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2023 (6) TMI 1184
Scope of Advance Ruling application - Transfer of unutilized balance in E-credit ledger on merger of distinct persons within same State having same PAN - transfer of unutilized balance in E-credit ledger between distinct persons from one GSTIN to another GSTIN in some State with same PAN, without following the process of merger - HELD THAT:- Any person who is registered under GST or desirous of obtaining a registration under GST may apply for an advance ruling and that the question on which an advance ruling is sought for, may be with respect to any of the issues referred to in Section 97 (2) ibid which are in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. In other words, it is the supplier of goods or services or both who can seek an advance ruling on any of the issues specified in clauses (a) to (g) of Section 97(2).
In the instant case there is neither any issue involving applicability of a Notification issued under the provision of Act nor this is a case regarding admissibility of input tax credit of tax paid or deemed to have been paid. Here the issue being raised by the applicant is admissibility of transfer of unutilized balance of Input Tax Credit in E-credit ledger and not regarding the admissibility of Input Tax Credit of tax paid - as Section 97 (2) (d) specifies about the admissibility of input tax credit of tax paid and not regarding admissibility of transfer of unutilized balance of Input tax credit lying in E-credit ledger, the issues raised by the applicant in the instant ARA-01 is out of the scope of advance ruling and accordingly their application merits rejection.
Application for Advance Ruling on the issue of transfer to unutilized balance of Input tax credit lying in E-credit ledger is not maintainable.
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2023 (6) TMI 1183
Levy of GST - export of pre-packaged and labelled rice upto 25 Kgs, to foreign buyer, to exporter on “bill to ship to” basis i.e., bill to exporter and ship to customs port and to the factory of exporter - HELD THAT:- Export of goods in its cognate expression means taking goods out of India to a place outside India. Exports under GST are “zero rated supplies” and in this context, as per section 16 of IGST, Act 2017 export of goods or services or both and supply of goods or services for authorized operations to Special Economic zone developer or Special Economic zone units are zero rated supplies. We further find from the detailed submissions put forth by the applicant, that they are of the firm opinion that in view of amendment in entry no. 51 of Schedule I of Notification No. 1/2017-Central Tax (Rate) dated 28.6.2017, CGST and SGST @2.5% each is appliable with effect from 18.7.2022 on export of pre-packaged and labelled rice up to 25Kgs directly to a foreign buyer / to an Exporter on “bill to ship to” basis/ to the factory of exporter.
If specified commodities are supplied in a package that do not require declarations / compliances under the Legal Metrology Act, 2009 ( 1 of 2010), and the rules made thereunder, the same would not be treated as pre-packaged and labelled for the purposes of GST levy and that rice supplied in pre-packaged form would fall in the definition of “pre-packaged commodity” under Legal Metrology Act, 2009 and rules made thereunder, if such prepackaged and labelled packages contains a quantity up to 25 Kgs.
GST would be applicable on the supply of prepackaged and labelled rice up to 25 Kgs, for both domestic supplies as also for export clearances. Thus, the applicable rate of GST on the supply of pre-packaged and labelled rice up to 25 Kgs, for both domestic sales as also for export clearances is 5% [2.5% CGST + 2.5% SGST] or (5% IGST) as the case may be, in terms of amended entry no. 51 to Schedule-1 to Notification no. 01/2017-CT(Rate) /Integrated tax [Rate) dated 28.6.2017 as amended, with effect from 18.7.2022 - for inte-rstate supply of taxable goods by a registered supplier to a registered recipient/ merchant exporter, for exports the IGST rate of 0.1 % has been stipulated vide Notification no. 41/2017-lntegrated Tax (Rate) dated 23.10.2017, subject to the adherence of the terms conditions as stipulated therein.
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2023 (6) TMI 1182
Classification of supply - HSN Code - rate of tax - Fortified Rice Kernels(FRK) which the applicant intends to manufacture and supply at Chhattisgarh - to be classified under Chapter Heading 1103 of Customs Tariff Act or not - HELD THAT:- There remains no ambiguity as regards the fact that the impugned goods are nothing but preparations of rice flour. At this juncture, for ascertainment of the correct classification of impugned good viz. Fortified Rice Kernels (FRK) and thereby to arrive at the applicate rate of GST on the same, we would also like to cite reference to the Agenda for 45th GST Council meeting held on 17th September 2021 (volume 2) wherein at Agenda item 14 relating to issues recommended by the Fitment committee for the consideration of GST council - From Recommendations made by the Fitment Committee for making changes in GST rates or for issuance of clarification in relations to goods, it gets amply clear that Fortified Rice Kernel is classifiable under chapter heading 1904.
