|
Advanced Search Options
Case Laws
Showing 141 to 160 of 1569 Records
-
2024 (5) TMI 1429
Extension of time limit for GST assessment u/s 73 - Challenge to N/N. 09/2023 Central Tax and N/N. 56/2023-Central Tax and section 73 of the CGST/AGST Act, 2017 - Extension of time limit - force majeure - situation of COVID-19 pandemic in existence or not - recovery of ineligible ITC - HELD THAT:- In the Explanation to Section 168A of the CGST Act, 2017, the expression ‘force majeure’ means a case of war, epidemic, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature or otherwise affecting the implementation of any of the provisions of the Act. It is noticed that the time limit under sub-section [10] of Section 73 of the CGCT Act was extended once prior to the Notification dated 31.03.2023.
The Hon’ble Allahabad High Court, the Hon’ble Gujarat High Court, the Hon’ble Punjab & Haryana High Court, the Hon’ble Madras High Court and this Court have provided interim reliefs to the noticees/assessees by inter alia observing that the proceedings in pursuance of the impugned Show Cause Notice may proceed but no final order shall be passed and if final order is passed already, no recovery is to be effected. The said interim orders are stated to be in operation till date.
This Court is inclined to provide that till further orders of this Court, the recovery of the amount assessed against the petitioner by the Order-in-Original shall not be enforced - petition disposed off.
-
2024 (5) TMI 1428
Penalty order - Violation of provisions related to E-Way Bill - classification of goods as Over Dimensional Cargo (ODC) due to the speed at which they were transported - penalty imposed on the ground that the goods had travelled at a fast speed, and therefore, according to the authorities could not be categorised as the ODC - intent to evade tax or not - HELD THAT:- In the present case, the entire imposition of penalty is based on surmises and conjectures without there being any basis or finding with regard to intention to evade tax.
One may rely upon the judgments of this Court in the case of GIRISH AND COMPANY VERSUS STATE OF UP AND 4 OTHERS [2024 (1) TMI 1107 - ALLAHABAD HIGH COURT] and M/S. HINDUSTAN HERBAL COSMETICS VERSUS STATE OF U.P. AND 2 OTHERS [2024 (1) TMI 282 - ALLAHABAD HIGH COURT] where it has been held that presence of mens rea for evasion of tax is a sine qua non for imposition of penalty.
The mere fact that the goods in question were transported at a faster speed does not constitute sufficient grounds for penalization, in light of the departmental circular explicitly excluding transit speed as a criterion for classification. The reliance on speculative assumptions and conjectural reasoning to justify the imposition of penalties is antithetical to the principles of fairness and equity that underpin the rule of law.
The prospect of facing penalties serves as a powerful disincentive for individuals and entities tempted to engage in fraudulent or deceitful conduct, thereby promoting voluntary compliance with tax laws and fostering a culture of accountability and transparency. In the absence of wilful intent, penalties lose their deterrent effect and instead become arbitrary exercises of state power, subjecting innocent taxpayers to undue hardship and injustice. It is imperative that penalty imposition be grounded in sound reasoning and substantive evidence of wilful misconduct.
The said orders are quashed and set-aside - Petition allowed.
-
2024 (5) TMI 1427
Seeking to quash the prosecution - No Dues - Discharge Certificate issued - application of the Sabka Vishwas (Legacy Dispute Resolution) Scheme - liability of the petitioners-accused under the Central Excise Act 1944 and the Indian Penal Code - HELD THAT:- In peculiar facts of this case, mere pendency of an application dated 15.10.2022, for withdrawing the prosecution filed by Respondent-Complainant, if any, cannot be the basis for continuing the prosecution, when, the petitioner(s)-accused have remitted the liability and even the No Dues-Discharge Certificate and approval for withdrawing the prosecution from concerned Court stands accorded by the Respondent-Complainant competent authority. Further, no fruitful purpose would be achieved in continuing with the prosecution.
At the same time continuing with the prosecution despite the fact that the alleged liability has become non-existent, obsolete in view of the Sabka Vishvas [Legacy Dispute Resolution] Scheme, under which the liability stands liquidated. Further, the continuance of prosecution shall unnecessarily burden the docket of the Learned Trial Court and lead to accusation which no longer survives and continuance of prosecution shall entail unwarranted suffering and humiliation to the petitioner-accused, contrary to the purpose and object of the criminal justice system.
Accordingly, the Complaint, titled as Central Excise & Customs Department & Ors. Versus M/s Him Cylinders Ltd. & Anr. pending before Learned Chief Judicial Magistrate, Amb, District Una [H.P.], is quashed and set aside; and the petitioner(s)-accused shall stand acquitted of the accusation for all purposes, so far as it relates to the instant complaint.
Thus, the instant petition as well as the pending application(s), if any, shall stand disposed of.
-
2024 (5) TMI 1426
Cancellation of GST registration of petitioner - registration obtained by means of fraud, wilful misstatement or suppression of facts - HELD THAT:- Reference may be had to the Section 29 (2) of the Central Goods & Service Tax Act, 2017 which interalia stipulates that during the pendency of the proceedings relating to cancellation of registration, the Proper Officer may suspend the registration for such period and such manner as may be prescribed - Reference may also be had to Rule 21-A (2) of the Central Goods & Service Tax Rules, 2017, which interalia stipulates that where a Proper Officer has reason to believe that the registration of a person is liable to be cancelled under Section 29 of the Act, then he may suspend the registration of such person with effect from the date to be determined by him.
Since the date of suspension of the registration is automatically determined by the portal as the date of the notice and there is no option with the proper officer to specify a different date, apparently, there is no conscious application of mind by the Proper Officer deciding to suspend the registration from the date of issuance of the Show Cause Notice.
It is deemed expedient to direct a senior competent officer of the GSTN Network to file an affidavit indicating the manner in which the portal functions - Let the affidavit be filed within one week.
-
2024 (5) TMI 1425
Maintainability of petition - availability of efficacious alternative remedy of appeal - Validity of pre show cause notice issued u/s 74 of the WBGST Act, 2017 and SCN - SCN were not uploaded in the “view notices and orders” section of the portal and uploaded in the “additional notices and orders” section.
Validity of pre show cause notice issued u/s 74 of the WBGST Act, 2017 and SCN - SCN were not uploaded in the “view notices and orders” section of the portal and uploaded in the “additional notices and orders” section - HELD THAT:- It is noticed that although, the petitioner claims that the notices in question including the final order passed under Section 74 of the said Act had been uploaded in “additional notices and orders” section instead of “view notices and orders” section, no statement has been made by the petitioner as to when the petitioner came to learn with regard to the factum of uploading of the notices/order.
