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Showing 241 to 260 of 1445 Records
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2024 (3) TMI 1205
Nature of expenses - expenses on repairs and maintenance of stores and spares - revenue or capital expenditure - HELD THAT:- The Division Bench of this Court in [2019 (8) TMI 1347 - GUJARAT HIGH COURT] dismissed the appeal of the Revenue relying on an order of the Division Bench in the case of Gujarat Narmada Valley Fertilizers and Chemicals Ltd. [2023 (4) TMI 334 - ITAT AHMEDABAD] as held from the perusal of the documents, it can be seen that these expenditures were not totally on the replacement but replacement of part of machinery/plant which in totality cannot be treated at par with the repairs and maintenance that of entire Plant & Machinery. The pipelines and duel fuel burner system are forming some part of entire plant and machinery and both these parts do not function independently or used independently for the projects of the assessee company. Thus, the CIT(A) was not right in confirming the addition. In fact, these expenditures are revenue in nature.
Disallowance u/s 37(1) - expenses being contribution /donation to a trust, though the same is devoid of any business expediency? - HELD THAT:- The Division Bench of this Court in [2019 (8) TMI 1347 - GUJARAT HIGH COURT] held that Agro Products of the assessee company are sold under the brand name ‘Sardar’ which is very popular amongst the farming community since more than four decades. It was an apprehension of the assessee that the construction of a statue of Sardar Vallabhbhai Paltel would significantly enhance the value of the brand name under which the assessee carries on its business. This would help enhance sales as well as exports of the company’s agro products and would as a corollary enhance the brand value of other products of the company. Thus, the contention of the Ld. AR that the expenditure was incurred wholly and exclusively for the purpose of business on account of commercial expediency and accordingly is allowable u/s 37 of the Act, appears to be genuine. Further, it appears that the funding was for State Government. The decision of Gujarat Narmada Valley Fertilisers Co Ltd. (supra) under identical facts held that, the said expenditures were allowed related to deduction under Section 37
Expenditure written off by the assessee - HED THAT:- ADMIT – Only on substantial question of law-(C)
"Whether the Appellate Tribunal is justified in law and on facts in holding that the expenditure written off by the assessee has to be considered as business revenue expenditure without appreciating the fact that expenses incurred for establishing a new project will remain capital expenditure in nature even if these projects did not materialize and hence, cannot be allowed as business expenditure under section 37 of the Act?”
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2024 (3) TMI 1204
Income taxable in India or not - Taxation of Technical Collaboration Fees @ 10% u/s. 9(1)(vii) r.w.s 115A(1)(b) - As per assesee there is no “Service PE” existing in India - as submitted during the scrutiny assessment proceedings assessee has voluntarily agreed to tax the FTS u/s. 115A to buy peace, to avoid litigation and also to avoid penal proceedings, thus this amount is not taxable in India, in the absence of Service PE - HELD THAT:- There is no dispute on the fact that the assessee is not having a Permanent Establishment [PE] in India. Further, there is no specific clause in the DTAA entered into between the Republic of India and Mauritius as pointed out by the Ld. AR in his written submissions, Article-12A was inserted w.e.f 1/4/2017 and cannot be applied for the FY 2017-18. We also find that various judicial pronouncements including the Coordinate Benches and various Hon’ble High Courts have held that in the absence of any specific provisions in the DTAA, the scope of taxing the said income shall be only business profits subject to existence of PE in India, and cannot be tax under the residuary Article of the relevant DTAA.
The said income cannot be expanded within the scope of section 9(1)(vii) r.w.s 115A of the Act.
It is settled position of law that in the absence of a clause in DTAA not dealing with a particular item of income, the payments are not be regarded as residuary income but as business income which is not chargeable to tax in India, in the absence of any PE of the Non-Resident in India. Decided in favour of assessee.
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2024 (3) TMI 1203
Disallowance of WIP - CIT(A) deleting the disallowance being the amount provided in valuing work-in-progress of construction contracts - As per revenue to that extent profit of the assessee company got reduced - HELD THAT:- Respectfully following the decision of Co-ordinate Bench in assessee's own case in the preceding Assessment Years 1994-95, we find no merit in the ground raised by the Revenue in its appeal wherein as observed that the Tribunal has made specific finding in the earlier years that the valuation of work-in-progress relating to incomplete contracts has been made by the assessee company in a consistent manner following the accepted principles of accounting and decided the issue in favour of the" assessee. Respectfully following the decision of the coordinate bench in assessee's own case, we set aside the impugned orders of the authorities below and allow the ground of appeal raised by the assessee. Decided against revenue.
Disallowance of Commission - AO has disallowed payment of commission as the assessee had not furnished adequate evidence to substantiate that the expenditure was incurred wholly and exclusively for the purpose of business - HELD THAT:- We find that this issue is recurring. In absence of any cogent evidence, the assessee’s claim of payment of commission has been consistently dismissed. Similar is the situation in the impugned assessment year. No evidence has been brought on record by the assessee to substantiate its claim. Decided against assessee.
Addition u/s. 40A(9) - Contribution to Utmal Employees Welfare Fund - disallowed assessee’s claim on the ground that the said payment is not backed by any legal provision or any law for the time being in force, hence, the amount was disallowed u/s. 40A(9), also confirmed by CIT(A) - HELD THAT:- As this issue has been decided by the Tribunal [2022 (5) TMI 104 - ITAT MUMBAI] (supra). The Co-ordinate Bench following the order of Tribunal in assessee's own case for preceding Assessment Year allowed assessee’s contribution towards Utmal Employees Welfare Fund. We find that this issue has been recurring since Assessment Year 1994-95. In preceding Assessment Years, the Tribunal has consistently allowed contribution towards said Fund.. The facts being similar in the impugned assessment year, ground No.2 of appeal is allowed for parity of reasons.
Reduction in depreciation claim arising on account of refusal to treat transfer of Bangalore Undertaking as “Slump Sale” - HELD THAT:- We find that identical ground was raised by the assessee as additional ground of appeal in appeal for Assessment Year 2001-02 [2020 (10) TMI 1324 - ITAT MUMBAI] The Co-ordinate Bench decided the issue following the decision of Tribunal in assessee’s own case for Assessment Year 1998-99. No contrary material is placed before us by the Department. Hence, respectfully following the decision of Co-ordinate Bench we direct the Assessing Officer to accept assessee’s claim of depreciation. Decided in favour of assessee.
Disallowance u/s.14A on account of interest expenditure - assessee has earned income from tax free bonds - contention of the assessee is that assessee is having own funds sufficient to cover the investments - HELD THAT:- It is no more res-integra that where the assessee is having mixed bag of; own interest free funds and borrowed interest bearing funds, it shall be presumed that the assessee has made investments from own interest free funds. Similar disallowance made by AO in Assessment Year 2001-02 & Assessment Year 2002-03 [2022 (5) TMI 104 - ITAT MUMBAI] was deleted by the Co-ordinate Bench. We deem it appropriate to restore this issue to Assessing Officer for the limited purpose of verification of availability of assessee’s own funds matching investments. In the result, ground No.4 of appeal is allowed with aforesaid directions.
