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2020 (7) TMI 825
Addition u/s 56(2)(vii) v/s 69 unexplained investment - HELD THAT:- DR fails to dispute the clinching fact that the impugned addition u/s 56(2)(vii) never formed subject matter of assessee’s grounds in the lower appellate proceedings nor any such issue had arisen in the assessment order. This tribunal’s co-ordinate bench’s decision in Bikram Singh [2016 (4) TMI 822 - ITAT DELHI] CIT(A) was not empower to enhance an income on an issue which was not the subject matter of the assessment. CIT(A) cannot touch upon an issue which does not arise from the order of the assessment and was outside the scope of the order of the assessment.
Thus direct the Assessing Officer to delete the impugned addition. Assessee’s appeal is allowed.
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2020 (7) TMI 824
Income deemed to accrue or arise in India - royalty receipt - consideration received by the Appellant from supply/distribution of its copyrighted software products - DTAA between India and Ireland ('AADT) - Whether right to use' the copyright in the software? - HELD THAT:- The issue arising in the present appeal is identical to the issue raised in assessee’s own case in Assessment Year 2013-14 [2018 (12) TMI 112 - ITAT DELHI] and applying the ratio laid down by the Jurisdictional High Court in Infrasoft Ltd. [2013 (11) TMI 1382 - DELHI HIGH COURT], we hold that the receipt from sale of software by the assessee was not in the nature of ‘Royalty’ under Article 12 of DTAA between India and Ireland. Since the treaty provisions are more beneficial, there is no merit in adjudicating the issue vis-àvis amended provisions of section 9(1)(vi) - Ground of appeal raised by the assessee are thus allowed.
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2020 (7) TMI 823
Revision u/s 263 - effect of omission of clause (i) of section 92BA w.e.f 01.04.2017 - meaning of “omission” - Specified domestic transactions referred to in clause (i) of section 92BA - reference to Transfer Pricing Officer (TPO) - HELD THAT:- As in respect of specified domestic transactions which is referred to clause (i) of section 92BA of the Act, which was omitted with effect from 01.04.2017 and the effect of such “omission” of clause (i) of section 92BA means that this provision never existed in the statute book, hence reference to TPO was bad in law.
As the issue is squarely covered in favour of the assessee by the decision of Coordinate Bench in the case of M/s Raipur Steel Casting India (P) Ltd. [2020 (6) TMI 629 - ITAT KOLKATA] and there is no change in facts and law and the Revenue is unable to produce any material to controvert the above said findings of the Co-ordinate Bench. Therefore, respectfully following the decision of Co-ordinate Bench on the technical issue narrated above we allow appeal of the assessee.
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2020 (7) TMI 822
TP adjustment made on account of intra-group services - assessee has purportedly received support services from its regional headquarter primarily in the areas of management of human resources, sale, debt management and collection, advertisement and marketing, legal services, etc. - TPO applied ‘benefit test’ on the intra-group services received by the assessee and determined the ALP of such services at ‘Nil’ - HELD THAT:- We find that the TPO has failed to properly analyse the support services received by the assessee from its regional headquarter - The settled legal position now is that the ALP of intra group services cannot be determined at ‘Nil’. The ‘benefit test’ analysis which was earlier accepted has now been held to be redundant. The Tribunal in the case of Merck Ltd. [2016 (3) TMI 1105 - ITAT MUMBAI] has held the concept of ‘benefit test’ as irrelevant. The Tribunal held that by applying befit test ALP of intra-group services cannot be determined at ‘Nil’. Thereafter, in various decisions by the Tribunal the application of benefit test analysis has been rejected. Thus, we deem it appropriate to restore the issue back to the file of TPO for fresh adjudication and for determination of ALP of intra-group services by applying most appropriate method specified in section 92C of the Act. Ground No.1 of the appeal is thus, allowed for statistical purposes.
Adjustment in respect of reimbursement of expenses - Since we have restored ground No.1 to the TPO, we deem it appropriate to restore ground No.2 of the appeal as well, to the TPO for de-novo adjudication after affording reasonable opportunity of hearing to the assessee.
