the taxable income of the assessee. If it is found that the liability was merely carried forward as a current liability without being claimed as an expense, the disallowance under Section 43B of the Act shall be deleted.
Addition of unsecured loan u/s 68 - AO observed that the assessee failed to establish the creditworthiness of the lenders and the genuineness of following loan transactions - HELD THAT:- Considering the submissions and the judicial pronouncement relied upon by the AR, we deem it appropriate to restore the matter to the file of the Assessing Officer for fresh verification. The AO is directed to verify whether the loans in question were repaid in part or full and to reconsider the addition made under Section 68 of the Act, after examining the genuineness of transactions and the creditworthiness of the lenders in light of the ratio laid down in the case of CIT Vs. Apex Therm Packaging (P.) Ltd [2013 (12) TMI 1541 - GUJARAT HIGH COURT] Accordingly, this ground is allowed for statistical purposes.
Addition u/s 69 - treating the opening cash balance as unexplained investment, citing the assessee’s failure to substantiate the source of funds - HELD THAT:- We find that the assessee has relied on the certified personal balance sheet as on 31-03-2014, which reflects the opening cash balance. The assessee has contended that this balance was duly carried forward from the preceding year and does not represent any fresh credit during the year under consideration.
We deem it appropriate to restore the matter to the file of the AO for fresh verification. The AO is directed to examine the certified balance sheet and other supporting documents, including the cash book, to verify the genuineness of the opening cash balance. If it is found that the cash balance was genuinely carried forward from earlier years and is duly reflected in the books of accounts, the addition under Section 69 of the Act shall be deleted. This ground is allowed for statistical purposes.
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2025 (3) TMI 1082
Addition u/s 14A r.w.rule 8D - As argued no expenditure was incurred by the appellant to earning exempt income - HELD THAT:-Section 14A is applicable if the assessee has income which is not includible in its total income and further assessee has incurred certain expenditure to earn such income.
In the instant case, the assessee has not incurred any expenditure which could be related to earning exempt income though it had exempt income. The language of section 14A is not at all ambiguous and in fact very clear and by virtue of the same, only expenditure actually incurred in relation to income not includible in total income shall be disallowed.
In no way, it could be interpreted that it seeks to disallow expenses on assumption basis. Therefore, disallowance u/s 14A can be made only when assessee has actually incurred any expenses in relation to such exempt income. The Hon’ble Supreme court in the case of Maxopp Investment [2018 (3) TMI 805 - SUPREME COURT] also expressed this view.
Looking to the fact that assessee has not claimed any expenditure which was incurred in relation to earn exempt income and further before invoking the provision of section 14A along with Rule 8D, the AO has failed to record satisfaction with respect to expenses claimed as related to earn exempt income, thus in our considered opinion the addition made made by invoking the provisions of section 14A r.w. rule 8D of the IT Rules, 1962 is not sustainable. Appeal of the assessee is allowed.
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2025 (3) TMI 1081
Additions of 'Advance received from Customers' - HELD THAT:- The issues are covered by order in [2024 (10) TMI 32 - ITAT DELHI] for A.Y. 2009-10 in assessee’s own case as relying on Taparia Tools Ltd. [2015 (3) TMI 853 - SUPREME COURT] assessee would be entitled to deduction of the entire expenditure in the year in which the amount was actually paid. Decided in favour of assessee.
Disallowance of Security Deposit written off debited under the accounting head advances written off - HELD THAT:- As in view smallness of the amount vis-à-vis income of the assessee, the assessee claim for disallowance to be allowed as business loss as it pertains to revenue field on account of security deposit for participating in tenders.
TP adjustments in respect of international transactions of 'commission received' with its Associated Enterprise - comparable selection - HELD THAT:- Once the companies selected were dissimilar comparable are excluded then the operating profit/sales margin works out to 13.98. Moreover in subsequent years the TPO has accepted commission as Arm’s Length and has not made any addition vide order dated 29.01.2015. Accordingly, Ground of assessee’s appeal is allowed.
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2025 (3) TMI 1080
TP Adjustment - corporate guarantee given by the appellant on behalf of its Associated Enterprises falls within the definition of international transactions u/s 92B - HELD THAT:- We find that the issue is a recurring one in the assessee own case and has been decided by the co-ordinate Bench in assessee’s own case [2023 (2) TMI 523 - ITAT KOLKATA], wherein it has been held that the corporate guarantee transactions are international transactions and accordingly, ground no. 2 raised by the assessee is dismissed.
As relying on [2023 (2) TMI 523 - ITAT KOLKATA]in assessee’s own case, wherein the Arm’s Length Price corporate guarantee fee has been restricted to 0.5%.
Addition u/s 14A r.w.s Rule 8D of the Rules - assessee has suo moto disallowed as expenses u/s 14A relating to earning of exempt income - HELD THAT:- CIT (A) deleted the addition by following the decision [2023 (2) TMI 523 - ITAT KOLKATA] as most of the investments held by the assessee are brought forward from preceding year and also the major portion of the investment is in the sister/group concerns of the assessee and thus, reverse the finding of ld. CIT(A) and delete the disallowance made by ld. AO and accept the suo moto disallowance offered by the assessee.