In view of the aforesaid and by reason of failure on the part of the petitioner to make appropriate disclosure as to when he had come to learn with regard to factum of uploading of aforesaid notices, it is not inclined to exercise discretion in favour of the petitioner.
Maintainability of petition - availability of efficacious alternative remedy of appeal - HELD THAT:- Taking note of the fact that the petitioner has an efficacious alternative remedy in, the form of appeal, the petitioner should be permitted to approach the appellate authority under Section 107 of the said Act. However, at the same time since, it is not in dispute that the notices in question including the order passed under Section 74 of the said Act had been uploaded in “additional notices and orders” section instead of “view notices and orders” section and without going into the controversy at this stage as to whether uploading of the notice in the “additional notices and orders” section constitutes due service of notice within the meaning of Section 169 (1)(d)of the said Act, the petitioner should be permitted to approach the appellate authority.
Petition disposed off.
-
2024 (5) TMI 1424
Dishonor of Cheque - Challenged the judgments of conviction u/s 138 of Negotiable Instruments Act - Suspension of sentence u/s 389 CrPC, reason for directing deposit of 20% of fine - HELD THAT:- In the impugned order, the Sessions Judge did not assign sufficient reason while ordering a deposit of 20% of the amount of compensation imposed by the Trial Court. The Sessions Court has also not considered whether the case of the petitioner fell in the exception or not. Therefore, the orders impugned to the extent it directed the petitioner to deposit 20% of the amount of compensation imposed by the trial court stand set aside. The Sessions Court is directed to reconsider the applications afresh after affording opportunity of hearing to both sides within a period of one month from the date of receipt of a copy of this judgment.
-
2024 (5) TMI 1423
Validity of assessment orders passed by the Deputy State Tax Officer for the assessment years 2017-2018 and 2018-2019 - request for personal hearing not considered - violation of principles of natural justice - HELD THAT:- A perusal of the petitioner's representation, dated 21.11.2023 shows that the petitioner has made a request for one more opportunity of personal hearing. However, it appears that the same was not considered by the respondent.
This Court, by relying upon the provision under Section 75(4) of the GST Act, 2017 in SHREE SHYAM GRANITES AND MARBLES VERSUS THE ASSISTANT COMMISSIONER (ST) (FAC), HOSUR (SOUTH) - III CIRCLE, HOSUR [2023 (2) TMI 652 - MADRAS HIGH COURT] has held that the respondents ought to have provided an opportunity of personal hearing, if they contemplated an adverse decision as against the assessee even when no request for personal hearing was made by the assessee.
Here, in the present case on hand, the petitioner has submitted a representation on 21.11.2023 with a request to provide one more opportunity.
The orders impugned in these writ petitions are hereby set aside. The issue is remanded back to the respondent for fresh consideration. The petitioner shall appear before the respondent for personal hearing on 26.02.2024, without expecting any separate notice from the respondent.
Petition allowed by way of remand.
-
2024 (5) TMI 1422
Violation of principles of natural justice - SCN has been posted in the “View Additional Notices” tab, instead of “View Notices” tab, which is the normal practice - HELD THAT:- Reliance placed on the decision of this Court in the case of M/S. SABARI INFRA PRIVATE LIMITED, REPRESENTED BY ITS GENERAL MANAGER-FINANCE VERSUS ASSISTANT COMMISSIONER (ST), CHENNAI [2023 (9) TMI 501 - MADRAS HIGH COURT] wherein under similar circumstances, this Court has held that the petitioner should be given a fair opportunity and the matter was remitted back to the Department to pass a fresh assessment order, after hearing the writ petitioner.
The writ petition is allowed and the order with consequential recovery notices and Form GST DRC-13 passed by the 1st respondent are set aside - petitioner shall deposit 10% of the Tax Component as a precondition without prejudice for being afforded a fresh hearing to object to the show cause notice - petition allowed.
-
2024 (5) TMI 1421
Violation of principles of natural justice - Service of notices - notices and orders were uploaded on the “View Additional Notices and Orders” tab on the GST portal and not communicated to the petitioner through any other mode - tax proposal pertaining to the discrepancy between the petitioner's GSTR 3B return and the auto-populated GSTR 2A - HELD THAT:- On perusal of the impugned order, it is evident that the tax proposal pertains to the discrepancy between the petitioner's GSTR 3B return and the auto-populated GSTR 2A and the consequential inference that Input Tax Credit (ITC) was wrongly availed of. It is also clear that such tax proposal was confirmed because the petitioner did not file a reply to the show cause notice. Upon considering the averments in the affidavit and contentions of learned counsel, it is just and necessary that an opportunity be provided to the petitioner to contest the tax demand by putting the petitioner on terms.
The impugned order dated 11.10.2023 is set aside and the matter is remanded for reconsideration on condition that the petitioner remits 10% of the disputed tax demand as agreed to within a period of two weeks from the date of receipt of a copy of this order - Petition disposed off by way of remand.
-
2024 (5) TMI 1420
Levy of penalty for non filing of the annual return - notices and orders were uploaded on the GST portal, but not communicated to the petitioner through any other mode - seeking an opportunity to be heard - violation of principles of natural justice - HELD THAT:- By pointing out that the turnover of the petitioner did not exceed the threshold during the financial year 2019-2020, petitioner seeks an opportunity to contest the matter on merits.
The petitioner has placed on record evidence of remittance of sum of Rs. 54,640/- towards the disputed tax demand relating to order dated 22.06.2023. On perusal of such order, it is clear that the tax proposal was confirmed because the petitioner did not reply to the show cause notice or participate in the personal hearing. In the circumstances outlined above, the interest of justice warrants that the petitioner be provided an opportunity to contest the matter on merits.
The impugned orders dated 13.02.2023 and 22.06.2023 are set aside subject to verification of receipt of 10% of the disputed tax demand under order dated 22.06.2023. The petitioner is permitted to submit replies to the show cause notices within two weeks from the date of receipt of a copy of this order.
Petition disposed off.
-
2024 (5) TMI 1419
Challenge to SCN and intimation issued under the TNGST Act, 2017 - imposition of GST under the reverse charge mechanism on the seigniorage paid by the petitioner to the Government - HELD THAT:- Reliance placed on record the recent judgment of the Division Bench of this Court in a batch of writ petitions, Tvl. A. Venkatachalam v. Assistant Commissioner (ST), Palladam II Assessment Circle, Palladam [2024 (2) TMI 488 - MADRAS HIGH COURT]. In the said judgment, it was held that 'It is made clear that there shall be no recovery of GST on royalty until the Nine Judge Constitution Bench takes a decision.'
