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Showing 321 to 340 of 1484 Records
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2025 (3) TMI 1164
Denial of Foreign Tax Credit (FTC) - Form No.67 which was required to be filed in support of the claim of FTC was filed beyond the due date of filing the return of income - HELD THAT:- The issue under consideration is no longer res integra and we considering the decision in the case of Ashish Agrawal [2023 (10) TMI 86 - ITAT HYDERABAD] who is another employee of the very same company of which the assessee is employee, i.e. Emerson Electric Company (India) Private Limited and the Tribunal held that filing of Form No.67 is only directory since Double Taxation Avoidance Agreement overrides the Act and Rules and therefore if the assessee has paid the taxes abroad and is duly supported by evidence, then the claim of the assessee needs to be allowed.
Claim of FTC by the assessee is denied only for delay in filing of Form No.67 and no discrepancy has been noticed in the contents of Form No.67 and therefore considering that Form No.67 is directory is nature, we direct the AO to accept the claim of the assessee made through Form No.67 - Appeal of the assessee is allowed.
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2025 (3) TMI 1163
Income deemed to accrue or arise in India - Royalty as per the section 9(1)(vi) of the Income tax Act and Article 13 of the DTAA between India UK - payments proposed to be made for Global technology/Knowledge management, Global Communication and Global Brand - HELD THAT:- As relying on case of Deloittee Haskins & Sells LLP and Deloitte Touche Tohmatsu India LLP [2022 (7) TMI 1586 - ITAT MUMBAI] we hold that the payments made to DGSHL do not fall within the scope and ambit of royalty under Article 13 of India UK DTAA and consequently, assessee was not required to deduct TDS while making the payment. Accordingly, the appeals of the Revenue are dismissed.
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2025 (3) TMI 1162
Allowability of Provision for Claim Pay Out created - HELD THAT:- CIT(A) had allowed deduction for actual Claim Pay Out. On perusal of the above details, it can be seen that the Provision for Claim Payout created for AY 2019-2020 was less than the actual Claim Pay Out. Further, on an overall basis (i.e. from A.Y. 2016-2017 till A.Y. 2022-2023), the aggregate difference between the Provisions for Claims Pay Out and actual Claim Payout was only 2.21% only. Further, the Assessee has been granted exemption from income tax u/s 10(46B) of the Act by the Finance Act, 2023.
We overturn the finding returned by the CIT(A) that the Provision for Claim Pay Out has been created on adhoc basis. In our view, the Assessee has created provisions for the liability to make payment towards Claim Pay Out on the basis of actuarial report furnished by an independent actuary after application of mind to the attendant facts and circumstances.
The Provision for Claims Pay Out so created is an ascertained liability keeping in view the provisions of the Trust Deed, the Scheme and the applicable agreement. Therefore the order passed by the AO and the CIT(A) in relation to Provision for Claim for Pay Out is set aside and the AO is directed to grant deduction for Provisions for Claim Pay Out created during the relevant previous year.
Our above view draws strength form the following decision of Credit Guarantee Fund for Micro and Small Enterprises [2023 (11) TMI 1107 - ITAT MUMBAI] and Credit Guarantee Fund for Micro and Small Enterprises [2024 (12) TMI 1477 - ITAT MUMBAI] Appeal of assessee allowed.
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2025 (3) TMI 1161
Computation of income from assessed income as per intimation u/s 143(1) when the scrutiny assessment was initiated before passing intimation order - HELD THAT:- In view of the finding made in the case of MSTC Ltd. [2024 (10) TMI 1642 - ITAT KOLKATA] since the adjustment made in the intimation u/s 143(1) of the Act have neither been reversed by the Ld. AO nor any adjudication has been made in the assessment order therefore, the CIT(A) was justified in dismissing the appeal of the assessee on the ground that the impugned intimation was not contested in appeal.
Hence, we find no error in the order of the Ld. CIT(A) which is hereby upheld in view of the order of the Hon'ble Jurisdictional High Court and the doctrine of merger discussed in the case of MSTC Ltd. (supra). Hence, ground nos. 1, 2 & 3 are dismissed.
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2025 (3) TMI 1160
Addition u/s 56(2)(vii) - Immovable property has been purchased by the Assessee below the Circle rate and considered the applicable circle rate as sale consideration - HELD THAT:- In the present case, it is not the case of wrong mentioning of provision of Section, it is crystal clear that the AO has proceeded to make addition u/s 56(2)(vii)(b)(ii) of the Act and accordingly made addition under the very same provision.
Even the CIT(A) has also confirmed the very same addition made u/s 56(2)(vii)(b)(ii). Such a blatant error of invocation of a Provision against the Assessee, which was not even applicable/exist in the year under consideration, which has been confirmed by the First Appellate Authority, cannot be construed as mere wrong mentioning of provision of law.
