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2024 (6) TMI 1466
Allowability of E-SOP expenses - AO observed that E-SOP expenses claimed are capital in nature and hence they are not liable as expenses - assessee contended that expenses are in revenue nature as it is part of salary/employee cost which was incurred in relation to employees of the assessee and they are paid as incentive with a view to motivate and encourage the employees - HELD THAT:- This is an allowable expenditure in view of the judgement in the case of CIT Vs. Biocon Ltd. [2020 (11) TMI 779 - KARNATAKA HIGH COURT] wherein held that ESOP was allowable as a deduction u/s 37(1) of the Act as the primary object is not to waste capital to earn profit by securing consistent service of employees.
In the present case also, assessee debited towards employee stock compensation plan. This expenditure has been incurred by assessee in relation to employees of the assessee and they are paid as incentive with a view to motivate and encourage the employees. Restricted Stock Units (RSU) were issued at discounted premium to the employees under the incentive plan to compensate the employees for the continuity of their services and the company had stated that it neither raised any share capital under the incentive plan nor issued shares to its employees out of its capital and hence, there is no change in the fixed capital of the assessee. In view this, it is allowable expenditure.
When assessee claims it as an expenditure as it is relating to the employees welfare, the assessee should have deducted the TDS subject to this claim of assessee is liable u/s 37 of the Act as held in the case of Biocon Ltd. Accordingly, the issue is remitted to the file of ld. AO to verify whether there was due deduction of TDS on the expenditure debited to the P&L account towards ESoP in the assessment year under consideration and decide it afresh in the light of above judgement of jurisdictional High Court.
TP Adjustment - AMP expenditure towards selling/marketing, distribution expenses incurred by the assessee - whether AMP not an international transaction in absence of an arrangement between the Assessee and AE? - HELD THAT:- There is no arrangement between the Assessee and AE for incurring AMP expenses on behalf of the AE and thus, the AMP expenses incurred cannot be considered as an international transaction.
AMP is part of combined TNMM as per Advance Pricing Agreement (‘APA’) - as per DR AMP expenditure is not covered under the Advance Pricing Agreement (APA) entered newly by assessee with CBDT and therefore, AMP adjustment made by the TPO being separate international transaction shall sustain - As decided in Nissan Motor India Pvt. Ltd [2024 (5) TMI 1569 - ITAT CHENNAI] all the four pending appeals would fall under the purview of said APA. It is noted that Para- 3, 4, 5, & 6 clearly lay down the scheme of working which has to be followed by the assessee while reporting its business affairs. It is also be noted that the assessee has reported its financial transactions in complete fulfilment of the stipulations postulated in the said APA. Accordingly, there was no case for any adjustment to be made by the TPO and for the DRP to reiterate TPO’s actions. The addition made by the AO is thus in conflict with the agreements done in the APA and consequently deserves to be quashed and set aside. Addition to be deleted.
Thus, it is appropriate to remit the issue to the file of ld. AO/TPO as the benefit of this order was not available to the AO/TPO at the time of deciding the issue by them.
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2024 (6) TMI 1465
Denial of exemption u/s 11 & 12 - school being run by the assessee society is not recognized by Directorate of Education, Government of NCT, Delhi - receipt of corpus donations - HELD THAT:- Revenue’s ground that the assessee is not recognized by the Directorate of Education, Government of NCT, Delhi has no relevance on the facts of the case. The assessee has been granted Registration u/s 12AA of the Income Tax Act where the CIT granting registration has examined the genuineness of activities of the Trust and its compliance with any requirements of any law as are material for the purpose of achieving its objects.
It is settled position of law that once the society/trust/institution is registered u/s 12A, the Assessing Officer has no loco-standi to decide as to whether it is 'charitable' or otherwise. Once the trust is registered by the CIT under a particular category, the process of definition and classification of the activity ceases. It was held in the case of ACIT vs. Surat City Gymkhana[2008 (4) TMI 16 - SUPREME COURT] that the registration of a trust once done u/s 12A is a fait accompli and the Assessing Officer cannot thereafter make further probe in to the objects of the trust.
It was similarly held in the case of Hiralal Bhagwati v [2000 (4) TMI 14 - GUJARAT HIGH COURT] where held that once the registration under section 12A(a) was granted, the grant of benefit and exemptions could not be denied.
Receipt of corpus donation - We find that the contribution received have been utilized for the purposes of building the school which is in furtherance of the Trust’s objective of imparting education. We are also of the opinion that the Revenue has not established that the contributions received as corpus donation was utilized for purposes other than charitable purposes or there is a violation of provisions of section 13(1) or 13(2) of the I T Act.