In view of the above judgment, this petition is liable to be disposed of on the same terms.
-
2024 (5) TMI 1418
Dismissal of SLP on the ground of delay - insufficient reason for the delay - Recovery of dues - priority/precedence of dues - it was held by High Court that 'dual disability sets in. First, in the absence of material to show that the first charge under section 37 of MVAT Act was enforced by a valid attachment order before the registration of security interest by the petitioner with the CERSAI, the petitioner cannot be deprived of the right of priority under section 26E of the SARFAESI Act. Secondly, with the registration of the security interest with the CERSAI on 9th July 2020, coupled with the absence of registration of the department’s demand and/or order of attachment, the claim of the respondents becomes subservient to the right of the secured creditor.'
HELD THAT:- There is a delay of 498 days in filing the Special Leave Petitions. The explanation for the delay is not sufficient. Consequently, the Special Leave Petitions are dismissed on the ground of delay.
-
2024 (5) TMI 1417
Accrual of income in India - Indian establishment constituted a Fixed Place PE - Collaborative Exercise and Fixed Place PE - HELD THAT:- As had been eloquently observed in Vishakapatnam Port Trust [1983 (6) TMI 31 - ANDHRA PRADESH HIGH COURT] the Noida and/or the Varanasi premises would have had to be found to amount to a “virtual projection”, and thus essentially a complete takeover of the premises, either in its entirety or even in part, for the purposes of conducting the core business activities of the petitioner. None of the material which has been relied upon for the formation of opinion to initiate action u/s 148 answers the aforesaid test.
We also take note of the judgment in Formula One World Championship Limited, and where it was significantly observed that a PE must qualify and meet the tests of stability, productivity and dependence. Of equal significance were the observations which explained the phrases “at the disposal of” and “through”. Tested on the aforesaid precepts also, the impugned notices and the reasons set out for initiating action u/s 147/148 woefully fail to rest on any evidence which could have possibly compelled us in acknowledging that a Fixed Place PE had come into being.
Undisputedly, the Noida factory premises and the Varanasi office would clearly not fall under any of the categories which stand specifically enumerated in Article 5 (2) and sub-clauses (a) to (k) of the India-USA DTAA. We also bear in mind the distinct and divergent categories of products, and in the manufacture of which, the petitioner and the Indian subsidiary were engaged. Of equal significance was the Noida outfit undertaking manufacturing activity in its own right and supplying products to various arms of the Indian Railways. All of the above, in our considered opinion, when viewed cumulatively, would have been sufficient to dispel any presumption of the petitioner conducting its business activity from a permanent premises situate in India. We are consequently of the firm opinion that the assumption of a Fixed Place PE is misconceived and untenable.
Whether an Indian establishment was performing functions of a “preparatory” or an “auxiliary” character? - From the statement of Mr. Shivanshu Narendra Kaushik, it transpires that designs and inputs created by employees of the Indian subsidiary were also shared with the petitioner. The said officer further stated categorically while responding to Question No. 9 that while their primary task is “India specific”, they were also engaged with teams created for designing traction systems as well as locomotives in relation to global tenders that may have been submitted by the petitioner. The details of the work with which the petitioner was engaged and related to overseas tenders submitted by the petitioner have also been recorded in his answer to Question No. 10. The officer then appears to have been queried with respect to the allocation of work pertaining to design of components and locomotive parts for global tenders. Responding to the said query, the officer submitted that a team is generally designated and created by the petitioner and all the team members work together and coordinate with each other.
It may only be observed that the engagement of Indian personnel in connection with global tenders that were proposed to be submitted or one in which the petitioner intended to participate would also clearly fall within the ambit of work of an “auxiliary” or “preparatory” character and not be in furtherance of the core activity of the petitioner. All that need be observed is that merely because the submission of those tenders was aided by a collaborative exercise between employees of the petitioner and those of the Indian subsidiary, the same would clearly not meet the test of a complete takeover, a “virtual projection” or for that matter the Indian subsidiary being liable to be viewed as an “alter ego”.
We are of the firm opinion that the respondents have clearly failed to appreciate that a collaborative team comprising of Indian and foreign employees would really not be indicative or evidence of the Noida or Varanasi premises having been virtually placed fully at the “disposal” of the petitioner. To meet that test, it would have to be found on facts that the Indian establishment was a mere conduit created for the business interests of the petitioner.
It may only be observed that the engagement of Indian personnel in connection with global tenders that were proposed to be submitted or one in which the petitioner intended to participate would also clearly fall within the ambit of work of an “auxiliary” or “preparatory” character and not be in furtherance of the core activity of the petitioner. All that need be observed is that merely because the submission of those tenders was aided by a collaborative exercise between employees of the petitioner and those of the Indian subsidiary, the same would clearly not meet the test of a complete takeover, a “virtual projection” or for that matter the Indian subsidiary being liable to be viewed as an “alter ego”.
We are of the firm opinion that the respondents have clearly failed to appreciate that a collaborative team comprising of Indian and foreign employees would really not be indicative or evidence of the Noida or Varanasi premises having been virtually placed fully at the “disposal” of the petitioner. To meet that test, it would have to be found on facts that the Indian establishment was a mere conduit created for the business interests of the petitioner.
Article 5 (4) and DAPE - The issue of a habitual or recurrent exercise of authority does not arise at all since we have already found that an “authority to conclude contracts” never stood conferred. Suffice it to observe that there is not an iota of evidence which may have even remotely justified Article 5 (4) (a) being invoked.
Similar is the position which emerges when the case as set up against the petitioner is examined on the anvil of Article 5 (4) (c) of the India-USA DTAA. This would have required the respondents to have established or found, as a matter of fact, that the Indian subsidiary was engaged or created solely for the purpose of securing orders for the petitioner. Clause (c) of Article 5 (4) would have been attracted if the respondents had, even on a prima facie examination, found that the Indian subsidiary was concerned primarily with securing orders for the petitioner. This, in light of the said clause using the expression “wholly or almost wholly for the enterprise”. Clause (c) not only alludes to aspects of an enterprise being exclusively concerned with working for the fulfilment of the business interests of another, it would also have to be additionally proven that it does so “habitually”.
The respondents do not dispute the indubitable fact that both the petitioner as well as the Indian subsidiary had independent dealings with DLW and other arms of the Indian Railways. Of equal importance is the table which was relied upon by Mr. Datar extracted hereinabove and which indicated the extent of revenue earned by the Indian subsidiary and the minuscule percentage of that income being referable or relatable to receipts from the petitioner.
