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2023 (2) TMI 1210 - ITAT MUMBAI
Disallowance u/s 14A r.w.r. 8D - sufficiency of own funds - HELD THAT:- It is observed that AO has not made disallowance u/s 14A applying rule 8D as it was not in statute in the year under consideration. AO has made proportionate disallowance of interest as per formula mentioned in Assessment Order [Borrowings/own funds * investements].
It is observed that Assessee has sufficient own funds in form of share capital and reserves and surplus in comparison with investment in shares made by it. Thus as relying on South Indian Bank Ltd [2021 (9) TMI 566 - SUPREME COURT] and Shapoorji Pallonji & Co Ltd [2020 (3) TMI 552 - BOMBAY HIGH COURT] held that if there are funds available with the assessee, both, interest-free and overdraft and/ or loans taken, then a presumption would arise that investments would be out of the interest-free funds generated or available with the assessee if the interest-free funds were sufficient to meet the investments. Ground of appeal filed by Assessee is allowed.
Addition of different unutilised CENVAT credit u/s 145A - HELD THAT:- , Coordinate bench held in the case of Mahindra & Mahindra Ltd. [2020 (2) TMI 62 - ITAT MUMBA] the amount of the unutilized Cenvat credit could not have been directly added to the closing stock. The Tribunal has not committed any error." (underlined for emphasis by us) It is evident from the above that irrespective of the method of accounting followed by the assessee, i.e. 'Inclusive method', wherein the taxes are included in the opening stock, purchases, etc. or the 'Exclusive method', the MODVAT credit does not have any impact on the profit of the assessee. Thus, following the ratio laid down by the Hon'ble Supreme Court in the case of Indo Nippon Chemicals Co. Ltd. [2003 (1) TMI 8 - SUPREME COURT] and followed by case of Diamond Dye Chem Ltd. [2017 (7) TMI 616 - BOMBAY HIGH COURT], we set-aside the order of the CIT (A) and direct the Assessing Officer to delete the addition made. Ground of appeal filed by Assessee is allowed.
Club entrance/subscription fee for its director expenditure was incurred on account of subscription to clubs for the purpose of promoting and fostering its business relationship and objective of the assessee was to enable its directors to meet various kinds of people in the clubs so that by such meeting they would develop business relationship. Thus expenditure incurred by the assessee wholly and exclusively for the purpose of business and the expenditure is allowable as deduction u/s 37 of the Act.
Nature of receipt - amount received on sale of TDR is a capital receipt.
Sales tax incentives received by assessee are rightly considered as Capital Receipts by Ld.CIT(A) both for the purposes of normal tax as well for the purposes of computation u/s.115JB of the Act and be excluded while computing taxable income.
Provision of Director’s retirement benefit Treating the same as unascertained liability - Allowing deduction holding the same to be a liability in praesenti to be discharged at future, capable of being estimated with reasonable certainty.
TDS u/s 195 liability on interest payment made to SBI Bank- Bahrain Branch - As settled position that a branch office is part of the entire SBI and not a separate legal entity. Payment to foreign branch of Indian entity tantamount to payment made to Indian company only. Accordingly, provisions of Section 195 are not applicable in respect of payments made to foreign branch of Indian Bank. Considering all we are inclined to accept the findings of CIT(A) for deleting the addition made by Assessing Officer.
Nature of expenses - cost of dismantling assets - By incurring expenditure no new assets of enduring nature was brought into existence and hence was claimed as revenue expenditure.
Deduction u/s 80IA on two units purchased from Tata Power Limited - deduction is denied on the ground that assessee has not set up any undertaking and same has been formed by transfer of previously used plant & machinery - HELD THAT:- A settled position that the deduction u/s 80IA is qua undertaking and not qua entity. Every undertaking will be entitled to avail deduction u/s 80IA for a period of 10 consecutive years from 15 years from the commencement of business. There is substance in the argument of assessee that Tata Power Company Limited might not have claimed for deduction u/s 80IA for various reasons and there is nothing on record to prove that said company was not entitled for deduction in respect of 80IA on such power plant.
On the other hand, claim of deduction u/s 80IA made by assessee is emanating from notes forming part of return of income for A.Y. 1999-2000 and not disputed by Assessing Officer in assessment proceedings hence there is no reason for not allowing deduction u/s 80IA for TG-2 Wadi. The Hon’ble Bombay High court in the case of Simple Food Products (P.) Ltd. [2017 (8) TMI 646 - BOMBAY HIGH COURT] has held that if deduction u/s. 80-IB was granted for an initial assessment year, same could not be rejected for subsequent assessment years unless relief for initial year was withdrawn.
In view of holistic discussion made herein above, assessee is entitled to deduction u/s 80IA on TG-2 and TG-3, Wadi unit. Thus, related ground of appeal in departmental appeal is dismissed and ground of appeal in assessee’s appeal is allowed.