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2025 (3) TMI 1079
Disallowance of depreciation on goodwill acquired/created as a result of amalgamation - HELD THAT:- In the present cases, there is no dispute on the valuation of acquired/created goodwill pursuant to the scheme of amalgamation in the books of account of the appellant assessee as neither the AO nor the CIT(A) has ever questioned the valuation of the said goodwill though the Ld. CIT(A) has held that the value of goodwill in the hands of the appellant company should be NIL as there was no value assigned to the goodwill in the books of account of amalgamating company; i.e. North Star Apartment Pvt. Ltd. Admittedly, the amalgamation has taken place in pursuant of the order dated 07.03.2015 of the Hon’ble Punjab and Haryana High Court.
We are of the considered view that this case is squarely covered by the decision of Eltek SGS Pvt. Ltd.[2023 (8) TMI 681 - DELHI HIGH COURT]. Thus, hold that the claim of depreciation on acquired/created goodwill pursuant to the scheme of amalgamation in AY 2015- 16 and 2016-17 respectively is justified. Decided in favour of assessee.
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2025 (3) TMI 1078
Assessment of trust - Disallowing the donation and other expenses - AO disallowed the donation made by the assessee to another trust on the ground that the recipient trust was not registered u/s 12A - HELD THAT:- The provision of section 11(1)(a) allows a charitable trust to claim an exemption if at least 85% of its income is applied for charitable or religious purposes. Benefit of application is available only if the recipient entity is a registered charitable trust under Section 12A, as clarified in Explanation 2 to section 11(1).
Moreover, the assessee failed to provide any documentary evidence proving that the amounts were spent for charitable purposes. The burden of proof lies with the assessee to demonstrate that the expenditure qualifies for exemption u/s 11 of the Act. In the absence of such proof, the AO was justified in making the disallowance. Accordingly, we concur with the decision of the lower authorities. The assessee has neither substantiated that the payments were made for charitable purposes nor demonstrated that the recipient entity fulfilled the requirements of section 12A of the Act. Accordingly, the ground of appeal of the assessee is dismissed.
Addition by treating certain expenses as not allowable as an application of income - whether the disputed expenditures qualify as an ‘application of income’ for the purposes of section 11? - Role of the AO regarding the determination of income of a trust is limited to the provision of section 11 of the Act. In the present case, the authority below has not doubted regarding payment of expenses but only had a doubt regarding the expenses incurred in connection to charitable purposes or not.
In this regard, we referred the judgment of CIT Vs. Trustee of H.E.H. the Nizam's Supplemental Religious Endowment Trust [1978 (2) TMI 7 - ANDHRA PRADESH HIGH COURT] where it was held that expenses which are incidental to carrying out the charitable purpose cannot be excluded from the exemption.
As in view of above it clear that any incidental expenses incurred in carrying out the activity of charitable purpose, it should be excluded from the income of a trust. Now we need to determine that such expenses are of incidental nature of the trust or not.
Interest on TDS - Expenses on which TDS was deducted has not been doubted by the authorities therefore it is clear that such expenses incurred in connection of charitable purpose but the delay in compliance the assessee paid an extra cost. Thus, it does not mean that such excess cost is not allowable.
Penalty - ESI and Professional Tax - Penalties levied for delayed statutory payments should not be treated as personal in nature but as incidental to business operations. Since these payments relate to employer obligations, they are incidental to the charitable objectives of the assessee.
Gifts - It is well settled that expenses incurred for social and charitable activities aligned with the trust’s objects and therefore the same is qualified as an application of income. In CIT Vs. Surat Art Silk Cloth Manufacturers Association [1979 (11) TMI 1 - SUPREME COURT] it was held that any expenditure contributing towards achieving the trust’s objectives must be considered an application of income.
DKA Statue Expenses - The expenditure on the statue pertains to promoting the cultural and educational objectives of the trust.
Input Tax Credit Write-off - The assessee had to write off unutilized Input Tax Credit (ITC), which is a recognized accounting expense. As decided in CIT Vs. Munjal Showa Ltd. [2008 (2) TMI 19 - SUPREME COURT] has held that any write-off required due to legal and operational reasons must be considered a valid deduction.
Accumulation of income u/s 11(2) - assessee claimed having made an investment under the provisions of section 11(2) - whether the assessee has made the investment in the manner provided under the provisions of section 11(5) of the Act to claim the benefit of the application of income as provided under section 11(2)? - HELD THAT:- We are of the opinion that the amount lying in the bank account of the assessee can be treated as an investment as per the provisions of section 11(5) of the Act. Thus, in view of the above, it transpires that there was sufficient compliance by the assessee in keeping the money set apart as invested in the mode specified under section 11(5) of the Act.