Nature of receipts - Extinguishment of Sales Tax deferred loan liability treated as revenue receipts - HELD THAT:- As decided in assessee own case [2020 (10) TMI 1324 - ITAT MUMBAI] we are inclined to set aside the order of CIT(A) on this issue by holding that such receipt is a capital in nature - Decided in favour of assessee.
Deduction u/s. 80HHC - Reduction of 90% gross interest received from profits & gains of Business - HELD THAT:- We find that the Co-ordinate Bench while deciding the appeal for Assessment Year 2001-02 and Assessment Year 2002-03 following the decision of Tribunal in assessee's own case in [2020 (10) TMI 1324 - ITAT MUMBAI] for Assessment Year 2001-02 restored the issue back to the file of Assessing Officer. Both sides are unanimous in stating that the facts relating to Assessment Year under appeal on this issue are identical, hence, respectfully following the decision of Co-ordinate Bench we restore this issue back to the file of Assessing Officer with similar directions.
Set off of loss on export of trading goods against profits on export of Manufactured goods - As assessee fairly stated that this issue has been decided against the assessee in the preceding Assessment Years, the facts in the impugned assessment year are identical. In view of the statement made by ld.Counsel for the assessee, sub-ground No. (b) is dismissed.
Reduction of 90% Miscellaneous Income received from profits of Business - We find that similar issue was raised before Co-ordinate Bench in appeal by the assessee in Assessment Year 2001-02 and Assessment Year 2002-03 placing reliance on the decision of Tribunal for Assessment Year 2000- 01 [2020 (10) TMI 1324 - ITAT MUMBAI] restored the issue back to the file of Assessing Officer. The Revenue has not placed on record any material to controvert the submissions of the assessee, hence, following the decision of Co-ordinate Bench, we restore sub-ground (c) to the Assessing Officer for parity of reasons.
Reduction of profits in respect of projects eligible for deduction u/s. 80HHB - We find that this issue was also considered by Co-ordinate Bench in the preceding Assessment Year and was restored to the Assessing Officer. Both sides are unanimous in stating that the facts relevant to the issue are identical to the facts in appeal for Assessment Year 2001-02 [2020 (10) TMI 1324 - ITAT MUMBAI] Hence, following the decision of Co-ordinate Bench, the issue in sub-ground (d) is also restored to the Assessing Officer.
Rejection of claim of deduction u/s. 80IA in respect of Captive Power generating units - HELD THAT:- this issue has been considered by the Tribunal in the preceding Assessment Years in favour of assessee.
Disallowance u/s. 14A for the purpose of computing book profit u/s. 115JB - HELD THAT:- Special Bench in the case of Vireet Investments Pvt. Ltd. [2017 (6) TMI 1124 - ITAT DELHI] has held that while computing book profits u/s. 115JB of the Act disallowance made u/s.14A r.w.r. 8D shall not be considered. The Hon’ble Karnataka High Court in the case of Sobha Developers Ltd. [2021 (1) TMI 378 - KARNATAKA HIGH COURT] has reiterated that disallowance made u/s. 14A could not be added to book profits of assessee u/s.115JB of the Act. In light of aforesaid decisions, assessee succeeds.
Adjudication of additional grounds - assessee is claiming deduction u/s. 80HHC and 80HHE of the Act under MAT provisions - HELD THAT:- The additional grounds raised by the assessee are purely legal, hence, additional grounds are admitted for adjudication. Since, these grounds have been raised for the first time before the Tribunal, we deem it appropriate to restore this ground to the Assessing Officer for consideration and adjudication on merits after affording reasonable opportunity of making submissions to the assessee, in accordance with law. Hence, additional ground No.1 and 2 are allowed for statistical purpose.
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2024 (3) TMI 1202
Application for final approval u/s 80G(5)(iii) rejected - as per revenue assessee had already commenced its activities since long even prior to grant of provisional registration, and since the time period for making application mentioned in Clause (iii) to First Proviso to section 80G(5) of the Act had already expired, therefore, the assessee could not be granted final registration u/s 80G(5) - HELD THAT:- The issue is squarely covered by the decision of the Coordinate Kolkata Bench of the Tribunal in the case of “Tomorrow’s Foundation [2024 (3) TMI 941 - ITAT KOLKATA] the appeal of the assessee is allowed accordingly and the ld. CIT(Exemption) is directed to grant provisional approval to the assessee under Clause (iii) to First Proviso to section 80G(5) of the Act, if the assessee is otherwise found eligible. It is directed that the ld. CIT(E) will decide the application of the assessee for final approval as expeditiously as possible but not later than two months from the receipt of this order.
As further directed that, if the assessee is granted final approval by the ld. CIT(E) then, the benefit of approval u/s 80G of the Act, available to the assessee prior to the Amendment brought vide Amending Act of 2020, will be deemed to be continued without any break. The assessee will not be deprived of the benefit during the time period falling between 31/03/2021 and the date of grant of provisional approval under clause (iv) i.e., 28/05/2021, due to technical errors occurred in making the application under the relevant provisions of the Act because of the confusion and misunderstanding on part of the assessee as well as on part of the ld. CIT(E) in properly interpreting the relevant provisions. Appeal of the assessee allowed for statistical purposes.
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2024 (3) TMI 1201
Rejection of approvals u/s 80G - approval application filed belatedly - As per revenue Form 10AB has not been filed within the due dates as mentioned in the Act or within the time limits extended by CBDT - whether its is genuine hardship case? - HELD THAT:- It is to be noted that the assessee trust has commenced its activities on 14.07.2017 and assessee is also provisionally approval u/s. 80G(5)(iv) - assessee trust was required to file application in Form No.10AB u/s. 80G(5)(iii) of the Act within the time period of six months prior to expiry of the period of provisional approval or within six months of commencement of its activities, whichever is earlier, in term of clause (iii) of first proviso to sub-section (5) of section 80G.
We have gone through the CBDT Circular No.6 of 2023 dated 24.03.2023 and noted that the CBDT has clarified the provision relating to charitable and religious trusts and has extended the timeline for furnishing Form No.10A seeking provisional registration/approval within the extended period up-to 30.09.2023.
Timeline prescribed for filing Form No.10AB for registration u/s. 12A of the Act in the case of assessee trust has been extended up-to 30.09.2023 after considering the genuine hardship faced by charitable institutions vide various CBDT circulars and finally, vide Circular No.6/2023 dated 24.05.2023. Similarly, the timeline prescribed for filing Form No.10A for recognition u/s. 80G of the Act was also extended up-to 30.09.2023 by the same circular for trusts filing registration under clause (i) to first proviso to section 80G(5) of the Act.
Once, the CBDT has extended the timeline for filing Form No.10AB for recognition u/s. 12A of the Act and also for filing Form No.10A for recognition u/s. 80G of the Act extended up to 30.09.2023 for trusts filing registration under clause (i) of first proviso to section 80G(5) of the Act, we find no difference in continuing hardship as recognized by CBDT even in filing Form No.10AB for renewal of recognition u/s. 80G of the Act under clause (iii) of first proviso to section 80G(5) of the Act.