We are in agreement with the findings of the ld. CIT(A)that the contributions cannot but be treated as voluntary in nature towards corpus donation u/s 11(1)(d). Capitation fee being in the nature of contributions which are voluntary in nature and exempted u/s 11(1)(d), the decision of the Hon'ble Karnataka High Court in the case of Kammavari Sangham, on which the assessee has relied, squarely applies [2022 (11) TMI 672 - KARNATAKA HIGH COURT]
CIT(A) was justified in allowing the benefit of exemption u/s 11(1) of the Act and deleting the addition. We also note that the ld DR has not controverted the fact that proposal sent by the AO to the DIT(Exemption) for cancellation of registration, has not been acted upon or the Department itself has not accepted the charitable nature of the assessee and has denied grant of exemption u/s 11 and 12 in subsequent AYs. Considering all the facts in totality and the legal principle of consistency, both the ground raised by the Revenue are dismissed.
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2024 (6) TMI 1464
Reliability of private laboratory report over government chemical examiners regarding the degradation of carotene content in Crude Palm Oil - grant of benefit under N/N. 21/2002-Cus. - respondents have deposited the amount of penalty in compliance of the Order-in-Original passed by the Commissioner of Customs, these appeals would not survive - HELD THAT:- All three Tax Appeals are disposed of as having become infructuous.
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2024 (6) TMI 1463
Method of valuation - stock transfers of clinker to sister units based on the transaction value at which clinker was sold to independent buyers - to be valued under Rule 11 of the Central Excise Valuation Rules, 2000, or under Rule 8, based on cost of production for captive consumption? - interconnected undertakings related to each other under Section 4(2)(b)(F) of the Central Excise Act, 1944 - HELD THAT:- A similar issue has been examined by this Tribunal in the case of Nalco [2024 (4) TMI 1088 - CESTAT KOLKATA] wherein this Tribunal has observed 'the appellant has correctly paid the duty on the goods in question, which has been captively consumed by the sister unit for manufacturing of excisable goods in terms of CBEC Circular No 692/8/2003-CX dated 13.02.2003.'
In similar set of facts this Tribunal has examined the issue in the case of Nalco and this Tribunal has came to a conclusion that the Appellant has correctly paid the duty on goods in question, which has been captively consumed by the sister unit for manufacturing of excisable goods in terms of CBEC Circular No. 692/8/2003-CX dated 13.02.2003 - Appellant has correctly paid duty as per CAS-4 in terms of Rule 8 of the Valuation Rules.
Conclusion - Appellant has correctly paid the duty in terms of Rule 8 of the Valuation Rules. In that circumstance, demand against the Appellant is not sustainable. The penalty is also not imposable on the Appellant.
The impugned order iss et aside - appeal allowed.
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2024 (6) TMI 1462
Validity of reassessment proceedings - Issue the satisfaction note w/o DIN number to the assessee at the time of issuance of notice for reassessment - as argued in absence of date or DIN number in the satisfaction note as per the Circular No. 19/2019 dated 14.8.2019 issued CBDT the initiation of the reassessment proceedings would be vitiated and the satisfaction note shall be deemed to have been never issued.
HELD THAT:- On perusal of the section 148 there is no provision to give a copy of satisfaction note recorded by the AO along with the notice u/s 148. AO has uploaded the satisfaction note which is an internal communication sent along with the proposal which is evident from the communication addressed by the AO to the PCIT which clearly shows the enclosure as a satisfaction note.
The said satisfaction note therefore, cannot be said to be communication as contemplated under the Circular No.19/2019 and even otherwise the same can be regularized by issuing the copy of the said satisfaction note with DIN number which would be a procedural aspect for issuing notice u/s 148 of the Act which already contains the DIN number and date.
With regard to the contention raised on behalf of the petitioner that there was inordinate delay in sending the proposal for reopening the assessment on the basis of the search conducted in the year 2021, as such, there is no time limit prescribed for initiation of the reassessment proceedings. The reliance placed on Circular No. 24/2015 dated 31.12.2015 is concerned, the same is issued by the CBDT in relation to the recording of the satisfaction of the AO of the searched person either and the time limit is prescribed for recording satisfaction of AO of searched person either at the time along with the initiation of proceedings against the searched person u/s 158BC or during the course of the assessment proceedings u/s 158BC or immediately after the assessment proceedings are completed under Section 158BC of the Act. Therefore, such guidelines would not apply for recording of the satisfaction note in case of the person other than the searched person on the basis of the materials seized or found during the course of the search.
The reliance placed on behalf of the petitioner on the decision Ashok Commercial Enterprise [2023 (9) TMI 335 - BOMBAY HIGH COURT] also provides for regularization of the satisfaction note by issuing the DIN number, which learned advocate for the Revenue has agreed and has undertaken to issue the satisfaction note with DIN number to the assessee at the time of issuance of notice for reassessment or as may be requested by the assessee.
No interference is called for in the impugned notice issued u/s 148.