Thereafter it is also observed that in the 45th Meeting of the GST Council, held at Lucknow on 17th September, 2021, the GST Council has inter-alia made the recommendation of lowering the rate of GST from 18% to 5% on Fortified Rice Kernels for schemes like ICDS etc. Accordingly, vide Notification No. 11/2021 C.T.(Rate) dated 30.09.2021, Notification 39/2017 dated 18.10.2017 stood amended effective from 01.10.2021, by including the terms “Fortified Rice Kernel (Premix) supply for ICDS or similar scheme duly approved by the Central Government or any' State Government” in column (3) and also, the words 'Food Preparation' is amended as 'goods' in column (d) of the Notification, by citing the chapter of the goods as Chapter 19 or 21.
The applicable rate of GST on all goods of 1904 including Fortified Rice Kernels (FRK) meriting classification under chapter subheading 19049000 is 18% [9% CGST + 9% SGST] or (18% IGST) as the case may be, in terms of entry no. 15 to Schedule-Ill to Notification No. 01/2017-CT(Rate) dated 28.6.2017 as amended.
It is also seen that the applicant in their submissions have also referred that the quantity of vitamins and minerals which are to be added in rice flour to prepare FRK as per FSSAI Regulations which provides for the ratio of Vitamin and Minerals to be added in a quantity of 1 kg of Rice. In this context, it is seen that Food Fortification Resource Centre FFRC set up by the very same FFSAI has in its advisory dated 12/7/2021 addressed to all business operators and FRK manufacturers giving reference to chapter heading 1904 has advised to take appropriate action for uniform billing of Fortified Rice Kernels.
The other issues /points raised by the applicant in their application, including the reference to the discussion of the fitment committee of the GST Council put forth in the agenda for the 37th GST Council Meeting, is distinguishable to the facts and circumstances involved here, in view of the subsequent agenda of 45th GST council meeting held on 1 7.9.2021.
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2023 (6) TMI 1181
Input Tax Credit - GST paid on various services/ expenses incurred towards discharging its CSR obligation - to be considered as being in course or furtherance of business in terms of Section 16(1) of the CGST Act, 2017 r/w UPGST Act, 2017 or not - HELD THAT:- As per Rule 4(1) above (for the period prior to 23-1-2021), the CSR activities undertaken by the company shall exclude activities pursuance of applicant’s normal course of business. Companies must ensure that none of these activities is included in their CSR policy as they have specifically been excluded from the definition of CSR. It has been clarified that any costs incurred as a result of these actions are not eligible for CSR credit - The new CSR Rules along with Section 135 of the Act has created a very strict regulatory framework for CSR activities. Earlier the Parliament intended for Section 135 compliance to be voluntary rather than compulsory. Now the CSR activities are independent of normal business activities of the entity requiring separate registration and records for compliance of law. The CSR Policy and projects approved by The Board of Directors are implemented by a CSR Committee which is made public on the website.
As per Rule 4 on and after April 1, 2021 Companies can undertake CSR activities only through implementing agencies which are registered with MCA. These implementing agencies will have to file e-form CSR-1 with MCA portal and will receive unique CSR registration number. Rule 7(4) says that the CSR fund may be spent by a company for creation or acquisition of a capital asset which shall be held in the name of only section 8 company or registered public trust or registered society having CSR registration number and cannot be held in the name of the company itself. For existing capital assets compliance within 180 days is required. Thus the corporation cannot directly own this capital asset that was made or purchased with CSR funding. It is also prescribed that the surplus generated by CSR activities will not be included in a company’s business profit and will be transferred to the Unspent CSR Account or reinvested in the same project. The company should transfer any unspent CSR funds to any funds listed in Schedule VII of the Act until a fund is specified in Schedule VII in accordance with sections 135(5) and 135 (6) of the Act.
Section 16(1) of the CGST Act, stipulates that a registered person is entitled to take credit of input tax charged on any supply of goods or services or both, which are used or intended to be used in the course or furtherance of his business. Thereby, Section 16 (1) of the CGST Act bars CSR activities from input/input service.
CSR activities, as per Companies (CSR Policy) Rules, 2014 are those activities excluded from normal course of business of the applicant and therefore not eligible for ITC, as per Section 16(1) of the CGST Act.