Precedents rendered on the subject of Fixed Place PE bid us to answer that question based upon a finding of a fixed place being at the “disposal” of and under the “considerable control” of a foreign enterprise. There is also no material which the respondents may have taken into consideration and which would have been indicative of the Noida or the Varanasi premises having been virtually placed for the use of the petitioner and at its discretion. Even as we go through the various statements which came to be recorded, they fail to evidence the Noida or the Varanasi premises having been placed at the constant “disposal” of the petitioner.
For the purposes of adjudging whether a Fixed Place PE had come into existence, one would have to necessarily come to the conclusion that the core business of a foreign entity was being carried on through a PE. The core business of the petitioner is the manufacture of a wide range of products, details whereof have been set out in the preceding parts of this decision. As we view and weigh the import of the statements which have been heavily relied upon by the respondents, it becomes apparent that the view as taken is rendered wholly untenable and proceeds on various assumptions which cannot possibly be countenanced. Regard must also be had to the fact that the respondents do not allege that the products being supplied by the petitioner to DLW or other arms of the Indian Railways were being manufactured in India and through the Indian subsidiary. This is a factor which weighs heavily against the respondents.
Issues emanating from the MES Agreement including the General Services Agreement dated 01 January 2011 which has been taken into consideration, those and issues arising therefrom would have to be necessarily evaluated bearing in mind the significant observations which appear in the TPO’s order, which not only speaks of the Noida premises providing back office support and technical support services, but also takes into consideration the Indian subsidiary being duly remunerated for those services on a cost plus basis. Even if one were to take into consideration the nature of services which were rendered by the Indian subsidiary under the aforesaid agreements, it becomes apparent that all of those would really fall within the scope of supportive “preparatory” and “auxiliary” services. Be it tracking of Letters of Credit for shipments, monitoring of upcoming tenders, coordinating with the petitioner for timely bid submission for tenders in the Indian market, gathering technical details, these are all services rendered which would fall under the larger umbrella of “preparatory” and “auxiliary” services.
We have also had an occasion to take note of Article 5 (3) and sub-clauses (d) and (e) excluding fixed place of businesses used “solely for the purpose of purchasing goods or merchandise” or for that matter for “collecting information”. The supply of information is a subject which is considered alongside activities which would fall within the scope of “preparatory” or “auxiliary” functions. Of equal significance is the statement of Mr. Phaneendra Kumar Potnuru, the Director- Finance of PRIPL, Noida, which came to be recorded under Section 131 of the Act. While explaining the composition of the Board of Directors of the Indian subsidiary, the Director-Finance disclosed that two out of the four Directors are foreigners. However, the mere fact that the parent company places representatives on the Board of its wholly owned subsidiary, would hardly compel one to hold that a PE had come into existence.
The aforesaid response would also establish that the Indian subsidiary was undertaking business activities independently and in its own right with DLW, Varanasi. This was therefore not a case where the subsidiary stood created solely for the purposes of undertaking activities and discharging functions concerned solely with the core business activity of the petitioner.
Concluding observations - Insofar as the tests laid down in Article 5 (4) (a), (b) and (c) are concerned, the same are clearly not met since the respondents have failed to refer to any authority that may have been conferred upon the Indian entity “to conclude contracts” on behalf of the petitioner. The mere discovery of the seal of the petitioner is also not liable to be viewed as resulting in clause (a) and stipulations contained therein being satisfied. This, since it is not the case of the respondents that the Indian entity had been authorized to affix that seal on any document or contract. This, quite apart from there being no material that the seal was in fact affixed on any contract or agreement to which the petitioner was a party. The reasons recorded by the first respondent in support of the proposed action under Sections 147/148, also does not refer to any contract that the petitioner may have entered into with the Indian Railways, and which may have been executed for and on its behalf by the Indian subsidiary. The conclusions recorded on this score thus clearly appear to proceed on surmises and conjecture.
Even clause (c) of Article 5 (4) would not stand attracted since undisputedly the Indian subsidiary had independent transactions with DLW and other Indian Railway entities. It was thus not a mere arm or an extension of the petitioner established to secure orders on its behalf and that too “wholly or almost wholly” for it.
We are of the considered opinion that the opinion as formed by the first respondent on the issue of a PE is wholly perverse and untenable. We find ourselves unable to sustain that opinion even on a tentative, formative or prima facie basis. We are of the firm opinion that that since the very foundation on which the impugned action is based is itself rendered wholly arbitrary and unsustainable, the impugned reassessment proceedings would be liable to be quashed.
We bear in mind the indubitable fact that but for the PE question being liable to be answered against the petitioner, the first respondent would have no authority to proceed. It was thus incumbent for the Court to have come to a conclusion that the decision on the question of PE had been correctly decided or was at least a tenable or plausible view which could have been taken or harboured. We, for reasons aforenoted, have found ourselves unable to sustain the opinion as formed. In our considered view, the same would not sustain even if that opinion were to be tested on a prima facie basis. We also bear in mind the fact that the view as expressed by the first respondent in the impugned proceedings cannot possibly be countenanced as being either tentative or one which left very much for contestation or debate. We consequently find ourselves unable to sustain the assumption of jurisdiction.
Operative directions - We accordingly allow the present writ petitions and quash the impugned notices issued under Section 148 as well as other consequential notices issued by the first respondent. This order, however, shall be without prejudice to the respondents to independently examining whether the office of the petitioner in the Delhi Circle constitutes a PE. That is an issue which has neither been examined nor ruled upon. Consequently, all rights and contentions of parties in that respect are kept open.
Since the transfer of the PAN of the petitioner was solely to facilitate the first respondent conducting the reassessment, and which we have for reasons aforenoted found to be unsustainable, the order dated 05 November 2019 passed by the fourth respondent transferring the jurisdiction of the PAN of the petitioner from the fourth to the first respondent shall also stand quashed.
-
2024 (5) TMI 1416
Correct head of income - rental income receipts - income from house property or business income or income from other sources - AO granted standard deduction of 30% as per Section 24 - assessee as submitted, it leased out the property to avoid keeping the property idle and earn lease rental, till any potential buyer offering the right price was found - HELD THAT:- Lease deed when read with Exhibit-A makes it very apparent that the user was not given possession of the premises as a tenant alone, but, was given the possession of the premises which was held as a commercial asset by the appellant and the charges agreed to be paid were not for occupation of the building along, but, for all the facilities and amenities mentioned in the aforesaid Exhibit-A. Various substantial infrastructure apart from the building such as AC plants, DG Sets. lifts and escalators, internet lines, fax lines, EPABX fire extinguishers, electrical purchases, water system, hand dryers, shredders, CO2 flooding system, carpets, etc. were leased by the appellant company, along with the building, which added substantial value to the building and the lease rentals.