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2024 (6) TMI 1461
Violation of principles of natural justice - no speaking order - Challenge to order of adjudication under section 17(4) of Customs Act, 1962 - enhancement of value and classification of goods - HELD THAT:- The Adjudicating Authority sought to change the classification and to enhance the value of assessment in the bill of entry by doing so under Section 17(4) of the Act, but no order has been passed under section 17(5) of the Act which is mandatory for the Adjudicating Authority to pass a speaking order for change of classification and enhancement of value. The said order was challenged by the Respondent before the Ld. Commissioner (Appeal) who examined the record and held that as no order under section 17(5) has been passed by the Adjudicating Authority, in that circumstance, the enhancement of value and change of classification is not sustainable.
The observation made by the Ld. Commissioner (Appeal) in the impugned order agreed upon wherein it has been held that the Adjudicating Authority is mandatorily required to pass the speaking order under section 17(5) of the Act which Adjudicating Authority fails to do so.
There are no merit in the appeal - appeal dismissed.
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2024 (6) TMI 1460
Method of valuation for waste and scrap generated during the manufacture of BOPP films, which is partly captively consumed in the manufacture of PP granules and partly sold to independent buyers - applicability of Rule 8 of Central Excise (Determination of Price of Excisable Goods), 2000 or Section 4 of Central Excise Act, 1944? - HELD THAT:- This Tribunal considering the very same issue in the appellant’s own case for the previous period [2020 (1) TMI 757 - CESTAT AHMEDABAD], held that as per the Ispat Industries Judgment [2007 (2) TMI 5 - CESTAT, MUMBAI-LB] for the purpose of captive consumption, the value of transaction made through the outside buyer should be taken as assessable value.
Conclusion - The provisions of Rule 8 of the Valuation Rules will not apply in a case where some part of the production is cleared to independent buyers.
The issue is no longer res-integra. Accordingly, the impugned orders are set aside. Appeals are allowed.
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2024 (6) TMI 1459
Set off of capital loss against income for the purpose of section 74 - assessee is entitled to get exemption under Article13(4) of DTAA - Whether the brought forward long-term capital losses and short-term capital losses can be set off against long-term capital gains (LTCG) exempt under Article 13(4) of the India-Mauritius Double Taxation Avoidance Agreement (DTAA)?
HELD THAT:- Considering the plain reading of the section that capital loss, after being carried forward, can be set off only against income under the head capital gains. Therefore, existence of a taxable income is a precondition for a set of losses against such income. In this appeal, the gains of Rs.26,36,44,954/- are admittedly exempt by virtue of article 13(4) of the treaty. The said gains, therefore, cannot be termed as income for the purpose of section 74 of the Act.
We relied on the orders of Swiss Finance Corporation (Mauritius) Ltd [2022 (10) TMI 1208 - ITAT MUMBAI] . In our considered view the answer is against revenue. The exempted income is not a part of taxable Gross Total Income.
The non-grandfathered LTCG will be adjusted with brought forwarded loss, following the order of Goldman Sachs Investments (Mauritius) Ltd. [2020 (9) TMI 1049 - ITAT MUMBAI]. The orders which are relied on by the ld. DR are distinguishable. The impugned final assessment order is dismissed. Decided in favour of assessee.
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2024 (6) TMI 1458
Eligibility of an incorporated members' club to claim a refund of Service Tax paid under the category of "Club or Association Services" post 1st July 2012 - HELD THAT:- The matter is no longer res-integra as the Hon'ble Supreme Court in its decision in case of State of West Bengal and Ors. Vs Calcutta Club Ltd and Chief Commissioner of Central Excise and Service Tax Vs Ranchi Club Ltd [2019 (10) TMI 160 - SUPREME COURT] has already decided the matter in favour of respondent holding that service tax does not apply to incorporated members' clubs.
Conclusion - The refund claims of the incorporated club for Service Tax paid post 1st July 2012 allowed.
The department’s appeal is accordingly dismissed.
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2024 (6) TMI 1457
Income deemed to accrue or arise in India - taxability of background screening services - Royalty or FTS under the provision of Article 13 of India-USA DTAA - HELD THAT:- Co-ordinate Bench Tribunal in [2024 (5) TMI 635 - ITAT DELHI] in assessee's own case, held that background screening services provided by an assessee does not qualify as royalty. Appeal of the assessee is allowed.
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2024 (6) TMI 1456
Seeking to quash Annexure A9 Final Report and all further proceedings - unlawful assembly - offences punishable under Sections 143, 147, 447, 294(b), 506(i) and Section 149 of the IPC - HELD THAT:- In the decision in Vineet Kumar & Ors. v. State of U.P & anr., [2017 (4) TMI 978 - SUPREME COURT], the Apex Court held in paragraph 39 that inherent power given to the High Court under Section 482 Cr.P.C is with the purpose and object of advancement of justice. In case solemn process of Court is sought to be abused by a person with some oblique motive, the Court has to thwart the attempt at the very threshold. The Court cannot permit a prosecution to go on if the case falls in one of the Categories as illustratively enumerated by this Court in State of Haryana v. Bhajan Lal [1990 (11) TMI 386 - SUPREME COURT]. Judicial process is a solemn proceeding which cannot be allowed to be converted into an instrument of operation or harassment. When there are material to indicate that a criminal proceeding which cannot be allowed to be converted into an instrument of operation or harassment.
