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Showing 101 to 120 of 1393 Records
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2024 (2) TMI 1293 - TELANGANA HIGH COURT
Maintainability of petition - impugned order is an appealable order and the appeal would lie to the Appellate Tribunal under Section 86 of the Finance Act, 1994 - HELD THAT:- Under Section 174(2)(f) the repeal and savings clause under the GST Act, the makers of the statute have categorically held, that the repeal of the Act shall not affect any of the proceedings including that relating to an appeal instituted before on or after the date under the said amended act or repealed act and as such the proceedings shall be continued under the said amended act or repealed acts as if this act had not come into force and the said acts have not been amended or repealed.
When the statutory authority themselves has entertained an application under Section 85 of the Act for the purpose of availing an appeal before the Commissioner, the natural corollary that would follow would be the next appellate forum under the same provision of law i.e., under Section 86, to the Customs Excise and Service Tax Appellate Tribunal (CESTAT) which undisputedly is functional as on date and is also entertaining the appeals arising out of orders passed by the Commissioner under Section 85 of the Act.
Since the petitioner has a forum of appeal available before the CESTAT, the present writ petition is rejected, reserving the right of the petitioner to avail the remedy of appeal. However, there shall be no order as to costs.
Petition dismissed.
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2024 (2) TMI 1292 - ITAT JODHPUR
Addition u/s 69A - cash deposit in bank during demonetization period - as per assessee cash deposits are the amount as originated from the sale of stock - HELD THAT:- The assessee deposited cash by claiming that the amount was originated from the sale of stock. It is never a question that the assessee has never controverted that assessee has in sufficient stock and purchased on the date of announcement of demonetisation on dated 08.11.2016. The assessee sold goods from his shop. Before that date, the assessee was sufficiently covered by the stock. The assessment was completed by the Sales Tax Authority and the turnover and purchased was duly accepted.
As further submitted that from the documentary evidence the source, purpose and sequence of event duly established that there was direct nexus of cash deposit in bank account out of sales realization in cash. It is settled position of law that when the ld. AO had not doubted the sales, purchases, stock and gross profit declared by the assessee then the cash deposit out of such sales cannot be doubted. The authority below had treated the normal transaction in respect of business receipt as something unusual and out of the ordinary only as undiscerningly which is against the principle of natural justice.We respectfully, relied on the order of Anand Metal Corporation [2004 (7) TMI 49 - MADRAS HIGH COURT]
Assessee’s books was rejected u/s 145(3) for non maintenance of stock register -The assessee claimed that the assessee is dealing with the items which are not possible for her to maintain stock register. The ld. AR respectfully relied in the order of the Hon’ble Jurisdictional High Court in the case of Malani Ramjivan Jagannath [2006 (10) TMI 145 - RAJASTHAN HIGH COURT]
We also respectfully followed the order of the Hon’ble Jurisdictional High Court in the case of non maintenance of stock register cannot be the reason for rejection of books of account. The assessee was eligible to prove the stock, the purchased and the assessment order of the Sales Tax Authority. There are no discrepancies on purchase and stock of goods. On mere suspicion the sale of goods cannot be treated u/s 69A of the Act. The ld. DR was unable to submit any contradictory orders / judgments before the bench. Accordingly, the ground of the appeal is allowed.
Discrepancy of the stock valuation in survey team with the declared in the books of accounts - assessee filed a retraction letter for non-accepted the valuation of the revenue as assessee in reconciliation placed that the parties had accepted that the goods sale for approval, so, the same goods are not entered into the stock of the assessee and affidavit was also filed during the assessment and appeal proceeding but none of the revenue authorities had rejected the affidavit of the parties - HELD THAT:- In our considered view, the assessee was filed a proper calculation of stock and with the details of approval of goods which are not entered in the stock of the assessee. Accordingly, we set aside the impugned appeal order. The addition of amount is quashed.
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2024 (2) TMI 1291 - MADRAS HIGH COURT
Violation of principles of natural justice - Non-service of SCN - petitioner became aware of the intimation, show cause notice and impugned order, upon examining the GST portal - HELD THAT:- Solely with a view to provide an opportunity to the petitioner to establish the genuineness of the transaction and consequently the genuineness of the ITC claim, the impugned order calls for interference. At the same time, it should be noticed that such impugned order was issued on 31.05.2023 and the petitioner has approached this Court belatedly. It should also be noticed that it appears prima facie that the ingredients of Section 74 were satisfied. In order to safeguard the interest of revenue in the facts and circumstances, the petitioner shall remit 10% of the disputed tax demand as a condition for remand. The petitioner, through counsel, also agrees to this condition.