In our view, this being a genuine hardship case, which is recognized by Revenue or CBDT by issuing a general circular, we are of the view that this specific provision of clause (iii) to first proviso to section 80G(5) cannot be excluded and or it has not been the intention of the CBDT while issuing the circular.
In our view, we agree with the argument of assessee that the timeline prescribed under clause (iii) of first proviso to section 80G(5) of the Act should be treated as directory and not mandatory especially considering the transitional nature of the amendment as brought out by the taxation of other laws (relaxation and amendment of certain provisions) act 2020 for bringing new regime. Hence, in our view, the CIT(Exemptions) should not have rejected the assessee’s application in Form No.10AB only for this technical reason.
Hence we remand the matter back to the file of the CIT(Exemption) to decide the issue on merits.
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2024 (3) TMI 1200
TP adjustment for administrative support serves in relation to Inter Bank Indemnities - selection of MAM - HELD THAT:- The facts in the impugned assessment year are identical to the facts in Assessment Year 2008-09 held that TNMM method would be the Most Appropriate Method in the facts and circumstances of the instant case and CUP could not be applied herein because of non availability of data.
In any case in respect of adjustment made simply relying on 133(6) information from the market had been deleted by this Tribunal in the case of Asian Paints Ltd [2014 (1) TMI 16 - ITAT MUMBAI] It is also prudent to note that the same transactions were accepted by the Id. TPO upto A Y2012-13 in the case of the assessee Hence, even going by the rule of consistency as has been held in the case of Radhasoami Satsang [1991 (11) TMI 2 - SUPREME COURT] there is no need for the Id. TPO to take a divergent stand when there is no change in the facts and circumstances during the year with that of earlier years Hence, we direct the Id TPO to delete the adjustment made in respect of guarantee fees. Decided in favour of assessee.
Rate of tax on interest income from foreign currency loans - Tribunal has consistently held that interest income earned on foreign currency loans is taxable @20%. CIT(A) in impugned order has followed the decision of his predecessor in AY 2008-09, which in turn followed the decision of Tribunal in assessee's own case in AY 1997-98 - We find no infirmity in the findings of the CIT(A) on this issue, hence, ground No.1 of appeal is dismissed, sans-merit.
Deduction u/s. 44C - AO allowed head office expenses only to the amount reflected in Form 3CEB - Assessee claimed that deduction u/s. 44C should be allowed to the extent of Rs. 9,90,15,825/- or 5% of adjusted total income, whichever is lower - AO rejected the contentions of the assessee further held that the assessee had furnished incomplete and partial details - HELD THAT:- No specific details in respect of the amount in excess of Rs. 2.10 crores is furnished by the assessee - CIT(A) re-examined the documents and accepted submissions of the assessee. CIT(A) allowed assessee’s claim primarily for the reason that the claim of the assessee is within the limit of 5% of the adjusted total income and the said claim of the assessee is supported by auditors certificate. The Co-ordinate Bench in the case of Doha Bank QSC [2020 (11) TMI 371 - ITAT MUMBAI] held that head office expenses attributable to the business of assessee in India is allowable in accordance the provisions of section 44C, irrespective of the fact whether or not any amount is debited in the books of account.No contrary material is brought before us by the Department to controvert the findings of the CIT(A) or the decision cited by assessee.
Not allowing interest on income tax refund as exempt from tax in accordance with the provisions of Article 11(3)(a)(i) of India – Canada DTAA - Whether interest income on income tax refund is exigible to tax in India or is exempt in light of provisions of Article 11(3) of India-Canada DTAA? - HELD THAT:- The treaty under reference in the said case was India-Italy DTAA. On reading of Article 12 of the aforesaid treaty which deals with “Interest”, we find that provisions of clause (3) are pari-materia to clause (3) of Article 11 of India Canada-DTAA. Hence, the ratio decidendi in the case of Ansaldo Energio SPA [2016 (5) TMI 945 - MADRAS HIGH COURT] would apply to the instant ground of appeal.
In so far as the decision in the case of B.J. Services Co. Middle East Ltd. [2015 (5) TMI 1036 - UTTARAKHAND HIGH COURT] on which the CIT(A) has placed reliance, we find that it referred to UK-India DTAA. We have examined the provisions of the said treaty. The provisions of Article -12 dealing with interest in the said DTAA are not parimateria to India- Canada DTAA. There is no clause in Article-12 of India UK-Treaty similar to Article -11(3) in India –Canada Treaty. Hence, the decision in the case of B.J. Services Co. Middle East Ltd [2015 (5) TMI 1036 - UTTARAKHAND HIGH COURT] would not apply to the facts of the present case. In the facts of case and the decision of Hon'ble Jurisdictional High Court, we find merit in assessee succeeds on ground No.2.
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2024 (3) TMI 1199
Validity of assessment order passed u/s 153C/143(3) against Settlement Commission order - as submitted assessee JV had carried out one single contract during the relevant year and that the Settlement Commission had finally settled the taxable income for AY 2013-14 qua such contract undertaken for UMC and that the final assessment order pursuant thereto had been passed by the AO, thus no further income in relation to the same contract could be again re-assessed by the AO - HELD THAT:- Section 153A or 153C of the Act, is overriding only Sections 139, 147, 148, 149, 151 & 153 of the Act. As rightly pointed out by the Ld. AR, it does not override the specific provision of Section 245-I of the Act, which provides that the orders passed by the ITSC shall be conclusive as to the matters stated therein and no matter covered by such order shall, save as otherwise provided in that Chapter, be reopened in any proceeding under the Act or under any other law for the time being in force. In this regard, we take note of the legal maxim expressio unius est exlcusio alterius, which means that express mention of one is the exclusion of other [GVK Industries Ltd [2011 (3) TMI 1 - SUPREME COURT]]. Since Section 153A overrides only the specific provisions, as stated hereinabove, then it clearly means that provisions of Section 245-I has been excluded and that it has not been overridden by Section 153A of the Act.
We therefore hold that the AO erred in law by reopening the assessment for AY 2013-14 and made addition u/s 153C of the Act, which assessment had already been concluded and settled by ITSC, Mumbai, whose order had attained finality. Thus orders passed u/s 153C/153A/143(3) is held to be impermissible in law and is accordingly all additions made therein also stands deleted. - Decided in favour of assessee.
Bogus purchases - payments made to the thirty (30) vendors were fake - HELD THAT:- Analysis and the inference drawn by the AO is found to be actionable. This analysis was however only the starting point of investigation. The Revenue however ought to have brought on record further corroborative material to support their analogy that the entire value of these payments had come back and remained unaccounted in the hands of the assessee. We take note of the fact that, the assessee had provided the relevant supporting evidence such as invoices, ledgers, proof of payments etc. which it was ordinarily required to substantiate the genuineness of these purchases. Also, there was no statement made by any Directors of the assessee Group averring that these payments found noted on these loose papers were not genuine. However, at the same time, none of these parties complied with the enquiries made by the AO. None of them provided their work orders, financials, audit reports, details of expenses incurred, bank statements etc. to justify the work done for the assessee. Amongst the thirty (30) parties, Shri Gursahani who represented six (6) parties attended the enquiry and admitted to undertaking work viz., providing labour to the assessee but was unable to provide any of the details as sought by the AO and the reason given by him was theft, for which copy of FIR was provided. The fact however remains that, independent enquiries from the vendors could not be made. Overall therefore, we are in agreement with the Ld. CIT(A) to the extent that the assessee was unable to fully discharge the genuineness of these payments made to the thirty (30) vendors.