Similarly, in another decision in Mahmood Ali v. State of U.P, [2023 (8) TMI 1359 - SUPREME COURT], the Apex Court while considering the power under Section 482 Cr.P.C, in paragraph 12 held that whenever an accused comes before the Court invoking either the inherent powers under S.482 of the Code of Criminal Procedure or extraordinary jurisdiction under Art.226 of the Constitution to get the FIR or the criminal proceedings quashed essentially on the ground that such proceedings are manifestly quashed essentially on the ground that such proceedings are manifestly frivolous or vexatious or instituted with the ulterior motive for wreaking vengeance, then in such circumstances the Court owes a duty to look into the FIR with care and a little more closely.
Conclusion - The legal position is clear that quashment of criminal proceedings can be resorted to when the prosecution materials do not constitute materials to attract the offence alleged to be committed. Similarly, the Court owes a duty to look into the other attending circumstances, over and above the averments to see whether there are materials to indicate that a criminal proceeding is manifestly attended with mala fide and proceeding instituted maliciously with ulterior motives. Once the said fact is established, the same is a good reason to quash the criminal proceedings.
Petition allowed.
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2024 (6) TMI 1455
Dishonour of Cheque - cognizance of an offence under Section 138 of the Negotiable Instruments Act without first condoning the delay in filing the complaint beyond the prescribed period under Section 142(1)(b) of the NI Act - HELD THAT:- Since Section 142 (1)(b) originally did not provide for taking cognizance of a belated complaint, the argument that the Magistrate was required to condone the delay before taking cognizance and, until then, he did not possess jurisdiction, cannot be a valid argument. If a Magistrate is empowered to condone the delay in presenting the complaint and then take cognizance, the mere fact that he took cognizance first and then condoned the delay would be of little consequence. It is only if the Magistrate does not condone the delay at all during the pendency of the proceedings and goes on to adjudicate the matter will the proceedings be vitiated.
In fact, the Apex Court in the case of Pawan Kumar Ralli [2014 (8) TMI 608 - SUPREME COURT], while dealing with the case in which the High Court had quashed the proceedings on the ground of limitation, has observed that with a view to obviate the difficulties from a part of the complainant, the Parliament has inserted the proviso to clause (b) of Section 142 of the NI Act in the year 2002 which conferred jurisdiction on the learned Magistrate to condone the delay. The Supreme Court has also observed that a litigant should not be deprived of the remedy provided in the legislature and a genuine litigant should be allowed to pursue his case against a defaulter by overcoming the technical difficulty of limitation.
In the present case, the taking of cognizance without condoning the delay would, at best, be a curable defect, and by condoning the delay, this irregularity stood cured.
The learned Magistrate at the time of taking cognizance did not notice whether the complaint was within the prescribed time or not. The learned Magistrate was probably misled by the averment in the complaint at paragraph No.8 that it was within time - This order of the learned Magistrate reserving liberty to the accused and noticing that the cognizance had been taken, even though there was a delay, has been accepted by the accused and has not been challenged. The petitioner has presented this petition four years thereafter, when orders have been passed by the learned Magistrate condoning the delay in presenting the petition.
In light of the fact that the learned Magistrate has ultimately condoned the delay, no prejudice has been caused to the accused by the cognizance already taken. Even if the contention advanced by the petitioner is accepted, all that would have to be done is to set aside the order taking cognizance and call upon the learned Magistrate to consider the application of condoning the delay and then consider the question of taking cognizance. Since in the instant case the complaint is of the year 2013 and the matter has been pending for more than 11 years, there would be no justification in considering this plea of the petitioner. Furthermore, since the delay of merely 2 days in filing the complaint has already been condoned, the cognizance taken, though irregular, cannot be found fault with, as the irregularity has stood cured on the delay being condoned.
Conclusion - i) The Magistrate did not err in taking cognizance before condoning delay. ii) The subsequent condonation of the two-day delay cured any irregularity.
The petition challenging the proceedings on the ground of delay in filing complaint is dismissed.
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2024 (6) TMI 1454
Classification of goods intended to be imported - Menthol Scented Sweet Supari and Flavoured and Coated Illaichi - to be imported under the CTH-0802 80 or under CTH-2106 90? - HELD THAT:- These processes as described and carried out on the subject products are essential for the preparation of the subject goods as mouth freshener and goods after subjecting to such processes cannot be ordinarily used for any other purpose. There is nothing on record to dispute claim of the applicant. The betel nut products commonly known as supari is covered under sub-heading 2106 90 30 of this chapter. Applicant has relied upon C.B.I. & C. Circular No. 163/19/2021-GST, dated 6th October, 2021 for their claim to the classification of scented sweetened supari.