The impugned assessment order is quashed and the matter is remanded for reconsideration subject to the condition that the petitioner remits 10% of the disputed tax demand within a maximum period of two weeks from the date of receipt of a copy of this order. The petitioner is also permitted to issue a reply to the show cause notice within a maximum period of two weeks from the date of remittance.
Petition disposed off.
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2024 (2) TMI 1290 - MADRAS HIGH COURT
Principles of natural justice - Validity of assessment order - alleged difference between the Input Tax Credit (ITC) claimed under GSTR 3B and that reflected in GSTR 2A - HELD THAT:- The assessing officer merely referred to the reply dated 21.12.2023 to the show cause notice and recorded that the reply is not acceptable. On that basis, the proposed levy of tax, interest and penalty was confirmed. The said findings clearly do not contain any reasons for rejecting the petitioner's reply and for confirming the proposed levy of tax, interest and penalty notwithstanding such reply. Therefore, the impugned order, which is completely unreasoned, calls for interference.
The matter is remanded for re-consideration. The respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh reasoned order within a maximum period of two months from the date of receipt of a copy of this order - the impugned assessment order is set aside.
Petition allowed.
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2024 (2) TMI 1289 - ALLAHABAD HIGH COURT
Levy of tax - inadvertent error has crept in the proceedings - principles of natural justice - HELD THAT:- Since rules of natural justice are mandatory to the extent they bind the respondent authority to deal with the objection of the petitioner and if required grant opportunity of hearing to the petitioner before adverse order is passed, no useful purpose would be served in keeping this writ petition pending or calling for a counter affidavit at this stage.
The order dated 5.12.2023 is set aside and the matter is remitted to respondent No.2 to pass a fresh reasoned and speaking order after affording due opportunity of hearing to the petitioner - Petition disposed off.
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2024 (2) TMI 1288 - ALLAHABAD HIGH COURT
Validity of the N/N. 09/2023 dated 31.3.2023 and N/N. 515/SI-2-23-9(47)/17-T.C215-U.P. Act- 1-2017-Order-(273/2023) dated 24.4.2023 - valid reason exists to grant second extension of time to issue show cause notice under Section 73(10) of the U.P. GST Act, 2020 or not - HELD THAT:- All respondents are represented. They pray for and are granted six weeks' time to file counter affidavit. Petitioner shall have two weeks, thereafter, to file rejoinder affidavit.
List thereafter showing the name of Sri N.C. Gupta as counsel for Union of India.
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2024 (2) TMI 1287 - MADRAS HIGH COURT
Violation of principles of natural justice - Validity of assessment order - order was passed without providing an opportunity to raise objections with regard to such assessment - cancellation of the GST registration - non-payment of GST arrears - HELD THAT:- The order of cancellation of registration was issued on 23.11.2022 pursuant to an application made by the petitioner on 10.10.2022. The final return is on record, and this document clearly indicates that such return was filed after the cancellation of registration on 17.03.2023. Nonetheless, in view of the cancellation of registration, it is likely that the petitioner would not have reason to access the portal in the manner that a registered person would be required to. In any event, the assessment order discloses that the petitioner did not participate in proceedings culminating in such assessment order. For this limited reason, the impugned order warrants interference.
The matter is remanded for re-consideration by the first respondent. The petitioner is directed to submit a reply to the show cause notice in Form DRC- 01 within a maximum period of two weeks from the date of receipt of a copy of this order - Petition disposed off.
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2024 (2) TMI 1286 - MADRAS HIGH COURT
Validity of summons issued under Section 70 of the Tamil Nadu Goods and Services Tax Act, 2017 - imposition of GST under the reverse charge mechanism on the seigniorage paid by the petitioner to the Government - HELD THAT:- Reliance placed in the recent judgment of the Division Bench of this Court in TVL. A. VENKATACHALAM VERSUS THE ASSISTANT COMMISSIONER (ST) [2024 (2) TMI 488 - MADRAS HIGH COURT] where it was held that In the cases, where the challenge is made to the show cause notices, the writ petitioners shall submit their objections / representations within a period of four weeks from the date of receipt of a copy of this order.
The petition is disposed off.
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2024 (2) TMI 1285 - PUNJAB AND HARYANA HIGH COURT
Duty Free Shops (DFS) at airports and various government authorities - Refund of amount collected by respondents No.3 and 4 (AAI) on wrongful application of CGST Act, the Integrated Goods and Service Tax Act, 2017 (the IGST Act) and PGST Act - clarification by Hon’ble Third Judge - Respondents No.3 and 4 (AAI) contended that the amount that has been paid by the said respondents to respondent No.1 (UOI) has to be reimbursed to respondent No.3 by the petitioner and thereafter refund may be claimed from Union of India/respondent No.1 by the petitioner in accordance with law.