Estimation of income on Bogus purchases - Only the profit element embedded in the payments ought to be assessed to tax and that on the given facts, the disallowance of entire value of purchases was unwarranted.
Following the above order of ITSC and having regard to the fact that the same contract was continued in the relevant AY 2014-15, we hold that the profit of the assessee for the year is to be estimated at 8% of the contractual receipts. The Ld. AR had pointed out to us that, the assessee had offered 8% of contractual receipts in the return of income filed u/s 153C of the Act. The AO is accordingly directed to verify this contention and ensure that the total income is finally assessed at 8% of the contractual receipts for the relevant AY 2014-15. With these directions, these grounds are disposed off.
Disallowance of contractual payments - AO had disputed the genuineness of the contractual payments made by the assessee to IDCC - HELD THAT:- IDCC had regularly filed their service tax returns and VAT Audit reports and that it had fully discharged its service tax and VAT liabilities levied on their invoices to the credit of the Government. Having perused the financials of IDCC, we note that it has reported substantial turnover in excess of several hundred crores in AYs 2013-14, 2014-15 & 2015-16 respectively. The audited financials reveal that IDCC is a fully functioning company engaged in rendering contractual services.
CIT(A) is also noted to have taken cognizance of the income declared by IDCC across various assessment years of the appellate order, which showed that IDCC was declaring substantial income each year and therefore lacked the characteristics of a paper/shell entity as alleged by the AO. It is further noted that the AO was unable to find any defect in any of these documents. Even before us, the Revenue was unable to point out any specific infirmity in these evidences furnished by the assessee and IDCC, which demonstrated the genuineness of the payments made towards sub-contract charges. Payments made to IDCC was genuine and the AO is held to be unjustified for disallowing the same.
Unexplained cash credit in the hands of the assessee JV - principle of telescoping - protective addition - HELD THAT:- Same income should not be taxed twice i.e. once at the time of generation and thereafter at the time of application for routing back into the business. The said principle would equally apply where the cash generated by business concerns are routed through partners/directors - JV partners had disclosed income in the hands of the assessee JV before the ITSC, Mumbai and such additional income represented the intangible addition / secret profit, which applying the judicially approved principle of telescoping, could be set off against any unexplained money/investment found by the Revenue.
Since the additional income offered to tax in earlier years was sufficient to cover such cash investment alleged to have been made by JV partners, no separate protective addition was required to be made in the hands of assessee JV. Accordingly, the appeal of the Revenue is dismissed.
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2024 (3) TMI 1198
Estimation of income - bogus purchases - HELD THAT:- Since there is allegation of getting accommodation bills, it is possible that the assessee could have purchased goods from someone else, while the purchase bills were obtained from some body else. In that case, there is a possibility that the assessee could have made some profit, which can be assessed by the AO
What could be assessed by the AO is only the profit element involved in the alleged bogus purchase transactions
The gross profit rate in respect of trading of diamonds may be taken at 3%. In the instant case, the assessee has sold the alleged bogus purchases and hence it was a trading transaction. Since the assessee has already declared gross profit rate of 1.42%, we are of the view the addition should be restricted to 1.58% (3% less 1.42%). Accordingly, we modify the order passed by Ld CIT(A) and direct the AO to restrict the addition to 1.58% of the value of alleged bogus purchases. Appeal filed by the assessee is partly allowed.
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2024 (3) TMI 1197
Calculation of Capital Gain - Non-Resident - Applicability of section 144C - eligible assessee - Disallowance of brokerage expenses - Fair market value determination of the rear basement - HELD THAT:- We are of the considered view that the facts as brought before us require verification and, therefore, in regard to disallowance of brokerage, the issue is restored to the file of ld. AO for giving an opportunity to the assessee and allow the same in totality, if found verified.
Fair market value of the rear basement - We are of the considered view that before the DRP, the assessee had brought on record evidences indicating that the assessee had acquired interest in the rear basement by way of agreement to sell dated 15.04.1994. The fact that this property was rented out and Form 16A against the rent paid by Israel Aircraft Industries Ltd. for the period 01.04.1996 to 31.03.1997 was sufficient piece of evidence to show that the rear basement was acquired before 01.04.2001. Thus, there was no justification for the DRP to disregard the registered valuer’s report and instead direct AO to accept the circle rates. Thus, the directions of the DRP to the AO to apply circle rate is also not sustainable and, to that extent, the DRP directions and the findings of the ld. AO in the final assessment order require to be reversed with the direction that the indexed cost of rear basement should be taken, on the basis of the valuation report as provided by the assessee, as per law.
Assessee has sold the second floor of D4/5, Vasant Vihar, New Delhi, in which she had 50% of the share by way of sale deed dated 07.12.2018 for a sale consideration coming to her share at Rs. 6,87,50,000/-. The assessee has claimed that there was a brokerage of Rs. 20,28,125/- and a copy of invoice is made available aThe claim of the assessee is that the assessee has been charged brokerage of Rs. 20,28,125/- in respect of her 50% share in the second floor and the AO ought to have allowed the same in full. A clarification of the broker Satia Homes Pvt. Ltdis provided certifying and confirming that the assessee was owner of 50% of second floor of D4/5, Vasant Vihar, New Delhi for which separate tax invoice No.18 dated 04.12.2018 was issued on account of brokerage to the assessee and the same was paid by her. This amount was inclusive of GST @ 18%. This brokerage amount pertains only to 50% share in the second floor of D4/5, Vasant Vihar, New Delhi.
We are of the considered view that the facts as brought before us require verification and, therefore, in regard to disallowance of brokerage, the issue is restored to the file of ld. AO for giving an opportunity to the assessee and allow the same in totality, if found verified.
Stamp duty paid by the assessee for purchase of second floor have not been considered by the AO in the cost of acquisition - As submitted on behalf of the assessee that stamp duty of Rs. 10 lakhs was paid at the time of sale deed on 09.02.2009, in regard to front portion of the second floor on and a stamp duty of Rs. 7 lakh was paid on the purchase of rear portion of the second floor by sale deed dated 07.02.2009 and, thus, for arriving at the cost of acquisition for second floor, this amount of Rs. 17 lakhs should have been considered.
We are of the considered view that apparently, the ld. AO has failed to take note of the directions of the DRP in this regard and, accordingly, we direct the AO to give benefit of the stamp duty for arriving at the cost of acquisition in regard to second floor.
As a consequence of the aforesaid discussion, the grounds No.4-7 are cumulatively decided in favour of the assessee.