Therefore, the Judgment relied by DR in the case of Namev Arora [2016 (8) TMI 219 - PUNJAB AND HARYANA HIGH COURT] is not applicable to the case in hand.
Proving the source of investment for purchase of Agriculture Land - AO disbelieved the claim of the Assessee without their being any contrary evidence or without making any investigation or examination of the parties. Considering the land holdings of the Assessee and his family members, AO should have accepted the claim of the Assessee in the absence of any contrary evidence brought on record. AO has committed error in making the addition and the CIT(A) has also erroneously upheld the same. Addition made by the A.O. which has been upheld by the CIT(A) it hereby deleted. Accordingly, we allow the Ground No. 5 to 7 of the Assessee.
CIT(A) confirmed part addition of agricultural income - It is the case of the Assessee that the Assessee was owing six acres of the land from the beginning of the Financial Year which yielded him the income. The said fact that the Assessee was owning additional six acres of land which has been acquired during the starting of the Financial Year has not been considered by the A.O. However, though the CIT(A) has granted substantial relief after considering the holdings of the land of the Assessee, no reason or justification has been given for sustaining addition. CIT(A) ought to have allowed the entire claim of the Assessee as agriculture income in view of 18 acres of land holdings of the Assessee and his family member.
Appeal of the Assessee is allowed.
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2025 (3) TMI 1159
Penalty u/s 271(1)(c) - defective notice - non specification of clear charge - Non mentioning under which limb of section 271(1)(c) the penalty is being initiated - HELD THAT:- We are of the opinion that the assessee has not been called upon to explain if he has concealed the particulars of income or furnished inaccurate particulars of such income. In such a situation the decision of Manjunatha Cotton and Ginning Factory & Ors. [2013 (7) TMI 620 - KARNATAKA HIGH COURT] is illuminating.
We find ourselves as having a considered view that when the assessee has not been specifically made aware of the charges leveled against him as to whether there is a concealment of income or furnishing of inaccurate particulars of income on his part, the penalty u/s 271(1)(c) is not sustainable. Decided in favour of assessee.
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2025 (3) TMI 1158
Levy of interest on the outstanding receivables from its AE treated by the TPO as international transactions - HELD THAT:- In case it is proved that the assessee has transferred the benefit to its AE then certainly this transaction will fall in the International transaction. No such findings were brought on record by the tax authorities.
Assessee was properly compensated by its AE, this is also fact on record that the DRP has deleted the adjustment proposed by the TPO on the provision of services to its AE.
It clearly shows that the assessee is being compensated properly. Now the issue before us is whether the assessee incurs financial cost in India and allows extended period of credit to its AE, so that the AE enjoys the benefit out of funds borrowed in India.
The revenue must bring on record how the benefit is exported without claiming any compensation for the same.
In the given case, the company is debt free and able to survive based on the compensation from its AE. We noticed that the assessee has actually incurred finance cost and majority of the finance cost consist of penal interest paid to revenue u/s 234B/C of the Act.
Technically there is no finance cost of employment for any debt or borrowings. If that is the case, the passing of benefit to its AE is ruled out. We cannot apply the provisions of the Act blindly without show casing how it is falling under the short term loan or financial transaction. Even though Ld DRP tried to distinguish the Bechtel India case, however, unless it is brought on record that this particular transaction falls within the framework of financial transaction, you cannot invoke the provisions mechanically.
The term of settlement is subjective and depends upon the mutual agreement and industry practice. We noticed that the average credit period of the assessee is 92 days against the average credit period in the case of comparable companies determined at 105 days.
Since the assessee is debt free company and has recovered the remittances within the terms agreed between them and there is no red flag of excessive delay in remittance which gives the impression that the AE is enjoying the credit facility beyond reasonable period.
Therefore, revenue has failed to bring any material to suggest that the assessee has passed on the benefit to its AE by borrowing or extension of remittance beyond the industry average. In the regular business transactions even in the case of non AE, the credit period extension within the industry average is accepted norms.
In our view the findings of Bechtel India [2016 (9) TMI 196 - DELHI HIGH COURT] is applicable in this particular case. Therefore, we are inclined to allow the grounds raised by the assessee and direct the AO to delete the additions proposed by TPO. Appeal filed by the assessee is allowed.
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2025 (3) TMI 1157
Disallowance of the claim of depreciation and additional depreciation claimed on alleged bogus purchases and addition on account of VAT incurred on the impugned bogus purchase
HELD THAT:- It is trite law that the primary onus is on the assessee and the correctness of the return is a matter to be established by the assessee on whom the burden lies. For this proposition, we draw support from the decision of Smt. Jasvinder Kaur [2013 (10) TMI 837 - GAUHATI HIGH COURT] The assessee has only furnished copy of the invoices of M/s. B.N. Trading Company, which on verification has been found to be bogus.