HELD THAT:- The petitioner stopped paying the GST amount for ‘services’ to respondent No.1 from November 2017. Despite the fact that respondents No.3 and 4 paid the said amount the petitioner is refusing to reimburse them causing continuous loss to the public exchequer.
The petitioner was not willing to pay tax on Services on the ground that it was entitled to refund on account of supply of goods. Even though the petitioner was entitled to ‘ITC’ he would still be liable to pay tax on the Services availed. The petitioner had not been paying taxes to respondents No.3 and 4 due to interim orders passed by the Court but respondents No.3 and 4 were depositing the same with the department/ authorities being the service provider. Therefore, the Hon’ble Third Judge did not modify the order dated January 04, 2018, but clarified that the petitioner would be liable to pay interest on the withheld amounts of GST on Services in terms of interim order dated April 30, 2018.
In the light of observations made and the interim orders dated January 04, 2018 and April 30, 2018 passed by Hon’ble Third Judge and the terms of the concession agreement, it is opined that the petitioner should first pay the respondents No.3 and 4 and then claim ITC and/or subsequent refund, if any, from respondents No.1, 5 and 6.
Therefore, the petitioner is bound to pay the GST on the Services provided by the respondents No.3 not only in accordance with the case laws discussed hereinabove but also due to the binding concession agreement between the petitioner and the respondents No.3 and 4 - it is directed that the petitioner will reimburse the sum of Rs. 3,83,38,993/- to the respondents No.3 and 4 within a period of four weeks from date of this order, along with interest as the order dated April 30, 2018 also makes it clear that the petitioner is liable to pay GST along with interest if it does not succeed in the writ petition.
Petition disposed off.
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2024 (2) TMI 1284 - MADRAS HIGH COURT
Offence u/s 276CC - petitioner prime facie found that the non-filing of the return was wilfull - Economic Offences - petitioner submitted that there was no wilfulness on the part of the petitioner in not filing the returns and that the petitioner had Tax Deducted at Source standing to his credit which covers the entire income earned by the petitioner during the relevant point of time and mere delay in filing the income tax returns due to ill health should not result in a prosecution - HELD THAT:- The only criterion for initiation of prosecution is that there must be a wilful failure to furnish returns as required under Section 139(1) of the Act and once that requisite is fulfilled, the statutory presumption under Section 278E starts operating and this provision brings in a statutory presumption with regard to the existence of a culpable mental state. At this stage, the Court can only presume the culpable mental status of the petitioner and the onus is upon the petitioner to prove the contrary and that can be done only at the time of the trial.
There is no dispute with regard to the fact that the petitioner did not file the returns under Section 139(1) of the Act for the Assessment Year 2014-2015 on or before 31/07/2014. The petitioner for the first time, reacted only after notice u/s 148 of the Act was issued to him. It must be borne in mind that the notice u/s 148 of the Act has nothing to do with the return of income to be filed u/s 139(1) of the Act.There is no connection between the notice issued u/s 148 of the Act and the duty of the assessee to file the returns under Section 139(1) of the Act.
it is not as if the petitioner has paid the tax and there was only a delay in filing the returns. The petitioner cannot assume that the Tax Deducted at Source will cover the entire tax liability for the relevant Assessment Year even without filing his returns and declaring his total income.
As petitioner submitted that an appeal has been filed against the assessment order and the same is pending before the appellate authority and therefore, the prosecution cannot be continued, there is no basis for this submission and the mere pendency of the appellate proceedings is not a relevant factor for initiating prosecution proceedings u/s 276CC. Useful reference can be made to the judgment of the Apex Court in Sasi Enterprises v. CIT [2014 (2) TMI 19 - SUPREME COURT]
In the instant case, the trial has already commenced and this is yet another reason as to why this Court is not inclined to interfere with the criminal proceedings which was initiated in the year 2017. Therefore, it is left open to the petitioner to raise all the grounds before the Court below and the same will be considered on its own merits and in accordance with the law. Any finding rendered in this Order will not have any bearing on the trial court while dealing with the issues involved in the case.
This Criminal Original Petition stands dismissed and there shall be a direction to the Court below to complete the proceedings in E.O.C.within a period of three months from the date of receipt of copy of this Order.