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2024 (3) TMI 1196
TDS u/s 195 - proceedings u/s 201 - non-deduction of tax at source on payments made to its Non-Resident Telecom Operators (NTOs) for provision of bandwidth capacity and provision of interconnect services - HELD THAT:- Tribunal in the case of M/s. VSL (the payer) [2019 (12) TMI 206 - ITAT BANGALORE] in the proceedings under section 201 of the Act, had held that the said charges paid to the non-resident is Royalty/FTS and the income is deemed to accrue or arise under section 9 - However, the order of the Tribunal in the case of VSL was reversed by the Hon’ble jurisdictional High Court in the case relied on by the CIT(A)
Since the Hon’ble jurisdictional High Court has categorically held that the payment made by the VSL is not Royalty/FTS, the same cannot be brought to tax in the hands of the assessee under section 9 of the Act and the relevant DTAA. The relevant finding of the Hon’ble jurisdictional High Court has been elaborately extracted in the impugned order of the CIT(A), therefore the same is not reiterated here. In view of the aforesaid judgment of the Hon’ble High Court in the case of VSL [2023 (7) TMI 1164 - KARNATAKA HIGH COURT], we hold that CIT(A) is justified in deciding the issue on merits in favour of assessee and deleting the additions made by the AO for Assessment Years 2009-10 and 2010-11 - Decided in favour of assessee.
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2024 (3) TMI 1195
TP adjustment - price of the power transferred by the section 80IA eligible captive power plant of the assessee to the non-eligible manufacturing units of the assessee and thereby, reducing the claim of deduction claimed by the assessee u/s 80IA - HELD THAT:- As decided in assessee own case [2023 (2) TMI 341 - ITAT KOLKATA] transfer pricing adjustment made for deduction u/s 80IA of the Act raised by the Revenue are dismissed.
Claim of balance additional depreciation - assessee purchased and installed new plant and machinery in the preceding year but put to use the same for a period less than 180 days in that year - HELD THAT:- As decided in assessee own case [2023 (2) TMI 341 - ITAT KOLKATA] we are of the view that the law laid down by the Hon'ble High Court of Karnataka in the case of CIT and another vs. Rittal India Private Lid [2016 (1) TMI 81 - KARNATAKA HIGH COURT] is applicable to the present case, thus we hold that the assessee is entitled to claim remaining 50% depreciation of such 20% which is equal to the actual cost of new plant and machinery, accordingly ground no-I raised by the assessee is allowed.
Nature of expenses - Deduction on proportionate basis of the compensation paid in connection with the mining activity for obtaining limestone, used as raw material for manufacturing of cement - AO disallowed the claim of the said expenditure by observing that the same was capital expenditure in nature - HELD THAT:- As decided in assessee own case [2023 (2) TMI 341 - ITAT KOLKATA] held that payment of compensation to persons whose rights are infringed by the mining activity is revenue in nature.
Nature of receipt - amount received by the assessee as industrial promotion assistance from the State Govt. - revenue v/s capital receipt - HELD THAT:- As decided in Tribunal [2023 (2) TMI 341 - ITAT KOLKATA] to hold that the interest subsidy is to be treated only as a capital receipt and accordingly the grounds raised by the assessee in this regard are allowed.
Disallowance u/s 14A r.w.r.8D - HELD THAT:- The impugned order of the CIT(A) is modified and it is directed that the Assessing Officer would recompute the disallowance u/s 14A r.w.r 8D(2)(iii) by considering all investments including investments in subsidiary companies which yielded dividend income. This Ground of the revenue’s appeal is partly allowed.
MAT Computation - exclude the subsidy from the books profits assessable u/s 115JB - HELD THAT:- As decided in own case of assessee [2023 (2) TMI 341 - ITAT KOLKATA] no infirmity in the finding of ld. CIT(A) holding that the subsidy/incentive received by the assessee which have been held to be capital receipts are to be excluded from the book profit u/s 115JB.
Upward adjustment made to book profit on account of disallowance of expenditure computed u/s 14A of the Act r.w.r. 8D - HELD THAT:- It is to be pointed out that as per Explanation 1(f), the book profit means the profit shown in the statement of profit and loss account as increased by the amount of expenditure relatable to the exempt income. The said amount of expenditure has already been ordered to be determined as per our observations made above while adjudicating the issue relating to the disallowance u/s 14A vide Ground No.10 of the revenue’s appeal. It has to be further noted that section 115JB in itself does not prescribe any procedure to calculate the expenditure relatable to exempt income earned by the assessee. The said provision has been separately and specifically placed in the Act u/s 14A of the Act. Therefore, the book profits of the assessee are liable to be increased by the expenditure as calculated u/s 14A of the Act as provided under Explanation 1 to Clause (f) of section 115JB of the Act. In view of this, it is directed that the book profits will be increased u/s 115JB of the Act by the disallowance calculated as per our directions given while adjudicating Ground No.10 of the revenue’s appeal. This ground of the revenue’s appeal is hereby allowed.
Deduction of leave encashment actually paid - HELD THAT:- Claim of leave encashment actually paid by the assessee during the previous year relevant to A.Y 2015-16 allowed.
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2024 (3) TMI 1194
Smuggling - two kilograms of gold, with Swiss markings - Contraband item - number of material facts as well as the judgments cited were overlooked while arriving at conclusions - reliability of statements - burden to prove -HELD THAT:- It is from the statement under Section 108 itself that the identity of the person intercepted was revealed, which was found to be verified and correct by the Assistant Commissioner (Preventive) - The identity of the owner of the gold seized from the intercepted person also was revealed from the statement. The statement also admitted the person having boarded Howrah-Mumbai Mail Express, and that he was travelling to Raipur; in the course of which, some persons in civil dress woke him up and introduced themselves as officers of DRI, Patna. They searched his body and during the course of search, the smuggled gold kept hidden and covered inside the pants, was detected. So much of the statement has not been retracted from.
The person intercepted had also disclosed the name of the person from whom he had received the gold bars at Kolkata, who had directed him to hand over the same to the respondent, who was his employer. The statement indicated the intercepted person having confessed to his knowledge, that the gold was smuggled from Bangladesh, as told to him by one Sonu, who handed over the gold bars for onward transmission to his employer, the respondent - The retraction admits the possession of the gold bars at the time of interception. The description of which, as is found with the DRI, is also admitted to be that which was seized.
There is no escape from the fact that the contraband was imported as revealed from a mere visual inspection, which discloses the markings on the gold bars. Now, the question arises as to whether the alleged owner of the goods referred to as Noticee No. 2, the respondent herein, had obtained valid possession through a legal import made by him - The First Appellate Authority found that the entire case of the Department spins around the confessional statement of the intercepted person. The First Appellate Authority found that the statement recorded under Section 108 was specifically stated to be under duress and there was a finding by the Original Authority that he had not retracted the statement; while, in fact, the statement was specifically retracted. It was found that Section 108 of the Act, though is substantive evidence, some corroboration has to be available before acting upon it, which can be the slightest corroboration.
The First Appellate Authority and the Tribunal had entirely relied on the invoice dated 21.07.2017 produced by Noticee No.2 to hold that the seized gold bars were purchased from Saheli Gems and Jewellers Pvt. Ltd. It cannot but held that the reliance placed is wholly irrelevant since the two sets of bill books produced requires further evidence to establish the transactions between Saheli Gems and Jewellers and Adinath Jewellers having occurred on the day it is said to have occurred; prior to the interception and seizure, especially since no payment was made for the purchase - If Saheli Gems and Jewellers had imported it by a proper bill of entry filed and the same received from a notified entry point for the purpose of home consumption, then and only then would the burden of proof under Section 123 be discharged and the goods seized from Noticee No.1 be absolved of the confiscation proceedings under the Customs Act. The falsity of the story projected by the owner of the gold bars, is one another circumstance standing against the claim raised by the owner and in favour of the confiscation proceedings.