No further details have been furnished by the assessee demonstrating the exact location of the said company. Even the verification from the Good & Services Tax Department, Govt. of Maharashtra, mentioned elsewhere, revealed that the products in which M/s. B.N. Trading Company dealt with had no co-relation with the goods purchased by the assessee.
The decision of SVD Resins & Plastics Pvt. Ltd [2024 (8) TMI 564 - BOMBAY HIGH COURT] relied upon by the ld. Counsel is entirely on different set of facts. Once the facts are distinguishable, the decision cannot be relied upon. Appeals of the assessee are dismissed.
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2025 (3) TMI 1156
Validity of Notice issued u/s. 143(2) by the ITO, Ward-4(5), Raipur as without jurisdiction - HELD THAT:- Derived from the Latin word “notitia”, which means being known, notice is the starting of any hearing. Unless a person knows the issues of the case in which he is involved, he cannot defend himself. For a notice to be adequate it must contain- (a) Time, place and nature of hearing; (b) Legal authority under which hearing has to be held; and (c) The specific charges, grounds and proposed actions the accused has to meet.
In this case as per the documents on record that the first notice u/s. 143(2) was issued by the ITO, Ward-4(5), Raipur and thereafter, another notice u/s. 142(1) was issued by the ITO, Ward-3(1), Raipur who had framed the assessment without any order of transfer as required u/s. 127 by the Ld. Pr. CIT.
Similarly, if it is to be accepted that the actual jurisdiction is with the ITO, Ward-3(1), Raipur then first notice u/s. 143(2) of the Act, dated 18.09.2017 which had been issued for initiating the scrutiny proceedings by the ITO, Ward- 4(5), Raipur is definitely without a valid jurisdiction over the assessee. When the issuance of notice and framing of assessment order suffers from lack of jurisdiction as enshrined in the statute then all subsequent proceedings becomes non-est in the eyes of law.
Thus the assessment framed by the ITO-3(1) Raipur vide his order passed u/s. 143(3) in absence of an order of transfer u/s. 127 of the Act having been passed by CIT and without any issuance of notice by him u/s. 143(2) to the assessee, is held to be without jurisdiction, invalid and bad in law and thus, the same is quashed. Appeal of the assessee is allowed.
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2025 (3) TMI 1155
Entitlement to benefits of the Vivad Se Vishwas Scheme, 2020 -technical glitches and procedural errors that prevented the issuance of Form 5 under the scheme - HELD THAT:- Assessee should not be suffered from such technical glitches that prevail at the side of revenue.
As is clear that there were technical glitches and considering that aspect of the matter the assessee has deposited the part payment of tax dispute even though the form no. 3 was not issued and served to the assessee. The bench noted that though the Form no. 3 placed on record has date 31.12.2020 but the same was served on 23.03.21 i.e. almost a year[ based on the copy of the form no. 3 filed by the ld. DR].
As bench appreciate the effort of the revenue but at the same time the assessee alternatively argued that the present scheme of VSVS 2024is extended arms of that scheme of 2020 and therefore, if the revenue could not resolve that dispute in the scheme of 2020 then the benefit of the present scheme be given to the assessee by the concerned PCIT by passing a order in that 2020 scheme and thereby the assessee may avail the scheme 2024 for which the assessee is also alternatively eligible. Based on these discussion we hold that the assessee be given the benefit of resolving the dispute of Vivad se Vishwas scheme either in 2020 or 2024.
Since this matter is time barring the copy of the order be placed before the PCIT’s office immediately so as to the assessee be given benefit as discussed herein above. Since the appeal was dismissed by ld. CIT(A) in incorrect appreciation of facts, the same is also directed to restore to the file of the CIT(A) so as to avail the benefit of the new Scheme by the assessee. Assessee appeal allowed.
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2025 (3) TMI 1154
Legality of reassessment order passed on non-existent entity - HELD THAT:- Admittedly the notice u/s 148 was issued when the company was seized to exist i.e. when it is its name was struck off from the Register of Companies. It is also a matter of fact that the company had applied for winding up under the scheme declared by the Ministry of Corporate Affairs wherein after obtaining the approval from the jurisdictional Assessing Officer of Income Tax Department and other stake holders, the name of the company was struck off. Once the notice was issued when company was not in existent such notice is bad in law.
The Hon’ble Supreme Court in the case of PCIT vs. Maruti Suzuki [2019 (7) TMI 1449 - SUPREME COURT] has held that initiation of assessment proceedings against an entity which had ceased to exist was void ab initio and participation of the company cannot be operate as an estoppel against law.