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2023 (6) TMI 1180
Exemption u/s 11 - Charitable activity or not - Profit motive - Exemption was disallowed on the ground that registration u/s 12AA granted to the assessee stood cancelled - what's the charitable nature of activities carried out by assessee in terms of Section 2(15)? - ITAT and HC restored the registration and allowed the benefit of exemption - as decided by HC [2022 (8) TMI 1400 - ALLAHABAD HIGH COURT], mere selling some product at a profit will not ipso facto hit assessee by applying proviso to Section 2(15) and deny exemption available u/s 11 and proviso to Section 2(15) is not applicable to the facts and circumstances of the case, and the assessee was entitled to exemption provided under Section 11
HELD THAT:- No ground to interfere with the impugned judgment.
The special leave petitions, accordingly, stand dismissed.
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2023 (6) TMI 1179
Depreciation allowed as per its original return of income u/explanation-5 to clause (ii) of Section 32(1) inserted vide Finance Act - HELD THAT:- Relying upon the decision of this Court in the case of Commissioner of Income Tax vs. Mahendra Mills [2000 (3) TMI 3 - SUPREME COURT] the High Court has dismissed the Appeals preferred by the Revenue.
Revenue has heavily relied upon Explanation 5 to Section 32(1) of the Income Tax Act, 1961. We are of the opinion that, in the facts and circumstances of the case, Explanation 5 to Section 32(1) shall not come to the rescue of the Revenue.
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2023 (6) TMI 1178
Addition u/s 45(1) under the head long term capital gains - Consideration received on retirement from partnership firm - Receipts as full and final settlement of its right, title and interest as a partner as having 50% share in the firm - It is the case of the appellant revenue that this is a case where the AO was right for the reason that the sum of Rs. 15 crores received by the respondent was paid in excess of the amount due to it by way of the share it was entitled under the partnership deed - High Court deleted the additions
HELD THAT:- As per appellant is not a case where the amount which it has received is attributable in other words to the share which the retiring partner would be entitled in law. The amount is far in excess. Had the amount being the same as the share, the Revenue would not have raised objection. This is in addition to the fact that the amount paid to the respondent was, in fact, brought in by the three new incoming partners. This made the amount exigible to Income Tax under the head income under the capital gains u/s 45 of the Income Tax Act, 1961.
As Learned senior counsel, on the other hand, would point out that actually though the amount may appear to be in excess of the share standing to the credit of the capital account of the respondent-assessee, the amount in excess is attributable to the goodwill which, according to him, is subject matter of decisions of this Court and since goodwill under the law as it stood was to be taken into consideration in determining the share of the retiring partner, no part of the amount received by the respondent-assessee was exigible to tax.
From the impugned order, we do not find any discussion on any submission on the lines which has been addressed before this Court. We are of the view that the matter should, therefore, be reconsidered by the High Court with reference to the facts as are not in dispute and law which governs the field. The appeal is allowed. The impugned order will stand set aside. The case will stand remitted. The appeals will be reheard.
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2023 (6) TMI 1177
Exemption u/s 11 - scope and amplitude of the definition “charitable purpose” - correct interpretation of the proviso to Section 2(15) for “charitable purpose” - HELD THAT:- The issue is covered by the judgment reported as “Ahmedabad Urban Delvelopment Authority [2022 (10) TMI 948 - SUPREME COURT]
The special leave petition is dismissed in the light of the said judgment and the clarification.
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2023 (6) TMI 1176
Income taxable in India - Addition of recharacterization of receipts from sale of software licenses to Indian customers/distributors as royalty - High Court has held that, in view of the decision of Apex Court, the income is not taxable in India - HELD THAT:- Special leave petitions is covered against them vide judgment in the case of “Engineering Analysis Centre of Excellence Private Limited vs. The Commissioner Of Income Tax & Anr [2021 (3) TMI 138 - SUPREME COURT]
Learned Additional Solicitor General states that a Review Petition has been filed against this judgment, which is currently pending and the right of the Revenue to revive the present special leave petitions may be reserved, in case the Review Petition is allowed.
Recording the aforesaid, the special leave petitions are dismissed, as the same is covered by the said decision of this Court. In case the review petition on the issue raised in the present special leave petitions is allowed, it will be open to the petitioner(s) to get the present special leave petitions revived.
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2023 (6) TMI 1175
Reopening of assessment u/s 147 OR assessment u/s 153C - Addition u/s 69B of the Act as unexplained investment - HC decided in favour of assessee - HELD THAT:- This Court is of the opinion that the order impugned does not call for interference. The Special Leave Petition is, accordingly, dismissed. All Pending applications are disposed of.