Since the product under consideration is Flavoured and coated Illaichi (Cardamom) which applicant has claimed to be edible product in terms of supplementary note 5(b) of the chapter 21 of the Customs Tariff Act, 1975 examination of relevant CTHs under chapter 21 is essential.
Applicant has referred to the C.B.I.C. Circular No. 163/19/2021-GST dated 6th October, 2021 issued based on the recommendations of the GST Council in its 45th meeting held on 17th September, 2021 for clarifying classification aspects of the scented sweet supari and flavoured coated illaichi. It is found that both the products will be subjected to the processes before their importation and hence it is pertinent to consider the contents of the CBIC circular noted earlier in view of the provisions of the Section 3(7) of the Customs Tariff Act, 1975.
In the instant case menthol scented sweet supari does not contain lime, katha (catechu) and tobacco. It will specifically contain menthol. Due to carrying out of such processes this product is not classifiable under Chapter 8 of the Customs Tariff Act, 1975. On the background of contending classifications, relevant chapter notes & supplementary notes, CBIC Circular referred above, explanations in the IGST Rate Notification amended from time to time, and the Section 3(7) of Customs Tariff Act, 1975 instant product - betel nut product known as supari -menthol scented and sweet - is more appropriately classifiable as a betel nut preparation under chapter 21 i.e., CTH 2106 9030 than in any of the headings under Chapter 8. CBIC circular legally supports this view.
Conclusion - “Menthol Scented Sweet Supari” merits classification under CTI 2106 90 30 and “Flavoured and coated Illaichi” merits classification under CTI 2106 90 99 of the First Schedule to the Customs Tariff Act, 1975.
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2024 (6) TMI 1453
Acquittal of the accused - it is alleged that the respondent No. 2 had physical relations with appellant, on the pretext of marriage and promise to give her a job - HELD THAT:- The law with regard to the scope of interference by the Appellate Court in an appeal against acquittal, is no longer res integra.
In SHEO SWARUP AND ORS. VERSUS THE KING-EMPEROR [1934 (7) TMI 17 - PRIVY COUNCIL], one of the earliest case dealing with the scope of the Appellate Court against an order of acquittal, the Privy Council held 'Sections 417, 418 and 423 of the Code give to the High Court full power to review at large the evidence upon which the order of acquittal was founded, and to reach the conclusion that upon that evidence the order of acquittal should be reversed. No limitation should be placed upon that power, unless it be found expressly stated in the Code. But in exercising the power conferred by the Code and before reaching its conclusions upon fact, the High Court should and will always give proper weight and consideration to such matters.'
The law on the issue i.e. scope for interference in an appeal against acquittal can very broadly be summarized as follows; that in exceptional cases where there are compelling and substantial reasons; and where the judgment under appeal is found to be perverse, clearly unreasonable, manifestly erroneous, contrary to the evidence on record, or contrary to law, and the findings have been arrived at, by ignoring or excluding relevant material or by taking into consideration irrelevant/inadmissible material or is `against the weight of evidence’ or if the finding so outrageously defies logic as to suffer from the vice of irrationality, the Appellate Court can interfere with the order of acquittal. However, whilst doing so, the Court has to bear in mind the presumption of innocence of the accused and further that the trial Court’s acquittal bolsters the presumption of his innocence; and that interference in a routine manner, only because another view is possible should be avoided.
It is the appellant’s case that she got married to the respondent No. 2 as per Hindu rites and customs. The evidence of the neighbours also does not, in any way, further the prosecution case.
Conclusion - Keeping in mind all the sections alleged as against the respondent No.2. In the facts, there are no infirmity in the said judgment and as such, no interference is warranted.
Appeal dismissed.
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2024 (6) TMI 1452
Process amounting to manufacture - activity of printing of wedding cards and visiting cards - entitlement to the benefit of SSI Exemption N/N. 8/2003-CE dated 01.03.2003 - inclusion of value of blank cards supplied by the customers for printing in the value of finished wedding / visiting cards - invocation of extended period of limitation.
