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Showing 41 to 60 of 1640 Records
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2024 (7) TMI 1600
Liability to discharge service tax - Management Consultancy Services - Manpower Supply Agency Service - availment of inadmissible levy of service tax under airport services on the deposit amount collected from unsuccessful bidders - CENVAT credit on various input services - extended period of limitation.
Whether manpower service supplied by M/s. Unique to the appellant, is leviable to service tax under reverse charge basis, for the period in question? - whether the ratio of the judgment in the case of CC, CE & ST, Bangalore (Adjudication) Vs. Northern Operating Systems Pvt. Ltd. [2022 (5) TMI 967 - SUPREME COURT] is applicable to the facts and circumstances of the present case? - HELD THAT:- In the ‘Expatriate Remuneration Reimbursement Agreement’ dated 11.7.2005 between the appellant and M/s. Unique reveals that the terms and conditions are more or less similar to the one referred to in para 3 of the judgment of the Hon’ble Supreme Court in Northern Operating Systems Pvt. Ltd. [2022 (5) TMI 967 - SUPREME COURT].
In the present case also, the appellant was in need of personnel for facilitating the business operations in India and the overseas company, which has such personnel, who possesses the requisite qualification and skill desired to employ such persons on exclusive basis and the overseas company has duly consented to depute such personnel. The deputed personnel while under employment with the appellant was not in any way subjected to any kind of instruction or control or direction or supervision of the overseas company and they would report only to appellant’s management. They function solely under the control, direction and supervision of appellant and in accordance with the policy, rules, guidelines applicable to the employees of the appellant.
The service tax is applicable on the amount paid to M/s Unique for receiving Manpower service by the Appellant. However, the demand of service tax confirmed by the Ld. Commissioner cannot be sustained for the period prior to 18.4.2006 and also for the extended period as their Lordships on the issue of invocation of extended period of limitation, decided in favour of the assessee. Consequently, the demand be restricted to normal period of limitation.
On the issue of reimbursable expenses, it is found that the Ld. Commissioner has not recorded any specific finding about the true nature of the said expenses as claimed by the appellant and hence, the matter needs to be remanded to the Ld. Commissioner, to verify the said claim of the appellant and decide the issue in the light of the principle laid down by the Hon’ble Apex Court in Intercontinental Consultants and Technocrats Pvt. Ltd. case [2018 (3) TMI 357 - SUPREME COURT].
Confirmation of demand relating to Airport Services rendered by the appellant during the relevant period - HELD THAT:- The Revenue could not establish that the unsuccessful bidders have rendered any services to the appellant and thus, the amount collected as a pre-bid offer from unsuccessful bidders cannot be considered as a “consideration” for rendering Airport Services and accordingly not leviable to Service Tax. However, the Ld. Commissioner has confirmed the demand on altogether a different ground. He has held that except submitting list of unsuccessful bidders, no documentary evidence has been placed on record to prove that the said amounts relate to unsuccessful bidders and consequently, he has confirmed the demand. Therefore, to ascertain this fact, this issue needs to be remanded to the adjudicating authority.
CENVAT Credit on various input services namely, photography and videography services, asset hiring, landscaping services, office rent, civil and interior work, etc. - HELD THAT:- All these services have been considered by the Tribunal in the case of JSW Steel Ltd. Vs. CCE [2021 (12) TMI 381 - CESTAT BANGALORE] and held that the same satisfy the definition of “input service” as prescribed under Rule 2(l) of the CENVAT Credit Rules, 2004, hence, duty paid on these services is admissible to credit. Following the said precedent, it is opined that CENVAT credit of the duty paid on these services is admissible.
Conclusion - i) The demands relating to the period prior to 18.04.2006, for all categories of services received from the overseas company cannot be sustained. ii) The demands with interest confirmed on ‘Manpower Supply Services’ received from the overseas company for the period after 18.4.2006, under reverse charge mechanism are sustained for the normal period of limitation only. iii) The applicability of Service Tax on the amount collected from unsuccessful bidders as pre-bid fees and retained is not liable to service tax under Airport Services. However, the adjudicating authority is directed to verify from the records whether the disputed amount relates to unsuccessful bidders only, as claimed by the Appellant. iv) The CENVAT Credit availed on various input services are admissible and hence demands on this issue are set aside. v) The penalty imposed on the Appellant cannot be sustained.
All these appeals are remanded to the adjudicating authority to recompute the demands with interest - appeal allowed by way of remand.