Whoever be the owner, the gold being one manufactured outside the country, if it is seized in the same form, the owner who raises a claim for release of the said gold should establish unequivocally before the Authority that it had been brought into India duly in accordance with the provisions of the Customs Act. This is the rigor placed on the person possessing or the owner of the seized goods, by Section 123, which puts the burden of proof squarely on the person from whose possession or the owner who has entrusted the said gold to the person possessing it, to establish the source from which it has been received.
The appellate authorities have found the findings of the original authority, regarding the absence of proof of the transaction, including the movement of the goods to be bad, only by reason of the invoice produced - the invoice is not a document on which any reliance can be placed. Even if such reliance can be placed, in the present case, the gold bars; which demonstrably were manufactured and sourced from outside the country, should be proved to have been brought into the country in accordance with the provisions of the Customs Act.
The orders of the Appellate Authorities set aside - the orders of the original authority restored - appeal allowed with costs computed at Rs. 5,000/- which can be recovered from the respondent by the Revenue.
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2024 (3) TMI 1193
Smuggling - Gold - baggage rules - petitioners have not given proper declaration in respect of the gold they were bringing in even if it was allegedly in the form of jewellery or bangles - existence of mens rea on the part of the petitioners to smuggle gold into India or not - HELD THAT:- The import and export of goods into and out of India are subject to the provisions of the Foreign Trade (Development and Regulation) Act, 1992. In exercise of the powers conferred by Section 3 read with Section 4 of the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992), the Central Government has framed the Foreign Trade (Exemption from Application of Rules in Certain Cases) Order, 1993. As per Rule 3(h) of this Order, a passenger of Indian Origin or having a valid Indian passport and who has a stay of more than six months abroad is allowed to import gold subject to certain conditions.
An international passenger is required to file International Customs Declaration Form (I.C.D.) with the Customs Department under Section 77 of the Customs Act, 1962. Merely wearing the bangles on body by the petitioners does not obviate the statutory requirement of filing an ICD form with the Customs Department. Further, the fact of non-filing this ICD Form and not submitting the same to the Customs Department has not been disputed by the petitioners.
The petitioners were permitted to redeem only on payment of redemption fine and appropriate customs duty so that the gold bangles would be cleared for domestic consumption. However, the option of re-export of gold bangles does not provide any right on the petitioner to get the gold bangles cleared for home consumption and it is under these circumstances that no duty is demanded on the option of re-export of gold bangles - there are no illegality or perversity on the part of the adjudicating authority at the first instance and then by the Commissioner of Appeals subsequently, while modifying the order, both of which subsequently stood affirmed by the CESTAT vide the impugned order under challenge in the present case.
In the instant case, the petitioner No. 1 was in possession of the gold bangles while passing through the Green Channel of the Customs at the Rajiv Gandhi International Airport, Shamshabad. Despite possessing the gold bangles which are dutiable goods, the petitioners neither adopted the Red Channel nor submitted the ICD Form to the Customs Department and thus tried to take the undue advantage of the Green Channel facility at the Customs violating the provisions of Section 77 of the Act - since the petitioners are not eligible passengers in terms of the provisions of the Foreign Trade (Development and Regulation) Act, 1992 read with the Foreign Trade (Exemption from Application of Rules in Certain Cases) Order, 1993, the original authority was correct in finding the petitioners ineligible to import the gold bangles. Thus, the order of the original authority to confiscate the gold bangles in terms of Section 111(1) of the Act, cannot be found fault with.
Another reason why this Court is not inclined to entertain the Writ Petition is the fact that the petitioners have voluntarily availed the option that was floated by the adjudicating authority at the first instance. Having availed the option floated and having paid the redemption fine and customs duty while redeeming the gold bangles, the petitioners cannot now be permitted to turn around and challenge the order which he has voluntarily complied with.
Petition dismissed.
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2024 (3) TMI 1192
Right of the Purchaser of confiscated vessel in an action - Vires of of Art. 14 and 19 of the Constitution of India - direction to issue No Due Certificate (NDC) in relation to subject vessel MSV Safina Al-Miraz to the Petitioner and permit the Petitioner to shift the Vessel from Salaya Port to Okha Port forthwith - seeking refund the amount paid by the Petitioner towards e-auction of MSV Safina Al-Miraz alongwith amount incurred by the Petitioner towards repairing of the Vessel, with interest - confiscation of vessel u/s 115 of the Customs Act, 1962 - HELD THAT:- It is not in dispute that the subject vessel was confiscated by the respondent Nos. 1 and 3 as per the provisions of the Customs Act and therefore in accordance with the provisions of Section 126 of the Act, the subject vessel would vest in the Central Government. Once such subject vessel vests in the Central Government, the mortgage of the respondent No. 4-GMB would come to an end and therefore the respondent No. 4-GMB is required to issue the ‘No Due Certificate’ qua the subject vessel which was auctioned to the petitioner by the Customs Authority in accordance with law.
With regard to the reliance placed by the learned advocate for the respondent No. 4-GMB in the decision of the Supreme Court in case of O. Konavalov [2006 (3) TMI 145 - SUPREME COURT] is concerned, the said decision is rendered under the Maritime Laws under the provisions of the Merchant Shipping Act, 1958 in relation to the pre-existing right of the crewmen vis-a-vis Section 115 read with Section 126 of the Customs Act. The Hon’ble Apex Court in the facts of the said case applied the principles enshrined in Article 21 to a foreigner for holding that confiscation by the Government of Vessel cannot extinguish the pre-existing rights of the crewmen as India has become signatory to various international conventions honouring the social, political, civil and economic rights of human beings. It was further held that India has travelled very far from 1950 and the Courts have given way to dynamic constructive approach in the aspect of social justice while referring to international conventions, etc. - The reliance placed on the provisions of the Admiralty (Jurisdiction and Settlement Maritime Claims) Act, 2017 to submit that maritime claim means mortgage or charge of the same nature on a vessel with regard to exercise of jurisdiction by the High Court under said Act to hear and determine such question on maritime claim against the vessel. Therefore, the judgment rendered by the Apex Court vis-a-vis the pre-existing rights of the crewmen of the vessel would not apply to the facts of the present case.
The respondent No. 4-GMB is directed to issue No Due Certificate to the petitioner so as to enable the petitioner to shift the vessel from Salaya Port to Okha Port - Petition allowed.
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2024 (3) TMI 1191
Seeking review of order - error apparent on the face of record or not - petitioner submits that while concluding that the applications filed by the petitioner for revalidating the Advance Authorizations were belated, the Court has not taken note of the amendments to the Foreign Trade Policy for the period 2009-2014 with effect from 27.08.2009 - HELD THAT:- The revalidation of the Advance Authorization can be made only for a period of six (6) months from the date expiry of the Original Authorization.