Also decided in Marut Nandan & Co [2025 (2) TMI 829 - ITAT DELHI] re-assessment noticed issued u/s 148 of the Act in the name of the non-existent entity is clearly vitiated and rendered nonest in law. Decided in favour of assessee.
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2025 (3) TMI 1153
Disallowance made of the deduction claimed in respect of the Research & Development expenditure incurred at the approved in-house R&D facility u/s 35(2AB) - HELD THAT:- Denial of weighted deduction u/s 35(2AB) will not disable the assessee from claiming normal deduction for the said R&D expenditure, both revenue & capital, u/s 35(1)(i) and 35(1)(iv) of the Act respectively.
R&D expenditure, including expenditure of capital nature, consolidated claim statement, details of disclosure of R&D expenditure in the notes to audited financial statements along with a reconciliation statement between the amount certified in Form 3CLA and the figures reported in notes to audited financial statements.
Details evidencing incurrence of capital expenditure at the approved in-house R&D facility was duly disclosed in the notes to the audited financial statements and further the statutory auditor had verified and certified the same being relatable to scientific research in Form 3CLA. According to us therefore, these contemporaneous evidences sufficiently establish that the capital expenditure was incurred in relation to scientific research and was therefore eligible for deduction u/s 35(1)(iv) . Hence, the order of the lower authorities to that extent stands reversed.
We direct the AO to further allow normal deduction for the capital R&D expenditure u/s 35(1)(iv) and resultantly delete disallowance accordingly. This ground therefore stands partly allowed.
Denial of deduction u/s 80IC for its plant/unit at Pantnagar - AO observed that the books of accounts were maintained against the principles of accounting standards and was being prepared in a manner to create artificial profits with the intention of claiming increased deduction u/s 80-IC - AR contended that the lower authorities were unable to pin-point any specific defect or infirmity in the audited stand-alone accounts of the eligible unit and rather had made sweeping remarks which did not have any cogent basis - HELD THAT:- We find that the revenue of the eligible unit was booked on prudent accounting principles and in accordance with provisions of Section 80-IA(8). It is noted that, there is no dispute regarding the direct costs debited in the audited stand-alone accounts of the eligible unit. The assessee has further demonstrated that the common/indirect costs have been allocated on sound and reasonable parameters. According to us therefore, the resultant profits relatable to the manufacturing unit as reported in the audited financial statements did not suffer from any infirmity, as wrongly alleged by the lower authorities in as much as there was no excess or higher profits reported by the assessee in its eligible unit at Pantnagar.
AO had not pin-pointed any defect in the working of the "profit" of the eligible Unit and had instead estimated the margin of the eligible at 10% of cost basis.
Thus, the action of the lower authorities in assuming that the profits of the eligible unit was artificially higher because the other units or company as a whole had a lower profitability without any relevant evidence or material, was baseless and unjustified.
It is not in dispute that the assessee had indeed invested and set-up a manufacturing facility in industrially designated backward area in Pantnagar, Uttarakhand, in which it has investment more than Rs. 2250 crores. The said unit has been in operation for more than nine years and in none of the prior years the authorities are noted to have doubted its existence. It is also not the Revenue’s case that the assessee has not fulfilled the conditions precedent in Section 80-IC to avail deduction in respect of profits derived by this eligible unit. We are in agreement with assessee that the assessee is free and entitled to arrange its affairs within the four corners of law to avail tax benefits, which the law permits it to claim. According to us therefore, the AO grossly erred in alleging tax evasion in the present case.
Thus, we thus hold that the profits reported in the stand-alone audited financials of the eligible unit as certified in Form 10CCB issued by the auditor was based on sound accounting principles which does not warrant any interference. Accordingly AO is directed to allow the deduction u/s 80-IC as claimed by the assessee in the return of income and therefore delete the disallowance - Decided against revenue.
Disallowance of additional depreciation claimed u/s 32(1)(iia) in relation to pollution control and energy saving equipment’s - HELD THAT:- As the ‘energy saving devices’ were specifically mentioned at Sl. No. III(8)(ix), ‘renewable energy devices’ were mentioned at Sl. No. III (8)(xiii) and ‘pollution control devices’ were mentioned at Sl. No. III(3)(vii) & (ix). We are therefore in agreement with the Ld. CIT(A) that these fixed assets were in the nature of ‘plant & machinery’ and hence the assessee had rightly claimed additional depreciation u/s 32(1)(iia) on the same. CIT, DR appearing before us are was unable to controvert the same. We therefore do not see any reason to interfere with the order of Ld. CIT(A) in this regard and accordingly dismiss this ground of the Revenue.
Disallowance made u/s 14A while computing the book profit u/s 115JB - HELD THAT:- This issue stands settled by the decision of Sobha Developers Ltd. [2021 (1) TMI 378 - KARNATAKA HIGH COURT] wherein on similar facts and circumstances it was held that, the disallowance made u/s 14A cannot be added to book profit u/s 115JB.