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2024 (7) TMI 1599
CENVAT Credit - input services - outward freight, distributed through input service distributor (ISD) invoices - jurisdiction to adjudicate the admissibility of such CENVAT credit lies with the authorities having jurisdiction over the ISD or the recipient unit? - HELD THAT:- The Appellant have availed Cenvat credit on the basis of the invoices distributed the credit by their ISD Registered unit. That being so the admissibility of credit could not have been questioned in respect of individual services which might be referred in any annexure as an end of recipient unit. If any investigation/enquiry was required need to be made at the end of ISD.
The present proceedings have arisen out of a statement of demand issued in continuation to the various show cause notice and statement of demands issued to the appellant on the same issue. The show cause notice and some of the statements of demands have been finally adjudged in the favour of appellant without appeal being preferred by the revenue. This being a statement of demand no new ground has been stated in the statement of demand. Thus when revenue accepts the earlier decisions dropping the show cause notice and statement of demands for the past period on the same issue, judicial precedent needs to be followed.
Conclusion - i) The appellant's availing of CENVAT credit was legitimate. ii) The jurisdiction to adjudicate the admissibility of CENVAT credit distributed by an ISD lies with the ISD's jurisdictional authority.
Impugned order has no merits and needs to be set aside - Appeal allowed.
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2024 (7) TMI 1598
Cancellation of tender that had been awarded to the Appellant for the maintenance of two underpasses on Public-Private Partnership basis - scope of judicial review of the actions of the State in matters relating to contract/tender disputes under writ jurisdiction - violation of Article 14 of the Constitution of India.
What is the scope of judicial review of the actions of the State in the matters relating to contract/tender disputes under writ jurisdiction? - HELD THAT:- The present dispute even if related to a tender, cannot be termed as a pure contractual dispute, as the dispute involves a public law element. Although there is no discharge of a public function by the Respondent towards the Appellant yet there is a right to public law action vested in him against the Respondent in terms of Article 14 of the Constitution. This is because the exercise of the executive power by it in the contractual domain i.e., the cancelling of the tender carries a corresponding public duty to act in a reasonable and rationale manner. Thus, the writ petition filed by the Respondent was maintainable and the relief prayed for could have been considered by the High Court in exercise of its writ jurisdiction.
The approach of the court must be to respect the expertise and discretion of administrative authorities while still protecting against arbitrary and capricious actions.
Whether the action on the part of the Respondent herein in cancelling the tender vide its notice dated 07.02.2023 was amenable to the writ jurisdiction of the High Court? If so, whether the said action could be termed as arbitrary or unfair and in consequence of violation of Article 14 of the Constitution of India? - HELD THAT:- Once a decision has been officially made through proper means and channel, any internal deliberations or file notings that formed a part of that decision-making process can certainly be looked into by the Court for the purposes of judicial review in order to satisfy itself of the impeccability of the said decision.
Once a decision is made, all opinions and deliberations pertaining to the said decision in the internal file-notings become a part of the process by which the decision is arrived at, and can be looked into for the purposes of judicial review. In other words, any internal discussions or notings that have been approved and formalized into a decision by an authority can be examined to ascertain the reasons and purposes behind such decisions for the overall judicial review of such decision-making process and whether it conforms to the principles enshrined in Article 14 of the Constitution.
If the purported action of cancelling the tender is claimed to have been taken in view of certain technical faults in the same or even a change in policy the same ought to be clearly reflected from its internal file notings as-well, pursuant to which the purported decision was taken.
It is evident that the Notice of Cancellation dated 07.02.2023, issued to the Appellant, was at the behest of the concerned minister. The Respondent clearly recorded that, because instructions for cancellation had been received from the higher-ups, there was no option but to proceed with the cancellation. Even before the Respondent could properly and thoroughly explore the possibility of acceding to such request by consulting its legal cell, the tender was cancelled only at the instance and specific instructions of the concerned minister.
Considerations of public interest should not be narrowly confined to financial aspects. The courts must have a more holistic understanding of public interest wherever the fairness of public authorities is in question, giving due regard to the broader implications of such action on the stability of contractual obligations. Merely because the financial terms of a contract are less favourable over a period of time does not justify its termination. Such decisions must be based on a careful consideration of all relevant factors, including the potential harm to the integrity and sanctity of contractual relationships. The larger interest of upholding contracts cannot be discarded in the name of monetary gain labelled as public interest.
The present lis is nothing but a classic textbook case of an arbitrary and capricious exercise of powers by the Respondent to cancel the tender that was issued to the Appellant on the basis of extraneous considerations and at the behest of none other but the concerned Minister-In-Charge.