Adjustment made in respect of loans extended by the assessee to domestic group companies, held as ‘deemed International Transaction’ - HELD THAT:- A bare perusal of the meaning of “international transaction” defined in section 92B (1) would show that a transaction would fall within the ambit of international transaction if, either or both the associated enterprises are nonresident. In the present case none of the AEs i.e. neither the assessee nor the domestic group companies with which the assessee had entered into transaction are non-residents. All the companies are domestic entities and are subject to tax under the provisions of the Act.
In the present case, the authorities below have failed to take note of the fact that the transactions in question are within domestic entities only. No overseas entity is involved in the transaction. Unless the conditions set out in subsection (1) are satisfied, the provisions of subsection (2) cannot be invoked. The authorities below in the present case have erred in invoking deeming fiction solely on the premise that since shareholders of overseas holding company are holding shares of the assessee and AEs, ‘in substance’ the transaction between the assesse and the domestic group entities would fall within the ambit of “deemed international transaction”. Deeming provisions cannot be invoked by expanding the latitude of expressions used in the section. The authorities below have failed to take into consideration the fact that all group entities are companies incorporated in India having separate legal existence. Except for common shareholding, no material has been relied on by the TPO/DRP to substantiate that the transaction between the entities was influenced by the overseas holding company.
The findings of the lower authorities are based on conjectures and surmises. The authorities below have travelled too far to bring the transactions between the assessee and domestic entities within the domain of ‘deemed international transaction’ under section 92B (2) of the Act (prior to amendment). We find merit in ground no.3 of the appeal, according the same is allowed.
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2020 (7) TMI 821
TP Adjustment - working capital adjusted PLI of the comparables not considered - As per assessee PLI of the comparables after carrying out working capital adjustment, which is much less than the PLI the assessee - HELD THAT:- Though the assessee submitted working capital adjusted PLI of the comparables before Transfer Pricing Officer but same was not considered because unadjusted PLI of the assessee was higher than the average marginal comparables and resultantly, no adjustment was proposed to the international transaction of provision of information technology enabled services reported by the assessee
As the effect of the working capital adjustment has not been considered or examined by the lower authorities, we feel it appropriate to restore this limited issue whether the adjustment for delayed receivables from associated enterprises get subsumed in working capital adjustment, to the file of the learned Assessing Officer/Transfer Pricing Officer for adjudicating in accordance with law. It is needless to mention that assessee shall be afforded adequate opportunity of being heard. Appeal of the assessee is allowed partly for statistical purposes.
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2020 (7) TMI 820
Compassionate appointment or not - claim of the writ petitioner was rejected on the ground that only the dependants of the Part-Time Contingent Employees, who die before attaining the age of 60 years are eligible to be considered for compassionate appointment in terms of the industrial settlement entered into between the Kerala State Electricity Board and its employees, in 2007 - HELD THAT:- It is settled law that repeal of the Principal Act will result in the repeal of subordinate legislation framed under the provisions of the repealed enactment unless the same was specifically saved by the repeal and saving clause. We cannot, in S. 185, see any saving clause which protects Ext. P2 Regulation or gives life to Ext. P2 regulation de hors the repeal of Electricity (Supply) Act, 1948 - The provisions of sub-section (2), obviously cannot apply to save Ext. P.2 Regulations, in the manner suggested by the learned counsel for the Writ Petitioner as, obviously, the said provision can apply only to past actions under any of the repealed enactments. A reading of S. 185(2)(a), suggests that things, which have already been done will be saved insofar as it is not inconsistent with the provisions of the Electricity Act, 2003.
We accept the contention of the learned counsel for the writ petitioner that there is nothing contrary to the provisions contained in Ext. P2 in the Electricity Act, 2003. However, the lack of any inconsistency with the provisions of the 2003 Act cannot offer any protection, insofar as the writ petitioner is concerned, on account of the fact that it is not his case that any action had been taken in terms of Ext. P2 Regulation prior to the repeal of the Electricity (Supply) Act, 1948. In fact, as already noticed, the mother of the writ petitioner under whom he claims appointment under the dying-in-harness Scheme passed away only on 21.3.2011 on which date Ext. P2 Regulation was clearly not in force on account of the repeal provision in S. 185(1) - In the absence of any statutory regulation, the provisions of the long term settlement will apply.