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2024 (2) TMI 1283 - MADRAS HIGH COURT
Procedure of Conducting the search and seizure of the digital data from the premises of the petitioner - seizure of the .txt files from an undisclosed location - No opportunities of personal hearing to the petitioner provided - denial of natural justice - main grievance of the petitioner was that the digital data evidences were collected by the respondents from unknown locations without any valid search warrant and without following the guidelines issued by the CBDT vide Digital Evidence Investigation Manual - HELD THAT:- The search was conducted and the Show Cause Notices dated 21.12.2022 and 22.12.2022 were issued in a hasty manner and the reply was filed on 24.12.2022 and 28.12.2022, for which the assessment order was passed on 30.01.2023 without providing any opportunities of personal hearing to the petitioner.
Further, in the present case, an issue of suspicion is involved with regard to the collection and maintenance of data by the Department, whereby more than 52,000 files have been corrupted and some of them have been misplaced by the Department due to the storage of data/files in a very poor and negligent manner. Thus before passing the assessment order, the data, which were relied upon by the respondents, have to be corroborated by any additional evidences since the same is mandatory requirement as per the Digital Evidence Investigation Manual.
However, the same was not done. Further, no opportunity of personal hearing was provided to the petitioner before the passing of assessment order. Hence, there is no doubt that the assessment orders were passed in violation of principles of natural justice and accordingly, the same were liable to be quashed.
As the electronic data have been collected without following the various procedures laid down in the Digital Evidence Investigation Manual. This Court had already held that following the said Manual is mandatory and the respondents cannot claim any exemptions as held in State of Kerala vs. M/s.Kurian Abraham Pvt. Ltd., and another [2008 (2) TMI 289 - SUPREME COURT] and The Commissioner of Customs vs. Indian Oil Corporation [2004 (2) TMI 66 - SUPREME COURT]
If any electronic data is relied upon by the Department, the same has to be corroborated with the evidences.
This Court is of the considered view that since the respondents had not followed the Digital Evidence Investigation Manual while collecting and preserving the evidences, as per the law laid down by the Hon'ble Apex Court, if there is no corroborative evidence and proved in the manner known to law, the digital data collected by the Department in the course of search and seizure and thus, the said search and seizure is against the law and ab initio bad
In the present case, within a short span i.e., 10 days of time, after the show cause notice was issued without providing any time limit, the assessment orders were passed. Further, neither the opportunity of personal hearing nor the opportunity to cross-examine the witnesses, was provided to the petitioner.
Therefore, no doubt, the assessment orders were passed in violation of principles of natural justice and accordingly, the assessment order is liable to be set aside.
Rule 46A of the IT Rules only talks about the production of any additional evidences before the Deputy Commissioner (Appeals) and Commissioner (Appeals). In the present case, there is no question with regard to the production of additional evidences but the entire case is revolving around the failure on the part of the respondents to supply the documents, which they have relied upon in the show cause notice and thereafter, providing an opportunity for cross-examination of the witnesses, who had made sworn statements against the petitioner and also with regard to the failure to provide the opportunity of personal hearing before the passing of assessment orders. Therefore, it is not that a particular evidence alone needs to be produced or cross-examined by the petitioner and for that extent alone, the Appellate Authority can ask the Assessing Officer to provide the opportunity of personal hearing or cross-examination, etc. On the other hand, in the present case, the matter has to be re-adjudicated in its entirety since no procedure has been followed, which is complete violation of principles of natural justice as discussed above.
Taking all these aspects into consideration and to avoid the multiplicity of proceedings, it would be appropriate to set aside all the assessment orders, which are under challenge in the present writ petitions and thereafter, remit the matter back for re-consideration to the Authority concerned and to pass appropriate orders in accordance with law.
ORDER - The Digital Evidence Investigation Manual has been issued by the CBDT by virtue of powers available under Section 119 of the IT Act and hence, the Income Tax Authorities and all the other persons employed in the execution of this Act are bound to observe and follow such orders, instructions and directions issued by CBDT.
The electronic data have been collected in .txt files in violation of the provisions of Digital Evidence Investigation Manual. Though the procedures have not been followed while collecting the electronic data in .txt files, the data collected by the respondents can be relied upon only if the said data are supported by the corroborative evidences. 2nd respondent is directed to provide all the documents relied upon by them in the Show Cause Notice as requests by the petitioner. Assessing Officer is directed to pass the assessment order in detail taking into consideration of the deposition of the witnesses, during the cross-examination, whose statements are relied upon by the 2nd respondent to corroborate the electronic data collected by them.