Conclusion - i) The writ petition filed by the Appellant was maintainable, as the cancellation of the tender involved a public law element. The cancellation was not a mere contractual dispute but an arbitrary exercise of executive power. ii) The litigation at hand is nothing but a classic textbook case of an arbitrary exercise of powers by the Respondent in cancelling the tender that was issued in favour of the Appellant and that too at the behest of none other than the concerned Minister-In-Charge and thereby rendering the Notice of Cancellation dated 07.02.2023 illegal. iii) The order dated 16.09.2023 passed by the Urban Development and Municipal Affairs Department, Government of West Bengal merely transferred the operation and maintenance of the underpasses including the right to receive revenue from KMDA to KMC and therefore will have no effect on any rights that accrued in favour of the Appellant as such rights are independent of the authority in control of operations and maintenance.
The notice of cancellation dated 07.02.2023 is quashed and the impugned judgment and order passed by the High Court is hereby set aside - Appeal allowed.
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2024 (7) TMI 1597
Interpretation and application of promotion rules within the Bihar State Electricity Board, specifically regarding the concept of "Kal Awadhi" and its implications for retrospective promotions - promotion to the post of Joint Secretary with effect from 29th July 1997, instead of 5th March 2003 - HELD THAT:- It is no longer res integra that a promotion is effective from the date it is granted and not from the date when a vacancy occurs on the subject post or when the post itself is created. No doubt, a right to be considered for promotion has been treated by courts not just as a statutory right but as a fundamental right, at the same time, there is no fundamental right to promotion itself.
In State of Bihar and Ors. v. Akhouri Sachindra Nath and Ors. [1991 (4) TMI 469 - SUPREME COURT], it was held that retrospective seniority cannot be given to an employee from a date when he was not even borne in the cadre, nor can seniority be given with retrospective effect as that might adversely affect others.
The same view was reiterated in Keshav Chandra Joshi and Ors. v. Union of India and Ors. [1990 (11) TMI 428 - SUPREME COURT], where it was held that when a quota is provided for, then the seniority of the employee would be reckoned from the date when the vacancy arises in the quota and not from any anterior date of promotion or subsequent date of confirmation.
In Nani Sha and Ors. v. State of Arunachal Pradesh and Ors. [2007 (5) TMI 593 - SUPREME COURT] it was observed that mere existence of a vacancy is not sufficient for an employee to claim seniority and the date of actual appointment has to be in accordance with the prescribed procedure.
Conclusion - The Division Bench of the High Court ought to have refrained from interfering with the findings returned by the learned Single Judge who has rightly held that merely because the Respondent had completed the Kal Awadhi for promotion from the post of Under Secretary to Joint Secretary, would not necessarily entitle him for appointment from the date the post fell vacant. This is not a case where the Respondent has been deprived of promotion to the next higher post, nor is it a case where the action of the Board was guided by any malafides or colourable exercise of power. The action of the Board was purely guided by administrative exigencies. The Resolution of the Board dated 26th December, 1991 for fixing the Kal Awadhi was only directory in nature and cannot be treated as statutory for the Respondent to have claimed an entitlement to promotion reckoned from 29th July, 1997, instead of 5th March, 2003.
The impugned order dated 20th October 2011 is set aside and the order dated 3rd October, 2007 passed by the learned Single Judge is restored - Appeal allowed.
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2024 (7) TMI 1596
Appeal rejected on the ground of being delayed - cancellation of registration of petitioner - HELD THAT:- Section 107 of the Bihar Goods and Services Tax Act, 2017 (BGST Act) permits an appeal to be filed within three months and also apply for delay condonation with satisfactory reasons within a further period of one month. Here, the order impugned in the appeal was dated 14.05.2023. An appeal was to be filed on or before 12.08.2023 and if necessary with a delay condonation application within one month thereafter, i.e. on or before 11.09.2023. The appeal is said to have been filed only on 20.03.2024, after the limitation period expired.
The petitioner does not have any case that the show-cause notice was not received by him.
There are no reason to invoke the extraordinary jurisdiction under Article 226, especially since it is not a measure to be employed where there are alternate remedies available and the assessee has not been diligent in availing such alternate remedies within the stipulated time - petition dismissed.
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2024 (7) TMI 1595
Rectification application u/s 254 - Computing the profits eligible for deduction u/s 36(1)(viii) - allocation of the expenses incurred towards interest on foreign currency borrowing and provisions for contingencies - HELD THAT:- Specific findings have been given with regard to various categories of income such as Income from Housing Finance for residential purposes for a period less than five years, Income from Housing Finance for non-residential purposes and Income from Temporary requirement of funds.
We have held that Income from Housing Finance for a period of less than five years and Income from temporary deployment of funds are eligible for deduction u/s 36(1)(viii) and that Income from Housing Finance for non-residential purpose would not be eligible for such deduction thereby giving partial relief to the assessee.
Assessee has contended incorrect allocation of certain expenses by the AO and we notice that no specific findings have been given with regard to this contention of the assessee in the above referred order of the Tribunal. Therefore we allow the miscellaneous application filed by the assessee for the limited purpose of adjudicating Ground No. 2.4 of the assessee.