The same cannot be said to be inseparable from letting out of the building premises. Assessee is no expected to establish that if these services, amenities and facilities were not available the other party would not have accepted the letting out. The tax authorities should not expect that business entities were supposed to explain, with precision and accuracy, every decision they make, to based on commercial expediency, as understood by the said authority. The tax authority should take notice of transformation of business needs based on new business culture and environment. The ‘user’ here is not mere tenant but had accepted the possession of building, as a whole, with desired services and amenities made available by the appellant, so that no time, energy and resources are wasted in customizing the building to the needs of ‘user’, occupant.
The fact that in respect of certain facilities, limits were put up and the user was supposed to pay over and above the limits on consumption basis firmly establishes the fact that it was not merely a tenancy/lease agreement, but, the intention was to exploit the commercial asset.
Tax Authorities have fallen in error in changing the head of income from ‘Business income’ to ‘Rental income’ and accordingly the disallowance of expenditure and denial of depreciation on this account is not sustainable. The grounds raised in both the appeals are allowed.
-
2024 (5) TMI 1415
Income accrued in India or not? - receipt of guarantee charges by the appellant from its Indian subsidiaries in terms of an Intra Group Parental Guarantee and Counter Indemnity Services Agreement - Determination of source of income and the nature of services which are concerned with the extension of guarantees - Tribunal dismissing the additional ground raised by the assessee contending that since the source of guarantee for its Associated Enterprises to foreign banks is outside India, the parental corporate guarantee charges received from the Indian Subsidiaries cannot be held taxable in India?
HELD THAT:- Tribunal has correctly found that the appellant was neither a party to the loan agreements that may have been executed nor was there any privity of contract that could be said to exist. It was the aforesaid undisputed facts which weighed upon the Tribunal to hold that the payments received by the appellant would not fall under Article 12 of the DTAA.
No reason to differ from the view as expressed by the Tribunal bearing in mind the aforenoted undisputed facts. As was observed hereinbefore, the guarantee charges that the appellant received was a remuneration for the assurance that it had offered to lending entities and who may have extended credit facilities to its Indian subsidiaries. The debt that it owed was to those financial institutions. It would be those institutions which could have a claim against the appellant. The Intra Group Agreement also did not envisage any claims that the appellant could have laid against its own subsidiaries in the eventuality that they were to default. The Indian subsidiaries owed no debt to the appellant and which would have enabled us to recognise the guarantee charges as income derived from a debt or a claim and which constitutes the determinative factor for the purposes of examining the applicability of Article 12 of the DTAA. As is manifest from a reading of the Intra Group Agreement, the guarantee charges were levied for the service of providing parent company guarantees and counter-indemnification of the liabilities of the Indian subsidiaries. On an overall conspectus of the aforesaid we find ourselves unable to countenance the guarantee charges as being liable to be viewed as ‘interest’ under Article 12 of the DTAA.
The expression interest is defined to mean amounts payable in respect of any monies borrowed or debts incurred. Undisputedly the appellant had not borrowed any monies. The debt, if any, which could be said to have been incurred was clearly not one owed to the Indian subsidiaries. The income that it received from its Indian subsidiaries was solely in consideration of any liability that could possibly befall the appellant in case its Indian subsidiaries were to default in their repayment obligations. It thus becomes apparent that the guarantee fee would neither fall within the ambit of Article 12 of the DTAA nor Section 2 (28A) of the Act.
The income in the form of guarantee charges had in fact accrued and arisen in India. The guarantee charges clearly answered to the description of income accruing and which was explained by the Supreme Court to constitute “a periodical monetary return ‘coming in’ with some sort of regularity, or expected regularity, from definite sources”. As we view the Intra Group Agreement, it becomes evident and apparent that the foundational source of those payments was the appellant’s agreement to provide the service of parent company guarantees and counter indemnification facilities. These were services offered to the Indian subsidiaries to avail for their “own commercial benefit”. The charge was envisaged to be levied on a quarterly basis and the annual rate at the time of execution of the Intra Group Agreement was prescribed to be 1.125%. The annual rate was to levied on the “Recipient’s” [the Indian subsidiaries] “outstanding balance of parent company guarantees and counter-indemnification obligations as at each Quarter Day”.
As evident that the guarantee charges became leviable every quarter at a rate already agreed upon by parties and on the outstanding balance. Thus, not only was the payment ordained to come from a specified source, it was also envisaged to become payable with sufficient regularity. The payment was to be invoiced every Quarter Day and liable to be paid as per the instructions of the appellant. The Intra Group Agreement also provisioned for consequences which would ensue in case the Indian subsidiary were to default in payment of those charges by stipulating that in such an event, it would be open to the appellant to suspend the provision of services. Thus, in case the Indian subsidiary were to fail to honor any invoice raised in respect of guarantee charges, it would have been open for the appellant to discontinue the service of extending guarantees.
The guarantee charges were thus anchored to the Intra Group Agreement and were indelibly connected with the extension of services by the appellant in India for the benefit of its subsidiaries. The arrangement between the parties was independent of any other legal obligation or liability which the appellants may have taken over or owed to a lending institution. The only parties to this agreement were the appellants and their corresponding Indian subsidiary. The obligation to pay was incurred in India, was in respect of services utilized in India and was agreed to arise with regularity as per the stipulations forming part of the Intra Group Agreement.
The charge was in a sense recompense for the service provided by the appellant in extending a guarantee to overseas financiers who may have extended credit facilities to its Indian subsidiaries and the assurance of repayment proffered to them by the appellant. Regard must also be had to the fact that the appellant had not extended any credit or lent capital to its Indian subsidiaries. The guarantee charges were solely on account of the appellant having guaranteed repayment of debts owed to third parties by the Indian subsidiaries. The source and fountainhead of the receipt was thus indelibly connected and confined to the Intra Group Agreement and the obligations of the appellant in connection therewith.
Taxability of income is concerned solely with income accruing or arising - It is clearly not concerned with the ultimate destination of that income or the use to which it may be put. That the guarantee charges may be utilized by the appellant to meet its liabilities to overseas financial institutions would be wholly irrelevant for the purposes of examining whether income had arisen or accrued in India. As was pithily observed by the Supreme Court in Tuticorin Alkali Chemicals & Fertilizers Ltd [1997 (7) TMI 4 - SUPREME COURT] the Act is not concerned with destination or utilisation. It is focused on the aspect of income having arisen or accrued.