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2025 (3) TMI 1152
Bogus LTCG - addition relating to estimated commission expense - assessee and his sister has been exonerated by the SEBI - AO assessed 5% of the long term capital gains as estimated commission expenses incurred by the assessee - HELD THAT:-CIT(A) has given a finding that the assessee is a regular investor in shares. We also notice that a statement was taken from the assessee u/s 132(4) of the Act, wherein the AO did not find anything wrong. In the statement, the assessee had stated that he had purchased shares of Pine Animation Ltd on the advice of his Share broker Shri Bhavesh Shah and he had also confirmed that he only has advised the assessee to buy shares of M/s Pine Animation Ltd. None of these statements were found to be false.
It has to be held that the assessee has purchased the shares of M/s.Pine Animation Ltd in the normal course of his investment activities. Hence the long term capital gain earned by the assessee on sale of shares of above said company cannot be considered to be an accommodation entry. Accordingly, CIT(A) was justified in deleting the addition of long term capital gains made by the AO.
Since the long term capital gains earned by the assessee is held to be genuine one, the question of paying any commission expenses does not arise in the facts of the present case. Accordingly, we are of the view that the CIT(A) was justified in deleting the estimated commission expenses.
Addition on the basis of whatsapp chat - HELD THAT:- As decided in case of Designers Point (India) P Ltd [2023 (9) TMI 1664 - ITAT DELHI] has held that the addition cannot be made on the basis of whatsapp chat without bringing any material to corroborate the same.
AO has not brought any E-certificate as required u/s 65B of the Act before placing reliance on the digital evidence. Hence, the AO could not have placed reliance on the said document which is alleged to be print out of whatsapp chat. In the absence of e-certificate, the same shall become a third party document and it cannot be relied upon by the AO without bringing any corroborative evidence to show that the assessee has received/paid the money mentioned therein in cash.
We are of the view that the CIT(A) was not justified in confirming the addition made by the AO as unexplained cash credit u/s 68 of the Act. Accordingly, we set aside the order passed by the CIT(A) and direct the AO to delete this addition.
Assessee appeal allowed.
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2025 (3) TMI 1151
Challenge to Public Notice No.5/2020 dated 03.02.2020, as well as Exts.P3 toP5 communications issued - jurisdiction to issue public notice - HELD THAT:- Exts.P2 to P5 communications issued to them by the 3rd respondent runs contrary to the express terms of Ext.P1 Public Notice, and virtually reads-in conditions thereto that were not contained in, or contemplated through, Ext.P1 Public Notice. As a matter of fact, the respondents have not been able to point to any regulatory power on the basis of which a notice in the nature of Ext.P1 Public Notice could be issued, if it had the effect of interfering with the terms of a contract entered into between the shipping lines and the shipper/recipient of the goods under carriage. In the absence of such a regulatory power, traceable to the provisions of any statute or contract, such a power, that has the potential to interfere with the freedom of contract between parties, cannot be inferred from the terms of a Public Notice.
Ext.P2 to P5 communications are legally flawed and contrary to Ext.P1 Public Notice.
Conclusion - The Court set aside the communications (Exts.P2 to P5) as legally flawed and contrary to the Public Notice. It held that the Public Notice should not be interpreted in a manner that interferes with private contracts.
Appeal allowed.
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2025 (3) TMI 1150
Jurisdiction of Directorate of Revenue Intelligence (DRI) officials under Section 28 of the Customs Act, 1962 to issue SCN - proper officer or not - HELD THAT:- In the present petition, the show cause notice which is under challenge is dated 1st May, 2019 issued by the DRI, Mumbai Zonal Unit. This would be covered by directions given in paragraph 168 (vi) (a) of the Canon-II [2024 (11) TMI 391 - SUPREME COURT (LB)], wherein the adjudication of the show cause notice is to be restored to the adjudicating authority.
The proceedings in the show cause notice under challenge dated 1st May, 2019 shall now proceed before the appropriate adjudicating authority in accordance with law.
Petition disposed off.
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2025 (3) TMI 1149
Maintainability of petition - diversion of imported walnuts into the domestic market, by not re-exporting - no opportunity was afforded for personal hearing - violation of principles of natural justice - HELD THAT:- The Court is of the view that the Petitioners ought to be relegated to avail of the remedy against the impugned Order-in-Original before the CESTAT. This Court has not examined any of the grounds which have been raised by the Petitioners. All objections are kept open. The Petitioners are free to raise all their grounds of challenge to the impugned order before CESTAT.
Considering the nature of the matter and the submissions made today, in the unique facts and circumstances of these cases, the pre-deposit for filing the appeal is reduced to 3.75%. This order shall not be treated as a precedent.