As existing FDRs, which is free from any lien can also be treated as investments or deposit as per the provision of section 11(2)(b) of the Act. Hence, the ground of appeal of the assessee is allowed.
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2025 (3) TMI 1077
Refusal to grant registration u/s 12AB - assessee has failed to satisfy about the genuineness of the activities - HELD THAT:- We note that the Manager of the trust is an old and illiterate man, and don’t well conversant with the registration of Trust laws and the person who was working with the assessee, who is looking after this issue, has left the job, and the assessee could not avail the opportunity of being heard before the Ld. CIT(E).
We further note that, according to the order, notices were only sent to the assessee and the order does not speak about the services of notice upon the assessee.
It is settled law that principles of natural justice and fair play require that the affected party should be given an opportunity to represent case, before the authority. In the interest of justice, we set aside the order of CIT(E) restore the matter back to the file of Ld. CIT(E) for de novo adjudication in this matter and pass a speaking order after affording due opportunity of being heard to the assessee, who in turn, is also directed to submit the relevant documents before the Ld. CIT(E). Appeal filed by the assessee is allowed for the statistical purpose.
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2025 (3) TMI 1076
Restricted import or not - Scope of N/N. 12/2015-20 dated 12th June, 2020 - Brand New All Steel Radial Mining tires fall within the purview of said notification or not - amendment to import policy by the notification for various goods falling under Customs Tariff Heading (CTH) 4011 from ‘Free’ to ‘Restricted’ - HELD THAT:- In 2024, the disputed goods were tested by IRMRA. However, the tests were carried out on specific assumptions / requests of the DRI. The letter by DRI requesting the IRMRA to test the subject goods as per specific assumptions is neither on record nor provided to the Respondents when specifically asked. As per the tests reports of the IRMRA, the tests were not conducted on the basis of IS 15636:2022. In other words, despite the tires being categorized as “D” marking (i.e., speed not to exceed 65 km/hr), the disputed goods were tested as “J/K” category (i.e., speed not to exceed 100 km/hr or 110 km/hr).
The tests shall be conducted by Indian Rubber Manufacturers Research Association (IRMRA). This is on account of the fact that in 2022, similar tests were conducted by IRMRA (in terms of IS 15636:2022) when samples were drawn and forwarded by Central Intelligence Unit (CIU). IRMRA vide the test reports dated 15th September 2022, certified that the intended use of the tires was mining applications. Apart from the above tests, the IRMRA shall carry out any other test that it deems fit to determine whether the imported tires are of a kind used on construction, mining or industrial handling vehicles and machines. In the event the IRMRA also decides to do a speed test on the tires, the test report should indicate clearly that at what speed the tires were tested and the duration of the test as well as the wear and tear, if any, on the said tires.
Conclusion - IRMRA shall conduct specific tests to determine the classification of the tires as "Special-use" or "Normal-road-use". The results of these tests will inform the final determination of whether the tires fall under the restricted import category.
Stand over to 15th April, 2025.
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2025 (3) TMI 1075
Levy of penalties u/s 114(iii) and section 114AA of the Custom Act, 1962 - Penalty on F -card holder of Custom House Agent (CHA) - export of Led Flash Torch light by gross over-valuation and mis-declaration with an intention to avail higher export incentive benefit - corroboration to the confession of appellant - admissible evidence or not - HELD THAT:- The allegations of attempt to export goods improperly have been confirmed against the appellant solely relying upon his statement alleging the same as the admission on part of the appellant. The copy of the said statement is produced by the department. Perusal thereof reveals that the appellant is admittedly the authorized CHA of the exporting firm, the main appellant. He produced all the requisite documents when demanded as that of packing list, invoices etc. as were provided to him by the respective exporters or their representatives. He also deposed that his firm prepared check lists of shipping bills on the basis of said documents and thereafter filed the same with the customs authority at ICD, TKD. This deposition clarifies that none of the ingredients of attempt appears to be fulfilled as against the appellant. There is no denial of the department that the detained consignment was tallying in quantity with the packing lists submitted along with the shipping bills.
Overvaluation - HELD THAT:- The appellant in his statement has deposed that he is not aware regarding the actual value of the goods, however he accepted that supplier had overvalued the exported goods. In addition, he deposed that he was getting 1% of the IGST/Drawback from the exporters in cash in lieu of preparing export documents of the goods which were overvalued by them. However, except the said deposition, there is no corroborative evidence produced by the department to show the receipt of the said amount by the appellant as an additional amount to his professional charges and nor to show that the appellant had knowledge of overvaluation being done by the exporters prior filing the shipping bills.
No doubt the department has taken the stand that admissions need not to be proved but it has also been the settled proposition of law that such admissions which are voluntary and does not get vitiated on account of any of the premises envisaged Section 24 of the Evidence Act are admissible as cogent evidence.