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2024 (7) TMI 1594
Legality of arrest of the Petitioner - non-compliance with Article 22(1) of the Constitution of India and Section 50 of the Code of Criminal Procedure, 1973 - whether the subsequent remand orders were null and void due to this alleged illegality? - HELD THAT:- The amendment was effected in the Code of Criminal Procedure, with the very object of zealously safeguarding the inherent fundamental right available to every citizen and it’s protection at every stage, with a corresponding obligation to be discharged by every civilised State. Infraction of these fundamental rights have always been frowned upon by the Constitutional Courts and wherever necessary, for breach of the fundamental right,, compensation has been granted under public law, in addition to the private law remedy available to a person for tortious action and punishments have been imposed on the wrong doer.
The Apex Court considered the argument in light of the three-Judge Bench decision in Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT (LB)], holding that Section 65 of the Act of 2002 predicates that the provision of Code of 1973 shall apply insofar as they are not inconsistent with the provisions in respect of arrest, search and seizure, attachment, confiscation, investigation, prosecution and all other proceedings thereunder. Taking note of Section 19 of the Act of 2022 which prescribes the manner of arrest of a person involved in money laundering, with the inbuilt safeguards to be adhered to, by the authorised officers, such as recording of reasons for belief regarding involvement of the person in the offence of money laundering and, that the reasons shall be recorded in writing and while effecting arrest, the grounds of arrest are to be informed to that person.
Reliance was also placed on the decision of the Division Bench of the Bombay High Court in Chhagan Chandrakant Bhujbal Vs. Union of India & Ors. [2016 (12) TMI 1014 - BOMBAY HIGH COURT], where it was held that the grounds of arrest are to be informed to the person arrested and that would mean that they should be communicated at the earliest, but there is no statutory requirement of the grounds of arrest being communicated in writing.
Reiterating that right to life and personal liberty is the most sacrosanct fundamental right guaranteed under Articles 20, 21 and 22 of the Constitution of India and any attempt to encroach upon the same would be looked at with all seriousness and to be dealt with strictly, it is specifically held that the right to be informed about the grounds of arrest flows from Article 22(1) of the Constitution of India and any infringement of this fundamental right would vitiate the process of arrest and remand. It is also clarified that mere fact that the charge-sheet has been filed in the matter, would not validate the illegality and its unconstitutionality, committed at the time of arrest of the accused and the grant of initial police custody remand to the accused.
Conclusion - The grounds of arrest must be communicated in writing, as a matter of course and without exception, to uphold the fundamental rights of the accused. The Petitioner's arrest is declared illegal and the remand orders set aside. The Petitioner was ordered to be released on bail, subject to furnishing bail bonds to the satisfaction of the trial judge.
The Petitioner is entitled for his release and, since, the charge-sheet has been filed against him, his release from custody is directed on furnishing bail and bonds to the satisfaction of the trial Judge - petition disposed off.
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2024 (7) TMI 1593
Seeking grant of bail - allegations of manufacturing and distributing spurious anti-cancer drugs - anti-cancer injections were being supplied to the Petitioner, who is running a pharmacy shop in Muzaffarpur, Bihar in the name of Popular Medicine - HELD THAT:- In Prasanta Kumar Sarkar v. Ashis Chatterjee, [2010 (10) TMI 1199 - SUPREME COURT], the Apex Court has laid down the parameters for granting or refusing bail to an accused.
In the present case, the Petitioner is in custody since 13.03.2024. Charge-sheet has been filed. The evidence is primarily documentary in nature and is already in the custody of Police. Considering the fact that that the evidence is primarily documentary in nature, the possibility of the Petitioner tampering with evidence is very remote and since most of the witnesses are official witnesses, the chance of the Petitioner threatening the witnesses is also very remote.
This Court is inclined to grant bail to the Petitioner subject to fulfilment of conditions imposed - bail application allowed.
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2024 (7) TMI 1592
Deductions claimed u/s 80P - interest income earned from investments in co-operative and nationalized banks - HELD THAT:- In the case of Totagars Co-operative Sale Society [2010 (2) TMI 3 - SUPREME COURT] where the order of the Hon’ble Apex Court is followed. The co-operative bank and co-operative society are held to be the same entity and co-operative bank originated from the co-operative society.
Accordingly, the Hon’ble Court held that the interest earned from co-operative bank or co-operative society has no difference. The orders of the Co-ordinate benches of ITAT Mumbai have considered the issue and are in favour of the assessee, Reserve Bank Staff and Officers co-op credit society Ltd. [2024 (1) TMI 1034 - ITAT MUMBAI] Here, in our considered view, we respectfully follow the order in the case of CIT vs Vegetable Products Ltd [1973 (1) TMI 1 - SUPREME COURT] that the Hon’ble Court has laid down a principle that “if two reasonable constructions of taxing provision are possible, that construction which favour the assessee must be adopted”. Neither of the rival parties are able to submit any contrary order of the Hon’ble Jurisdictional High on this issue.