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2024 (2) TMI 1282 - ITAT HYDERABAD
Penalty u/s 271(1) (c) - period of limitation - treatment of lease rent income - initially assessee claimed the same as business income and claimed depreciation on assets - in the revised return, assessee claimed the same as income from house property to claim 30% standard deduction - AO treated the income of the assessee as income from business and initiated penalty proceedings - HELD THAT:- As section 275 of the Act is clear in its purport that no order imposing penalty under chapter XXI after the expiry of financial year in which the proceedings, in the course of which action for imposition of penalty have been initiated, are completed, or six months from the end of the month in which the order of the Appellate Tribunal was received by the PCIT or Chief Commissioner or Principal Chief Commissioner or Commissioner, whichever period expires later. In this case, the Tribunal passed the orders on 24/03/2021 and by 31/03/2021, the financial year ends or by the end of September, 2022, six months expires from the end of the month in which the order by the Appellate Tribunal was passed. There is evidence to justify the action of the AO in passing the current impugned order dated 01/04/2022. On this score, Revenue has no case.
Coming to the second objection, we are in agreement with the learned AR that whether or not subsequently cancelled by the learned CIT(A), with the passing of the first penalty order by 13/08/2021 within six months from the end of the month in which the Appellate Tribunal passed the orders, AO became functus officio and he has no jurisdiction to pass the second penalty order beyond the period prescribed u/s 275(1) of the Act.
Lastly, it is an established principle of law that law does not bar or prohibit an assessee for making a claim, which he believes may be accepted or is plausible; that when such a claim is made during the course of regular or scrutiny assessment, liberal view is required to be taken as necessarily the claim is bound to be carefully scrutinized both on facts and in law; that full probe and appraisal is natural and normal; that threat of penalty cannot become a gag and/or haunt an assessee for making a claim which may be erroneous or wrong, when it is made during the course of the assessment proceedings; that normally, penalty proceedings in such cases should not be initiated unless there are valid or good grounds to show that factual concealment has been made or inaccurate particulars on facts were provided in the computation. Law does not bar or prohibit a person from making a claim, when he knows the matter is going to be examined by the AO.
Merely because the assessee preferred a claim which was not acceptable to the Revenue, the assessee cannot be visited with the proceedings u/s 271(1)(c) unless and until the twin requirements u/s 271(1)(c) of the Act are satisfied.
Viewing from any angle, we find that the impugned penalty order is unsustainable in law and while accepting the plea of the assessee, we hold that the penalty cannot be sustained. Accordingly, we direct the learned assessing officer to delete the same. Decided in favour of assessee.
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2024 (2) TMI 1281 - ITAT MUMBAI
Income from other sources u/s 56 (2) (x) - difference between the valuation adopted by the district valuation officer and actual consideration - Onus to prove "on-money" transaction - assessee has purchased the property for a consideration which is less than the value determined by the learned departmental valuation officer - HELD THAT:- There is no provision in the act that before invoking the provisions of section 56 (2), the AO or the CIT-A should prove with evidence that there is a transaction of on money and then only addition can be made. It is an anti avoidance provision. Therefore, such argument deserves to be rejected.
Whether observation made by the learned registered valuer were not at all considered by the lower authorities i.e. CIT – A? - The preliminary valuation report was also submitted to the assessee and an opportunity was given for submitting the objection. Assessee submitted objection and it were considered by the learned DVO. Thus in view of the independent sale instances of similar sale consideration, it cannot be said that the report of the learned DVO suffers from any infirmity. As nothing was pointed out before the learned CIT – A that the valuation report prepared by the learned TPO suffers from any infirmity, it cannot be said that the learned CIT – A has blindly accepted the report of DVO. We have considered the submission made by the assessee on 27/3/2023 to the CIT – A placed at page number 48 – 67 of the paper book to reach at this conclusion. In view of the above facts, we do not find any infirmity in the order of the learned CIT – A in making the addition to the total income of the assessee being the difference between the actual consideration and the valuation determined by the learned district valuation officer.
Thus we, uphold the orders of the learned CIT – A in confirming the addition under section 56 (2) (x) (b) (b) of the act as the assessee has purchased the property for a consideration which is less than the value determined by the learned departmental valuation officer in accordance with the provisions of section 50 C - Decided against assessee.
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2024 (2) TMI 1280 - ITAT PUNE
Validity of revision proceedings u/s 263 - Adoption of either of view by AO - allowability under section 36(1)(viia) - HELD THAT:- As observed that different benches of ITAT have taken different views on the issue of allowability under section 36(1)(viia) deduction for provision for standard assets. The ITAT Indore Bench in the case of Vikramaditya Nagrik Sahkari Bank Maryadit Vs. ACIT [2018 (3) TMI 1516 - ITAT INDORE], Kotak Mahindra Bank Limited [2023 (2) TMI 1005 - ITAT MUMBAI] and Dy.CIT Vs. M/s.Punjab Gamin Bank [2016 (6) TMI 1443 - ITAT AMRITSAR] = had held that deduction under section 36(1)(viia) is allowable for provision for standard assets which is basically in the nature of bad & doubtful debts.