As per department, the statement of Shri Mali Ram Agarwal is a corroboration to the confession of the appellant. However, testimony of any statement recorded in the present case cannot be relied upon for the imposition of penalty unless it stands the test of Section 138B of the Customs Act, 1962 which is para materia to sub-section (1) of Section 9D of the Central Excise Act. The plain reading of both these provisions makes it clear that clause (a) and (b) of the said sub-section set out the circumstances in which a statement made and signed by a person before the officer of a gazetted rank, during the course of enquiry or proceeding under the act, shall be relevant for the purpose of proving the truth of the facts contained therein provided that the person making the said statement has been examined by the adjudicating authority. Section 9D came in for detailed consideration and examination by Hon’ble Delhi High Court in the case titled as J.K. Cigarettes Ltd. Vs. CCE [2009 (8) TMI 64 - DELHI HIGH COURT], it has been held that in absence of the circumstances specified in Section 9D(1), the truth of the facts contained in any statement recorded by the gazetted officer is not admissible into evidence.
The statement of Shri Mali Ram Agarwal has not stood the test of Section 138B of the Customs Act, also that the appellant has objected his statement recorded under Section 108A as involuntary, recorded under pressure. Resultantly, the statements on record are miserably insufficient to prove the alleged act of attempt to export improperly and to use the false information is wrong. For appellant’s alleged admission also since same stands retracted subsequently no evidentiary value can be attached that too in absence of any corroborative evidence.
Conclusion - The department has failed to prove the guilt of the appellant who otherwise was the authorized CHA, had all the KYC documents and had filed the shipping bills based on the documents provided to him by the respective exporter or their representative and that he was not personally sure about the value of the goods imported.
The order of imposition of penalty upon the appellant set aside - appeal allowed.
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2025 (3) TMI 1074
Additions of 'license fee' and 'advertising expenses' to the assessable value of imported goods - Lack of SCN - HELD THAT:- On a perusal of the records, it is found that the appellant herein had been importing from their overseas affiliates, and admittedly related parties, since 2006 and their original declarations, accepted by order of 29th March 2006, were, thereafter, sought to be renewed by communications of 23rd March 2009, 4th January 2011, 12th October 2012 and 24th June 2013 but it appears, in the absence of explanation in the orders of the lower authorities, that those, kept pending, were taken up for disposal only in July 2015 leading to the order for addition of specific components of recompense to overseas entities and which, but for the modification in the impugned order, were upheld by the first appellate authority.
It also transpires from the records, inasmuch as that the order of the original authority, directing loading for the imports covered for the period 2003-04 to 2013-14, was found to be unjustifiable to the extent of imports beyond five years from the relevant date, that the specific imports intended to be covered and those to be excluded, consequent upon the impugned order, remains unknown.
The impugned order is far from clear about to the reasons for limiting the additions to five years if, as stated in the order impugned before that authority, intent was to enable finalisation of provisional assessments. On the other hand, if the intent was to recover duty short-paid by reasons of evidence of the ingredients enumerated in section 28 of Customs Act, 1962 for invoking the period beyond the normal period of limitation, there should have been a finding of evidence to that effect consequent upon the importer being placed on notice of intent to invoke extended period of limitation as well as the consequential penalties specifically noted in such finding.
Conclusion - It would appear that the appeal before the first appellate authority had not been examined in terms of outcome of differential duty or evaluation of correctness of declared value in specific bills of entry which alone could have been cause of grievance. The correctness of the legality and propriety of the additions cannot be determined.
Matter remanded back to the first appellate authority for a fresh decision - appeal allowed by way of remand.
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2025 (3) TMI 1073
Classification of imported goods - Fiber Optic Transmitters/Receivers/Transceivers - classifiable under CTH 85176290 or CTH 854230? - applicability of exemption under S.No.20 of N/N.57/2017 - Extended period of limitation - confiscation - penalties.
Whether the impugned goods imported by the appellant are classifiable under CTH 85176290 or under CTH 854230 as contended by the appellants? - HELD THAT:- The adjudicating authority has gone through the details furnished by the appellant as well as various other documents referred to supra to come to the conclusion that goods are clearly classifiable under CTH 85176290 and the goods are also in the nature of OTE, in view of their actual function. He has also categorically ruled out the possibility of its classification as simple electrical integrated circuit, keeping in view the HSN explanatory note, according to which, essentially, at least one of the components are required to be present, which incidentally was not found to have been used in the said impugned goods.
The adjudicating authority has taken into account the statements recorded from technical expert of the appellant as well as expert opinion and felt that these are in the nature of apparatus or devices meant for certain specific functions like conversion of, inter alia, electrical signal into optical signal and vice versa, using optical fiber cable and therefore, they are more in the nature of OTE. The fact that OTE has been categorically classified under CTH 85176290 in the notification itself also supports that if the impugned goods are in the nature of OTE then it would obviously fall under CTH 85176290.
