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2024 (9) TMI 1743
Compliance with the mandatory pre-deposit requirement under section 35F of the Central Excise Act, 1944, in respect of the disputed service tax demands raised through two Show Cause Notices dated 07.03.2008 and 28.11.2008 - HELD THAT:- The calculation provided by the DR shows the demand of the impugned period was Rs. 13,66,31,566/- i.e. Rs. 8,35,86,570/-in SCN dated 07.03.2008 and Rs. 5,30,44,996/- in SCN dated 28.11.2008. After deducting the amount paid respectively for both the SCN. Hence the proposed demand under SCN dated 07.03.2008 was Rs. 4,28,08,029/- and that under SCN dated 28.11.2008 was Rs. 4,01,44,996/- totaling to Rs. 8,29,53,025/-. This amount is the amount under challenge.
As per section 35 F the amount of pre-deposit has to be certain percentage of duty confirmed or penalty imposed. Since the duty demanded already excluded the amount already paid, the said payment is not the subject matter of section 35 F of Central Excise Act, 1944. The only amount which can be set off against the amount of pre-deposit of section 35F is Rs. 45 Lakhs. From the calculation given by the Department it is apparent that the amount of pre-deposit is Rs. 62,21,477/- (7.5% of the demand of duty under dispute).
Resultantly, the balance amount is yet to be paid by the appellant for the impugned defect to be removed. One month time is given to the appellant to make good the deficiency of the said amount.
Matter be now listed on 13.11.2024.
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2024 (9) TMI 1742
Entitlement for post award interest on the sum awarded by the Arbitrator - denial of payment of such interest under a misplaced impression that the contract between the parties prohibited it - Validity of impugned Order passed by the High Court - HELD THAT:- We are of the opinion that the judgment of High Court is clearly erroneous. Firstly, the interest granted by the First Appellate Court only related to post award period, and therefore, for this period, the agreement between the parties has no bearing. Section 31(7)(b) deals with grant of interest for post award period i.e., from the date of the award till its realization. The statutory scheme relating to grant of interest provided in Section 31(7) creates a distinction between interest payable before and after the award. So far as the interest before the passing of the award is concerned, it is regulated by Section 31(7)(a) of the Act which provides that the grant of interest shall be subject to the agreement between the parties. This is evident from the specific expression at the commencement of the sub-section which says “unless otherwise agreed by the parties”.
So far as the entitlement of the post-award interest is concerned, sub-Section (b) of Section 31(7) provides that the sum directed to be paid by the Arbitral Tribunal shall carry interest. The rate of interest can be provided by the Arbitrator and in default the statutory prescription will apply. Clause (b) of Section 31(7) is therefore in contrast with clause (a) and is not subject to party autonomy. In other words, clause (b) does not give the parties the right to “contract out” interest for the post-award period. The expression ‘unless the award otherwise directs’ in Section 31(7)(b) relates to rate of interest and not entitlement of interest. The only distinction made by Section 31(7)(b) is that the rate of interest granted under the Award is to be given precedence over the statutorily prescribed rate. The assumption of the High Court that payment of the interest for the post award period is subject to the contract is a clear error.
The High Court, therefore, committed an error in relying on the decision of this Court in Jaiprakash [2019 (2) TMI 375 - SUPREME COURT] The judgement in Jaiprakash deals with the issue of prohibition of pendente-lite interest and will have no application to the facts of the present case where the claim relates to post-award interest.
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2024 (9) TMI 1741
Addition u/s 68 - assessee had not maintained any books of account - HELD THAT:- The provisions of Section 68 starts with “where any sum is found credited in the books of an assessee maintained for any previous year”. The emphasis is on the sum found credited in the books therefore, if the assessee has not maintained any books of account, then the provisions of Section 68 are not applicable.
As relying on BHAICHAND H. GANDHI [1982 (2) TMI 28 - BOMBAY HIGH COURT] considering the fact that the cash was found to be deposited in the bank and since the assessee has not maintained any books of account therefore, in our considered opinion and in the light of the judicial decisions discussed hereinabove provisions of Section 68 are not applicable and therefore no addition could have been made by the AO u/s 68. Appeal of the assessee is allowed.
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2024 (9) TMI 1740
Additions u/s 69A - partners introduced the capital during the demonetization period in SBN which was not a legal tender - HELD THAT:- The assessee has no source of income other than Agriculture Income which is exempt from the tax. Therefore, even if the explanation of the assessee in the opinion of the lower authorities was not satisfactory even then it cannot be presumed that the amount deposited in the bank account is out of the undisclosed income of the assessee without bringing on record an iota of evidence.
Even otherwise to my mind, there is no bar that if earlier partners have not contributed capital in cash they cannot contribute the capital subsequently in cash. The Peculiar urgency cannot be a reason to doubt the capital contributed by the partners in cash and an important fact which skipped from the attention of the revenue authorities that all the five partners who introduced the capital are regularly assessed to tax. In case of Sh. Niranjan Lal Data, Sh. Saurabh Data and Sh. Vijay Data cash flow statement is submitted. The same is backed by availability of opening cash in hand disclosed in the income tax return and their bank statement.