As relying on AMITABH BACHCHAN [2016 (5) TMI 493 - SUPREME COURT] and MEPCO INDUSTRIES LIMITED. [2006 (11) TMI 164 - MADRAS HIGH COURT] when two views are legally possible and AO adopts one view the Assessment Order cannot be said to be erroneous for the CIT to invoke jurisdiction u/s 263. In this case, applying the above principle of law, it is held that assessment order is not erroneous and prejudicial to the interest of the revenue and hence the order under section 263 is bad in law. Accordingly, appeal of the assessee is allowed.
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2024 (2) TMI 1279 - ITAT AHMEDABAD
TP Adjustment - adjustment made to the ALP of the international transaction of corporate guarantee charges - AO/TPO had proposed adjustment on account of corporate guarantee by applying rate of 2.52% which was confirmed by the DRP - HELD THAT:- As in assessee own case 2012-13 and 2013-14 ITAT had held, corporate guarantee fees charged at 1% on the international transaction with AEs was at ALP.
DR was unable to distinguish the decisions of the ITAT in the preceding years in any way before us; whether on facts or in law. In view of the same, the decision of the ITAT in the preceding years in the case of the assessee itself, will apply in the present case also, following which, we hold that the ALP of the bank guarantee charged by the assessee at the rate of 1% is justified. The adjustment, therefore, made to the same by adopting 1.5% rate is directed to be deleted.
Adjustment made to the international transaction of Optionally Convertible Loans (OCL) issued by the assessee to its AE on account of charging of interest - HELD THAT:- Going through the decision of the ITAT in the preceding year, which is reproduced in the order of the ITAT for AY 2014-15 [2022 (9) TMI 1560 - ITAT AHMEDABAD]we have noted that the ITAT held the convertible loans advanced to the assessee to be in the nature of quasi-capital in the sense that, substantive reward or true consideration for such loan was not interest simplicitor on the amount advanced, but was an opportunity to own the capital on certain favourable terms.
ITAT also noted the fact that whenever the assessee’s right to exercise option on conversion of the loans into equity came to an end, it was entitled to interest on commercial rates and noting that it was not even the case of the authorities below that the interest so charged by the assessee in a situation in which the right of exercising the option had come to end, is not at an arm’s length; that ITAT held that in such facts and circumstances, where the loans given by the assessee was found to be in the nature of quasi-capital and in the scenario of non-conversion of the loans into equity, the assessee was entitled to interest at commercial rate which was at arm’s length, no TP adjustment on account of interest on such loans was warranted.
ITAT in the case of the assessee itself, in the preceding assessment years, as noted by us, and in the light of the fact that no distinguishing facts has been brought to our notice by the Revenue, the issue, we hold, stands covered in favour of the assessee by the consistent decision of the ITAT, in its own case in preceding years.
TP adjustment made on account of alleged reimbursement of expenses to its AE - HELD THAT:- Since no distinguishing facts have been pointed out by the ld.DR from the facts of the preceding years, the decision rendered by the ITAT in Asst. Year 2014-15 [2022 (9) TMI 1560 - ITAT AHMEDABAD] will apply to the impugned year also, following which, we direct deletion of the adjustment made to the transaction of reimbursement of the expenses by AE to the assessee.
Nature of expenses - Product Registration Expenses and expenses product for Registration Support Services - revenue or capital expenses - HELD THAT:- As issues have been decided in favour of the assessee in the preceding assessment years, including immediately preceding assessment years i.e. Asst. Year 2014-15, [2022 (9) TMI 1560 - ITAT AHMEDABAD] and no distinction having been made before us either on facts or on law by the DR we see no reason to confirm the order of the AO treating the impugned expenses as capital in nature.
Entitlement of weighted deduction for expenditure on Scientific Research u/s. 35(2AB) in respect of Clinical Trials and Bio-equivalence Study - HELD THAT:- Issue decided in favour of the assessee in the preceding assessment years, including immediately preceding assessment year i.e. Asst. Year 2014-15; that the issue relating to the claim of weighted deduction under section 35(2AB) of the Act on activities carried outside the R&D facility of the assessee pertaining to clinical trial and bio-equivalence study, had been allowed by the ITAT in Asst. Year 2006-07 to 2010-11, which order had been confirmed by the Hon’ble Gujarat High Court holding that no question of law arose on the point.