Apportionment of the indirect Head Office expenses while computing deduction u/s.80IA/80IB - HELD THAT:- AO is directed to allocate Head office expenses (other than auditor fees and CMA expenses) on the basis of expenditure incurred by the units vis-à-vis overall expenditure. Thus, related ground of appeal in departmental appeal is dismissed and ground of appeal in assessee’s appeal is partly allowed as directed herein above.
Addition for provisions for wealth tax, provision for gratuity, provision for leave encashment, provision for Director’s retirement benefits, while computing the book profit u/s.115JB is to be deleted.
Addition of provision for contingencies while computing the book profit u/s.115JB - As assessee has admitted that this fact that this issue has been covered against the assessee due to insertion of clause (i) to Explanation 1 to Section 115JB vide Finance No. 2 Act, 2009 w.e.f 01.04.2001 - Accordingly, we set aside the finding of the CIT(A) on this issue and restored the issue before the Assessing Officer to decide the issue afresh by giving an opportunity of being heard to the Assessee in accordance with law.
Addition made in respect of VRS expenditure pertaining to earlier years in computing Book Profit u/s 115JB is to be deleted.
MAT computation on taxable long term capital gains arising on transfer of fixed assets - HELD THAT:- As evident that the assessee will be entitled to indexed cost of acquisition while computing capital gains u/s 115JB of the Act. It is also to be noted that in the immediately preceding year Coordinate Bench has held that long term capital gains credited in the books of accounts is taxable to which even the Ld. AR fairly conceded subject to the decisions as relied supra. However, he claimed that the indexed cost of acquisition does not form part of income computed u/s 115JB of the Act.
Respectfully following the ratio laid down in Best Trading and Agencies Limited [2020 (9) TMI 94 - KARNATAKA HIGH COURT] the Assessing Officer is directed to recompute taxable long term capital gains arising on transfer of fixed assets after giving the benefit of indexed cost of acquisition while computing taxable profits u/s 115JB of the Act. Thus, the related ground of appeal in Departmental Appeal as well as Assessee’s appeal is partly allowed subject to the above directions.
Deduction u/s 80HHC computed on the basis of book profit u/s 115JB - whether the assessee is entitled the benefit of reducing the profit of the business eligible for deduction under section 80HHC of the Act while computing the book profit under the provisions of section 115JB? - above benefit to the assessee was denied by the Finance Act 2011 with retrospective effect 01-04-2005 - HELD THAT:- As decided in Torrent Pharmaceuticals Limited [2022 (3) TMI 340 - ITAT AHMEDABAD] Admittedly, at the time of filing the return of income the assessee was entitled for the benefit as discussed above. But on a later date there was an amendment by the finance Act 2011 which denied the benefit to the assessee with retrospective effect. The Hon'ble Supreme Court in the case of Star India Pvt. Ltd vs. Commissioner of Central Excise [2005 (3) TMI 10 - SUPREME COURT] has held that the benefit granted under the statute to the assessee cannot be withdrawn by way of retrospective amendment. Any amendment denying the benefit to the assessee cannot be brought under the statute with retrospective effect.
Exclusion of amount withdrawn from share premium account while computing book profit u/s 115JB - HELD THAT:- We confirm the order of Ld. CIT(A) holding that amount transferred from Share Premium Account to the profit & loss account was correctly reduced from Book Profits by the Assessee while computing book profit as per the provisions of Clause (i) of Explanation to Section 115JB(2) of the Act. This ground of appeal in Departmental Appeal is dismissed.
Addition being debenture redemption reserve while computing book profit u/s 115JB - Hon’ble Bombay High court in the case of Raymond Limited [2012 (4) TMI 128 - BOMBAY HIGH COURT] has held that Amount set apart as a Debenture Redemption Reserve (DRR) is not a reserve within the meaning of Explanation (b) to section 115JA. Respectfully following decision of coordinate bench referred supra, we confirm the order of CIT(A) holding that amount transferred to Debenture Redemption Reserve cannot be added back while computing Book Profits.
Addition being expenditure incurred to earn dividend income while computing book profit u/s 115JB - HELD THAT:- As disallowance made by Assessing Officer u/s 14A is already deleted in proceeding paras hence consequential adjustment made while computing book profit u/s 115JB cannot be made.
Exclusion of Premium on Redemption of Foreign Convertible Bond in computing Book Profit u/s 115JB - HELD THAT:- Ahmadabad Bench in the case of Sun Pharmaceutical Industries Ltd. [2021 (4) TMI 998 - ITAT AHMEDABAD] and .in Mahindra & Mahindra Ltd. [2013 (12) TMI 139 - ITAT MUMBAI] has treated premium paid on redemption of FCCB is eligible for deduction - Thus it is held that assessee is entitled for deduction of Premium on Redemption of Foreign Convertible Bond in computing Book Profit u/s 115JB. Thus, this ground of appeal is allowed.