No discrepancy has been found in such cash flow statement except pointing out variation in the household withdrawals in different years. It may be noted that such withdrawal has been accepted in the hands of these persons in the assessment framed u/s 153A of the Act. Thus the capital contribution by these 3 partners is verifiable from their cash flow statement. In any case when all the 5 partners have accepted the capital contribution made by them with the assessee firm, the same cannot be added u/s 68 of the Act.
If the cash deposited during demonetization period is verifiable from the books of accounts and the same having been accepted, no addition can be made u/s 68/69 of the Act. See OM PARKASH NAHAR [2022 (2) TMI 326 - ITAT DELHI] and SMT. TRIPTA RANI [2022 (6) TMI 690 - ITAT CHANDIGARH] - Appeal of assessee allowed.
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2024 (9) TMI 1739
Reopening notice u/s 148 issued by non-jurisdictional AO - HELD THAT:- We are bound to follow the same. Moreover, as held in the case of ‘ACIT vs. Hotel Blue Moon’[2010 (2) TMI 1 - SUPREME COURT] that the issue of notice u/s 143(2) is sine qua non to assume jurisdiction to proceed with the assessment in a case.
Similarly, in our view, in the case of the reopening of the assessment u/s 147 of the Act, the issue of notice u/s 148 by the AO having jurisdiction is also sine qua non. If the said notices had been issued by the Assessing Officer who did not have the jurisdiction over the assessee, then such notices are to be treated as non-est. The assessment carried out in such cases will be bad in law.
Thus, assessment framed u/s 143(3) r.w.s. 147 of the Act, in this case, is held to be bad in law and the same is accordingly quashed. Appeal of the assessee stands allowed.
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2024 (9) TMI 1738
Disallowance of claim of weighted deduction on R&D expenditure - expenditure was not approved by DSIR - HELD THAT:- Similar ground has already been allowed by this Tribunal for AY 2010-11 in the assessee’s own case [2024 (9) TMI 1737 - ITAT CHENNAI] wherein held as the assessee has 3 in-house R&D facilities for undertaking scientific research duly approved by DSIR as an in-house R&D centre per requirement of section 35(2AB). Deduction claimed for these approved R&D centers was duly audited and certified by statutory auditors in annual report. DSIR is merely authority for approval of R&D facility. Once facility is approved, expenditure incurred automatically qualifies for deduction u/s.35(2AB), irrespective of DSIR approval.
It is noted that the R & D Facility has been approved as required by the authority i.e. DSIR. The settled position was that once facility is approved, expenditure incurred in this regard qualifies for deduction u/s.35(2AB) of the Act until amendment was brought in Rule 6(7A) of the of the Income Tax Rules, 1962 w.e.f. 01.07.2016 (relevant to AY 2017-18). Therefore, the AO/Ld.CIT(A) erred in disallowance the weighted deduction u/s.35(2AB).
Disallowance of deduction for forex loss accounted in hedge reserve - AR submitted that deduction may be allowed in the year in which forex loss is charged to P&L account of the assessee and brought to our notice that similar contentions were accepted in assessee’s own case for AY 2010-11 - HELD THAT:- We agree with the alternate submissions of the assessee and note that in AY 2010-11, the Ld.CIT(A) has appreciated the assessee’s alternate contention that there will be double disallowance of the same expenditure, once in AY 2009-10 (through AO order) and the other in AY 2010-11 suo-moto by the assessee. It is noted that the assessee had moved an application before the Ld.CIT(A) to withdraw the voluntary disallowance made by it in its return for AY 2010-11 and the Ld.CIT(A) after appreciating the claim of the assessee has rightly held in order to avoid double deduction, the debit to P&L in AY 2010-11 was nullified by the Appellant by adding back the amount of loss in the memo of income for AY 2010-11 However, the claim of deduction for AY 2009-10 was not allowed by the AO and confirmed by the CIT(A) and is pending before the ITAT. If the claim of deduction made in memo of AY 2009-10 is not allowed, the Appellant's adding back of the amount in AY 2010-11 will effectively result in denying this loss of forex changes on account of revenue item. Therefore, in order to mitigate the double whammy both in AY 2009- 10 (by the AO in his assessment order which has been upheld by the CIT(A)) and in AY 2010-11 (by suo-moto disallowance in return by the Appellant), the Appellant is eligible to delete the voluntary disallowance made in the return of income for AY 2010-11 which the AO is directed to allow. This ground is allowed in favour of the Appellant. However, if the disallowance is deleted for A.Y. 2009-10, the AO may accordingly recalculate the loss and add the same back to the income of the appellant in this year.
Disallowance u/s.14A r.w.r.8D while computing the book profits u/s.115JB of the Act - HELD THAT:- We note that this issue had come up in appeal in AY 2010-11 and appeal [2024 (9) TMI 1737 - ITAT CHENNAI] wherein similar grounds of appeal was raised by the assessee and this Tribunal was pleased to hold provisions relating to normal tax computation can’t be imported into sec.115JB of the Act which is a separate code by itself i.e. Rule 8D computation for disallowance u/s.14A can’t be used for making adjustment for computation of book profit u/s.115JB of the Act and relied on the decision of Special Bench in the case of ACIT v. Vireet Investment (P) Ltd [2017 (6) TMI 1124 - ITAT DELHI] which decision has been upheld by the Hon’ble Bombay High Court.