In the present case apparently, AE has not provided any capital to the appellant on which income is earned. It is a corporate guarantee, being a surety to the lender bank of the appellant that, if in a case, in future, the appellant fails to pay the due amount owed to those lenders, the Netherland Company will pay to those lenders. Thus, there was promise to reimburse the amount to those lenders on happening of an event i.e. failure of payments by the appellant of the dues owed to the lenders and lenders invoking the guarantee issued by the Netherlands company in favour of those lenders. Therefore it needs to examine whether there is any provision of capital by the Netherland Company to Indian Company appellant, answer is in negative. Further, there should be a “debt claim and ‘form’ such claim income should arise to qualify as ‘interest’. Thus the word ‘debt claim “predicate the existence of debtor-creditor relationship [lender-borrower]. That relationship can arise only when there is a provision of capital. In view of this, we hold that guarantee fee paid by the assessee to Netherlands company, in the above facts, cannot be covered in the definition of interest as per Article 11 of the DTAA
We, consequently, answer the two questions which stand posited in the negative and against the appellant. The issue of whether guarantee charges would constitute business income and fall within the ken of Article 7 of the DTAA is kept open to be addressed in an appropriate case.
-
2024 (5) TMI 1414
Second bail application filed for grant of regular bail - Money Laundering - scheduled offences - proceeds of crime - conspiracy with certain other persons started obtaining an illegal levy of Rs. 25 per ton of coal for issuance of delivery order for coal transportation - insufficient reason in remand order - reasons to believe - fulfillment of twin conditions of Section 45 of the PMLA, 2002.
Whether disclosure of insufficient reason in remand order, alleged illegal custody entitled the applicant to be released on bail under the PMLA, 2002? - HELD THAT:- From bare perusal of the Section 19 of the PMLA, 2002, it is quite vivid that for arresting any person, any officer authorized has on the basis of material on his possession and through such materials, he is expected to form a reason to believe that a person has been guilty of an offence punishable under the PMLA, 2002, then only, he is at liberty to arrest. This Section further provides that the said exercise has to be followed by way of an information being served on the arrestee of the grounds of arrest. Any non-compliance of the mandate of Section 19(1) of the PMLA, 2002 would vitiate the very arrest itself. Under sub-section (2), the Authorised Officer shall immediately, after the arrest, forward a copy of the order as mandated under sub-section (1) together with the materials in his custody, forming the basis of his belief, to the Adjudicating Authority, in a sealed envelope. Needless to state, compliance of sub-section (2) is also a solemn function of the arresting authority which brooks no exception.
From bare perusal of the order dated 13.10.2022 passed by the learned Special Judge granting remand of the applicant along with other accused has given reason wherein it has specifically stated that the present applicant has purchased coal washeries from M/s KJSL Coas & Power Ltd. to M/s Maa Madwarani Coal Benefaction Pvt. Ltd. at the cost of Rs. 35 crores and other two coal washeries have been purchased and the investigation within 24 hours is not possible, therefore, the custodial remand was ordered.
Whereas in the present case, the learned Special Judge has categorically recorded its reason and satisfaction while granting the remand of the applicant to the Enforcement Directorate. Thus, there is compliance of Section 19 of the PMLA, 2002 and the order dated 13.10.2022 passed by the learned Special Judge is inconformity with the law laid down by Hon’ble the Supreme Court in case of PANKAJ BANSAL VERSUS UNION OF INDIA & ORS. [2023 (10) TMI 175 - SUPREME COURT]. Therefore, the contention raised by learned Senior counsel for the applicant that there is non-compliance of Section 19 of the PMLA, 2002 vitiating the entire proceedings, applicant is entitled to be released on bail, deserves to be rejected.
The submission of the learned counsel for the applicant that his summon for 12.10.2022 and he remained in custody upto 5.30 a.m. cannot be considered as it is a matter of evidence which can be very well taken during the trial. Even the trial Court while granting remand has recorded its finding that within 24 hours of arrest, the applicant has been produced before the Court and there is no material to rebut the said finding recorded by the learned trial Court, as such the contention that the accused was remained in illegal custody from 12 a.m. to 5.30 a.m. deserves to be rejected and accordingly, it is rejected - the question answered against the applicant.
Whether the applicant fulfills twin conditions of Section 45 of the PMLA, 2002 for grant of bail? - HELD THAT:- From bare perusal of ECIR with regard to the allegations leveled against the present applicant, it is quite vivid that the the present applicant has played specific role and he is kingpin of the offence and is promoter of M/s Indermani Group having a close relationship with Suryakant Tiwari. Investigation revealed that the applicant had helped Surykant Tiwari in acquiring coal washeries from M/s Indus Udyog & Infrastructure Pvt. Ltd. and M/s Satya Power and Ispat Ltd. These coal washeries were acquired for an amount of Rs. 96 crore, out of which Rs. 34 crore was the registered value and was paid through banking channel and rest of the amount was to be paid in cash. Thus, large amount of illegally acquired cash was layered in these transactions. After the Income Tax raids, he made sham paper transactions to show that he was the owner of these two washeries - He has only blocked his capital in these assets and the remaining entire cash transactions were still done by Suryakant Tiwari only. The record would further reflect that several properties in the names of companies of the applicant herein viz., M/s Indermani Minerals Pvt. Ltd. & M/s KJSL Coal & Power Pvt. Ltd. which were acquired using proceeds of crime have been attached under Section 5(1) of the PMLA, 2002 on 09.12.2022 and 29.01.2023 and the same were subsequently confirmed by the learned Adjudicating Authority (PMLA), vide orders dated 01.06.2023 & 17.07.2023. Thus, the applicant is unable to fulfill the twin condition of Section 45 of the PMLA, 2002.
Considering the factual legal matrix, it is quite vivid that the applicant is unable to fulfill twin conditions for grant of bail as per Section 45 of the PMLA, 2002 and also considering the submission that the applicant has not prima facie reversed the burden of proof and dislodged the prosecution case which is mandatory requirement to get bail - considering the judgment of Hon’ble the Supreme Court in case of SAUMYA CHAURASIA VERSUS DIRECTORATE OF ENFORCEMENT [2023 (12) TMI 685 - SUPREME COURT] & SATYENDAR KUMAR JAIN VERSUS DIRECTORATE OF ENFORCEMENT, ANKUSH JAIN VERSUS DIRECTORATE OF ENFORCEMENT AND VAIBHAV JAIN VERSUS DIRECTORATE OF ENFORCEMENT [2024 (3) TMI 862 - SUPREME COURT], it is quite vivid that the applicant is unable to fulfill the twin conditions for grant of bail as provided under Section 45 of the PMLA, 2002. Thus, question is answered against the applicant.
The role played by the applicant, prima facie, the remand and arrest order are in accordance with the provisions of the PMLA, 2002 and also considering the gravity of offence, it is not inclined to enlarge the applicant on bail - the second bail application filed under Section 439 of the Cr.P.C. is also liable to be and is hereby rejected.