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2023 (2) TMI 1209 - ITAT HYDERABAD
TP Adjustment - MAM selection - analysing the transactions under the provisions of the TP - HELD THAT:- Insofar as the functions performed, assets deployed, and risks undertaken by the assessee are concerned, there is no change in this assessment year. Adoption of the MAM was considered by a Coordinate Bench of this Tribunal in assessee’s own case for the assessment year 2009-10 [2015 (5) TMI 861 - ITAT HYDERABAD] and the bench directed the learned Assessing Officer to consider the entire gamut of the issue relating to the selection of MAM and analyse it afresh, first by determining the MAM and then analysing the transactions under the provisions of the TP.
We are of the considered opinion that it would be in the fitness of things to set aside the impugned order for this year also with a direction to the learned Assessing Officer to determine the MAM first and to analyse the transaction under the TP provisions. Needless to say that in view of the decision of Gemplus India (P) Ltd [2010 (10) TMI 184 - ITAT, BANGALORE] the assessee has to prove the actual rendition of various services by the AEs. We direct the learned Assessing Officer accordingly.
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2023 (2) TMI 1208 - ITAT HYDERABAD
Condonation of delay in filling appeal - delay of 988 days - appeal against Revision order u/s 263 - HELD THAT:- If we look into the reasons, it is clear that the explanation given is that the staff of the assessee had not noticed the order sent by email to the assessee. Further, it was submitted that the Assessing Officer has also passed an ex-parte order without considering the paper book submitted before the PCIT. It was submitted by the assessee that the AO has sent a reminder in respect of payment of tax arrears and then only the assessee learnt about the non-filing of the appeal before the PCIT. No such evidence / document had been filed before us.
Law requires the assessee to be vigilant and careful in prosecuting its rights under the Act. In the present case, as pointed out by the ld. DR that the revisional order was passed on 28.02.2019 and thereafter, AO after issuing notice had issued the order giving effect u/s 143(3) r.w.s 263 on 31.12.2019. Almost 10 months have passed between passing of the revisional order and consequential order passed by the AO, yet the assessee has chosen not to proceed against the order of PCIT. Assessee appeal dismissed.
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2023 (2) TMI 1207 - ITAT RAJKOT
Unexplained capital introduction u/s. 68 - unexplained credit of share capital & premium - non-declaration of dividend - onus to prove - HELD THAT:- The provisions of Section 68 fasten the liability on the assessee to provide the identity of the lenders/creditor/investor, establish the genuineness of the transactions and creditworthiness of the lenders/creditor/investor. These liabilities on the assessee were imposed to justify the cash credit entries under Section 68 in the case of CIT Vs. Precision Finance (P) Ltd.[1993 (6) TMI 17 - CALCUTTA HIGH COURT] as held it was for the assessee to prove the identity of the creditors, their creditworthiness and the genuineness of the transactions. On the facts of this case, the Tribunal did not take into account all these ingredients which had to be satisfied by the assessee. Mere furnishing of the particulars was not enough.
As discussed in present case we note assessee company was formed during the year under consideration by taking running business of proprietary concern of promoter Shri Ramgopal Maheshwari. There were 8 parties who have given advance to the impugned proprietary concern which was converted into share capital on formation of assessee company. In case of Shri Ramgopal Maheshwari, the assessment u/s 153A was framed for the A.Y. 2010-11 and 2011-12 where genuineness of loan credit was examined and accepted by the AO. Therefore, in our considered view once the credit of such loan credit in erstwhile proprietary concern was accepted, then the conversion of such loan credit into share capital and premium thereon on subsequent occasion cannot be doubted.
Coming the credit of share capital and premium thereon from the remaining parties, we find that during the assessment proceedings details such as name of investor, there address, copy PAN, ITR, share allotment letter etc were furnished. AO issued notices u/s 133(6)/131(1) for verification.
AO recorded finding that in the second attempt the investors made reply in response to notices issued to them. Each and every queries raised by the AO were answered/ furnished along with necessary documents. However, the AO without pointing any deficiency in the above primary document held that the assessee failed to explain the genuineness of the credit of share capital for the reason that the physical share certificates were not issued to the investors, charging of premium was not justified satisfactory and there was no dividend issued.
The entire thrust of the Revenue for treating share capital shown by the assessee as unexplained cash credit u/s 68 is misplaced. It is for the reason that the fact that the physical share certificate issued to the shareholders were lying with the assessee cannot replace the other documentary evidences, as discussed above, filed by the assessee during the assessment proceedings.
It is equally important to note that it was the 1st year of operation of the assessee company and that might be the reason for not declaring the dividend. Moreover, the declaration of the dividend by the company has nothing to do with the share capital received by the assessee - no adverse inference can be drawn against the assessee in the event of non-declaration of dividend in the year under consideration. Decided in favour of assessee.
Estimation of income - bogus purchases - rate of profit should be adopted on the URD purchases from the unregistered parties - addition made on purchases form unregistered dealer from @6% - CIT(A) restricted addition to 0.24% - HELD THAT:- In the present case, the AO, has estimated the gross profit on such URD purchases at the rate of 6% and if the basis of the AO is considered or presumed to be true then the profit which has already been disclosed by the assessee i.e. 5.76%, the benefit of the same should be allowed.