Applicability of exemption under S.No.20 of N/N. 57/2017 - HELD THAT:- The impugned order is a well reasoned order, where after going through the detailed submissions and other evidence on record, the adjudicating authority has rightly held the impugned goods to be classifiable under CTH 85176290 and has also rightly held that these are in the nature of OTE and therefore, they shall not be entitled for the benefit under notification 57/2017. In view of the same, the classification as well as denial of benefit under S.No.20 of the notification 57/2017 upheld.
Invocation of extended period - HELD THAT:- There is nothing wrong for the appellant to have a bonafide belief to choose a heading which may be more beneficial to them even though, ultimately, it may not be found to be correct classification. However, this, per se, cannot become ground for invoking extended period of limitation. There has to be much more evidence on record to prove their deliberate plan or deliberate suppression in order to hoodwink the department into believing something else. Merely because they chose to claim classification under a heading, which they thought was more appropriate, it cannot be a ground for invoking extended period. Further, though the adjudicating authority has tried to bring in the concept of fraud for invoking extended period in the sense that they were deliberately misleading the department, it has neither been alleged in the SCN nor has been explained in what way the appellants were indulging in fraud. Therefore, invocation of extended period is not tenable and therefore, to that extent the impugned order is liable to be set aside.
Wrong calculation of duty demanded - HELD THAT:- There are no discussion on this issue and therefore, the matter needs to be remanded back to the adjudicating authority to examine this aspect and allow the benefit of this amount if it has already been paid, as submitted by the appellant.
Confiscation - HELD THAT:- When the issue is primarily that of classification, the confiscation cannot sustain and therefore, on that count itself, the impugned order to the extent of confiscation of impugned goods and imposition of fine is also not tenable.
Penalty u/s 114A - HELD THAT:- In view of the fact that the extended period cannot be invoked in the present case, as also there is no element of fraud, suppression or misstatement, etc., therefore, the penalty under this section is not sustainable.
Penalty u/s 114AA - HELD THAT:- In this case, whenever they have used a different classification than the classification which was indicated in the invoice, they knew that they are entering wrong classification in the bills of entry and therefore to that extent, the appellants knowingly and intentionally made the said entries. Their bonafide belief will not be of much help as here, it is an established fact that the classification mentioned in the bills of entry was different than the classification indicated by the supplier of the said goods. Therefore, there are no infirmity in the imposition of penalty under section 114AA.
Conclusion - The goods are classified under CTH 85176290, the exemption under Notification No.57/2017 is denied, the extended period for demand set aside, penalties under sections 112(a) and 114A are dismissed, the penalty under section 114AA is upheld, and the confiscation of goods is overturned.
Appeal partly allowed by way of remand for redetermination of quantum of demand.
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2025 (3) TMI 1072
Operating schemes/plans in the nature of Collective Investment Scheme (“CIS”) without obtaining prior registration from SEBI - attachment orders - existence of an alternate statutory remedy under the SEBI Act - HELD THAT:- In the opinion of the Court, all the grounds urged in the present petition can be urged before the Appellate Authority under the SEBI Act. Thus, in view of the of the fact that an alternate statutory remedy is available to Petitioner, the Court is not inclined to entertain the present writ petition under Article 226 of the Constitution.
At this juncture, it is noted that there is a limitation period to challenge the impugned orders, which has lapsed. However, considering the peculiar facts of this case, in case the Petitioner would prefer an appeal against the impugned orders within thirty days from today, the said appeal shall not be rejected on the ground of limitation.
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2025 (3) TMI 1071
Cancellation of IPO - misstatement in the prospectus regarding the procurement of software from a vendor with questionable credentials - Refund the subscription amounts to the successful investors and to cancel shares allotted to them pursuant to the Initial Public Offer (IPO) of the company - HELD THAT:- In our considered view, safeguarding the interests of the public shareholders particularly the retailers, is of paramount importance for all stakeholders of the capital market in a large country like India with significant asymmetry in capital and financial literacy. In view of this, adequacy and correctness of disclosure in Public Offers cannot be compromised. The appellant Company while going for Initial Public Offer for inviting subscription from public at large, was duty bound to obtain quotation from a genuine software provider entity for the purpose of vendor selection for an important software, which in their scheme of things, was going to be integral object of the Issue.
Despite being in the ITS sector, the company did not make desired professional efforts to evaluate whether the quotation by OCPL was genuine or not. We find that the quotation was received on May 16, 2024 and within two days on May 18, 2024, the Board of directors of the Company “noted and approved” procurement of ICCC software from the said vendor, even though in the DRHP dated May 30, 2024, in the notes to the ‘Deployment of proceeds’ segment, it has been qualified that no definitive agreement was signed with the said vendor and the Company may change vendor or quotation per se.
We also note that the decision of the Board of directors of the Company in ‘approving’ the purchase of software without due verification of credentials of the vendor and in utter disregard to its own purchase policy, which provides for taking at least three quotes for such an indent, did not the desired corporate governance norms. Surprisingly the purchase committee of the company, which ought to have examined the credentials of the vendor in details and assessed whether the vendor had deserved capability to provide ICCC software in the given time-frame, cleared the quote merely on the basis of GST returns filed for last two months, which obviously are of no technical assistance for deciding purchase of software. The committee also ignored that there was no business of OCPL during the FY 2020 and FY 2021 for which financials were available and turned blind eye on the absence of financials for the last 2 financial years i.e. FY2022 and FY 2023. We find that even the merchant banker has not done proper due diligence and has merely gone by the decision of the Board of directors for carrying out due diligence with regard to the Oasis.