The application could be made in time before the expiry of the period. However, revalidation can be made only for a period of six (6) months from the date of expiry of the Original Authorization. The six (6) months period expired long before - as per paragraph 4.23 of the Hand book of Procedure as in force from 27.08.2009, the petitioner had to satisfy with the requirements of 4.23(b) as in Column II to the above table.
It cannot be said that there is an error apparent on the face of the record. The order is detailed. Therefore, a review of the order is impermissible. A review cannot be an appeal in disguise.
This Review Application is liable to be dismissed and is accordingly dismissed.
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2024 (3) TMI 1190
Absolute confiscation of 211.07 gms of gold - imposition of penalty u/s 112 (a) and (b) of CA - domestic transportation of foreign marked Gold Bars without proper documents - onus to prove - HELD THAT:- The appellant have led cogent evidence that they are jewellers dealing in gold and gold jewellery having their shop under the name of M/s Padmavati Jewellers at Vijayawada. Appellant have also led evidence that in the ordinary use of business they regularly purchase gold from the reputed sellers like M/s DP Gold Pvt Ltd., and M/s SVBC Gold etc. In support of their contentions, the appellant have led evidence being extract of their stock register, summary of gold dealings showing quantum and value for the financial year 2020-21 and also a copy of ledger account of M/s DP Gold and M/s SVBC Gold for the financial year 2020-21 wherein appellant have got regular purchases from these concerns and they have been making payments through the banking channel - Appellant have also led evidences being screen shots of summary of the invoice of the purchase by them which are reflected on GSTN portal for few months in support of their regular business transactions wherein they purchase gold upon proper GST invoices.
The cogent evidences led by the appellant have not been found untrue. Thus the appellant have discharged the onus under Section 123 of the Customs Act. Further, the Court below have rejected the cogent explanation given, arbitrarily based on assumptions and presumptions, having no legs to stand.
The appellant shall be entitled to return of the seized gold and if the same have been disposed of, shall be entitled for refund of the auction proceeds along with interest as per rules - the impugned order set aside - appeal allowed.
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2024 (3) TMI 1189
Short payment of Countervailing Duty (CVD) - evasion of Customs Duty - import of Motor Spirit falling under CTFI 2710, by not declaring that a substantial portion of such imported Motor Spirit was not ‘intended for sale without a brand name’ - benefit of Sl.No. 70(i) of N/N. 12/2012-CE dated 17.03.2012 (as amended) - HELD THAT:- The Hon’ble High Court of Bombay in the case of COMMISSIONER OF CUSTOMS (IMPORT), MUMBAI VERSUS MAHESH INDIA [2006 (7) TMI 306 - BOMBAY HIGH COURT] while considering the main issue as to whether the Show Cause Notice dated 22.03.1993 issued by DRI under Section 28 read with Section 124 of the Customs Act, 1962 is valid and proper had observed that the assessment being only provisional, the Show Cause Notice is not maintainable. It was held that the Show Cause Notice issued under Section 28 when the goods have not been finally assessed is bad in law and not maintainable.
The Hon’ble High Court of Calcutta in the case of JAJU PETRO CHEMICAL PVT. LTD. & ANOTHER VERSUS THE COMMISSIONER OF CUSTOMS (PORT) & OTHERS [2017 (7) TMI 633 - CALCUTTA HIGH COURT], considered the issue with regard to the demand raised under Section 28 of the Customs Act, 1962 when the assessment was only provisional. It was observed that when the duty to be paid is yet to be finalised the importer cannot be saddled with the guilt of not paying the duty or short paying the duty.
In the present case, the Show Cause Notice is issued under Section 18 read with Section 124 of the Customs Act, 1962. There is no invocation of Section 28 for recovery of short paid duty. However there is proposal for recovery of differential CVD. There is no requirement for issuing a Show Cause Notice under Section 18 for finalisation of assessment. At the time of finalisation, the Department is free to look into all factors and finalise the Bills of Entry. The Show Cause Notice has been issued invoking Section 18 and 124 proposing to confiscate the goods, proposing to recover the differential duty and for imposing redemption fine and penalties.
The appellant has added the additives to make the Petrol branded after filing the ex-bond Bill of Entry. During such process of branding by adding additives, the goods are not in shore tanks and are outside the Customs area. Taking all these aspects in to consideration, it is not found that the appellant had any malafide intention to evade Customs duty by availing concessional rate of duty. It is not established by the Department that the appellant had estimated the quantity that is to be sold as branded at the time of import itself - the order of confiscation of the goods and the imposition of redemption fine and penalties set aside, without disturbing the finalisation of the assessment and confirmation of higher CVD as paid along with interest by the appellant and appropriate by Department.
The impugned order is modified to the extent of setting aside the confiscation of goods and imposition of redemption fine and penalties imposed under Section 112 (a) of the Customs Act, 1962 - appeal allowed in part.
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2024 (3) TMI 1188
Classification of imported goods - Agricultural Reaper - Spare parts of Reaper - classifiable under CTH 84672900 and 84679900 respectively (Revenue) or under CTH 84331190 and 84339000 respectively? - Levy of penalty under Section 114A of the Customs Act - HELD THAT:- Being a matter of classification of goods the burden of proof is on Revenue to show that the particular case or item in question is taxable in the manner claimed by them. The correct manner of classifying imported goods under the Customs Tariff, is by interpreting the headings and notes etc. as per the Rules for the Interpretation of the Schedule to the Customs Tariff Act, 1985 - It is not dispute that the Schedule to the Customs Tariff in itself does not contain a specific heading for “Agricultural Reaper” and its parts. There is also no dispute that though different models of goods have been imported all are sought to be classified under one heading. Finally, it is also not disputed that the impugned goods are marketed and known in the trade as “brush cutters” as also seen from the product literature and the tender notices etc. enclosed with the appeal.
In INDO-INTERNATIONAL INDUSTRIES VERSUS COMMISSIONER OF SALES TAX, UP. [1981 (3) TMI 77 - SUPREME COURT], it has been held by the Apex Court that "if any term or expression has been defined in the enactment then it must be understood in the sense in which it is defined but in the absence of any definition being given in the enactment the meaning of the term in common parlance or commercial parlance has to be adopted".
The Appellant has stated that as per Note 4 to Section XVI, which covers chapter 84, for machines with a clearly defined function by one of the headings in Chapter 84 or 85, the whole falls to be classified in the heading appropriate to that function. It is found that both the disputed heading fall under chapter 84 and as per the discussions have been found to have a clearly defined function covered by CTH 8467. Revenue has thus been able to discharge its burden and the impugned orders merit to be upheld - Since the classification of the goods is found to be falling under CTH 8467, hence in terms of Note 2(b) of Section XVI, parts of ‘brush cutter’ will be classifiable under CTH 84679900.