The activity of printing of wedding cards and visiting cards amounts to manufacture or not - HELD THAT:- The activity of printing on the cards supplied by the customers results into manufacture. Also, the Tribunal in the case of Venus Albus Co. Pvt. Ltd. [2018 (11) TMI 754 - CESTAT CHANDIGARH] held that the activity printing of cards, video albums, etc., amounts to manufacture
Entitlement to the benefit of SSI Exemption Notification No.8/2003-CE dated 01.03.2003 - HELD THAT:- In the present case, the printed wedding cards and visiting cards had been affixed with the brand name ‘Valavi’ which has been registered in the name of Valavi and Company as evident from the records referred in the order of the adjudicating authority bearing Certificate No.644263 dated 27.06.2007 (Trade Mark No.1239260 dated 24.09.2003) issued by the Registrar of Trade Marks, Mumbai under the Trade Marks Act, 1999; therefore, affixing the trade mark attracts Clause (a) of the SSI Exemption Notification No.8/2003-CE dated 01.03.2003. Therefore, appellants are not entitled to the benefit of the said Notification.
Inclusion of value of blank cards supplied by the customers for printing in the value of finished wedding / visiting cards - HELD THAT:- The learned Commissioner (A) in two appeals has rejected the appellant’s contention on the ground that the appellant had failed to place documentary evidences to exclude the value of cards from the transaction value; whereas in Appeal No. E/20552/2022, the learned Commissioner remanded the matter for verification of the claim of the appellant on the basis of documentary evidences to be placed by the appellant for proper verification. Since the views of the learned Commissioner (A) are inconsistent on the issue of inclusion of the value of the cards, supplied free by the customers to the appellant, in the total cost of the printed wedding cards, therefore, the matter needs to be remanded to the adjudicating authority to examine the issue in the light of Rule 6 of Central Excise (Determination of Price of Excisable Goods) Rules, 2000 and on the basis of documentary evidences on record or that would be produced by the appellant.
Invocation of Extended period of limitation - HELD THAT:- It is brought on record that the appellant had neither registered with the department nor intimated about the activity undertaken by them, therefore, the finding of the authorities below on the issue of suppression of fact does not warrant any interference, as no contrary evidence has been placed by the appellant to the finding of the authorities below - the invocation of the extended period is justified.
Conclusion - i) The activity of printing cards, even if customized, constitutes manufacture under the Central Excise Tariff Act, 1985. ii) The use of another entity's brand name disqualifies a manufacturer from SSI exemption benefits. iii) The value of blank cards provided by customers may be included in the assessable value, subject to verification of evidence. iv) The extended period of limitation is applicable where there is a lack of registration and disclosure by the manufacturer.
The impugned orders are modified and the appeals are remanded to the adjudicating authority only for the purpose of calculation of duty afresh after computing the assessable value of the printed cards in accordance with provisions of Section 4 of Central Excise Act, 1944 read with Central Excise Valuation Rules, 2000; thereafter, the penalty and interest be calculated accordingly - Appeal disposed off by way of remand.
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2024 (6) TMI 1451
Addition u/s 14A - AO was not satisfied with suo moto offering of disallowance of expenditure w.r.t. earning exempt income - HELD THAT:- AO cannot straight away resort to Rule 8D. Sub-Section 2 of Section 14A and Rule 8D (1), both require the ld. AO to first consider the books of accounts of the taxpayer before resorting to Rule 8D.
AO must arrive at an objective satisfaction that the assessee's claim is incorrect. The satisfaction of the AO as to the incorrect claim made by the assessee in this regard is sine qua non for invoking the applicability of Rule 8D. Such satisfaction can be reached and recorded only when the claim of the assessee is verified. If the assessee proves before the ld. AO that it incurred a particular expenditure in respect of earning the exempt income and the AO gets satisfied, then there is no requirement to still proceed with the computation of amount disallowable as per Rule 8D.
We respectfully relied on the order of Bombay Stock Exchange Ltd.(2019 (11) TMI 105 - BOMBAY HIGH COURT). We reject the impugned appeal order. The addition amount is quashed. The appeal of the assessee is succeeded.
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2024 (6) TMI 1450
Scope of appealable order - whether the procedural order passed by the National Company Law Tribunal (NCLT), which directed the consolidation of multiple pending company petitions for adjudication by an appropriate bench, falls within the ambit of appealable orders under section 421 of the Companies Act? - HELD THAT:- In the instant case, when the proceedings were taken up on 09.05.2024, the bench of the Learned Tribunal, realized the fact that there are other Company Petitions which were pending, and hence the Tribunal thought it appropriate to refer the matter to the Hon’ble Chairperson for nomination of the appropriate bench, so that all the matters which are similar in nature, are decided together. This order itself will not amount to be an adjudication of any of the rights to the party to the proceedings.
The observation thus made that the court is not inclined to grant any Interim Relief, “at this juncture”, has been misconstrued by the learned counsel for the Appellant, as if it amounts to denial of the Interim Order. That may not be the case and the correct interpretation of the order for the reason being that the court has expressed his inability to consider the Interim Relief Application at that stage owing to the reasons already given in the preceding paragraph of the Impugned Order as well as this Judgment too. On this simple count and arguments itself, the Learned Counsel for the Appellant has burdened the litigant to this appeal with the preparation of 7 volumes of documents running to 1312 pages, for no good purpose or valid reason.