If an established software player follows such a methodology to reach out to an entity with doubtful credentials, with an offer of commission of Rs. 50 lakhs for procuring quote from a Third Party, in our considered view, it cannot be treated as ‘genuine’ quotation and therefore we are not persuaded to accept the argument that the Company had made the disclaimer that such a quote was for budgetary estimate only. Therefore, we hold that the company’s claim with regard to its adequacy and correctness of disclosure in the prospectus was not bonafide and satisfactory.
In the disclaimer section of the prospectus, it is stated that the ‘Company is responsible for adequacy, correctness and accuracy of the facts disclosed’. Considering the above, we of the view that the respondent is right in holding that the said disclosure in respect of quotation from an entity such as OCPL, was a mis-statement. A listed entity has additional responsibility to its shareholders and when it comes with an Issue for public at large, it is required to ensure that the disclosures made in the prospectus are not only adequate and correct but genuine. The appellant Company has failed to meet the said requirements.
Therefore, we do not find merit in the alternative plea that the IPO may be allowed to proceed further subject to monitoring of the deployment of proceeds by an agency to be appointed by SEBI/ BSE.
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2025 (3) TMI 1070
Objection to the decision of Liquidator to include the Haldia property in the Liquidation Estate - HELD THAT:- The present is a case where no steps were taken by the Appellant under Regulation 37 and at no point of time, even a communication was sent by the Appellant to the Liquidator for informing about the estimated amount required to be paid under Regulation 21A (2) (a). As noted above, the Applicant as a secured creditor was to make payment under sub- regulation (2) of Regulation 21A, within 90 days from the liquidation commencement date. When obligation is linked with the time period, the Appellant cannot fall back on the argument that the Liquidator has not communicated the estimated amount to the secured creditor. When secured creditor at no point of time even asked for estimated amount from the Liquidator and no steps were taken under Regulation 37 by the Appellant, it is not open for the Appellant to contend that Regulation 21A, sub-regulation (2) shall not apply, since he was not communicated the estimated amount by the Liquidator.
The second proviso clearly protects the interest of the secured creditor to the extent that if there is any difference between the amount payable under sub-regulation (2) and the amount paid under the first proviso, the Liquidator or the creditor, as the case may be, is to do the needful. Thus, even if, a secured creditor, who does not write to the Liquidator for any estimation or Liquidator does not send any estimate and any amount is paid by the secured creditor, he is well protected by second proviso and thus, the secured creditor cannot fall back on the argument that Liquidator having never communicated the estimated amount, sub- regulation (2) of Regulation 21A is not attracted.
The view taken by the Liquidator as well as by the Adjudicating Authority that by virtue of sub-Regulation 2 of Regulation 21A, Haldia Unit is also part of the Liquidation Estate of the CD, is correct and cannot be faulted.
It appears that SCC in its Meeting dated 03.02.2024 has declared the Halder Venture Ltd. as successful bidder. Halder Venture has submitted the EMD of Rs.5,71,00,000/- on 30.01.2024. We have already noticed that as per the SCC decision, auction of Haldia Unit was subject to order passed by NCLT in MA 03 of 2023, which MA remained pending till the order was passed by the Adjudicating Authority on 16.02.2024. It is further relevant to notice that Liquidator on non-payment of entire amount by Halder Venture, has proceeded to issue fresh Sale Notice for auction to be held on 30.08.2024. It has been submitted before us that no bidder came forward and no auction has yet taken place of the units.
Conclusion - i) The Appellant's failure to comply with Regulation 21A resulted in the Haldia property becoming part of the Liquidation Estate, affirming the Liquidator's actions. ii) The secured creditors must actively comply with the requirements of the IBBI regulations to retain their security interests during liquidation. iii) The successful bidder, Halder Venture Ltd., is allowed to complete the purchase of the Haldia property by depositing the balance amount with interest, recognizing the bidder's readiness to fulfill its obligations.
Appeal dismissed.
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2025 (3) TMI 1069
Seeking de-freezing of demat account of the Corporate Debtor, frozen due to non-compliance with SEBI regulations - waterfall mechanism under Section 53(1) of the Insolvency & Bankruptcy Code, 2016 (IBC) - jurisdiction of the National Company Law Tribunal (NCLT) extends to adjudicating matters related to the freezing of demat accounts under SEBI regulations, in light of Section 60(5) of the IBC - HELD THAT:- SEBI issued a circular in order to ensure effective enforcement of the SEBI LODR. Further, it was the obligation of all the recognized stock exchanges to intimate the depositories of non-compliance of SEBI LODR on part of any listed entity, and on receipt of such intimation, it is the obligation of the depositories to freeze or unfreeze, as the case may be, the entire shareholding of the promoter and promoter group in such non- compliant listed entity as well as all other securities held in the demat account of the promoter and promoter group.