Levy of penalty under Section 114A of the Customs Act - HELD THAT:- As far as the description of the goods, quantity, classification etc. are concerned, the importer is bound to state the truth in the Bill of Entry. As per section 46(4) of the Customs Act, 1962, the importer while presenting the Bill of Entry shall make and subscribe to a declaration as to the truth of such Bill of Entry. Further, Section 114A does not incorporate ‘intention to evade payment of duty’. This is because while mens rea is an essential or sine qua non for criminal offence it is not an essential element for imposing penalty for breach of civil obligations or liabilities, unless specifically stated so in the statute. Similarly, the importer is required to make a true declaration of the description and quantity of goods etc which have actually been imported and not just the goods as declared in the import documents. Thus, if the goods actually imported are more in number or the actual description or CTH as determined by an order under the Act is different from what is declared in the Bill of Entry, the importer would have made a mis-declaration. If this is done knowingly it’s a willful misstatement.
Even if a matter is under appeal it does not mean that the legal stand of the importer which has been defeated in quasi-judicial proceeding can continue to be recognized as legitimate and duty short paid. A valid order determining the CTH of the imported goods and a statutory document filed for the same goods knowingly misstating the CTH cannot coexist legally and be recognised in law to be valid. It cannot be said that ordinary prudence has been exercised by the importer-appellant according to the standards of a compliant tax payer or even a reasonable person - The undertaking is meant to carry out the intent of the statute and accomplish the reasonable objectives for which it was passed and thus cannot be brushed off as being merely procedural.
Hence if an order or judgment has been passed on a lis between the department and an assessee, he is bound to follow that order, until it is upset in appeal by a higher judicial forum. The responsibility is more when the tax is self-assessed. This is not a mere failure to pay duty. It is something more. The Appellant has deliberately sought to defeat the provisions of law. Thereby contravening the provisions of Section 46(4) ibid. Further there is nothing in the section to mean that because there is knowledge by the Department of the earlier mis-classification of the goods by the Appellant the willful misstatement in the Bill of Entry subsequently which stands established disappears.
The Hon’ble High Court of Madras in M/S. KING BELL APPARELS VERSUS THE COMMISSIONER OF CENTRAL EXCISE [2018 (10) TMI 267 - MADRAS HIGH COURT] held that the contention that once knowledge has been acquired by the department, there is no suppression and the ordinary statutory period of limitation would be applicable was rejected as a fallacious argument inasmuch as once the suppression is established, merely because the department acquires knowledge of the irregularity, the suppression would not be obliterated. A statutory penalty flows from a disregard of statutory provisions. With relaxation in procedure in the clearance of goods comes greater responsibility on the part of importers. This responsibility has not been discharged and the impugned order hence merits to be upheld on this score.
Further it is seen that interest is necessarily linked to the duty payable, such liability arises automatically by operation of law. As per the Hon’ble Supreme Court's judgment in COMMISSIONER OF CENTRAL EXCISE, PUNE VERSUS M/S SKF INDIA LTD. [2009 (7) TMI 6 - SUPREME COURT] interest is leviable on delayed or deferred payment of duty for whatever reasons.
The impugned order upheld - appeal disposed off.
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2024 (3) TMI 1187
Classification of imported goods - Rubber Processing Oil (RPO) - enhancement the value - mis-declaration of the country of origin in the bills of entry.
Whether the Rubber Processing Oil imported by the Appellant is classifiable under Chapter Heading No. 27101990 as classified by the Appellants or under Chapter Heading No. 27079900 as classified by the Revenue? - HELD THAT:- From the judgment of this Tribunal in AMIT PETROLUBES P. LTD VERSUS C.C. -KANDLA AND HEMANT SHAH VERSUS C.C. -KANDLA [2023 (12) TMI 796 - CESTAT AHMEDABAD], it can be seen that in the identical fact the department’s claim of classifying the RPO under 27.07 was rejected. Therefore with the support of the above referred judgment and particular facts of the present case, the impugned order on the issue of classification is not sustainable.
Whether the value of the imported RPO can be enhanced based on the consent letters given by the directors of the Appellants at the time of release of the goods, without following the due process of law as contemplated under Section 14 of the Customs Act read with Customs (Determination of Value of imported value) Rules, 2017? - HELD THAT:- In the present case neither any contemporaneous value was adopted nor any method as prescribed under Section 14 read with Custom Valuation Rules, 2007 was followed. Therefore, merely on the basis of statements of director valuation cannot be enhanced. Therefore, the enhancement of the value is not sustainable in the facts of the present case. This similar issue has been considered in the case of GURU RAJENDRA METALLOYS INDIA PVT LTD VERSUS C.C. -AHMEDABAD [2020 (6) TMI 68 - CESTAT AHMEDABAD] wherein the tribunal held that only on the basis of the consent letters of the importer enhancement of valuation cannot be made - the enhancement of the value by the lower authorities is without any legal basis. Hence, the same will not sustain and accordingly, the enhancement of the value done by the Revenue is set aside.
Whether the Appellants mis- declared the Country of Origin in the Bills of entry filed by them? - HELD THAT:- The material information declared in the bill of entry mainly corresponds to the goods that are under import and mis declaration of country of origin is immaterial towards the valuation, description and other such particulars concerning the goods, and the appellant would have gained nothing as no preferential rate of duty was claimed by the appellant. Without prejudice, mis declaration of origin being an issue technical in nature does not seem to form any implication towards the revenue. Therefore, if there is a mis-declaration of country of origin the appellant being not the party to make any incorrect declaration cannot be held responsible and no consequential penalty can be imposed on the appellant.
Whether the quantum of penalties and redemption fine imposed disproportionate to differential duty involved in the matter? - HELD THAT:- This Tribunal held that for incorrect mention of country of origin, the importer cannot be penalized. Accordingly, in the present case also considering overall facts and the fact of incorrect declaration, if any, regarding country of origin in the Country of Origin Certificate, the appellant is not liable for any penalty or fine - As regard the appeals filed by individuals as observed, since there the impugned order against the main appellants is not sustainable, there is no reason to continue the personal penalty upon the individuals co- appellants.
The impugned order is set aside - Appeals are allowed.
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2024 (3) TMI 1186
Classification of exported goods - Abrasive Mesh - whether the goods exported are classifiable under CTH 2513 20 90 as ‘Abrasive Mesh’ as declared by the Appellant or under CTH 2513 20 30 as ‘Natural Garnet’ as assessed by the Department? - HELD THAT:- The Learned Commissioner (Appeals) while deciding the classification of the disputed goods under heading 2513 20 30 has not given any finding as to why the Appellant was not given an opportunity to cross examine the Chemical Examiner so as to determine what are the properties of the goods of the Appellant that correspond to the said classification nor ascertained reasons as to why the communications of M/s. IREL as requested by the Appellant were not shared with them.
It is noted that, the properties of the goods are technical in nature and vital to be determined before ensuring appropriate classification whereas the findings of the Commissioner (Appeals) are silent on this vital aspect of the factual circumstances.
This Tribunal draws support from the case of SWADESHI POLYTEX LTD. VERSUS COLLECTOR OF CENTRAL EXCISE, MEERUT [2000 (7) TMI 85 - SC ORDER],wherein it was held that “if the Adjudicating Authority intends to rely upon the statement of any such persons, the Adjudicating Authority should give an opportunity of cross examination to the appellant".
The lower authorities have not considered the submissions made by the Appellants in order to properly come to the conclusion for correct classification of goods in question - the matter needs to be remanded for re-consideration back to the adjudicating authority - Appeal allowed by way of remand.
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