Petition disposed off.
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2025 (3) TMI 1148
Challenge to validity of the addendum to the show-cause notice alleging that relevant documents relied upon in the issuance of the addendum was not given to them - Redetermination of the assessable value of the imported dredger as declared by the appellant - classification of the additional length of cutter head ladder and jet pump set is under CTH 89051000 or under respective heading? - admissibility of benefit of N/N.01/2011-CE dated 01.03.2011 - Penalty - Confiscation.
Challenge to validity of the addendum to the show-cause notice alleging that relevant documents relied upon in the issuance of the addendum was not given to them - HELD THAT:- The addendum to the show-cause notice was communicated to the appellant and appellant has submitted a detailed reply rebutting each and every allegation both in response to the initial show-cause notice as well as in the addendum to the show-cause notice. In these circumstances, there is no violation of principles of natural justice and the addendum is valid and issued within the frame of law laid down under various judgments referred by the learned Commissioner.
Redetermination of the assessable value of the imported dredger - HELD THAT:- The Managing Director has never retracted the statement nor disputed to the acceptance of appointment of independent Chartered Engineer to ascertain the correct value nor contested this at any point of time. Also while rejecting the said discount, the learned Commissioner has recorded that no discount was given by the overseas party to the appellant in its previous imports vide Bill of Entry No.4898940 dated 12.10.2011 which clearly indicates that the discount was not ordinarily given by the overseas supplier to the appellant but was given to the appellant only as a favoured buyer. There are no discrepancy in the Commissioner’s observation that the transaction value declared by the appellant is liable to be rejected under Rule 12(2) of the Customs Valuation Rules, 2007.
Classification of additional length of cutter head ladder and jet pump system - to be classified under Chapter sub-heading 89051000 or under 84314990 and 84137097 respectively? - HELD THAT:- The learned Commissioner referring to the dictionary meaning of the ‘parts’ held that part means an element of a sub-assembly or assembly, not normally useful by itself and not amenable to further disassembly for maintenance purposes; also referring to various judgments on the scope of parts and accessories, he has observed that these are two different things and not the same. In this backdrop, analysing the facts of the case and requirement of the additional length of cutter head ladder and also the jet pump system - Further negating the argument of the appellant that since the dredger imported being huge item could not be imported in its complete form and imported in CKD condition of the item and all the parts imported are integral parts of the dredger, learned Commissioner has held that because the dredger was dispatched in 48 pieces in CKD condition, it cannot be itself make all the parts as integral parts of the dredger. Analysing the observation of the learned Commissioner in arriving at the classification of the additional length of cutter head ladder under CTH 84314990 and jet pump system under CTH 84137097, there are no apparent error in the reasoning of the Commissioner; hence, the observation relating to classification of the said products are upheld.
Admissibility of N/N.01/2011-CE dated 01/03/2011 - HELD THAT:- The learned Commissioner has held that the benefit of 1% Excise duty without cenvat credit facility cannot be extended to them. This issue is no more res integra and covered by the judgment of the Hon’ble Madras High Court in the case of CC(Exports), Chennai Vs. Prashray Overseas Pvt. Ltd. [2016 (5) TMI 1106 - MADRAS HIGH COURT] - there are no error in the order of the learned Commissioner in denying the benefit of N/N.01/2011-CE dated 01.03.2011 to the appellant.
Penalty - Confiscation - HELD THAT:- The appellant had misdeclared the value and suppressed their relationship with the overseas seller, the initial survey report from the knowledge of the Department which has been candidly admitted by the Managing Director of the appellant company, resulting to short payment of duty of Rs.54, 67, 041/-. Hence, confirmation of demand under Section 28(4) of the Customs Act, 1962 is justified and upheld. Consequently, imposition of penalty under Section 114A on the appellant company and penalty on the Managing Director under Section 114AA is justified. However, in calculating the penalty amount under Section 114A of the Customs Act, 1962 against the appellant company, the learned Commissioner has added interest amount to the differential duty, which is erroneous in view of series of judgments of this Tribunal. Therefore, the penalty imposed be restricted only to the extent of differential duty confirmed. Since the imposition of penalty under Section 114AA on the Managing Director is upheld, further penalty under Section 112(a) of the Customs Act in the circumstances is not warranted and accordingly set aside.
Conclusion - i) The transaction value declared by the appellant is liable to be rejected under Rule 12(2) of the Customs Valuation Rules, 2007. ii) Classification of the additional length of cutter head ladder under CTH 84314990 and jet pump system under CTH 84137097 upheld. iii) The denial of the exemption under N/N.01/2011-CE. upheld.
Appeal disposed off.