Interest from co-operative bank and the nationalized bank. But during the hearing, AR was unable to distinguish the part of interest related to co-operative bank and related to nationalized bank. Accordingly, we remit the matter to the file of AO for verification of interest income and allow the deduction u/s 80(P)(2)(d) to interest earned from cooperative bank.
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2024 (7) TMI 1591
TDS u/s 194IC - payment made by the assessee to the tenants towards alternate accommodation charges/hardship allowance/rent -
HELD THAT:- As per the terms of the agreement the assessee agreed to pay a fixed sum per Sq.ft for the temporary alternate accommodation to each of the tenants for the reason that the existing property is to be demolished for re-development.
The term "consideration" is not specifically defined for the purpose of section 194IC, and its meaning has to be inferred from the definition of the term "specified agreement" as extracted above. As per the definition, it is the agreement entered into between the owner and the developer allowing the developer to develop the real estate project in consideration of share in the land or building or both in such project, with or without payment of part of the consideration in cash.
Therefore in our considered view any sum paid under the specified agreement, to be treated as a "consideration" should have been paid as part of a share in the land or building or both including cash payments.
In the given case, the payment towards alternate accommodation/hardship allowance is in the nature of a compensation paid by the developer towards hardship suffered by the owner / tenant due to dispossession and is not paid as part of a share in the land or building or both. The terms of the agreement in assessee's case makes it clear that the payment is made towards compensation for handing over the vacant possession of the property and towards rent if any payable by the tenants in the alternate accommodation until the completion of the re-development. Therefore we are of the view that the "Alternate accommodation charges / rent" cannot be treated as a consideration paid as part of a share in the land or building or both under the specified agreement, and would not fall within the provisions of section 194IC. No default for non-deduction and non-payment of TDS u/s 194IC.
Decided in favour of assessee.
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2024 (7) TMI 1590
Maintainability of petition - availability of alternative remedy - Legality of arrest of the Petitioner at the hand of the Respondent - gross violation of the provisions of Section 41A of the Code of Criminal Procedure - HELD THAT:- This Court is of the opinion that the petitioner herein had raised an objection regarding non-compliance of Section 41A of Cr.P.C. when his police custody remand had been sought by the State, and the same was dealt with and rejected by the learned Magistrate vide a detailed order dated 19.05.2024. Since a separate application in this regard had also been filed by the petitioner, the same was rejected by the learned Magistrate on the ground that the grounds raised in the said i.e. non- compliance of Section 41A of Cr.P.C., have already been dealt with by the learned Magistrate in his order dated 19.05.2024, and, therefore, the same had become infructuous.
It is true that the petitioner herein has not challenged the dismissal of the abovesaid application by the learned Magistrate, which he should have challenged before the learned Sessions Court as per the provisions of law, before approaching this Court. However, this Court is also of the opinion that it is not the non-compliance of Section 41A of Cr.P.C. alone which has been challenged before this Court, but also the manner in which he was arrested, the malafide of arrest and breach of his fundamental rights.
Maintainability of a writ petition, in light of availability of alternative remedy - HELD THAT:- It will be apt to take note of the observations of the Hon'ble Apex Court in case of M/S RADHA KRISHAN INDUSTRIES VERSUS STATE OF HIMACHAL PRADESH & ORS. [2021 (4) TMI 837 - SUPREME COURT] where it was held that 'When a right is created by a statute, which itself prescribes the remedy or procedure for enforcing the right or liability, resort must be had to that particular statutory remedy before invoking the discretionary remedy under Article 226 of the Constitution. This rule of exhaustion of statutory remedies is a rule of policy, convenience and discretion.'
Thus, one of the exceptions to the general rule that a writ petition would not be maintainable when an alternative remedy is available, is when a writ petition has been filed for enforcement of fundamental rights as enshrined in the Constitution of India. As noted above, the petitioner herein has specifically alleged breach of his fundamental rights by the State/police, while challenging his arrest on grounds of non-compliance of Section 41A of Cr.P.C. and directions of the Hon'ble Apex Court.
Conclusion - This Court is, therefore, of the opinion that at this stage, the petition before this Court is maintainable to the extent of issuance of notice to the respondent. The merit of the case will, however, be decided only after a reply is filed in this case by the State.
Let the matter be listed on 08.07.2024.