Rate at which purchase from the grey market was shown by the assessee cannot be relied upon as gospel truth in the absence of the facts noticed by the AO which have been elaborately discussed in the preceding paragraph. Thus, it is justifiable to add some margin to the taxable income of the assessee on account of such purchases from the unregistered parties.
In the present case, difference between the estimated profit determined by the AO on such URD purchases viz a viz the gross profit declared by the assessee, is liable to be added as income of the assessee in the given facts and circumstances. Hence, we do not find any infirmity in the order of the learned CIT(A). Decided against revenue.
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2023 (2) TMI 1206 - AUTHORITY FOR ADVANCE RULINGS CUSTOMS, MUMBAI
Classification of goods proposed to be imported - Fire TV Stick, which is a HDMI digital media receiver - to be classified under sub-heading 8528 71 00 or under sub-heading 8517 62 90? - HELD THAT:- The device Fire TV Stick, having been designed for reception, conversion and transmission of voice, images or other form of data through the internet and not through satellite/cable/terrestrial sources merits classification under six-digit Tariff Entry 8517 62.
From technology perspective it was brought on record by one of the respondent Commissionerates that the Wi-Fi frequency range is based on IEEE 802.11 protocol and is different from that of a television signal. Customs Tariff Heading 8517 specifically excludes apparatus for the transmission or reception of radio-broadcasting or television signal (Headings 85.25, 85.27 or 85.28). As far as the contending Tariff Entry 8528 is concerned, it appears to be an unsuitable tariff entry for classification of the device under consideration in the present proceedings insofar as the said entry is primarily suitable for receivers of television broadcast signals. Therefore, the views expressed for classification of applicant’s product under CTH 8528 viz. 8528 71 00 and 8528 73 90, examined on the background of technological facts discussed earlier, are not legally tenable.
The Amazon Fire TV Stick/HDMI digital media receiver with dual core processor, dedicated Videocore4 GPU, 1 GB of memory and 8 GB of storage having a dual band, dual antenna 802.11 AC Wi-Fi is classifiable under CTH 8517 62 90 of the First Schedule of the Customs Tariff Act, 1975.
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2023 (2) TMI 1205 - ITAT MUMBAI
Assessment u/s 144C - notice of demand u/s. 156 and notice u/s. 271(1)(c) sent - AR contended that the said draft assessment order was sent by the A.O. along with the demand notice and the penalty notice was also sent, which implies that the A.O. has not followed the mandatory procedures prescribed by the Act and cannot be considered as a mere procedural irregularity - HELD THAT:- As decided in the case of Vijay Television (P.) Ltd. [2014 (6) TMI 540 - MADRAS HIGH COURT] which has held that when there is an omission by the A.O. in following the mandatory procedure prescribed by the law, then the said omission cannot be considered as a mere procedural irregularity and the same cannot be cured.
Aker Powergas P. Ltd. (2022 (6) TMI 1118 - ITAT MUMBAI]), which has held that the issuing of draft assessment order along with the demand notice is said to be not following the mandatory provisions of the Act as per section 144C of the Act, wherein the assessment order was treated as void. The said decision by the Tribunal has considered various decisions of the Hon'ble Apex Court and the Hon'ble High Court decision in the case of Sun Engineering Works [1992 (9) TMI 1 - SUPREME COURT]and various other decisions.
We would also place our reliance on the decision of Atlas Copco (India) Limited [2019 (8) TMI 1415 - ITAT PUNE] which held that the issuance of notice of demand at the stage of draft order has brought a finality to the assessment at the stage of the draft order itself and the resultant final assessment is vitiated in law and is unsustainable.
Thus assessment order passed subsequent to the issue of draft assessment order along with the demand notice has been held to be bad in law and not just mere procedural defect. Appeal of assessee allowed.
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2023 (2) TMI 1204 - SC ORDER
Classification of goods - Zarda - to be classifiable under heading 24039910 as claimed by the Appellants or its Jarda Scented Tobacco classifiable under heading 24039930 as claimed by the revenue? - HELD THAT:- Having gone through the impugned judgment and order passed by the Customs, Excise & Service Tax Appellate Tribunal, Chandigarh (the Tribunal) and the reasoning given and, more particularly, the fact that the Revenue failed to establish and prove that the product in question was chewing tobacco, there are no reason to interfere with the impugned judgment and order passed by the Tribunal.
Appeal dismissed.
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2023 (2) TMI 1203 - CALCUTTA HIGH COURT
Grant of interim order - HELD THAT:- There is no scope of passing any interim order in the matter and the issues involve require affidavit from the respondents for final adjudication.
Respondents are directed to file affidavit-in opposition within four weeks. Petitioner to file reply thereto, if any, within two weeks thereafter. List this matter for final hearing in the monthly list of May, 2023.