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2025 (3) TMI 1147
Confiscation of 34,400 kgs of areca nuts - smuggling of foreign origin goods - notified item or not - confiscation was done solely on the basis of suspicions without any substantive proof to indicate that the goods were of foreign origin - HELD THAT:- The Department has not brought in any evidence to substantiate their allegation that the impugned goods are smuggled in nature. In this regard, the appellant has stated that the goods were lawfully purchased from local markets in Nagaland and Assam, and the confiscation was done solely on the basis of suspicion without any substantive proof to establish foreign origin of the goods in question. It is observed that the appellant's claim of purchase of the Betel Nuts/Areca Nuts from local market/mandi on payment of Cess has not been negated by the department. The goods were seized from the godowns in Indian territory far away from an international border. Since the goods were not seized within the Customs area, we observe that as per the provisions of Section 123 of Customs Act, 1962, the burden to prove that the seized goods were of foreign origin or smuggled in nature lies on Department.
The confiscation of the impugned goods is not sustainable and accordingly, the same is set aside. Since, the order of confiscation is not sustained, the demand of redemption fine in lieu of confiscation is not sustainable and accordingly the same is set aside. As the confiscation itself is not sustained, there is no question of imposing penalty on the appellant and hence the same is set aside.
The appellant needs to be compensated for the destruction of the impugned goods. Further, from the decision cited above, we observe that when goods valued Rs.88 lakhs was seized and destroyed at the pre-trial stage, the Hon’ble High Court has allowed the refund of Rs.60 lakhs. By adopting the same ratio, we are of the view that the appellant is liable to be refunded Rs.20 lakhs in lieu of the seizure value of Rs.32.68 lakhs. The refund is to be paid within a period of three months from the date of communication of this order and if the Department fails to comply, interest on the expiry of the said three months shall be payable on the refund amount at the rate of 12% per annum.
Confiscation - i) The appellant is eligible for refund of Rs.20 lakhs in lieu of the seizure value of Rs.32.68 lakhs. The refund is to be paid within a period of three months from the date of communication of this order and if the Department fails to comply, interest shall be payable on the refund amount at the rate of 12% per annum on the expiry of the said three months. ii) The impugned goods are not liable for confiscation. Accordingly, the order of confiscation is set aside. iii) The penalty imposed on the appellant is set aside.
Appeal disposed off.
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2025 (3) TMI 1146
Seeking provisional release of detained imported goods - Mulberry Raw Silk - detention on the ground that the documents pertaining to said goods were not available with the caretaker of the premises - HELD THAT:- The provisions of Section 110(2) of the Customs Act, 1962 came into effect on 29.03.2018 and at the seizure of the goods in question and release thereof, the said provisions were not in force. In that circumstances, the Revenue cannot rely on the amended provisions in 2018 for the release of the goods in 2016 provisionally. Therefore, the Revenue is duty bound to issue the show-cause notice within extended period of six months by the ld.Commissioner (Port), which they failed to do so.
The observations made by the ld.Commissioner (Appeals) in the impugned order not agrred upon and no show-cause notice was issued to the respondent within extended period of six months in terms of Section 110(2) of the Customs Act, 1962 as existed at the time of seizure of the goods - no proceeding is sustainable against the respondent and they are entitled to release of the goods, the personal Bond and Bank guarantee.
Conclusion - The respondent is entitled to the unconditional release of the goods and the return of the Bank Guarantee due to the Revenue's failure to issue a Show Cause Notice within the stipulated period.
The appeal filed by the Revenue is dismissed.
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2025 (3) TMI 1145
Penalty u/s 15HB of the SEBI Act - delay in commencing the adjudication proceedings against the appellant - HELD THAT:- A common SCN was issued on September 28, 2021. Since all these complaints are with regard to investment advices given by the appellant, we do not find any error in issuing a common show cause notice, which reduces multiplicity of proceedings. It is settled that where no limitation is prescribed, proceedings have to initiated in a reasonable period. Further, as rightly urged by Mr. Sancheti, appellants have failed to demonstrate any prejudice caused due to the delay. Considering the avowed object of IA Regulations, we find no merit in ground of delay taken by the appellant.
Double jeopardy, SEBI is right in contending that the proceedings before WTM and the AO are completely different under different provisions of the SEBI Act. Therefore, is no merit in this ground.
Denial of natural justice in rejecting the settlement application, as rightly contended by Mr. Sancheti, an appeal against rejection of application for settlement is barred under Section 15JB(4) of the SEBI Act. Hence this ground is also untenable.
Notice for inspection was served on the day of the inspection -We note that the impugned proceedings were started following several complaints received against the appellants. The appellant being a registered Investment advisory firm, was required to abide by the IA Regulations but on inspection in 2015 and later in 2017, it was found to be lacking on several counts. We are persuaded to accept SEBI’s contention that Appellants have not demonstrated any prejudice caused to them. Moreover, during proceedings, appellants were given opportunity to defend their cause. Hence, this ground is also baseless.