TDS u/s 195 - disallowance of consultancy expenditure u/s.40(a)(ia) of the Act for non-deduction of TDS - AO disallowed the consultancy expenditure claimed by the assessee for non-deduction of TDS by observing that though the payee/non-resident provides training to the engineers of the assessee company on their individual capacity, he is a Consultant who is qualified to provide managerial and professional services and in fact, imparting technical knowledge to the engineers would also satisfy the condition for “make available test” - HELD THAT:- As noted that assessee has made payment of legal fees and consultancy fees to individuals in UK & USA, on which, assessee hasn’t deducted tax at source by relying on Article-15 of the respective Tax Treaties on Independent Personal Services (IPS). Having gone through the Article-15 of the respective Tax Treaties on IPS as well as Article-13 of the DTAA with UK and Article-12 of USA, we are of the view that legal and accountancy services obtained from firm/individuals are exempt from tax in India and are taxable only in UK/USA i.e. country of resident.
Payment made to Singapore Entity, it is noted that the assessee has paid fees for consultancy study/report on “Customer Satisfaction Index”, on which payment, the assessee hasn’t deducted tax at source. According to the assessee, the services doesn’t meet “make available test” as laid down under Article-13 of the Indo Singapore DTAA. We note that the fees has been paid to the Singapore Entity for the study which they conducted on Customer Satisfaction Index and the AO hasn’t pointed out that ‘as to how’ the Singapore entity has made available technical knowledge or skill to the assessee, i.e. how to create such study.
Since, the services rendered by the Singapore entity doesn’t meet the “make available test” under the Article on fees for technical services of DTAA and the services which are covered under the Article Independent Personals Services of DTAA, the CIT(A) is right to hold after examining/verifying the relevant documents (invoices, CA certificate in Form 15CB) that the provisions of tax treaties applies to non-resident to the extent that they are more beneficial than provisions of the Act. Hence, assessee was not required to deduct tax at source u/s.195 therefore, we don’t find any infirmity in the action of the Ld.CIT(A) allowing the claim made by the assessee.
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2024 (9) TMI 1737
Disallowance of weighted deduction on R & D expenses u/s 35(2AB) - expenditure not approved by the DSIR in Form 3CL - HELD THAT:- Deduction claimed for these approved R&D centers was duly audited and certified by statutory auditors in annual report.
As noted that DSIR is an authority for approval of R&D facility. And once facility is approved, expenditure incurred by it qualifies for deduction u/s.35(2AB), irrespective of DSIR approval as per the law in force. As noted, the R & D Facility has been approved as required by the authority i.e. DSIR. The settled position as per the law in force is that once facility is approved, expenditure incurred in this regard qualifies for deduction u/s.35(2AB) of the Act until amendment was brought in Rule 6(7A) of the of the Income Tax Rules, 1962 w.e.f. 01.07.2016 (relevant to AY 2017-18). Therefore, the AO/Ld.CIT(A) erred in disallowing the weighted deduction u/s.32(2AB) of the Act on the expenditure incurred in an approved in-house R & D facility. In other words, deduction can’t be restricted to the amount of expenditure quantified by the DSIR before the AY 2017-18.
We allow this ground of appeal of the assessee and direct the AO to grant/deduction on R & D expenditure.
Disallowance of software expenditure u/s.40(a)(i) of the Act for non-deduction of tax at source -assessee purchased software (off-the-Shelf application software) for R & D centers and capitalized the same in its books of account on which admittedly TDS wasn’t deducted - HELD THAT:- We find force in the submissions of AR and note that the claim of the assessee for allowing expenditure on account of purchase of software license couldn’t have been denied by the AO. It is noted that the AO erred in relying on the amendment brought in by Finance Act, 2012 (albeit retrospectively from 01.04.1976), because assessee couldn’t have contemplated such a requirement (tax to be deducted at source) when it made payment in the relevant year that it requires deduction of Tax at source due to future amendments with retrospective effect. And since assessee can’t be expected to perform an impossible task which came into effect undisputedly by Finance Act, 2012, therefore applying the legal maxim ”lex non cogit ad impossiblia,” we are of the considered view that retrospective operation of explanation u/s.9(1)(vi) of the Act can’t be used to deny the claim of the assessee as held in the case of CIT v. M/s. NGC Networks (India) Pvt. Ltd. [2018 (5) TMI 1148 - BOMBAY HIGH COURT]
We allow this ground of appeal of the assessee and direct the AO to allow the expenses incurred for purchase of software and other alternate grounds on this issue are left open.
Disallowance u/s.14A r.w.r.8D while computing book profit u/s.115JB - HELD THAT:- We note that assessee suo-moto disallowed expenditure u/s.14A while computing of book profit u/s.115JB of the Act. According to the Ld.AR, provisions relating to normal tax computation can’t be imported into sec.115JB of the Act which is a separate code by itself. In other words, Rule 8D computation for disallowance u/s.14A can’t be used for making adjustment for computation of book profit u/s.115JB of the Act and relied on the decision of Vireet Investment (P) Ltd.[2017 (6) TMI 1124 - ITAT DELHI] which decision has been upheld by the Hon’ble Bombay High Court. He also pointed out that the Ld.CIT(A)/NFAC in the assessee’s own case for AY 2018-19 appreciated the aforesaid submissions of the assessee and allowed the claim of the assessee.