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2024 (7) TMI 1589
Seeking grant of regular bail under Section 439 of the Code of Criminal Procedure, 1973 - alleged assault - complain submits that she was brutally assaulted and apprehends danger to her life - HELD THAT:- The factors which are to be borne in mind while considering an application for bail amongst other circumstances have been reiterated in PRASANTA KUMAR SARKAR VERSUS ASHIS CHATTERJEE AND ORS. [2010 (10) TMI 1199 - SUPREME COURT] and may be beneficially referred.
Allegations of assault at the Chief Minister’s Office cum Residence made by the complainant(a sitting Member of Parliament) against PS to the Chief Minister, cannot be disbelieved merely on account of delay in registration of FIR, since the events unfolded after the incident, reflect that complainant was in a traumatized condition faced with the unprovoked brutal assault. Complainant would not have herself made a call on 112 during the course of assault, in case no such incident had occurred - despite mustering the courage to visit the police station on the same day and informing the SHO, complainant returned without lodging the FIR. In the peculiar facts and circumstances, it may be preposterous at this stage to infer that petitioner has been falsely implicated and allegations have been concocted, since apparently the complainant had no motive to implicate the petitioner.
No doubt, the petitioner happens to be only designated as a PS but the facts and circumstances reflect that he yields considerable influence and it cannot be ruled out that witnesses may be influenced or evidence may be tampered with, in case the petitioner is released on bail, at this stage.
Conclusion - The petitioner should not be granted bail, given the serious nature of the allegations, the potential for evidence tampering, and the influence the petitioner could exert over witnesses.
Bail application dismissed.
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2024 (7) TMI 1588
Income not taxable in India on the principle of mutuality - Taxation of membership fees received from the members - whether surplus arising to the assessee is chargeable to tax in India based on the principle of mutuality or not? - HELD THAT:- We find that the Dispute Resolution Panel in its direction for A.Y. 2014-15 dated 29th February 2017, in paragraph no.7 has considered all the issues and in paragraph no.7.4 has held that assessee qualifies as mutual concern having regard to the tests laid down by various courts. In view of the above finding of the learned Dispute Resolution Panel, which is not under challenge, there is no need for us to express any opinion on this aspect as revenue itself has accepted that assessee is a mutual concern. Decided in favour of assessee.
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2024 (7) TMI 1587
TP adjustment towards international transactions - interest rate applied to loans given to associated enterprises (AEs) - assessee company had advanced interest-free loans to its wholly owned two subsidiary companies at Germany and a joint-venture company @ 9% - plea of the assessee is that the assessee had sufficient own money to give interest-free advances to its subsidiaries and due to commercial expediency, loan was advanced to them and so it is allowable; and we agree to such a contention in principle - HELD THAT:- We find that similar issue had come up in the assessee’s own case for earlier assessment years [especially for AY 2010-11] [2016 (3) TMI 1486 - ITAT CHENNAI] wherein Tribunal had set aside the issue to the file of the AO to verify the actual surplus funds available with the assessee and also to verify whether assessee had borrowed loan and whether there was nexus between the borrowed loan and advance given by the assessee to the AEs at Germany.
Thus, matter needs to be reconsidered and orders of the lower authorities are set aside and issue of TP adjustment made in this regard for an amount are remitted back to the file of the AO; and the AO shall re-examine the issue.
TP Adjustment on corporate guarantee - HELD THAT:- We concur with the TPO’s order that this is an international transaction, but upward adjustment is now covered in favour of the assessee by the decision of Redington (India) Ltd. [2020 (12) TMI 516 - MADRAS HIGH COURT] and Everest Kanto Cylinder Ltd. [2015 (5) TMI 395 - BOMBAY HIGH COURT] therefore, we direct the AO to restrict adjustment @0.5% of the guarantee value.
Deduction u/s.35(2AB) - non-approval of the expenditure by the DSIR - HELD THAT:- Assessee has rightly contended that amendment was not applicable, and the prescribed authority was not required to quantify the expenditure and had to only give report in relation to the approval of in-house facility and development facility, and therefore, in the absence of any requirement of law, the AO erred in curtailing the expenditure and consequent weighted deduction claimed by assessee. Therefore, the non-approval of the expenditure by the DSIR doesn’t disentitle the assessee to make the claim. Thus AO couldn’t have disallowed.
Disallowance of software, Revenue expenditure - HELD THAT:- As similar issue had come up before this Tribunal in the assessee’s own case for AY 2011-12 [2016 (10) TMI 1403 - ITAT CHENNAI] Tribunal was pleased to set aside the matter back to the file of the AO , thus we note that the assessee’s case as far as total software expenditure in this year is concerned is noted to be on account of annual- licence fee, which issue was set aside back to the file of the AO to verify the nature of expenditure as observed therefore, we set-aside the impugned order on this issue back to the file of the AO to verify the nature of expenditure.