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2023 (2) TMI 1202 - ITAT MUMBAI
Validity of assessment u/s 153A - disallowance of bogus purchase and unexplained cash credit u/s 68 - As alleged assessment is being beyond six assessment years provided u/s 153A - HELD THA:- Wherever search under section 132 of the Act is initiated or requisition u/s 132A is made after the 01/04/2017 and the escaped income is likely to be ₹ 50 lakh or more, notice u/s 153A could be issued up to 10 assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made.
We find that in the instant case search was conducted on 06/11/2019 and income assessed for instant assessment year i.e. AY 2013-14 is more than 50 lakhs, therefore notice u/s 153A could have been issued up to the 10 assessment years preceding the assessment year 20-21. AO has validly issued notice u/s 153A of the Act in respect of the instant assessment year 2013-14. Thus, the ground No. one of the cross objections of the assessee is accordingly dismissed.
Assessment order passed u/s 153A as barred by limitation - Merely not uploading the instant assessment order on the income tax portal by 12.13 AM on 1/10/2021, it cannot be established that assessment order was not passed within the period of limitation. If the assessment order is served within a reasonable period from the expiry of the limitation of passing the assessment order, it is presumed that same was passed within the period of the limitation. The assessee has not brought on record any evidence that said assessment order was received beyond a reasonable period from the expiry of the limitation. In absence of any such documentary evidences, the allegations of the assessee are rejected.
Bogus purchases - whether there was any incriminating material qua the addition of bogus purchase in the year under consideration? - We find that the (a) information in the form of statement of the supplier parties, (b) absence of evidence in support of transport/delivery of material etc. from the assessee during the course of search proceeding,(c) none found at the premises of the supplier parties by the Inspector during verification etc. evidences, when seen in totality constitute material which is incriminating in nature. The entries in books of account regarding purchase are false, which also becomes an incriminating material for the purpose of invoking provisions of section 153A of the Act.
Therefore, we uphold the finding of the Ld. CIT(A) that qua the addition of bogus purchase their existed incriminating material. The cross-objection No. 3 of the assessee with respect to qua the bogus purchases is accordingly disallowed.
Estimation of income - When the purchases are admittedly bogus, then disallowance in such cases will depend on the facts and circumstances of the case and no uniform formula can be applied across the cases.
When it has been categorically established that, the amount of bogus purchases is debited to P&L by fictitious tax invoices and the respondent assessee failed to establish the consumption of such goods in the execution of civil contract by adducing such stock movement records to the satisfaction of Ld. AO., then taxing such bogus purchases GP rate of goes against the principles of taxation embedded in chapter VI of the Act and against the ratio laid down in “N K Proteins Ltd” [2017 (1) TMI 1090 - SC ORDER] and “PCIT Vs Pinaki D Pinani” [2020 (1) TMI 700 - BOMBAY HIGH COURT] for the reason, we are of the considered view that, the Ld. AO was right in making 100% disallowance towards bogus / hawala purchases, and thus we are inclined to uphold the order of assessment and reverse the order the Ld. FAA.
Addition in respect of unsecured loans - disallowance of interest expenses in respect of those unsecured loan parties which have been held as unexplained by the AO - HELD THAT:- As decided in NRA IRON & STEEL PVT. LTD. [2019 (3) TMI 323 - SUPREME COURT] merely filing of primary evidence by an assessee is not sufficient to discharge its onus u/s 68 of the Act when seen the finding of the AO during field enquiry and investigation and particularly the financial strength of creditor.
In the instant case also no documents other than primary evidence like PAN, ITR, ledger account etc. have been filed by the assessee. Neither, the parties were found at their address during field enquiry during search proceedings and nor have been produced by the assessee in assessment and remand proceedings.
In our opinion, the decisions relied upon by the ld CIT(A) are of no assistance to the assessee. The assessee has failed to discharge its onus of establishing Identity, credit worthiness and genuineness of transaction. We set aside the order of ld CIT(A) on the issue of addition to the extent of 18 unsecured loan creditors. Since we have upheld the credit from those unsecured loan parties as unexplained, the corresponding addition for interest is also upheld.
Disallowance of subcontract expenses - department conducted on the spot enquiry but the contractors were not found in existence at their given address - During proceedings before theCIT(A), assessee produced parties before the Assessing Officer in remand proceeding and thus ld CIT(A) deleted the disallowance - HELD THAT:- We find that by way of producing those parties before the Assessing Officer identity of the parties got established but the requirement of evidence in support of the services rendered by the those sub-contract parties has not been discharged by the assessee. In the circumstances, we feel appropriate to restore this issue to back to the file of the AO for deciding afresh after considering the submission and evidence by assessee in support of services rendered by those sub-contractor parties. The ground of the Revenue is accordingly allowed for statistical purpose.
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2023 (2) TMI 1201 - CALCUTTA HIGH COURT
Effect of notifications - effective date of the two Notifications No.22/2014- CE dated 12.11.2014 and 24/2014-Ce dated 02.12.2014 issued on 12.11.2014 and 02.12.2014 is in consonance with section 5A(5a) of the Central Excise Act, 1944 or not - payment of duty for the month of December, 2014 and January, 2015 by 6th January, 2015 and 6th February, 2015 in terms of Rule 8 of the Central Excise Rules, 2002 against clearance made on 12.11.2014 and 02.12.2014.