Sub-section (5) of S. 185, only makes it clear that the specific mention and saving of certain enumerated provisions/rules in sub-section (2) does did not mean that the effect of Section 6 of the General Clauses Act, 1897 was inapplicable in respect of provisions not so enumerated.
The right of the 1st respondent (if any) can be considered only in terms of the relevant provisions of the industrial settlement in force and not in accordance with the provisions - Appeal allowed.
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2020 (7) TMI 819
Invocation of extraordinary jurisdiction of this Court under section 482 Cr.P.C. - locus of opposite party no. 2- Kaptan Singh to ignite the instant criminal prosecution - HELD THAT:- It is undisputed that the contesting parties have entered into an agreement to sell on 27.10.2010 and from the FIR, it has been borne out that on 05.08.2015, the alleged Power of Attorney was executed by Mrs. Munni Devi in favour of Kaptan Singh but astoundingly no power of attorney in this regard has been annexed with the record. There are balled averments, conferring this stature of Kaptan Singh (opposite party no. 2), which cannot be accepted on its face value. For all the practical purposes, he is rank outsider and stranger to the ‘surreptitious’ deal, therefore, the criminal prosecution initiated at his behest would lead into nullity. In all fairness, he ought to have annexed the Power of Attorney allegedly executed by Ms. Mamta Devi in his favour with the counter affidavit. On the strength of bald Power of Attorney the opposite party no.2 Kaptan Singh has initiated the criminal case.
Section 482 envisages inherent power to the High Courts to pass necessary orders for securing the ends of justice. In the case of Indian Oil Corporation v. NEPC India Ltd [2006 (7) TMI 575 - SUPREME COURT], the Division Bench of Hon'ble Apex Court reviewed the precedents on the exercise of jurisdiction under section 482 Cr.P.C., and formulated the guiding principles holding that
In the instant case, there are two documents, annexed by the applicants. Though both the documents were executed on 27.10.2010 and signed by the contesting parties, this Court is at serious loss to spell out the genuineness of the aforesaid documents either way. Moreover, the civil courts are seized with the mater and they are required to adjudicate the pivotal question by taking evidence at their discussion on the point.
The present application filed under Section 482 Cr.P.C., is allowed.
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2020 (7) TMI 818
Revision u/s 263 by CIT - whether the assessee was eligible for the claim u/s 54F? - HELD THAT:- AO records that after a thorough verification of all records, the same has been found to be correct and the assessment completed by accepting the return filed by the assessee. We find that nothing more is required to be recorded by the assessing officer, especially when the assessment file would contain all the material which has been produced by the assessee. In fact the bank details have been produced to show that the amount has been invested in Capital Gain Scheme Account in two banks viz., Bank of Maharashtra and UCO Bank and the banks have given letters dated 31.12.2015 to the said effect. Thus, we are of the view that there was no material to indicate that the assessment was an erroneous assessment in so far as it is prejudicial to the interest of the revenue.
The tribunal fell in error in not testing at the very first instance, as to whether the show cause notice issued by PICT was justifiable for assumption of jurisdiction under Section 263 of the Act. Thus, without addressing the moot point, the tribunal proceeded on a different footing. In fact, before the tribunal, the assessee raised a point about non applicability of SEBI guidelines, because the transaction was between an individual and the company. We find that there has been no adjudication on the said issue.
Assessee had also specifically contended that it was necessary to comply with Section 54F (iv) and if the assessee invests the entire consideration in capital gains scheme account as contemplated within the period, then, such investment shall be deemed to be only cost of new asset and exemption under Section 54F is automatic.
The assessee further contended that shares were sold for Rs.15 Crores on 18.01.2011 and before the due date for filing the return, the assessee had deposited into Capital Gains Scheme Account, LTCG and therefore, contended that as per Section 54F(iv), the assessee had duly complied with the condition for availing exemption. These issues were not adjudicated by the tribunal. Thus, we hold that the assumption of jurisdiction by the PCIT is erroneous and the order passed by the tribunal confirming such an order, calls for interference. Decided in favour of the Assessee.