Conclusion - The appeal is not maintainable as the procedural order does not affect the appellant's rights.
Appeal dismissed.
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2024 (6) TMI 1449
Addition u/s 68 - cash deposited/ old currency as unexplained cash credits - quantum of cash sales was abruptly on higher side on a single day - HELD THAT:- As we find that the assessee has maintained consistent stock levels and recorded all transactions in the books of accounts. No discrepancies were found in the cash book, bank book, purchases, monthly stock, or audited books of accounts by the AO.
We have also noted the facts that the cash deposit in question is part of the sale which is explained by the assessee. AO has not doubted corresponding purchases and quantitative details. The profit element of such sale is already offered for taxation by the assessee. Income so declared by the assessee is also accepted by the AO. AO's additions were based on presumptions and assumptions without any cogent material evidence.
The judicial pronouncements relied upon by assessee highlight that once the underlying amount forms part of the sales duly accounted for in the books and the income element embedded therein has been accepted by the AO, the same amount cannot be added again u/s 68 of the Act as it would amount to double taxation.
We hold that the Ld. CIT(A) was justified in deleting the impugned additions. Assessee appeal allowed.
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2024 (6) TMI 1448
Classification of services - Clearing &Forwarding (C&F) agent services or Business Auxiliary Service (BAS) - whether the incomes shown under various heads are on account of cargo handling services for export and hence such services are exempted from payment of service tax? - recovery alongwith interest and penalty - Jurisdiction of Commissioner of Service Tax, Mumbai-VII over all the Branches of the assessee appellant for adjudication of the SCN dated 21.10.2008 - Extended period of limitation.
Classification of service - HELD THAT:- The ‘clearing and forwarding services’ relate to receipt of goods from factories or premises of manufacturer who is the principal and the C&F agent acts as his agent, in such receipt, warehousing of goods; receiving despatch orders from the principal manufacturer and arranging its despatch as per instructions of the principal and through his authorised transporters, maintaining records of stock, receipt and despatch on behalf of the principal, for which the C&F agents receives the remuneration as a commission, either as a percentage of turnover or in any other manner as variable commission based on certain performance indicators agreed upon between them. These aspects are clearly absent in the present factual matrix of the case. The present case is concerned only with handling of export/import cargo on behalf of the principal APLL HK, who is a vessel owner or a Non-Vessel Operating Common Carrier (NVOCC), involved in transportation of such cargo for their clients, both of whom are situated outside India. Thus, on the basis of facts of the present case, the services/activities performed by the appellant assessee as per agreement dated 01.01.2002 does not fall under the category of ‘clearing and forwarding agent’ service.
The taxable services under the category of ‘cargo handling service’ covers under its scope various activities related to handling of cargo in import/export operations through containerised or non-containerised freight listed out in the ’means’ portion of the definition; however, it the non-inclusion portion, the services relating to ‘handling of export cargo’ have been specifically excluded. Further, this service is limited in its scope, inasmuch as it covers only cargo handling activities and does not extend to financial, accounting, marketing services etc. as is the case of the appellants here. Thus, ‘cargo handling service’ is not relevant to the services provided by the appellant assessee in the present set of facts in this case.
The demand of service tax under Clearing and Forwarding agent service was confirmed on the basis of the terms and conditions of Forwarders Cargo Receipt (FCR) with specific reference to condition Sl. No.3 &4. On perusal of the sample copy of FCR produced by the appellant assessee, it is found that the appellant assessee had issued the document as agent of APLL HK for the ‘buyer’ situated abroad outside India to whom the export goods are sold by Indian business entity as ‘seller’ covering voyage of the export goods from India to destination port outside India, at the place of buyer - The word ‘customer’ has been explained in condition No.1 to include persons entering into an agreement with APLL HK, and therefore specific mention in condition No.3 & 4, that any services provided by appellant assessee to the customers could include the clients/customers or business entities who have entered into an agreement or arrangement with APLL HK - it is not feasible to extend such reference to the term ‘customer’ in the FCR document to business entities situated in India, and treat the appellant assessee as ‘agent’ of these business entities in India and thus cover the services provided by the appellants under the taxable category of Clearing and Forwarding agent services for charging service tax.
It is not found that appointment of sub-agents like APL Logistics and Warehouse Management Service (Hong Kong) Ltd. (APLL WMS), a company organized under Hong Kong laws, as unauthorized or deliberate action with an intention to evade tax. Further, it is also noted that the payment of service tax already made by the appellant assessee with effect from February, 2006 towards Business Auxiliary Services provided by them and with effect from June, 2006 towards Business Support Services, which have been appropriated in the impugned order for an amount of Rs.3,45,06,438/-.