Disallowance u/s.43B - HELD THAT:- As assessee fairly conceded that this issue has been decided against the assessee by case of Exide Industries [2007 (6) TMI 175 - CALCUTTA HIGH COURT] and therefore, the same stands dismissed.
Amortization of capital expenditure (lease hold land) - HELD THAT:-As relying on Madras High Court in the assessee’s own case [2021 (3) TMI 1471 - MADRAS HIGH COURT] as held held that even though foundational facts appears to have been recorded, the issue have not been canvassed by the assessee in the right Forum i.e. before the AO and therefore, the issue/claim of depreciation was remitted back to the AO for his adjudication - Thus the impugned order on this issue is set aside back to the AO and we direct the AO to consider whether the premium paid for grant of leasehold rights is eligible for depreciation after hearing the assessee.
Claim of foreign exchange fluctuation loss - HELD THAT:- We note that Forex loss which was on actual payment of loan taken for purchasing domestic assets. Therefore, it needs to be allowed as Revenue expenditure u/s.37 of the Act and is not hit by sec.43A of the Act, which is only when assessee has acquired imported assets; and since, we have noted that assessee has taken External Commercial Borrowings (ECB) for acquiring “indigenous assets” and not for acquisition of imported assets, disallowance made by the AO u/s.43A of the Act was erroneous and respectfully following the ratio of M/s.Wipro Finance Ltd. [2022 (4) TMI 694 - SUPREME COURT] we allow the claim of the assessee.
Re-statement of foreign currency loan - deduction towards foreign exchange loss on re-statement of foreign currency loan taken towards acquisition of capital assets which was disallowed by the AO stating that since such expenditure was towards acquisition of capital assets, it is in the nature of capital expenditure, and therefore, such claim made by the assessee is not allowable - HELD THAT:- We find force in the submission of Ld AR, and note that the assessee’s has claimed deduction towards foreign exchange loss on restatement of foreign currency loan (on 31st March) which was undisputedly taken towards acquisition of indigenous assets; and assessee as per AS-11 has rightly shown the same (forex loss) in the P & L A/c; and therefore is allowable as revenue deduction, and we order accordingly.
Interest on diverted funds - HELD THAT:- The assessee had profit after tax to the tune of Rs.95 Crs. and his net worth was Rs.694 Crs. and the loan given to the sister concern is only to the tune of Rs.9.06 Crs.
Therefore, applying the ratio in the case of CIT (LTU) v. Reliance Industries [2019 (1) TMI 757 - SUPREME COURT] it can be safely presumed that assessee had sufficient own funds, and that advances/loans were given to M/s.SFIL from the interest free funds (own funds) available with the assessee and not from the interest bearing funds (mixed fund of both) and refer to the decision of Hotel Savera [1997 (11) TMI 37 - MADRAS HIGH COURT] and also Reliance Utilities & Power Ltd [2009 (1) TMI 4 - BOMBAY HIGH COURT].
Disallowance u/s.14A - assessee had suo moto disallowed - HELD THAT:- We find force in the submission of the Ld.AR that since assessee had own funds of more than Rs.673 Crs. and investments as noted by the AO is only to the tune of Rs.132 Crs. It can be safely presumed that its own funds (interest free) were utilized for earning of exempt income. Therefore, no disallowance under Rule 8D(2)(ii) is warranted in this case.
Assailing the action of the AO in making adjustment u/r.8D(2)(iii) i.e. by applying 0.5% of the total investments made, as relying on Vireet Investment (P.) Ltd. [2017 (6) TMI 1124 - ITAT DELHI] we direct the AO to compute disallowance under Rule 8D(2)(iii) by only considering the investment which yielded exempt income (dividend) and not other investments.
Appeal filed by the assessee is partly allowed for statistical purposes.
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2024 (7) TMI 1586
Benefit of exemption under N/N.10/1997-CE dated 01.03.1997 for parts of aircraft supplied to specified institutions - Exemption has been denied alleging that the godos cleared by the appellants are only parts of air craft and does not meet the specifications prescribed in the notification and therefore not eligible for the exemption - scope of engineering goods - HELD THAT:- The main contention put forward by the appellant is that the Board vide circular dt. 29.2.2016 which has been reproduced above, has clarified that the engineering equipments would fall within the items which have been listed for exemption as per Notification No.10/97. It is seen that the Commissioner (Appeals) for subsequent period has considered the very same issue and allowed the exemption observing that the gods which are in the nature of parts of air craft would fall under the category of “Engineering Goods”. There are no grounds to take a different view.
Conclusion - The parts of aircraft can be classified as "engineering goods" eligible for exemption under N/N.10/1997-CE. The appellant is eligible for the exemption as per N/N.10/1997-CE.