Disallowance of depreciation and maintenance cost of aircrafts - HELD THAT:- We note that the assessee had purchased an aircraft in AY 2007-08 due to it increased business in international circuit. It is noted that at times the assessee has leased the said aircraft to third parties for use on which fees was earned and the same was offered to tax as business income.
AO called for the relevant log entries. According to the AO, the assessee couldn’t give the details regarding specific business activities carried out based on the logbook entries, which could prove the business exigency for owning & maintaining aircraft.
According to the AO, the assessee failed to furnish the requisite logbooks which are required to be maintained as per Rule 6 of Aircraft Rules, 1937.
AR countered the observations made by the AO and submitted that details regarding aircraft movement was duly submitted before the AO. It was pointed out by theAR that the cost of Aircraft in 2006 was allowed as part of the opening WDV as on 01.04.2009 and depreciation allowance on opening WDV therefore is automatically available. It was pointed out by the Ld.AR that in the assessee’s own case, this Tribunal for AYs 2007-08 & 2008-09 directed the AO to grant deduction for depreciation on aircraft operating expenditure after examining leasing requirements and the AO pursuant to the order of the Tribunal after verification of the relevant facts vide impugned, being convinced allowed the claim for operating expenditure & depreciation on aircraft. AR also brought to our notice that the CIT(A) for AY 2009-10 has already allowed the claim of the assessee.
In the light of the order of the Tribunal (supra), we set aside the impugned order back to the file of the JAO to examine this issue as directed in the order of the Tribunal [2016 (11) TMI 1152 - ITAT MUMBAI] in the assessee’s own case and pass order in accordance to law after hearing the assessee.
Depreciation on UPS @60% granted by theCIT(A) instead of 15% granted by the AO - HELD THAT:- We note that the assessee claimed depreciation @ 80% on UPS, stabilizers, etc., as part of block of Energy saving equipment, since Automatic power cut-off devices mounted on motors/ Automatic voltage controllers were eligible for depreciation @ 80%. Reliance was placed on Godfrey Philips India Ltd. [2012 (12) TMI 865 - ITAT MUMBAI]] However, we note that in the assessee’s own case, when similar claim came up before this Tribunal in AY 2005-06 & 2009-10 (supra), this Tribunal allowed depreciation @ 60% since it is part of the computer accessories and which has been granted by the Ld.CIT(A). Therefore, we don’t find infirmity in the action of the Ld.CIT(A) and uphold his action and dismissed the Ground of the Revenue.
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2024 (9) TMI 1736
Taking suo-motu cognizance on the newspaper item published in Hindustan Times - Stay on order passed by the learned Single judge - HELD THAT:- The Apex Court also took suo-motu cognizance of the same issue and, vide final order passed on 07.08.2024, disposed of Suo Motu Writ (Civil) No. 8 of 2024 [2024 (8) TMI 1557 - SUPREME COURT (LB)] has held that 'this Court in the exercise of its affirmative obligations as the custodian of the adjudicatory process would be failing in its duty if it were not to intervene by expunging the remarks which were made in the order dated 17 July 2024. The observations in the order dated 17 July 2024 are accordingly expunged with an expression of caution. We hope that it would not be necessary for this Court to intervene any such matter in the future either in relation to the same Judge or any other Judge in the country.'
In view of the aforesaid, since the Apex Court has taken note of the issue involved herein and passed the order expunging the remarks made by the learned Single Judge in the order dated 17.07.2024, this Court deems it appropriate to draw curtains to the controversy.
The petition stands dismissed as having rendered infructuous.
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2024 (9) TMI 1735
Addition to the returned income in assessment u/s 143(1) on the basis of particulars contained in the tax audit report ( TAR ) uploaded in the on line portal in form 3 CB / CD, by the tax auditor - HELD THAT:- We are of the opinion that on account of inadvertent error in reporting by the tax auditor in form 3 CD this addition has been made while framing the assessment order u/s 143(1) by CPC, Bangalore, which is system oriented.
Also apart from the tax auditor, there was error on the part of the assessee also, because the assessee has approved the uploaded TAR, by his digital signature, at a subsequent date, thereby validating the contents of the TAR, (uploaded by the CA).
Moreover, when this error has already come to light, it was incumbent on the part of the assessee and his auditor, to have revised the TAR, by filing a revised report, at a subsequent date, which has also not been done in the instant case.
Technically, this matter should go back to the first appellate authority to take a decision on merits of the case, but considering the technical defects existing in the TAR itself, we are of the opinion that the matter needs verification by the assessing officer at the ground level with respect to the audited accounts uploaded for the year under appeal, in consultation with the figures contained in the return in ITR - 5, supported by books of accounts vis a vis the contents of the TAR existing in the portal, and all these enquiry and verification can only be done by the AO.
Thus, remand the matter back to the files of the AO, for fresh adjudication on merits of the case. Appeal of the assessee allowed for statistical purposes.