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2020 (7) TMI 817
TP Adjustment - adjustment to the Arm’s Length Price of the assessee’s international transaction - Comparable selection - ‘Persistent loss’ making companies - HELD THAT:- A company can be accepted as comparable if it has not suffered persistent losses. The expression ‘persistent loss’ is not defined under the Act or the Rules framed thereunder. The expression has evolved in judicial rulings. One of the initial decisions of Tribunal supporting this principle is Bobst India (P.) Ltd. vs. Dy. CIT [2015 (12) TMI 684 - ITAT PUNE] ‘Persistent loss’ means losses in three consecutive financial years including the Financial Year corresponding to the Assessment Year under dispute and immediately two preceding Financial Years. The thumb rule of excluding persistent loss making company has been accepted in various judicial precedents over the period of time.
The company at Sr.No.1 has suffered losses in only one year and the companies at Sr. No.2 & 3 have incurred losses in two financial years. Thus, none of the above said three companies fall within the ambit of persistent loss making companies. The CIT (A) has directed the TPO to include AMI Computer (I) Ltd., Mercury Travels Ltd. and Nucleus Netsoft & GIS India Ltd. as these are not continuous loss making companies. We concur with the findings of CIT (A). The impugned order is upheld, ergo, the appeal of revenue is dismissed sans merit.
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2020 (7) TMI 816
TP Adjustment - comparable selection - TPO characterising the assessee as KPO - HELD THAT:- As assessee despite bringing the fact on record that Excel Infoways was excluded by DRP itself in AY 2012-13, the DRP upheld the order of TPO, without bringing material difference for the year under consideration to justify its inclusion. We have further noted that the TPO himself identify this company as back office services to its AE‟s. More over unusual business year is also not disputed by the TPO. Even otherwise this comparable was included by TPO by treating the assessee as KPO. The assessee has placed on record the annual report of this company.
We have carefully perused the annual report of this comparable company. Perusal of annual report of this comparable company shows that this company is engaged in providing business support service; IT enabled services and development of infrastructure facilities. Considering the segmental reporting of the comparable company, in our view this is not a valid comparable with the assessee which is engaged in providing non-binding investment advisory services. Therefore, we direct the TPO to exclude this comparable from the final set of comparable.
Considering the decision of Tribunal in assessee‟s own case for earlier year wherein three comparable namely Almond, Crisil and ICRA was considered as valid comparable. We have directed to exclude Excel Infoways Ltd on the basis of order of DRP for AY 2012-13 and our discussion therefore, we find that both the substantial ground of appeal are covered in favour of assessee. Considering the facts that we have allowed both the substantial ground of appeal in favour of assessee therefore, adjudication on the issue related with economic analysis has become academic.
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2020 (7) TMI 815
Stay of demand - Unexplained money u/s 69A - substantial credits in the bank accounts of the petitioner of demonetized notes - HELD THAT:- Both writ petitions have absolutely no merit and deserve to be dismissed in limine. The impugned order challenged has been passed by the Appellate Authority upon consideration of the merits as well as the financial and bank statements filed by the petitioner. The petitioner was directed to pay 25% of the tax demand within a specified time frame. The order also states that if the aforesaid direction was not complied with, the stay granted would stand revoked. No reason whatsoever to interfere with the attachment of the bank account.
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2020 (7) TMI 814
Dishonor of cheque - existence of legally enforceable debt or not - It is averred in the petition that the respondent is a stranger to the petitioner and that the petitioner never borrowed any amount as alleged in the complaint given by the respondent herein, and question of issuance of cheque does not arise - HELD THAT:- This Court finds that the grounds raised by the petitioner in this petition missed the question of facts and as such it cannot be considered for quashing the complaint by invoking Section 482 Cr.P.C. Hence, this petition is devoid of merits and accordingly, dismissed.
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2020 (7) TMI 813
Liquidation of Corporate Debtor - Section 33(2) of I & B Code, 2016 - HELD THAT:- For want of a resolution plan the CoC took a decision by 98.45% vote share of the financial creditors in terms of section 33(2) of the I&B Code. In view of the matter, there are no option but to pass the order of liquidation of the Corporate Debtor in the manner as laid down in the Chapter III of Part II of the I&B Code.