Appeal allowed.
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2024 (7) TMI 1585
Deduction u/s 80G - Corporate Social Responsibility ('CSR) under mandatory requirement of the Companies Act, 2013 - HELD THAT:- The assessee has fulfilled all the conditions for deduction u/s 80G in respect of deduction claimed. We also note there is no specific bar in section 80G for claiming deduction in respect of CSR expenditure if an assessee otherwise fulfill all the requirement of section 80G of the Act.
In view of the cases Reliance Industries Ltd. [2023 (10) TMI 1313 - ITAT MUMBAI] and Naik Seafoods Pvt. Ltd. [2021 (11) TMI 1168 - ITAT MUMBAI] we uphold the finding of the Ld. CIT(A) on the issue in dispute. The ground of appeal of the Revenue is accordingly dismissed.
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2024 (7) TMI 1584
Management of assets and the appointment of a Resolution Professional (RP) in the context of a Corporate Insolvency Resolution Process (CIRP) - HELD THAT:- Issue notice in all the appeals.
Let Reply be filed by the respondents within two weeks from today.
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2024 (7) TMI 1583
Collusion between the bank officials and the auction purchaser - managed show - lack of transparency - HELD THAT:- It is not inclined to entertain this question in view of the fact that the order of the Recovery Officer cancelling the auction has been fully affirmed by the High Court. The auction property has been restored to its original status and is now subject to such orders that may be passed by NCLT/NCLAT in the pending proceedings. The petitioner shall be at liberty to apprise the Tribunals about the estimated market value of the property and and/or other initiatives, as may be deemed appropriate, for the revival of the industry.
The Special Leave Petition is disposed of.
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2024 (7) TMI 1582
Levy of service tax - Supply of Tangible Goods Services under Section 65(105)(zzzzj) of the Finance Act, 1994 upto 30.06.2012 - lease rentals paid by the appellant to the foreign company (Lessor) for hiring the containers - activity would fall under definition of Service as per Section 65B(44) for the period w.e.f. 01.07.2012 or not - HELD THAT:- The five-fold test put forward in the BSNL [2006 (3) TMI 1 - SUPREME COURT] case stands satisfied. There is indeed transfer of possession as well as effective control of the containers to the appellant by the foreign supplier. In such circumstances, the activity cannot fall under Supply of Tangible Goods Services as defined under Section 65(105)(zzzzj). As the above five-fold test for transfer of right to use the goods being satisfied, the transaction has to be construed as a deemed sale. It cannot be a 'Service' as defined under 65B(44) of the Finance Act, 1994.
The Tribunal in the case of Universal Dredging and Reclamation Corporation Ltd. [2020 (6) TMI 619 - CESTAT CHENNAI] had considered the issue for the period post 01.07.2012 also. After adverting to the declared services listed under Section 66E, the Tribunal observed that if the transfer is in the nature of deemed sale, it would be outside the purview of taxability under Finance Act, 1994.
There is a transfer of possession and effective control of the goods, and the activity being transfer of right to use goods, the demand of service tax cannot sustain for the period upto 30.06.2012 and post 01.07.2012 also.
Conclusion - The five-fold test put forward in the BSNL case stands satisfied. There is indeed transfer of possession as well as effective control of the containers to the appellant by the foreign supplier. The lease of containers was a deemed sale, not subject to service tax under either the 'Supply of Tangible Goods Services' category or the definition of 'service' post-01.07.2012.
The impugned order is set aside. The appeal is allowed.
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2024 (7) TMI 1581
Addition u/s. 68 - bogus LTCG - long term capital gains arising on sale of alleged penny stock - HELD THAT:- The investigation report prepared by Investigation wing, Kolkatta is a generalized report with regard to the modus operandi adopted in manipulation of prices of certain shares and generation of bogus capital gains.
AO has placed reliance on the said report without bringing any material on record to show that the transactions entered by the assessee were found to be a part of manipulated transactions, i.e., it was not proved that the assessee has carried out the transactions of purchase and sale of shares in connivance with the people who were involved in the alleged rigging of prices. A.R submitted that the transactions carried on by the assessee were not subjected to scrutiny by SEBI at all.
Assessee has purchased the shares from Stock exchange platform and also sold the shares in the stock exchange platform. Both the transactions have been carried out at the prevailing market rates only. The assessee has furnished evidences to prove the factum of purchase and sale of shares.
The financial transactions have also been carried out through banking channels. The shares have entered into and exited from Demat account of the assessee. We notice that the AO did not find any fault with the documents so furnished by the assessee.
There is no reason to suspect the transactions of purchase and sale of shares of above said company declared by the assessee in both the years under consideration. Decided in favour of assessee.
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