Jurisdiction for adjudicating the SCN - HELD THAT:- Rule 3 of the Service Tax Rules, 1994 provide for appointment of officers for the purpose of exercising the powers under Chapter V of the Finance Act, 1994. We further find that the SCN dated 21.10.2018 does not specifically mention that the appellants had centralized registration during the relevant period and thus they had issued demand notice covering all the locations/branches of the assessee appellant. Further, we also find that in different jurisdiction i.e., at Chennai, the Commissioner of Service Tax, Chennai had also issued show cause notice for recovery of service tax payable on the business auxiliary services for the period from 10.09.2004 to 30.04.2006 and 10.09.2004 to 31.01.2006 vide SCN 12.07.2007 - the impugned order dated 31.12.2015 had by verifying the Chartered Accountant’s certificate dated 18.12.2015 had dropped the service tax demand in respect of interest earned on time deposits/fixed deposits. Therefore, there are no infirmity in the above decision of dropping of such demand on the basis of factual details and supporting evidential documents.
On perusal of CBEC instructions issued vide F. No. 137/ 50/2007-CX.4 dated 16.03.2007, it appears that these are the nature of administrative instructions for proper handling of files, documents and investigation records by a single authority having jurisdiction over service tax matters in respect of centralised registration, and the manner of handling transitional issues from decentralized registration to centralised registration. However, we do not find that the said instruction dated 16.03.2007 and provide any legal authority for exercise of the powers conferred on the officers by the Board under Rule 3 of the Service Tax Rules, 1994.
Further, the records available in the present case do not indicate that on account of centralised registration being taken by the appellant assessee in November, 2010, the SCNs pending adjudication at different locations were transferred to the Commissioner of Service Tax-VII, Mumbai. As the SCN in respect of the impugned order was issued on 21.10.2008, much prior to the centralised registration taken during November, 2010, there is no possibility for the jurisdictional Commissioner to assume jurisdiction over all the units of the appellant registered separately at different locations. In view of the above factual position, there are no merits in the appeal filed by the department stating that the dropping of the service tax demand raised in the SCN dated 21.10.2008 for locations other than Mumbai is legally sustainable.
Penalties proposed in the show cause notice - levy of penalty equal to the amount of service tax demanded under Section 78 ibid - Extended period of limitation - HELD THAT:- The legal provisions contained in Section 73(1) ibid provide that extended period can be invoked for demand of service tax, in situations where there is any involvement of fraud, or collusion, or wilful misstatement, or suppression of facts, or contravention of any of the provisions of this Chapter or of the Rules made thereunder with intent to evade payment of service tax, by the appellant assessee. Neither in the show cause notice nor in the impugned order, there is any specific allegation or finding for invoking such legal provisions - the Department claimed that the appellant by avoiding to provide the figures, had intentionally by design stopped the process of issuing to show cause notices by other jurisdiction, and thus they had intention to evade duty. We find from the factual details about various notices issued in other jurisdictions and that the entire data having been provided to the audit officers of the Department, there is no justification to claim suppression of facts in such a situation. Further, there is no evidence or any document to indicate that the appellant assessee in any manner had attempted to evade service tax. On the other hand, it is found that contrary to the claim of the Department, the assessee appellant had paid the service tax of Rs.3,45,06,438/- on various services for which service tax is payable under the Finance Act, 1994 - The invocation of extended period for demand of service tax in the present cases is not sustainable. Consequent to this, the penalty imposed on the appellants under Section 78 ibid also does not survive on the above grounds.
Conclusion - i) The services provided by the appellant did not fall under the 'Clearing & Forwarding Agent service' category and were not taxable under this category. ii) The services were taxable under BAS and BSS, for which the appellant had already paid service tax. iii) The Commissioner of Service Tax, Mumbai-VII, lacked jurisdiction over branches outside Mumbai. iv) Extended period of limitation and penalties also set aside.
Appeal allowed.
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2024 (6) TMI 1447
Levy of surcharge despite the total income was less than Rs. 50,00,000/- - Incorrect levy of additional interest u/s. 234B - HELD THAT:- The surcharge is leviable only when amount of income tax is computed where the total income exceeds Rs. 50,00,000/- and so on. Here in this case, the return of income is only Rs. 36,930/- so on this income, taxes shall be charged at a maximum marginal rate in terms of Section 164 of the Act.
Even after the trust is taxed at maximum marginal rate but for levying the surcharge, it is necessary that the slab of income which is chargeable to tax is exceeding Rs. 50,00,000/- and above. Thus, the interpretation and the observation of the ld. CIT (A) is ostensibly against the law. If CPC which is computer assisted programme has made a mistake, then at least ld. CIT (A) should have seen the law in correct perspective; or something should have been brought on record that there is any notification or interpreting the slabs provided in the Finance Act that even if income is less than Rs. 50,00,000/-, surcharge is leviable in case of AOP. Accordingly, the surcharge levied by the CPC is deleted. Consequentially, interest u/s. 234B has also got reduced.
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