Corporate Debtor M/s. Jas Infrastructure And Power Limited having its registered office at Sector III Salt Lake City Ground Floor Kolkata-700106, in the state of West Bengal, is ordered to be liquidated - application allowed.
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2020 (7) TMI 812
Late fees u/s 234E - processing the statement of tax deducted at source u/s 200A of the Act before the amendment was brought in w.e.f. 01.06.2015 in the provisions of section 200A of the Act - HELD THAT:- Fee u/s 234E of the Act was levied in the statements processed u/s 200A of the Act before 01.06.2015 i.e. before the amendment brought into effect from 01.06.2015 in section 200A of the Act thereby enabling the revenue authorities to raise demand in respect of levy of fees u/s 234E of the Act, Ld. CIT(A) erred in confirming the levy of late fees u/s 234E of the Act by the assessing officer.
Accordingly findings of CIT(A) in all these 10 appeals are reversed as we have recently taken a considered view against the revenue on earlier orders of Ld. CIT(A) wherein the identical orders by respective CIT(A) were passed and accordingly the revenue is directed to delete the levy of fees u/s 234E - Thus, common issue raised in these bunch of appeals is decided in favour of the assessee(s).
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2020 (7) TMI 811
Non adjudication of ground by Tribunal - validity of order passed by the Co-ordinate Bench - HELD THAT:- We find that ground no. 8 challenging the CIT-A order sustaining addition u/s 68 has not been adjudicated upon while passing the order [2020 (5) TMI 79 - ITAT JAIPUR]. Therefore, the order is recalled for the limited purposes of adjudication of Ground No. 8. The Registry is directed to fix the matter to hear the arguments on merits in due course.
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2020 (7) TMI 810
Violation of principles of natural justice - cross-examination of witnesses - petition filed for eschewing the evidence of a witness for not submitting himself for continuation of cross-examination - Whether the evidence of a witness, who failed to submit himself for cross examination, shall be rejected or not? - HELD THAT:- From the perusal of adjudications of the Trial Court placed before this Court, reveals that after cross examination in part on 07.09.2018, the case was adjourned for continuation of cross examination on six occasions. On all these hearings, in spite of the direction to be present, the witness failed to appear before the Court. Unless there is necessity for cross examination, the case would not have been adjourned several times. Even assuming that the elaborate cross examination was made, the evidence should have been closed on that date itself. Nobody can presume that there will not be any surprise element till closing of the evidence. Surprisingly admissions as to facts may pop up even at the end of the examination of witness.
Naturally, the defendant puts down his defense by way of written statement either denying averments made in the plaint as a whole or admitting to certain facts generally or specifically. He lets in evidence to disprove the case projected by the plaintiff and the evidentiary value of the plaint documents. When he underwent cross examination to a considerable extent, but could not complete the same due to certain unavoidable circumstances, Courts cannot reject entire evidence, but shall take into consideration its probative value, while deciding the case, more so, when the plaintiff evades or avoids and deliberately delays completion of evidence. On the other hand, a case projected by the plaintiff, shall be based on introduction of facts through plaint averments, supported by oral and documentary evidence. It can be controverted only through cross examination and the veracity of the evidence can be tested by other side.
Plaintiff being Dominus litis spearheads the litigation. Onus is more on him to prove the case, unless the burden is shifted to opposite side. In that process he must be ready and prepared and show that he is always available and willing to complete the evidence. In spite of his readiness, if it is shown that the cross examination was avoided or delayed at the instance of the opposite party, in such circumstances, probative value of the available evidence would be taken into consideration.
The conduct of the Plaintiff, after having filed the proof affidavit and marked the documents, remaining absent for cross examination will amount to denial of opportunity to the opponent to disprove the claim and render the evidence as complete one - the plaintiff in the instant case, who could not appear before the court on the ground that his employer refused to grant leave for months and in fact years together, is not entitled to any equitable treatment and his evidence cannot retained for considering its probative value. Even though it is countered by the respondent/Plaintiff that extensive cross examination has been done, it is relevant to note that the learned judge has not chosen to consider or accept the same and has not observed as such. If it is true that extensive cross examination has already been made, the matter need not have been adjourned for about seven hearings for continuation of cross examination.