Disallowance u/s 14A added to the book profits of the assessee u/s 115JB - HELD THAT:- we have no reason to uphold the order of the AO in this regard, as the finding of the AO is not in consonance with the ratio laid down by the Special Bench in Vireet Investments [2017 (6) TMI 1124 - ITAT DELHI] nor with the decision of the ITAT in case of the assesse in the immediately preceding A.Y 14-15. Therefore, the addition made to the book profits of the assessee on account of expenses disallowed under section 14A of the Act is directed to be deleted. Decided in favour of assessee.
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2024 (2) TMI 1278 - ITAT CHENNAI
Deemed dividend u/s 2(22)(e) - assessee company is a shareholder of lender company or not? - whether the loans advanced by M/s. IG3 Infra Limited to the assessee companies can be brought to tax in the hands of the assessee companies as deemed dividend u/s. 2(22)(e)? - HELD THAT:- Primary condition to attract section 2(22)(e) is the recipient of the loan or person benefitted should be a shareholder in the lender or payee company - such shareholder should own not less than 10% of the voting power. It implies that only the equity share holders are covered since they are the ones who are eligible for voting power, thus, excluding all other shareholders like preference etc. The expression 'shareholder, being a person who is the beneficial owner of shares’ is a subject matter of debate i.e. whether the shareholder to mean registered and beneficial or beneficial alone. As in the case of CIT v. Ankitech (P.) Ltd [2011 (5) TMI 325 - DELHI HIGH COURT] has held that the term 'shareholder’ used in the section referred to both a registered and beneficial shareholder.
In view of the above, having withdrawn the appeal by the assessee in the case of National Travel Service v. CIT 2021 (8) TMI 1380 - SC ORDER] as on date the binding judgement on the issue of the expression 'shareholder’ is that of CIT v. Ankitech (P.) Ltd (supra) as affirmed in the case of CIT v. Madhur Housing & Development Co [2017 (10) TMI 1279 - SUPREME COURT] Thus, respectfully following the same, we hold that the shareholder referred to in section 2(22)(e) of Act implies registered and beneficial shareholder.
Relevant date for determining the shareholding in order to examine the applicability of section 2(22)(e) - As we hold that the relevant date for determining the shareholding is the date of advancing of the loans.
In the case of assessee companies, neither the assessee companies nor its shareholders are the shareholders of M/s. IG3 Infra Limited as on the date of advancing of loans. There are no common registered and beneficial shareholders between M/s. IG3 Infra Limited and the respondent companies on the date of advancing of loans. Even prior to change in the shareholding pattern of the respondent companies, it is not the case of the revenue that both M/s. IG3 Infra Limited and the respondent companies have equity shareholders with 10% of the voting power or more.
None of the family members of Shri Thiagarajan are registered and beneficial shareholders of M/s. IG3 Infra Limited and the respondent companies either before or after change in shareholding of the respondent companies. Thus, we are of the opinion that the provisions of section 2(22)(e) are not applicable to the facts of the respondent companies and accordingly no addition towards deemed dividend is warranted in the hands of the respondent companies.
The undisputed facts are Shri Shanmugam Thiagarajan and Smt Rukmini Thiagarajan are not the registered shareholders of M/s. IG3 Infra Limited and consequently, both of them cannot be regarded as a “registered and beneficial shareholder”. Smt Unnamalai Thiagarajan though is a registered shareholder of M/s. IG3 Infra Limited, her shareholding in the company amounted to 0.002% which is less than the prescribed voting power of 10% to attract the provisions of third limb of section 2(22)(e) of the Act.
Thus, none of the three persons of Thiagarajan family satisfy the legal requirements of being a shareholder in M/s. IG3 Infra Limited in order to attract third limb of section 2(22)(e) - Whether the Thiagarajan family benefitted from the loans advanced by M/s. IG3 Infra Limited or not is immaterial when they do not fall within the conditions laid down in section 2(22)(e) of the Act. In view of this, we are of the opinion that even third limb of section 2(22)(e) of the Act is also not applicable to the facts of the case and accordingly no addition under section 2(22)(e) of the Act is warranted in the hands of the respondent companies.
No addition under section 2(22)(e) of the Act will survive in the hands of the respondent companies, another question considered is whether deemed dividend if any is taxable in the hands of the respondent companies when the respondent companies are not the shareholders. In this context, reliance is placed on the following judicial precedents:
The Hon’ble Bombay High Court in the case of CIT v. Universal Medicare Private Limited [2010 (3) TMI 323 - BOMBAY HIGH COURT] has held that the deemed dividend under section 2(22)(e) of the Act is required to be taxed in the hands of the shareholder and not in the hands of the concern in which such shareholder has substantial interest which received the loan.