-
2024 (5) TMI 1413
Unexplained cash deposited in bank u/s 68 - Assessee explained that the deposits were from cash withdrawals and opening cash in hand - HELD THAT:- On reading of the assessment order, it is observed that the AO has only took note of the fact that the withdrawals made by the assessee from the bank accounts to co- relate with the deposits made with the bank accounts completely ignoring the cash balances stood as on the first day of last month. Therefore, the entire exercise made by the AO appears to be futile. It is not in dispute that the cash book filed before the AO and the AO failed to examine the entries thoroughly and co-relate the deposits made into bank accounts vis-à-vis the cash balances as on first day of every month in the cash book. It appears that AO not even examined detailed submissions made by the assessee. Therefore, as the AO did not consider the cash balances and the realization of debtors and has simply gone by the just withdrawals, the addition cannot be sustained merely on that basis when the assessee had clearly demonstrated that the cash deposits were all made out of withdrawals, opening cash balance and realization of debtors. Thus, we direct the AO to delete the addition made u/s 68. Decided in favour of assessee.
Disallowance of interest paid u/s 36(1)(iii) - contention of the assessee is that the interest paid on bank loans is business expenditure and is deriving income from business on account of real estate and finance business was not accepted by the AO as the assessee has not sold any property or built/purchased any property during the current assessment year - HELD THAT:- Incomes/loss returned by the assessee under the head “income from business” have been accepted for the assessment years 2017-18 to 2022-23 by the Revenue and in none of these years, the incomes/losses shown by the assessee were disturbed. It is the submission that the decision of the Tribunal for the assessment year 2009-10 affirming the order of the learned Commissioner of Income-Tax (Appeals) in holding that the assessee is into real estate business has became final and this was accepted by the Revenue for assessment year 2009-10.
We are of the view that simply because the assessee has not shown any business income during the current assessment year, it cannot be held that the assessee is not carrying on the real estate business. Thus, following the order of the Tribunal for the assessment year 2009-10, we hold that the assessee is into the business of real estate and finance the interest expenditure incurred by the assessee is an allowable deduction. Accordingly, we delete the disallowance made by the AO. Ground no.1 of grounds of appeal raised by the assessee is allowed.
-
2024 (5) TMI 1412
Unexplained money u/s 69A - Unexplained cash deposits more than turnover - deposit of cash sourced from the sales proceeds or not is in combination of loan and turnover made by the assessee from his medical retail store - assessee derived income from retail store of medicines, managed/controlled by the assessee herself, after the death of her husband with the assistance of employees of the shop even though she was suffering from Neuro disease
HELD THAT:- Assessee is earning income from this only source of income and fighting for survival even though she has medical challenges for her health. We are aware that the assessee has not sincerely filed the return of income and has solely relied upon the accountant who has declared the turnover incorrectly. Though it was not correct state of affairs of the assessee and was wrongly declared by her accountant as confirmed by the assessee in her affidavit and supporting evidence. Even the assessee is dependent on the employee due to her neuron disease.
Based on those facts we are of the considered view that the turnover of the assessee reflected in the bank account cannot be considered partly loan amount and partly turnover. Therefore, considering that fact placed before us by the assessee in person as well as duly supported by an affidavit filed by her along with related corroborative evidence like ledger for purchase sales and CA certificate, we admit those additional evidences based on the contention raised by the assessee, though the contention of the assessee contradict with that of placed before the ld. AO but considering the peculiar aspect of the matter we admit those additional evidence. AO shall compute the total credit of cash deposited into the bank account of the assessee viz a viz with the turnover with the evidence.
Turnover declared by the assessee needs to be examined based on the corroborative evidence we direct the assessing officer to tax profit / income @ 8% of the total turnover under the provision of section 44AD of the act in the absence of any comparative chart, presently available by both the parties and law provide 8 % for retail trade. Therefore, we direct the assessing officer to verify the correct turnover based on the bank statement and other supporting evidence and at the same time assessee is directed to supply the related ledger for purchase, sale and CA certificate to assist the assessing officer. Accordingly, the appeal of the assessee is allowed.
-
2024 (5) TMI 1411
Money Laundering - proceeds of crime - illegal kidney transplantation - respondent herein along with the co-accused hatched a well-planned conspiracy by taking 'Century Gangotri Charitable Hospital' on rent and by pressurizing or alluring/inducing innocent and poor people into illegal kidney transplantation - HELD THAT:- As the present petition seeks cancellation of Bail granted to the accused, it is to be kept in view that the Bail granted to the accused can primarily be challenged and be cancelled on the ground that either the Court granting Bail has failed to consider the relevant facts and law applicable to the grant of Bail, or has taken into account irrelevant facts and considerations, or where while granting Bail to the accused or due to supervening circumstances, the Bail granted to the accused deserves to be quashed.
The Supreme Court in DEEPAK YADAV VERSUS STATE OF U.P. & ANR. [2022 (10) TMI 574 - SUPREME COURT] reiterated the principles governing the cancellation of bail and held 'The importance of assigning reasoning for grant or denial of bail can never be undermined. There is prima facie need to indicate reasons particularly in cases of grant or denial of bail where the accused is charged with a serious offence. The sound reasoning in a particular case is a reassurance that discretion has been exercised by the decision maker after considering all the relevant grounds and by disregarding extraneous considerations.'
The general directions given in the judgment of SATENDER KUMAR ANTIL VERSUS CENTRAL BUREAU OF INVESTIGATION & ANR. [2021 (10) TMI 1296 - SUPREME COURT] in relation to the process to be followed on production of the accused, who has not been arrested during the period of investigation, on filing of the Charge-Sheet/Complaint post the completion of investigation, remain the same and is also applicable to Special Acts, including PMLA, and, therefore, to the facts of the present case.
Recently, the Supreme Court in TARSEM LAL VERSUS DIRECTORATE OF ENFORCEMENT JALANDHAR ZONAL OFFICE [2024 (5) TMI 837 - SUPREME COURT], has reiterated that a complaint under Section 44 (1) (b) of the PMLA will be governed by Sections 200 to 204 of the Cr. P.C. Therefore, while the Court has the discretion to issue either a warrant or summons, as held in INDER MOHAN GOSWAMI & ANR VERSUS STATE OF UTTARANCHAL & ORS [2007 (10) TMI 550 - SUPREME COURT], as a general rule, the Court should direct issuance of summons and not warrants on the complaint to the accused who was not arrested till the filing of the complaint. It was further held that Section 437 of the Cr. P.C. will not apply when an accused appears before the Special Court after a summon is issued on a complaint under Section 44 (1) (b) of the PMLA.