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2023 (6) TMI 1174
Prosecution for commission of offence u/s 276B r/w 278B - Sanction u/s 279(1) - TDS deducted but not deposited in time - offence allegedly committed u/s 276(B) and 278(B) - As per HC amount has already been deposited with interest and there is no reason why the criminal proceeding shall proceed and the criminal proceeding was launched after receiving the said amount with interest, had it been a case that the case was immediately instituted and thereafter the TDS amount has been deposited with interest, the matter would have been different - HELD THAT:- SLP dismissed.
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2023 (6) TMI 1173
Revision u/s 263 - cancellation of registration for the year when the cancellation order was not available to the AO while passing the order u/s 147/143(3) - HC confirmed Tribunal order as allowing the assessee’s case and held that Section 12AA(3) is applicable only from the assessment year 2011-12 deciding substantial questions of law raised in this appeal are covered against the revenue - HELD THAT:- Heard learned counsel for the petitioner.
We are not inclined to interfere with the impugned order and judgment of the High Court. However, the question of law is kept open. Special leave petition is dismissed.
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2023 (6) TMI 1172
Faceless Assessment - Validity of assessment order u/s 144B - Legality and validity of the notice u/s 148 issued on the ground that the said notice is without jurisdiction, in as much as the necessary satisfaction u/s 151 has not been obtained - High Court quashed the notice - HELD THAT:- As the impugned order does not call for interference.
The Special Leave Petition is accordingly dismissed. However, the question of law is kept open.
Pending application stands disposed of.
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2023 (6) TMI 1171
Nature of subsidy receipt - value of the MILIEV grant given by the Dutch government as a subsidy for purchase of wind turbine generator - transfer of right by the assessee to another company, no offset credit and electricity charges paid to Wescare as deduction - HC confirmed ITAT orders for deleting the additions - HELD THAT:- No case for interference is made out in exercise of our jurisdiction under Article 136 of the Constitution of India.
The special leave petitions are, accordingly, dismissed.
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2023 (6) TMI 1170
Validity of reopening of assessment - monetary requirement for reopening assessment - unexplained cash credit under Section 68 - as decided by HC condition precedent of an asset in the form of Rs.50 lakhs is not be attracted to the present case, as the notice u/s 148A(b) had been issued on 17th March, 2022 i.e. within three years of the assessment year sought to be assessed, namely, 2018-19 and Section 148A(d) order as well as Section 148 notice issued on 31st March, 2022 was within prescribed time
HELD THAT:- Learned counsel seeks liberty to withdraw the special leave petition and agitate all issues before the authorities. Liberty sought for is granted.
The petition is accordingly dismissed as withdrawn.
Pending application(s), if any, stand disposed of.
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2023 (6) TMI 1169
Validity of Reopening of assessment - accommodation entry being provided to the petitioner, as alleged, in the form of a bogus loan made by Mr Rajesh G Mehta - reliance on third party [entry provider] statement - whether AO had material available with him to form a reasonable belief that income chargeable to tax had escaped assessment? - HELD THAT:- As the foundation for triggering reassessment proceedings qua the petitioner is the statement of Rajesh G Mehta.
The statement, by itself, does not lend any clarity as to whether the AO had underlying material available with him for reaching a conclusion that income chargeable to tax qua the petitioner had escaped assessment. This aspect would have, perhaps, become clear if the AO had accorded personal hearing to the authorized representative of the petitioner.
As required to be noticed that, as adverted to hereinabove, the search and seizure action under Section 132 of the Act was not carried out against the petitioner; such action was carried out against a third party. The period in issue, as noted right at the outset, is FY 2018-19 [AY 2019-20].
There seems to be weight in the submission made on behalf of the petitioner that the CBDT via the aforementioned circular i.e., circular dated 01.08.2022 and 22.08.2022 has relaxed the rigour of the law.
CBDT has read into the provisions of 148A and Section 148 of the Act, the principles of natural justice. Therefore, we are of the view that the best way forward would be to set aside the order under Section 148A(d) of the Act and consequential notice of issued under Section 148 - Decided in favour of assessee.
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2023 (6) TMI 1168
Revision u/s 263 by CIT - denial of claim of deduction u/s 80IC in respect of exchange rate fluctuation income, interest income and insurance claim - HELD THAT:- As we find that the impugned order passed under section 263 of the Act by learned PCIT is dated 15.03.2017. Certainly, the giving effect order to section 263 of the Act should have been passed by learned Assessing Officer by this time.
DR before us was not able to provide any details with regard to the fact as to what happened in the giving effect proceedings. The assessee also was not present to explain the status of giving effect proceedings. Hence, in absence of details of the giving effect proceedings before us, we deem it fit and appropriate, in the interest of justice and fair play to modify the revision order passed by learned PCIT by simply setting aside the assessment order dated 20.01.2015, instead of cancelling the same.