We hold that the deemed dividend under section 2(22)(e) of the Act is required to be taxed only in the hands of the common registered shareholder in a case where a closely held company advances a loan to a company in which such common shareholder has substantial interest and the said deemed dividend is not taxable in the hands of the company which is in receipt of the loan. Accordingly, on this count as well, the loans advanced by M/s. IG3 Infra Limited cannot be taxed in the hands of the assessee companies since the assessee companies are not the shareholders in M/s. IG3 Infra Limited.
We are of the opinion that the ld. CIT(A) has rightly deleted the additions made by the Assessing Officer under section 2(22)(e) of the Act in the hands of the assessee companies. Decided against revenue.
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2024 (2) TMI 1277 - SC ORDER
Validity of Provision mandating a pre-deposit of 7.5% of the penalty - challenge to the constitutional validity of Section 129-E - limitation - HELD THAT:- We dispose of these special leave petitions by reserving liberty to the petitioners herein to withdraw the writ petitions filed by them before the High Court. Consequently, the impugned order would pale into insignificance as far as the petitioners herein are concerned. However, liberty is reserved to the petitioners herein to file an appeal u/s 129-E of the Customs Act, 1962 within a period of one month from today. If an appeal is filed within a period of one month from today, the CESTAT shall not raise the issue of limitation, since we have granted liberty to the petitioners to file an appeal.
The Special Leave Petitions are disposed of in the aforesaid terms.
Pending applications shall stand disposed of.
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2024 (2) TMI 1276 - MADRAS HIGH COURT
Penalty imposed u/s 117 - handling agent in respect of the import of goods - HELD THAT:- Undoubtedly, the petitioner was not provided a reasonable opportunity. In addition, on examining Section 117 of the Customs Act, I find that the sum of Rs. 4,00,000/- is the ceiling with regard to imposition of penalty, whereas, in the impugned order, a penalty of Rs. 5,00,000/- was imposed u/s 117. This is clearly unsustainable.
Thus, the impugned order is quashed in so far as it imposes a penalty on the petitioner. As a corollary, the matter is remanded for reconsideration. After providing a reasonable opportunity to the petitioner, including a personal hearing, a fresh order shall be issued in respect of the petitioner within a maximum period of six weeks from the date of receipt of a copy of this order.
W.P.No.4398 of 2024 is disposed of on the above terms. There will be no order as to costs. Consequently, W.M.P.No.4738 of 2024 is closed.
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2024 (2) TMI 1275 - BOMBAY HIGH COURT
Cancellation of the Advance Authorization Scheme - For duty free imports - received foreign remittances - Recovery for demand duty - application for conversion of shipping bill from one scheme code to another - HELD THAT:- The case of the Petitioner is to the effect that the request of the Petitioner was bona fide and it was obviously on account of a mistake which had taken place in entering the wrong scheme code, hence, the Application filed by the Petitioner for entering the correct scheme code ought to have been granted.
We find that as the hearing that has taken place before the Commissioner of Customs NS-II on 29th March 2023 which was post the filing of this Petition, the Petitioner needs to raise all the contentions as raised in the present Petition, before the Commissioner, and an appropriate decision can be taken by the Commissioner, after considering the principles of law as applicable including in the decisions noted hereinabove. Accordingly, a final decision be taken by the Commissioner of Customs, NS-II and an order thereon be passed in accordance with law. Needless to observe that, in the event, the Commissioner is of the opinion that there was any inadvertent error and all other statutory compliances have been met, the Commissioner would consider granting the benefit to the Petitioner.
The Petitioner is directed to appear before the Commissioner with a copy of this order - Writ Petition disposed of in the above terms.
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2024 (2) TMI 1274 - ALLAHABAD HIGH COURT
Maintainability of the writ petition - availability of alternative remedy - Direction to respondents to not to arrest the petitioner against the summons issued under Section 108 of Customs Act 1962 - seeking expeditious disposal of enquiry pertaining to the Seizure of Betel Nuts, pending since May 2023 preferably within a stipulated time period- HELD THAT:- It is not in dispute that the maintainability of the writ petition under Article 226 of the Constitution of India is concerned, the same is maintainable with only rider that such power should be exercised sparingly and the same has been considered the judgement in Choodamani Parmeshwaran Iyer [2018 (12) TMI 1897 - GUJARAT HIGH COURT].
Thus, at this stage we are not inclined to entertain the writ petition - Accordingly, the writ petition is disposed of.
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