Further, due to non-compliance of various regulations of SEBI (LODR) Regulations, 2015, demat accounts of Cox and Kings Limited, Cox and Kings Financial Services Limited and Tulip Stars Hotels Ltd., were put on freeze on 19.11.2019 and 31.12.2019. Since, Liz Traders and Agents Private Limited/ Corporate Debtor was disclosed as Promoter of the above mentioned companies in the shareholding pattern filed by them, demat account of Corporate Debtor was also put on freeze on 19.11.2019 and 25.02.2020.
Since the Corporate Debtor is under liquidation and Liquidator’s request to defreeze the demat account has not yielded any result, the Applicant has filed the present application seeking directions against Respondent nos. 1, 2 and 3 to defreeze the demat account of the Corporate Debtor, in order to enable the Applicant to take immediate custody of the shares to sell the same and distribute the proceeds as per the waterfall mechanism under section 53(1) of the Code, to the stakeholders of the Corporate Debtor.
In the facts and circumstances of the case it does not bar the jurisdiction of this Tribunal. Further, the aforementioned shares of 6 companies are assets of the Corporate Debtor, and under liquidation, it’s the duty of the liquidator to liquidate the Corporate Debtor expeditiously and maximise the recovery.
The Hon’ble Supreme Court in Gujrat Urja Vikas [2021 (3) TMI 340 - SUPREME COURT] have observed that if a nexus with the insolvency of the Corporate Debtor exists then this Tribunal have jurisdiction to decide the dispute. The CIRP or liquidation process is a time-bound process. The continued freezing of demat accounts would cause delay in the liquidation process, especially in the facts when the two defaulting listed entities are also under liquidation and compliances expected of them for defreezing of the Demat account of the Corporate Debtor is an impossibility. Further, for an entity under liquidation, this dispute or impasse cannot be of any benefit to anyone, including the concerned regulators. Accordingly, there is clear connection of the issue/dispute involved with insolvency of Corporate Debtor.
The protection of the corporate debtor’s property from attachment and restraint in proceedings related to offenses committed before the initiation of the CIRP continues even during the liquidation process, where the successful sale of assets is affected. In the present case, the freezing of demat account is obstructing the Liquidator from selling the shares and obtaining their best value. In light of the aforesaid judgement, such attachment and restraint cannot be allowed to be continued during the proceedings of liquidation under IBC.
The Respondent No. 1, 2 and 3 is directed to defreeze the demat account of the Corporate Debtor. Further Respondent no. 4 is directed to extend its co-operation to the Applicant by ensuring the proper functioning of the trading account.
Conclusion - i) The IBC's provisions, particularly regarding liquidation, have an overriding effect over conflicting SEBI regulations when they impede the liquidation process. ii) The CIRP or liquidation process is a time-bound process. The continued freezing of demat accounts would cause delay in the liquidation process, especially in the facts when the two defaulting listed entities are also under liquidation and compliances expected of them for defreezing of the Demat account of the Corporate Debtor is an impossibility.
Application allowed.
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2025 (3) TMI 1068
Anti-competitive agreements - abuse of dominant position - contravention of the provisions of Section 3 and 4 of Competition Act, 2002 - engaging in non-transparent and arbitrary processes in the awarding of contracts and issuance of a Request for Proposal (RFP) - HELD THAT:- With regard to the violation of Section 3 of the Act, the Commission notes that it prohibits anti-competitive agreements which include but are not limited to cartel and bid-rigging. The Commission notes that the Informant has alleged tacit agreement between OP-1 and OP-2 in awarding tender, however, it has not provided any evidence or material which could indicate bid rigging in violation of Section 3 of the Act. Accordingly, the Commission deems it appropriate not to proceed further on the basis of such unsubstantiated allegations.
As far as allegations under Section 4 is concerned, the Informant has alleged that OP-1 awarded the Work Order to OP-2, despite it having no prior experience or relation whatsoever with the PM SHRI Scheme and abused its dominant position under Section 4 of the Act. Further OP-2 abused its dominant position by issuing an RFP which is faulty, restrictive and defective. The Commission is of the view that the alleged conduct of OP-1 in appointing OP-2 as PMC and further issuance of faulty RFP by OP-2 themselves are not amenable under the province of Section 4 of the Act without any supporting evidence. Simply selection or non-selection of an agency as PMC or issuance or non-issuance of RFP or issuance of defective RFP by an entity cannot be said to be abusive in terms of Section 4 of the Act unless and until there are availability of ingredients of the same as required under the Act. As stated, these issues lie within the precinct of the freedom of the procurer.
The Commission, based on the facts and circumstances and analysis carried out, does not find it appropriate to examine the conduct of OP-1 and OP-2. Accordingly, the Commission has refrained from delineating relevant market and assessment of dominance, as required under the provisions of the Section 4 of the Act.