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2024 (9) TMI 1734
Refund being demand recovered in excess of 20% of the demand - HELD THAT:- Petitioner filed an appeal on 29.04.2015 and multiple stay applications were also filed by him between 05.05.2015 and 30.11.2016 and the petitioner is making earnest efforts to get the appeals as well as the stay applications disposed of. In this context, perusal of the Circular/Office Memorandum dated 31.07.2017 will indicate that in the event, the petitioner deposits 20% by way of pre-deposit, there shall be stay of demand till disposal of the appeal by the Appellate Authority. However, in the instant case, despite the petitioner having filed the appeal as long back as in the year 2015 and multiple stay applications between 2015 to 2016, the Assessing Officer has neither passed any orders on the stay applications nor as the Appellate Authority disposed of the appeals.
The respondents were clearly not justified in adjusting the refund amounts payable to the petitioner in excess of 20% and consequently, necessary directions have to be issued to the respondents to refund the entire amounts payable to the petitioner in excess of 20% of the demand for the assessment year 2012-13 within a stipulated time frame and by directing respondent No. 1 to dispose of the appeals within a stipulated time frame.
Order - The concerned respondents are directed to refund the entire amount in excess of 20% of the demand raised for the assessment year 2012-13 together with the applicable interest back to the petitioner after due verification within a period of six weeks from the date of receipt of a copy of this order. The concerned respondent / Appellate Authority is directed to dispose of the appeal within a period of three months from the date of receipt of a copy of this order.
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2024 (9) TMI 1733
Deduction u/s 80P(2)(a)(iii) - Interest received on Investments held with Banks in form of FDR's - basic object of the assessee cooperative was the welfare of cane growers. The assessee was registered under the U.P. Sahkari Samiti Adhiniyam, 1965 and was providing facilities to cane growers
HELD THAT:- The principle that interest income arising from investments in statutory reserve funds and other funds as per the provisions of sections 58 and 59 of the U.P. Cooperative Societies Act is “attributable” to the main activities of that Society, has been accepted by the Revenue. The assessee is governed by the same U.P. Cooperative Societies Act and Rules as the Cooperative Cane Development Council, Lakhimpur and therefore, in its case also, it must be held that interest earned from investment made by it as per sections 58 and 59 of the U.P. Cooperative Societies Act r.w.r.173 of the U.P. State Cooperative Rules, is attributable to the activity in which the assessee is engaged and therefore, is eligible to be deducted u/s 80P(2)(a) of the Act.
As in the case of K. 2058, Saravanampatti Primary Agricultural Co-Operative Credit Societies Ltd. [2020 (2) TMI 214 - MADRAS HIGH COURT] after considering that the Societies was required to maintain a statutory reserve of 25% under the Tamilnadu Cooperative Societies Act held that the same could not be regarded as the surplus funds of the Society as decided in M/s Totgars Cooperative Sale Society Limited [2010 (2) TMI 3 - SUPREME COURT] and therefore, it set aside the assessment of the ld. Assessing Officer in the light of the decision of Nawanshahar Central Cooperative Bank Ltd. [2005 (8) TMI 28 - SC ORDER]
Therefore, investment in fixed deposits and other securities or on account of the provisions of sections 58 and 59 of the U.P. Cooperative Societies Act, 1965 and section 173 of the U.P. Cooperative Societies Rules, 1968, it is quite clear that since it has been held that interest on such investment is attributable to the main activity of the assessee cooperative society, the interest earned from such investments ought not to be regarded as a surplus within the meaning of Totgar’s Case, but an interest attributable to the main activity of the assessee cooperative and therefore, deductible under section 80P. The assessee has submitted copies of its byelaws and the detailed breakup of investments and interest arising on the same.
However, we observe that AO has not examined the breakup of such investments and the interest earned on the same, with reference to the byelaws or sections 58 and 59 of the U.P. Cooperative Societies Act, 1965 and 173 of the U.P. Cooperative Societies Rules, 1968 as he was of the view that no such interest was deductible in view of the decision of Hon’ble Supreme Court in the case of Totgars (supra).
Now that the position with regard to such investments has been clarified in the case of Cooperative Cane Development Council, Lakhimpur [2022 (9) TMI 1597 - ITAT LUCKNOW] and accepted by the Revenue in the consequent assessment, we deem it appropriate to restore the matter in all three cases back to the file of the ld. Assessing Officer for the limited purpose of re-computing the admissible deduction under section 80P with reference to the interest earned on investments made in accordance with sections 58 and 59 of the U.P. Cooperative Societies Act, 1965 and 173 of the U.P. Cooperative Societies Rules, 1968 . Ground numbers 1 to 5 are accordingly allowed.
Adding back the interest on PF balance of the seasonal employees of the society - As we observe that the same cannot be considered to be the investments of the society and accordingly the interest accruing on the said amount cannot be said to be income of the society. Therefore, any adding back of such interest income to the income of the society is not maintainable and accordingly, additions made on this account in A.Ys. 2017-18 and 2020-21 are deleted.
Appeal of assessee is partly allowed.