Assessing Officer is directed only to examine afresh the eligibility of claim of deduction under section 80IC of the Act in respect of the aforesaid three receipts, uninfluenced by earlier decisions taken by him, if any. The order passed by learned PCIT under section 263 of the Act is modified. Decided partly in favour of assessee for statistical purposes.
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2023 (6) TMI 1167
Disallowance of interest expenses - AO observed that the loans/advances were given without charging interest whereas the assessee had paid interest on funds borrowed from Syndicate Bank and Allahabad Bank - CIT-A deleted the addition - HELD THAT:- If there are funds available both interest-free and over draft and / or loans taken, then a presumption would arise that investments would be out of the interest-free fund generated or available with the company, if the interest-free funds were sufficient to meet the investments. Thus respectfully following the decision of Reliance Utilities [2009 (1) TMI 4 - BOMBAY HIGH COURT] and assessee’s own case [2014 (11) TMI 1272 - ITAT DELHI] we uphold the order of CIT (Appeals) in deleting the disallowance of interest expenses and reject ground No. 1 of appeal of the Revenue.
Addition towards unexplained stock - HELD THAT:- Contentions made during search, seizure and survey operations do not serve any useful purpose if such contentions are not based upon credible evidence collected in the course of search and survey operations. See S. Khader Khan Son [2007 (7) TMI 182 - MADRAS HIGH COURT]
We hold that addition on account of undisclosed difference in stock discrepancy cannot be made merely on the basis of the statement given by the partner at the time of survey without any corroborative evidences found in the course of survey. In this case the assessee explained that there is no discrepancy in stock along with various evidences and explanations and, therefore, the ld. CIT (Appeals) has rightly deleted the addition of Rs. 4,00,84,677/- (4,29,63,309 - 28,78,632). Thus, the order of the ld. CIT (Appeals) is sustained to this extent. Ground No. 2 of grounds of appeal of Revenue is rejected.
Bogus fabrication expenses - Merely because the summons could not be served, in our opinion, the addition cannot be sustained. The assessee in respect of these fabrication expenses furnished copies of bills, copies of ledger account, copy of Form 16A issued to the fabricators wherein the assessee has deducted TDS and remitted to the Govt. account. All these evidences cannot be brushed aside simply because the summons issued to the parties could not be served. There may be various reasons for non-service of summons on the parties.
Thus simply because the summons could not be served the fabrication expenses incurred by the assessee cannot be treated as not proved. Thus, allowing ground No. 2 of grounds of appeal of the assessee, we direct the Assessing Officer to delete the addition.
TDS u/s 195 - Disallowance being the commission paid to foreign agents - We hold that the commission paid to non-resident for procuring sales cannot be said to be fee paid for any technical services within the meaning of Explanation (2) to section 9(1)(vii) - Thus, we reverse the order of the ld. CIT (Appeals) on this issue and direct AO to delete the disallowance made u/s 195 for non-deduction of TDS. Ground of appeal of the assessee is allowed.
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2023 (6) TMI 1166
Dismissal of assessee appeal by CIT(A) by passing an ex-parte order on the basis of the non-prosecution - denial of principles of natural justice - Reopening of assessment - capital introduced by the appellant in firm by alleging the same to be from unexplained source - HELD THAT:- We find that the CIT(A) has dismissed the appeal without considering the material available on record, as also without going into the merits of the case. As such, an opportunity of hearing requires to be given to the assessee to represent his case fully before the Ld. PCIT. Even otherwise, it is trite [‘S. Velu Palandar Vs. DCIT’ 1971 (8) TMI 42 - MADRAS HIGH COURT)] and incumbent on the authority to decide an appeal on merit.
Finding force in the grievance raised by the Assessee, in the interest of justice, the matter is remitted to the file of the ld. CIT(A), to be decided afresh on merit, in accordance with law, on affording due and adequate opportunity of hearing to the assessee.
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2023 (6) TMI 1165
Eligible for registration u/s 12AB - application of the assessee was rejected without giving adequate opportunity to the assessee / applicant to present its case on merits - HELD THAT:- As in the interest of justice, the case is being set-aside to the file of Ld. CIT(Exemption) for denovo consideration of the application of the assessee Trust for registration u/s 12AB of the Act and to pass appropriate orders after considering the documents filed by the applicant / assessee in accordance with law. Hence, the matter is being set-aside to the file of CIT(Exemption) with the above direction. Appeal of the assessee is allowed for statistical purposes.
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