Conclusion - The Commission is of the view that no prima facie case of contravention of either Section 3 or Section 4 of the Act is made out in the present matter against OP-1 and OP-2. Accordingly, the Information is ordered to be closed forthwith in terms of the provisions contained in Section 26(2) of the Act. Consequently, no case for grant for relief(s) as sought under Section 33 of the Act arises and the same is also rejected.
Application disposed off.
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2025 (3) TMI 1067
Seeking grant of interim bail under the Prevention of Money Laundering Act, 2002, due to the alleged medical conditions of his family members and the inability of his wife - it was held by High Court that 'there is no ground to enlarge the applicant on interim bail.'
HELD THAT:- There are no ground to interfere with the impugned order passed by the High Court. However, the High Court is requested to decide the pending bail application on its own merit, without being influenced by the impugned order.
SLP dismissed.
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2025 (3) TMI 1066
Non-reversal of proportionate Cenvat credit availed on common input services namely, Chartered Accountant services, telephone services, Legal services, etc., used in relation to Redemption of Mutual Funds by considering it to be “Trading of Goods” which is an exempted service - HELD THAT:- The activity to classify as “exempted service” under Rule 2(e) of the Cenvat Credit Rules, 2004 needs to be qualified as “service”, as defined under Section 65B (44) of the Act, meaning thereby that service is an activity carried out by a person for another for consideration and includes a ‘declared service’ but excludes a transfer of title in goods or immovable property by way of sale, gift, etc.
The activity of investment in mutual funds does not involve the presence of a service rendered by a service provider towards a recipient of service for some consideration. Following the principles in the case of the appellant, the activity undertaken would not amount to service ‘service’ in terms of Section 65B(44) of the Act.
The impugned orders deserve to be set aside - Appeal allowed.
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2025 (3) TMI 1065
Refund of accumulated cenvat credit under the provisions of Rule 5 of Cenvat Credit Rules, 2004 - Refund of service tax under Section 11B of Central Excise Act, 1944 made applicable to service tax matters through Section 83 of Finance Act, 1994.
Refund of accumulated cenvat credit under the provisions of Rule 5 of Cenvat Credit Rules, 2004 - HELD THAT:- As a transaction between the appellant company and subsidiary company or the appellant who is a holding company, invoices are raised between the two and money is transferred to the holding company irrespective of the value of service provided by subsidiary outside the territorial jurisdiction of India to overseas clients. The services provided by overseas subsidiary to their overseas clients are treated by the appellant as having provided by them on the strength of invoices which are for financial transactions between the holding company and subsidiary company where the appellant has no role in providing services by their subsidiary to their clients. Appellant has paid service tax on these transactions on reverse charge basis and availed cenvat credit of the same.
Contention of Revenue is that those services are provided by subsidiaries and the appellant has nothing to do with them and, therefore, they are not input services for the appellant and, therefore, cenvat credit of service tax paid on the transactions that took place between overseas subsidiaries and their overseas clients does not satisfy the definition of input service under Rule 2(l) of Cenvat Credit Rules, 2004, thereby holding that the authorities below have denied refund of accumulated cenvat credit of such cenvat credit under Rule 5 of Cenvat Credit Rules, 2004 - The said cenvat credit is cenvat credit of service tax paid on transactions that completely took place beyond the territorial jurisdiction of India and under the provisions of Section 64 of Finance Act, 1994, service tax was not leviable on the same. Therefore, there are no infirmity in denial of refund of the said cenvat credit through the above stated orders-in-appeal.
Refund of service tax under Section 11B of Central Excise Act, 1944 made applicable to service tax matters through Section 83 of Finance Act, 1994 - HELD THAT:- The said claim for refund is in respect of service tax paid by the appellant in respect of transactions that took place beyond the territorial jurisdiction of India and, therefore, that service tax was not payable - The affidavit has not given bifurcation in respect of refund claim dealt with in each appeal. Therefore, even if the appeals in Batch-II appeals are allowed, the refund sanctioning authorities will not be in a position to decide the quantum of refund to be allowed to the appellant in each individual refund claim dealt with in each appeal of Batch-II appeals. Therefore, such an order will be unimplementable order and an unimplementable order is not sustainable in law and, therefore, for want of sufficient information, we are not able to pass orders for allowing refund in case of Batch-II appeals. Thus in the absence of complete information required to pass orders, we are not able to allow appeals in Batch-II appeals.
Conclusion - The services provided by subsidiaries directly to overseas clients do not qualify as input services for the appellant, thus not eligible for Cenvat credit refund under Rule 5 of the Cenvat Credit Rules, 2004. ii)The denial of the refund of Cenvat credit affirmed. ii) In case of refund of service tax, appeals rejected due to insufficient information to substantiate the refund claims, despite acknowledging the appellant's partial withdrawal of claims.
Appeals dismissed.
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