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2024 (9) TMI 1732
Seeking grant of regular bail - forgery, cheating, criminal conspiracy, and evidence tampering - reasonable or prima facie grounds to believe the petitioner's involvement in the alleged offences - registration of earlier FIR - No adversarial circumstances in status report - prolonged incarceration and trial to take time - grounds of parity - No apprehension by state authorities that petitioner may flee away or thwart cause of justice.
Registration of earlier FIR - HELD THAT:- This Court is of the considered view that mere registration of other FIRs or pendency of another matter, cannot by itself, be made the basis for continuing the detention endlessly or for prolonging the incarceration of the petitioner. Denial of bail merely, due to the registration of other FIRs-matters, shall certainly amount to not only curtailing and depriving the personal liberty of the petitioner enshrined in Article 21 of the Constitution of India but shall also amount to prolonging the custody, on basis of previously registered FIRs, which are still accusations and are yet to be examined, tested and proved during trial - in the instant case, once the State Authorities have not pointed out any adverse eventuality, in the Status Report, in relation to earlier FIRs-matters then, the plea for bail deserves to be accepted in peculiar facts herein.
No adversarial circumstances in status report - HELD THAT:- Claim for bail needs to be accepted, for the reason, that the State Authorities have not pointed out any other adversarial circumstances i.e. either by way of expressing any apprehension that the petitioner will flee away or may tamper with the evidence or cause any inducement or threat or promise to any person acquainted with the facts of the case. In the absence of any such adversarial circumstances having been pointed out by the State Authorities, the claim for bail carries weight and the same is accordingly accepted.
Bail - prolonged incarceration and trial to take time - Article 21 of the Constitution - HELD THAT:- Since the bail petitioner herein, has suffered incarceration for about six months now and even the conclusion of the trial is likely to take considerable time, therefore, this Court is of the considered view, that further detention of petitioner, shall certainly amount to implicating the petitioner on mere accusation or conjectures at this stage. The action of the State Authorities is dehors the object of bail, which is neither punitive nor preventative. Prolonging imprisonment before conviction has a substantial punitive content, which certainly amounts to depriving or curtailing the personal liberty of the petitioner enshrined in Article 21 of the Constitution of India.
Parity - Co-accused released on bail - HELD THAT:- The State Authorities have not disputed the fact that other co-accused, namely Suresh Chander, Prakash Veer Chauhan, Sohan Lal and Damandeep Singh have been enlarged on bail, who as per Status Reports were alleged to have acted as agents of the main accused [Parikshit Azad], whereas once the petitioner, has neither been named in the complaint nor any substantial material is borne out from the material on record which are yet to be tested, examined and proved during the trial therefore, in these circumstances, the petitioner deserves to be enlarged on bail.
No apprehension by state authorities that petitioner may flee away or thwart cause of justice - HELD THAT:- The Status Report does not indicate that the release of the petitioner will thwart the cause of justice and no apprehension expressing any possibility of the petitioner either fleeing away or cause any inducement, threat to any witness or persons acquainted with facts of case in any manner. However, this Court, still imposes the following stringent conditions against the bail petitioner.
Conclusion - Taking into account the entirety of facts and circumstances and the material on record as borne out from the Status Report and the stand of the petitioner vis-à-vis the prosecution story and other factors i.e. that the petitioner is in custody for last six months; and prolongation of detention shall certainly violates personal liberty; and further detention shall defeat the principle of "Bail is a Rule and Jail is an Exception"; and once no reasonable grounds exists against the bail petitioner, even as per the Status Report, is running a medicine whole sale business, having substantial transaction of more than Rupees Two Crores during 2020-2024 vis-à-vis the accusation of having received a sum of Rs. 13,72,236/- approx. and when, the veracity of such accusation is yet to be tested, examined and proved during the trial in accordance with law; and the fact that the Investigation is complete; and the Challan-Final Police Report has been filed before the competent Court; and nothing is to be recovered from the petitioner therefore, this Court is of the considered view, that any further detention or prolongation thereof shall certainly amount to pre-trial incarceration by way of punishment on the basis of mere accusation, which are yet to be proved, shall amount to incarcerating the petitioner on the basis of mere surmises-allegations. In these circumstances, the petitioner, at this stage, is entitled to be enlarged on bail.
The State Authorities are directed to release the petitioner, on bail, subject to fulfilment of conditions imposed - bail application allowed.
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2024 (9) TMI 1731
TDS u/s 194LBC - amount of excess interest spread paid by the Appellant to the originator - HELD THAT:- As per relevant provisions of Section 194LBC it is observed that the section casts an obligation for deduction of tax at source if the following twin conditions are satisfied, firstly, the income is payable to an investor and secondly, the income is in respect of investment in the Securitization Trust. Further the section states that the definition of the term ‘investor’ shall have the meaning assigned to it in Clause (d) of Explanation to Section 115 TCA which in turn defines ‘investor’ and ‘securities debt instrument’.
As the cash flow received was to be utilized in the manner provided in the waterfall mechanism of the trustee, the EIS is the residual amount that flows to the originator and is not pursuant to any investment in the securitization trust or return of investment so made. Thus even when the originator is as an investor, there still is no requirement for tax was to be deducted u/s. 194LBC on the EIS as the said payment was not in respect of investment made by the originator in the PTCs issued by the assessee. The surplus here especially represents a reward earned by the originator for its effort of creating an assignable pool of loan receivables.