HELD THAT:- There is not labour much to find an answer to this issue as the Ahmedabad Bench of the Tribunal in M/S. INDIAN OIL CORPORATION LIMITED (IOCL) BARAUNI REFINERY VERSUS COMMISSIONER OF CENTRAL EXCISE, PATNA [2022 (6) TMI 1438 - CESTAT KOLKATA] has considered elaborately this issue in the assessee’s own case pertaining to the very same two notifications and has come to a conclusive finding that the notifications cannot be applied to the case of the assessee and they are entitled for refund.
Further, in the cases on hand the revenue has accepted the impugned order and by orders dated 26.10.22 has granted refund. Inasmuch as the fact that the notifications were published only on 22.11.2014 and 11.12.2014, the same would be the date on which the notifications came into force and, therefore, the finding recorded by the adjudicating authority and the first Appellate Authority that the notifications came into effect on 11.12.2013 is factually incorrect.
The appeals are dismissed and the substantial questions of law are answered against the revenue.
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2023 (2) TMI 1200 - SC ORDER
Withholding rate of tax in respect of dividend - India-Swiss DTAA - Revenue, cannot but accept that the issue raised herein is covered by ‘Concentrix Services Netherlands B V case [2021 (4) TMI 1051 - DELHI HIGH COURT] - A certificate under Section 197 of the Income Tax Act, 1961 will be issued in favour of the petitioner, indicating therein, that the rate of tax, on dividend, as applicable qua the petitioner is 5% under India-Swiss DTAA.
HELD THAT:- Leave granted. Arguments concluded.
Judgment reserved.
Learned counsel for the parties request for some time to file written submissions. Learned ASG appearing for the Revenue shall ensure that written submissions are filed within two weeks.
Ld. counsel for the intervener is tasked with the responsibility of ensuring that submissions of all respondents are in place in one compilation.
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2023 (2) TMI 1199 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI
Appellant is Financial Creditor or not, for the purpose of filing an application claiming it in Form C instead of Form CA - Appellants had already obtained a decree from the UPRERA regarding refund of their amount.
HELD THAT:- Hon’ble Supreme Court in the case of KOTAK MAHINDRA BANK LIMITED VERSUS A. BALAKRISHNAN & ANR. [2022 (6) TMI 13 - SUPREME COURT] held that once the Recovery Certificate has been issued, the party in possession of the Recovery Certificate is to be considered as a Financial Creditor.
There are no merit in the present appeal and the same is hereby dismissed.
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2023 (2) TMI 1198 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI.
Return of bank guarantee - HELD THAT:- Recording the submission of the IL&FS, it is directed that the IL&FS to return such bank guarantees to the Bank for which extension is not required. It is also directed that IL&FS shall make payment of commission charges with regard to bank guarantees for which extension is now sought for, in the peculiar facts and circumstances of the present case.
Application is disposed of accordingly.
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2023 (2) TMI 1197 - ITAT DELHI
TP adjustment - interest charged on loan advance to Overseas Associated Enterprises (AEs) - assessee is a resident corporate entity and is engaged in manufacture and sale of tractor implements, linkage parts, system and forging - while ultimately computing the adjustment, the TPO has applied domestic PLR applied by Indian Banks on commercial loans - HELD THAT:- It is fairly well settled that the rate of interest on loans advanced by the assessee to AEs have to be in accordance with the rate of interest prevailing in the country of residence of the AEs wherein the loan was availed.
This is the view expressed in case of CIT vs. Cotton Natural (I) Pvt. Ltd. [2015 (3) TMI 1031 - DELHI HIGH COURT]. Therefore, domestic PLR rate cannot be applied in respect of loans advanced in foreign currency to AEs situated in USA and Europe. As regards, the submission of learned Departmental Representative that certain guiding principles laid down by the Hon'ble jurisdictional High Court have not been followed, we are not convinced.
Considering the fact that the assessment year involved is 2010- 11 and more than 12 years have passed, we are disinclined to restore the issue to the AO at this stage. Thus, having considered the overall facts and circumstances of the case in the light of judicial precedents cited before us, we do not find any infirmity in the decision of learned Commissioner (Appeals). Grounds raised are dismissed.
Disallowance of interest expenditure u/s 36(1)(iii) - interest paid to banks on loans utilized for non-business purposes like advancing loan to subsidiaries at a lesser rate - HELD THAT:- It is observed, while considering identical nature of dispute in assessee’s own case in assessment year 2009-10, [2021 (10) TMI 276 - ITAT DELHI] is true that the loan was given in earlier F.Y and the assessee had sufficient own funds to give the loan. It is equally true that no disallowance was made in the earlier Assessment Year though the DRP 19 has observed that rest judicata is not applicable under Income Tax proceedings but, in our considered opinion, when the facts are same, and the law has not changed, then the rule of consistency ought to have been followed - we do not find any merit in the addition made by the AO.