Considering Section 88 of the Cr. P.C., the Supreme Court held that the same shall apply after filing of the complaint under Section 44 (1) (b) of the PMLA. It confers a discretionary power on the Special Court to call upon the accused to furnish bonds for his appearance before the Court. The object of Section 88 of the Cr. P.C. is to ensure that the accused regularly appears before the Court. When an accused appears before the Special Court on summons issued on the complaint, and offers to submit bonds in terms of Section 88 of the Cr. P.C., therefore, there is no reason for the Special Court to refuse or decline to accept the bonds - The Supreme Court denounced the practice of some of the Special Courts under the PMLA of taking the accused into custody after they appear pursuant to the summons issued on the complaint. The Court held that where, before the filing of the complaint, the accused is not arrested, after the filing of the complaint and after he appears in compliance with the summons, he cannot be taken into custody or forced to apply for Bail.
In the present case, the learned Trial Court has taken cognizance of the fact though the ECIR was registered in the year 2017; the petitioner took more than four and a half years to investigate the case; and, the petitioner consciously did not arrest the respondent during the investigation. Applying the principles of Satender Kumar Antil, the learned Trial Court, therefore, held that the rigours of Section 45 of the Act do not apply. In fact, after the judgment of the Supreme Court in Tarsem Lal, no fault can be found in the above view of the learned Trial Court.
As far as Section 436A and Section 428 of the Cr. P.C. are concerned, though again the learned counsel for the petitioner is right in his submission that these provisions were not applicable to the facts of the present case and, at the present stage, however, the learned Trial Court has merely used these provisions, their object, and the principles governing them, to supplement force to its decision to release the respondent on bond. The Impugned Order cannot be faulted on this account as well.
There are no merits in the challenge of the petitioner to the Impugned Order - petition dismissed.
-
2024 (5) TMI 1410
LTCG - deduction u/s 54F - assessee failed to fulfill the conditions as prescribed in the Income-tax Act - Payments made to parties before the transfer of the asset AND Payments made to parties after the date of filing return of income u/s. 139 WITH No evidences such as bills / vouchers produced by the assessee for payments made to different parties
HELD THAT:- Primary goal of exemption provisions of sections 54 / 54F of the Act, are to promote housing. The procedural and enabling provisions of sub section (4) cannot be strictly construed to impose strict limitations on the assessee and in default thereof to deny him the benefit of exemption provisions.
In the present case it was decided mutually by both the parties i.e. the buyer and seller that the final sale deed will be executed on making full payment of the sale consideration. However, since the assessee had consciously decided to sell the land and since the buyer was also certain to purchase the land, it was decided by the assessee to apply the funds of advance consideration towards the advance payments for construction of residential bungalow for timely compliance of provisions of section 54F. The assessee had already agreed to sell the property for certain amount and had decided to utilize the sale consideration for construction of new residential house on the land already owned by him, assessee had started all preliminary activities like finalization of design of a new bungalow, preparation of plan through architect, preparation of drawings and other preliminary requirements for approval of plan etc
The assessee had assigned the composite contract for construction of a residential house to M/s United One Infra Pvt. Ltd. The said contract was given for RCC construction and masonry work inclusive of supply of basic raw material for construction as well as labour charges. Since the assessee had already received the permission for construction of a residential house as per the approved plan and since the construction was to be started, the said contractor had asked for advance payment for procurement of necessary raw material as well as for other construction activities to be carried out by it. Therefore, the assessee had made above stated payments to the said M/s. United One Infra Pvt. Ltd. Similarly, advance payment was made to Ashok Timber Trading Co. for procurement of round logs of teak wood so that sizing and cutting work can be started on procurement of goods as per the designs provided by the Architect. Moreover, the advantage of bulk purchases in a lot could also be taken by the assessee. Therefore, the deduction claimed by the assessee ought to have been allowed by the assessing officer considering that the provisions of section 54/54F are benevolent provisions with the object of promoting housing facilities.
As decided in M. George Jeoseph [2021 (7) TMI 914 - KARNATAKA HIGH COURT] wherein it was held that if the amount is spent for construction for a new residential house out of advance payments received, the assessee is entitled to claim exemption u/s 54F - we note that the payment made by the assessee before the sale of property should be allowable and addition was rightly deleted by ld CIT(A), hence we confirm the findings of ld CIT(A).
Payments made to party after the date of filing of return - We note that assessing officer`s action in rejecting the claim of expenditure of Rs. 3,30,04,128/- is not justifiable in as much as the assessing officer made wrong inquiry regarding purchase from A-Class Marble Pvt. Ltd. for A.Y. 2019-20 whereas the assessee had incurred expenditure in F.Y. 2020-21 and hence the said reply has no relevance with the facts of the case of the assessee.
ITAT Chennai Bench in the case of ITO Vs. Rekha Shetty [2020 (8) TMI 312 - ITAT CHENNAI] held that “Mere non-compliance of a procedural requirement under section 54(2) itself cannot stand in the way of the assessee in getting the benefit under section 54, if he is, otherwise, in a position to satisfy that the mandatory requirement under section 54(1) is fully complied with within the time limit prescribed therein. “We note that based on the above facts, the assessee is able to prove that the transaction does exist.
Having regard to above judicial pronouncements and submission of the assessee, CIT(A) held that the utilization of capital gain has been done in the right spirit of the law and therefore merely for not depositing money in capital gain account and that too during Covid 19 pandemic, shall be held reason for non-granting deduction, was not justifiable on the part of the AO. Therefore, ld CIT(A) allowed as deduction - We have gone through the above findings of ld CIT(A) and noted that there is no infirmity in the conclusion reached by ld CIT(A), hence we approve and confirm the findings of ld CIT(A).
Payments made to different parties - During the course of assessment proceedings, the assessee had submitted all the details and the said party had also responded to notice u/s 133(6) of the Act and submitted its confirmation letter, cross copy of ledger account from his books of accounts and copies of all invoices along with copy of relevant bank statement reflecting the payments given by the assessee. A copy of the said confirmation letter is enclosed - assessee had already incurred the expenses for construction of a residential house and the assessee had also established the genuineness of expenses. Therefore, we note that assessee has provided bank statements confirming payments made to the sellers. The assessing officer has also received confirmation from each of the sellers, confirming the transaction. The residential house was completed within the time period of three years as per the requirement of section 54F of the Act. Based on these facts, ld CIT(A) held that the transaction has been established genuine and that the amount has actually spent in construction of house.
Appeal filed by the Revenue is dismissed.
............
|
9911796707