MRR requirement was introduced by RBI for the first time in the year 2012 and prior to such there was no requirement for the originator to comply with MRR and even for such bills prior to 2012 EIS was paid to the originator. This further corroborates the position that EIS cannot be regarded as income in respect of investment. Hence, the second condition is not fulfilled in the case herein; accordingly we hold that the TDS liability u/s. 194LBC is not applicable on EIS.
The liability to deduct TDS arises only where any income is payable to an investor in respect of the investor’s investment in a secularisation trust. The ‘investor’ has been defined to mean a person who is a holder of any securitised debt instrument or securities or security receipts issued by the securitization trust. Once it seen that the Assessee is an investor but that the income in the hands of the originator is not in respect of investment in the securitization trust and that the EIS is the residual amount that flows to the originator and is not pursuant to any investment in the securitization trust or return of investment so made, therefore the twin conditions mentioned in Section 194LBC have not been met and hence the liability to deduct TDS does not trigger. Before us without prejudice it has been stated that since the payee has discharged its liability to deduct tax in respect of EIS, then assessee cannot be regarded as ‘assessee in default’. Appeal filed by the assessee is allowed.
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2024 (9) TMI 1730
Validity of the assessment order not passed within the limitation period prescribed u/s. 153 - Value of unsigned order - date of assessment order framed u/s. 143(3) r.w.s. 144B - HELD THAT:- When the assessment order was made on 28/09/2021 as claimed by the AO and DR, the same was not signed. In our considered opinion, the unsigned order has no value. The notings by the AO also show that due to certain technical glitches, the case has been stuck in CPC due to computation failure.
The report also shows that multiple complaints were raised on the ITBA helpdesk. Even the screen shot annexed to the report show that till 30/09/2021, the case is still appearing in the work list of FAO. These evidences on record go on to show that the assessment order was not digitally signed till 01/10/2021 and the assessment order made on 28/09/2021 was unsigned.
Hon’ble Supreme Court in the case of Kalyankumar Ray [1991 (8) TMI 291 - SUPREME COURT] has held that there must be some writing initialled or signed by the I.T.O. before the period of limitation prescribed for completion of the assessment has expired in which the tax payable is determined and not that the form usually styled the "assessment order" should itself contain the computation of tax as well.
The signing of the assessment order is an integral part of order generation in e-assessment and the assessment proceedings conclude only after the order is digitally signed, therefore, signing of the assessment order should not be brushed aside lightly. Therefore, the signing of the assessment order is a mandatory requirement and not a procedural formality unless the order is signed assessment does not complete.
As per the Faceless Assessment Scheme 2019 which was substituted for e-assessment by Notification No. S.O. 2745(E) dated 13/08/2020 w.e.f. 13/08/2020 as per Clause xiv, the assessment unit shall, after taking into account all the relevant material available on the record make in writing, a draft assessment order and then as per Clause xvi, the National e-Assessment Centre shall examine the draft assessment order and finalise the assessment within the period of limitation. In the instant case the assessment order finalized by NFAC is dated 01/10/2021 which is obviously beyond the period of limitation.
No hesitation to hold that the impugned assessment order dated 28/09/2021 was not made till 30/09/2021 and it was not digitally signed and was an incomplete assessment order which was completed on 01/10/2021 and hence, barred by limitation.
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2024 (9) TMI 1729
Classification of palm stearin including refined bleached deodorized (RBD) palm stearin from palm oil - to be classified under Tariff Item No. 15119090 of the Schedule to Central Excise Tariff Act, 1985 or under Tariff Item No. 38231112 of the said Schedule? - applicability of benefit of N/N. 3/2006-CE dated 01.03.2006 as amended - Applicability of extended period of limitation - HELD THAT:- It is noted that prior to the pronouncement by Hon’ble Supreme Court in CCE, C AND SERVICE TAX VERSUS JOCIL LTD. [2010 (12) TMI 24 - SUPREME COURT], the decision of this Tribunal in the case of JOCIL Ltd. [2009 (2) TMI 306 - CESTAT BANGALORE] was prevailing, wherein it was directed to classify similar goods under Tariff Item No.15119090. Further, till 26.07.2011 the guidance by Central Board of Excise and Customs for classification of similar goods was to classify under Chapter 15. Further, as stated in para 11.2 of the show cause notice, the appellant had declared the said goods in ER-1 returns filed by them. Therefore, there are no grounds for invoking extended period of limitation in the present case.
It is further noted that the show cause notice was issued on 07.03.2014 and the period for which the show cause notice was issued was from February 2009 to July 2010 which falls beyond the normal period of limitation. Therefore, in the present case, Revenue did not have jurisdiction to demand the said central excise duty demanded through the said show cause notice.
Conclusion - i) Classification of palm stearin by the appellant under Tariff Item No. 15119090 of the Central Excise Tariff Act, 1985 is correct. ii) The appellant had declared the said goods in ER-1 returns filed by them. Therefore, there are no grounds for invoking extended period of limitation in the present case.
Appeal allowed.