Delayed payment of ESIC - Addition u/s 36(1)(va) - CIT(A) has deleted the disallowance made u/s 36(1)(va) on the ground that the payments were made before the due date of filing of return of income u/s 139(1) - HELD THAT:- As decided in Checkmate Services (P)Ltd. [2022 (10) TMI 617 - SUPREME COURT] has held that unless the payment towards employees contribution to PF and ESIC are paid within the time limit prescribed under the relevant statutes, as provided under explanation to section 36(1)(va) of the Act, no deduction can be allowed to the assessee.
Disallowance u/s 14A read with Rule 8D - HELD THAT:- As agreed the assessee has not earned any exempt income. That being the factual position emerging on record, no disallowance under Section 14A read with Rule 8D can be made in absence of any exempt income earned during the year. In this regard, we refer to the decision of the Hon'ble jurisdictional High Court in case of PCIT vs. Era Infrastructure (India) Ltd., [2022 (7) TMI 1093 - DELHI HIGH COURT]. - Accordingly, we uphold the decision of learned Commissioner (Appeals) by dismissing the grounds.
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2023 (2) TMI 1196 - SC ORDER
Grant of Default bail - Section 167(2) of the Criminal Procedure Code - HELD THAT:- There are no reason to interfere with the order impugned. However, we make it clear that the observation which has been made by the High Court is only limited for examining the scope and ambit of the default bail under Section 167(2) of the Code and will not affect merits of the trial.
SLP dismissed.
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2023 (2) TMI 1195 - ITAT SURAT
Revision u/s 263 - Reopening of assessment u/s 147 - credit entry in ING Vysya Bank Account and disallowance u/s 10AA - HELD THAT:- For credit entry in ING Vysya Bank Account we note that assessee has submitted its reply before the assessing officer who after getting the reply of the assessee, has applied his mind and framed the assessment order. Therefore, such order passed by the assessing officer cannot be termed as erroneous and prejudicial to the interest of revenue. We also note that assessing officer had with him copy of said bank account at the time of reopening of assessment u/s 147 as the reasons were recorded by AO based on the copy of the said bank statement. Therefore, entries in the said bank statement were examined by the AO in the reassessment proceedings and AO has applied his mind also.
AO’s role while framing an assessment is not only an adjudicator. AO has a dual role to dispense with i.e. he is an investigator as well as an adjudicator; therefore, if he fails in any one of the role as afore-stated, his order will be termed as erroneous.
We take note that it is not the case of ld. Principal CIT that AO failed to made any additions/disallowances, the AO conducted sufficient enquiry to examine the debit and credit in the bank statement and he also examined the eligibility to claim deduction under section 10AA of the Act and that is why he disallowed deduction under section 10AA .
It is pertinent to mention here that there was as such no allegation of ‘no enquiry’ or ‘lack of enquiry’ or verification, because the Ld. Pr. C.I.T. himself found all the details/evidences in the assessment record, i.e. well within the A.O.’s possession and what he alleged was about the plausible view taken by the A.O. as against his perception and understanding on the same set of facts and documents. Therefore, the notices issued for examination of the issues during the assessment proceedings and submission and verification of the same has not been shown to be fallacious.
In this connection it is pertinent to mention here that the way in which assessment should be finalized falls in the exclusive domain of the Assessing Officer. Section 142(1) speaks of inquiry before assessment and gives immense power to the A.O. for conducting enquiry. Therefore, the A.O. u/s 142(1)(ii) & (iii) can ask the assessee almost any information which he thinks necessary for passing assessment and even if Ld. Commissioner has such results of enquiries, the resultant order cannot be subjected to revision proceedings. Therefore, the very initiation of proceeding u/s. 263 of the Act by the Ld. Pr. C.I.T. is in violation of the settled position in law. When the conditions precedent for invoking revisional power u/s 263 of the Act on the facts and in the circumstances of the case are not fulfilled in the case of the assessee, the subsequent action in passing the order u/s. 263 on such invalid proceeding becomes null and void.
Assumption of jurisdiction u/s. 263 by the Ld. Pr. C.I.T. and consequential direction to the A.O. to impose his own understanding on the issue in question resulted in almost no change in follow-up action by the A.O. Therefore, it goes to establish that the proceeding u/s 263 and order passed thereupon was totally uncalled for in the case of the assessee - Decided in favour of assessee.
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2023 (2) TMI 1194 - CESTAT MUMBAI
Refund of amount left unutilized in account current which is popularly know as Personal Ledger Account (PLA) - refund rejected to the appellant on the ground of limitation - HELD THAT:- After hearing both the sides and after perusal of record and provisions of Central Excise Act, 1994, it is very clear that the amount deposited in PLA is an advance kept by the assesses with the exchequer and only when an amount is debited in PLA it is treated as payment of duty. The limitation discussed in the impugned order will be applicable for such quantum of debits which actually become duty. The amount which is not debited in the PLA is not duty and therefore, limitation does not apply to the same. The amount deposited in the PLA till such time it is not debited towards duties is property of the appellant. Therefore, the balance left over in the PLA is not covered by limitation.