Petition allowed.
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2020 (7) TMI 809
Maintainability of Advance Ruling application - Classification of goods - Flavoured Milk - What is the appropriate chapter under the customs Tariff Act, 1975 (51 of 1975) under which the product Flavoured Milk can be classified as per the explanation (iv) of the Notification No. 1/2017-Central Tax (Rate) dated 28th June 2017? - HELD THAT:- The Directorate General of GST Intelligence, Visakhapatnam Zonal Unit had informed that an investigation had already been initiated against the same issue through summons dated 07-11-2019 for mis-classification of flavoured milk under HSN 0403 instead of HSN 2202 in his letter numbered F.No. DGGI/VZU/INV/GST/104/2019 dated 24-02-2020 requesting for rejection of the applicant's plea for admission for advance ruling in terms of provisions of sub-section (2)of section 98 of CGST Act, 2017.
This authority after examining the relevant proviso to sec 98(2), makes the observation that it is a fit case for rejection as the applicant approached the Authority for Advance Ruling for clarification while the case is still pending with the Revenue on the same issue i.e., with respect to the classification of the product under question.
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2020 (7) TMI 808
ITAT remanding the matter back to AO - Whether the Tribunal was right in passing an order merely on the ground that the documents relied on by the Assessee was not available in the file? - HELD THAT:- Unfortunately, the Assessee, who was the appellant before the Tribunal was not present when the case was heard and he had also not engaged an Advocate, to argue on his behalf. The Tribunal records that its Registry placed a copy of the postal acknowledgement card to show that the notice has been served on the Assessee.
Assessee has filed the copies of the revenue records in the typed set of papers, and on perusal of the same, the seal of the Assessing Officer is found at the bottom of the photostat copies of the documents. Therefore, it is clear that the documents were part of the assessment file. Considering the fact that the Tribunal had proceeded ex parte on account of non-appearance of the Assessee, and though the Tribunal might have been justified by doing so, yet, considering the fact that the assessment order is of the year 2015, and the Assessing Officer has already perused the records and given relief to the Assessee, and the appeal filed by the Assessee before the Tribunal arises out of the order passed under Section 263 of the Act, this Court is of the view that the matter can be remanded back to the Tribunal for fresh decision on merits, after affording an opportunity to the Assessee.
Tax Case appeal is allowed, the impugned order is set aside and the matter is remanded back to the Tribunal for fresh decision on merits.
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2020 (7) TMI 807
Seeking grant of regular bail - forged documents to create the profile of a non-existent Company and claimed GST refund - HELD THAT:- Undoubtedly, the petitioner has committed serious offence, however, it cannot be lost sight of the fact that he has been in custody since 15.06.2019 and the trial is not likely to be concluded at an early date. The petitioner is undergoing magisterial trial, thus, it is deemed it appropriate to grant regular bail to the petitioner.
The petition is allowed and the petitioner is directed to be released on regular bail on his furnishing bail and surety bonds to the satisfaction of the trial Court/Duty Magistrate concerned.
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2020 (7) TMI 806
Validity of assessment order - Best assessment order - concessional rate of tax as per Section 3(4) of TNVAT Act - HELD THAT:- The grounds raised by the petitioner, are factually in nature and do not fall under any of the exceptions for them to over look the appellate remedy and invoke the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India. It is settled proposition of law that barring a few exceptions, this Court will not entertainn a Writ Petition on grounds touching upon the errors on the facts. The petitioner has not raised any exceptional grounds for this Court to invoke its extraordinary jurisdiction and thereby interfere with the impugned proceedings. Nevertheless, since this Court is of the view that the grounds requires consideration, it would be appropriate to grant liberty to the petitioner to challenge the impugned proceedings before the Appellate Authority.
The petitioner is granted liberty to file an appeal as against the impugned proceedings dated 13.01.2016, within 30 days from the date of receipt of a copy of this order - The Writ Petition is disposed of.
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