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2024 (9) TMI 1728
Classification of goods - Palm Stearin (PS), manufactured by refining crude palm oil through fractionation/separation without chemical modification - classifiable under Central Excise Tariff Entry (CETH) 1511 (covering palm oils and fractions not chemically modified) or under CETH 3823 (covering chemical products)? - applicability of exemption under N/N. 3/2006-CE dated 01.03.2006 for the period June 2009 to July 2010 - HELD THAT:- It is not in dispute that during the period June 2009 to July 2010, the CBIC had issued Circular No. 81/2002-Cus dated 03.12.2002 wherein it was clearly held that PS would be classifiable under chapter 15 and not under Chapter 38. The said Circular was withdrawn only after the decision of Hon’ble Apex Court in the case of Jocil [2010 (12) TMI 24 - SUPREME COURT] vide Circular No. 31/2011-Cus dated 26.07.2011. In these facts and circumstances, it is apparent that even CBIC at the material time held a view that the goods are classifiable under Chapter 15 and not under Chapter 38 therefore, the bonafides of the appellant, therefore, cannot be doubted. In these circumstances, there are no merit in invocation of extended period of limitation to demand Central Excise duty, interest and to impose penalty under Section 11C. The Show Cause Notice is therefore, set aside on account of limitation.
Conclusion - Vide Circular No. 31/2011-Cus dated 26.07.2011, CBIC at the material time held a view that the goods are classifiable under Chapter 15 and not under Chapter 38.
Appeal allowed.
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2024 (9) TMI 1727
Classification of transactions involving lease or hire of machinery and equipment - supply of tangible goods for use service, liable to service tax or transfer of right to use goods, treated as deemd sale, liable to VAT - HELD THAT:- The Assessee have rented out the textile machineries to M/s. Arvind Ltd for manufacture of textile products. The department’s case is that leasing of machineries to M/s. Arvind Ltd is classifiable under supply of tangible goods for use service.
Right to possession and effective control of machineries have been transferred to the lessee M/s. Arvind Ltd. Moreover since the right to possession has been transferred, the transaction is of deemed sale in terms of Article 366 (29A) of the Constitution of India and the Assessee are admittedly paying the said VAT. Therefore, this fact also reinforces the contention of the Assessee that right to possession and effective control have been transferred to the lessee M/s. Arvind Ltd. Therefore, The transaction is of deemed sale and not of supply of tangible goods for use service. Hence, the same is not liable for service tax.
Similar view was taken by CESTAT Mumbai in the case of UFO Moviez India Ltd [2017 (9) TMI 507 - CESTAT MUMBAI] wherein on the basis of the fact that the transaction was of deemed sale in terms of Article 336 (29) A it was held that the activity same is not classifiable as service of supply of tangible goods for use.
Conclusion - The transaction is a deemed sale and not a supply of tangible goods for use service.
Appeals filed by Assessee are allowed.
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2024 (9) TMI 1726
Classification of imported NIKON brand “digital still image video cameras” - entitlement to Basic Customs Duty [BCD] exemption under the notification dated 01.03.2005, as amended by the notification dated 17.03.2012 - HELD THAT:- The matter has since been decided by the larger bench of the Tribunal [2024 (6) TMI 1422 - CESTAT NEW DELHI [LB]]. The larger bench held that 'the appellants are eligible to exemption from BCD under the said Notification 25/2005 CE dated 1.3.2005 as amended.'
The appellant would, therefore, be eligible to claim exemption from Basic Customs Duty under notification dated 01.03.2005.
The impugned order dated 06.06.2019 passed by the Commissioner of Customs (Appeals) is, accordingly, set aside - appeal allowed.
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2024 (9) TMI 1725
Validity of revision u/s 263 - ITAT set aside revision as noticed that the Assessing Officer had raised several queries and had also demanded documents, the details of which have been mentioned in the ITAT order - HELD THAT:- AO had issued a questionnaire on 28.12.2020 and had also asked for documents, which were answered and furnished to the AO by the assessee and the same were also informed to the PCIT, who ensued proceedings under Section 263 of the IT Act.
PCIT have not pointed out any further enquires, which were required to be made by the AO in this case, which have not been so made. The scope of Section 263 of the IT Act, is apparently to see whether the concerned AO has failed to conduct a proper inquiry, and therefore, committed an error resulting in causing loss to the revenue.
Simply by holding that the AO was required to make more enquiries, would not be a valid ground for treating the order of the AO as erroneous and prejudicial to the interests of the revenue. The power u/s 263 of the Act cannot be invoked in such circumstances by the PCIT. The order, therefore, passed by the PCIT is not sustainable in the eyes of law and the same has been quashed by the ITAT, which does not warrant any interference by this Court in appeal.
No substantial question of law has arisen in this appeal for consideration, as the factual aspects have completely and thoroughly been examined by the ITAT. Decided against revenue.
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2024 (9) TMI 1724
Direction upon the respondents to allow TRAN-1 credit to the petitioner - rejection of petitioner’s prayer for TRAN-1 credit - HELD THAT:- This writ petition cannot be decided without calling for affidavits.
Accordingly, let affidavit-in-opposition to the present writ petition be filed within four weeks after the annual vacation. Reply thereto, if any, be filed within three weeks thereafter.
Liberty to mention for inclusion in the list after expiry of the period for exchange of affidavits.
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