The original authority are directed to issue refund cheque to the appellant within a period of four weeks from the date of receipt of this order - the impugned order set aside - appeal allowed.
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2023 (2) TMI 1193 - SUPREME COURT
Seeking transfer of the investigation to Central Bureau of Investigation or to any other agency to investigate/re-investigate the FIR, registered at Vartak Nagar Police Station, Thane - rejection to order further investigation/re-investigation/de novo investigation - refusal mainly on the ground that once the chargesheet is filed after investigation and the charges are framed, the Magistrate has no jurisdiction to order further investigation/re-investigation/de novo investigation.
HELD THAT:- In the case of HIMANSHU KUMAR AND ORS. VERSUS STATE OF CHHATTISGARH AND ORS. [2022 (7) TMI 1469 - SUPREME COURT], this Court had occasion to consider the power of the Court to transfer investigation to any other independent agency. After taking into consideration the catena of judgments on the point, it is reiterated that investigation may be transferred to the CBI only in "rare and exceptional cases".
Bearing in mind the position of law and, in the facts, and circumstances of the case, it is opined that the High Court has not committed any error in refusing to transfer the investigation to CBI. Even the learned Counsel appearing on behalf of the Appellant has not vehemently pressed such a prayer - the view taken by the High Court insofar as refusing to transfer the investigation to CBI is concerned completely agreed upon.
Power of the Constitutional Courts to order further investigation/re-investigation/de novo investigation even after the chargesheet is filed and charges are framed - HELD THAT:- Applying the law laid down by this Court in the case of DHARAM PAL VERSUS STATE OF HARYANA AND ORS. [2016 (1) TMI 1460 - SUPREME COURT] and BHARATI TAMANG VERSUS UOI. & ORS. [2013 (10) TMI 1297 - SUPREME COURT] and to do the complete justice and in furtherance of fair investigation and fair trial, the constitutional courts may order further investigation/re-investigation/de novo investigation even after the charge sheet is filed and the charges are framed. If the submission on behalf of the Accused and even as observed by the High Court that once the chargesheet is filed and the charges are framed, there may not be any order for further investigation/re-investigation/de novo investigation is accepted, in that case, the Accused may see to it that the charges are framed to avoid any fair investigation/fair trial. It would lead to travesty of justice.
It is required to be noted that in the present case, the allegations in the FIR, right from very beginning, were against the Accused No. 13, who at the relevant time was the sitting Cabinet Minister occupying the high position. Even at the relevant time, when the State Police investigated the FIR bearing No. 120 of 2020, in the first chargesheet and the second chargesheet did not name the Accused No. 13. Even the investigation was also conducted in a perfunctory manner. The real investigation started only after the intervention of the High Court and after passing various orders in the present proceedings by the High Court. The allegations in the FIR were very serious including the misuse of powers by the sitting Cabinet Minister and of abducting, kidnapping and beating the complainant - there was no proper investigation by the State investigating agency at the relevant time and even the material evidences were also not collected.
The impugned judgment and order passed by the High Court refusing to transfer the investigation of the FIR No. 120 of 2020 to CBI is hereby confirmed. The impugned judgment and order passed by the High Court refusing to order further investigation/re-investigation is hereby quashed and set aside - Petition allowed in part.
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2023 (2) TMI 1192 - DELHI HIGH COURT
Maintainability of petition - availability of alternative remedy - opportunity of a personal hearing not provided - principles of natural justice - HELD THAT:- This Court does not consider it apposite to entertain the present petition as the petitioner has already availed the alternate remedies in respect of cancellation of his GST registration.
The concerned appellate authority [Additional Commissioner, CGST (Appeals-I)]is requested to dispose of the petitioner’s appeal as expeditiously as possible and, preferably, within a period of two weeks from the date of personal hearing, after considering the petitioner’s contentions - petition disposed off.
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2023 (2) TMI 1191 - SC ORDER
Issuance of non-bailable warrants - charge sheet having been filed and during that period the appellants having cooperated but not having appeared before the Court personally but through a counsel - HELD THAT:- It is noted that even the mandate subsequently incorporated in SATENDER KUMAR ANTIL VERSUS CENTRAL BUREAU OF INVESTIGATION & ANR. [2021 (10) TMI 1296 - SUPREME COURT] has been violated - it cannot be understood why despite these judgments having been circulated, some of the trial Courts are conducting and passing the orders in the teeth of these judgments. It is a matter of concern that these cases thus, keep on coming up to the apex Court unnecessarily.
It also cannot be appreciated that the impugned order dated 24.01.2022 passed by the High Court calling upon the appellants, despite recognizing the fact that they are aged persons in their 70s and the alleged offences has a maximum punishment up to seven years, they have been called upon to surrender in the Court concerned.
Thus, the appellants can always connect virtually for the proceedings looking to their age - the impugned orders are set aside - appeal allowed.
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