Violation-1 - Whether appellant has violated Regulation 15(8) of the IA Regulations (KYC Procedure)? - We are of the vies that the appellant has not complied with the conditions laid down by the SEBI while granting ‘Certificate of Registration’ as an investment adviser conveyed vide letter dated May 19, 2014. Further, even prior to coming into operation of the IA Regulation 2013, appellant was covered by the SEBI circular dated December 23, 2011, which was addressed to SEBI registered intermediaries, even though the same did not specifically use the nomenclature ‘investment adviser’. Further, SEBI’s Circular (dated December 23, 2011) contains guidelines in pursuance of the SEBI KYC Registration Agency (KRA) Regulations, 2011 which required the appellant to upload the KYC data in conformity with details sought in the uniform KYC Form prescribed in the SEBI Circular dated October 5, 2011. It is clear that the appellant has failed to comply with the same.
Appellant vide letter dated July 7, 2015 has admitted that prior to April 1, 2015, it was not downloading KYC Forms from KRA. Therefore, we find no merit in appellant’s ground and hold this point in the affirmative.
Violation-2 - Whether appellant failed to carry out Risk profiling (RP) and violated Regulation 16? - We note that at the time of inspection, the SEBI found the appellant lacking in carrying out complete risk profiling. While some fields were found to be empty in the questionnaire to its clients, important details such as investment objectives were not even captured. The appellant shared details of one party but the SEBI’s findings are based on the evidence recorded at the time of inspection, which remained uncontested. In view of this, we don’t find no merit in appellant’s contention and this point is also held in the affirmative.
Violation-3 - Whether appellant has violated Regulation 17 requiring Suitability assessment to be made for the client before advising any product? - Appellant’s contention that product details were available on the website is not refuted by the SEBI. However, appellant did not carry out specific Suitability Assessment for individual clients before advising any product. This could have exposed the clients to serious risk. Moreover, admittedly the complete product details were not disclosed by the appellant until a client made a specific request for the same, which is a clear violation of Regulation 17 of IA Regulations. Hence we hold this point also in the affirmative.
Violation-4 - Whether appellant has violated Regulation 18 read with clause 5 of Code Of Conduct under Schedule III of IA Regulations, 2013? - On careful consideration, we find that the appellant did not make full disclosure in respect of all material information about all terms and conditions on which services are offered. We find that the appellant’s explanation with regard to the finding of the inspection that the method of calculation used by the appellant for assessing performance track record did not take into account advices provided on all the calls, but covered only such calls which were profit-making is not satisfactory as it does not give correct picture to the clients about the products offered. Therefore, we find no merit in appellant’s contention and hold this point also in the affirmative.
Violation-5 - Whether appellant has violated Regulation 22 of IA Regulations? - We find that the appellant is not a broker and hence execution activities cannot be carried out by it. The appellant has provided execution services to brokers of some of their clients and it was brokers who used to provide execution services and not the appellant. The appellant’s claim that it has not charged any fee for such execution business for client through the brokers, has not been rebutted. Hence, appellant is right in its contention. Accordingly, we hold this point in the negative.
Violation-6 - Whether appellant has violated Regulations 15(1) and 15(9) of IA Regulations read with clauses 2 and 4 of Code of conduct? - Admittedly, Appellant has not contested the complaint and refunded made by the refund only after complaint was filed. We are unable to persuade ourselves to accept appellant’s contention that appellants ‘non-contest’ and refund of money should not be construed as admission of violation. Such violations cause serious prejudice and loss to the clients in Securities market. Hence, in view of appellant’s such conduct, we hold this point also in the affirmative.
Violation-7 - Whether appellant has violated Regulation 19? -Though the Investment advisor Regulations were notified in 2014, ‘Investment advisors’ are certainly ‘Intermediaries’ to covered within the broad definition of ‘Intermediaries’ even prior to issuance of Regulations. Accordingly, this point is also held in the affirmative.
Violation-8 - Whether appellant has violated clause 2 of Code Of Conduct with respect to the complaint of Mr. Mahadeo Sadafule? - We also find that no evidence has been brought on record by the SEBI to corroborate that services were offered without risk profiling. No evidences is placed before us also to demonstrate that assured returns were offered by the appellants and it also not specific case of the complainant. Therefore, we find force in appellant’s argument and find no material in support of SEBI’s allegation that appellant had failed to act with due skill, care and diligence in the best interest of its clients. Accordingly, we hold this point in the negative.
Violation-9 - Whether appellant has charged excess fee in violation of Clause 6 of Code Of Conduct, under Schedule III of IA Regulations, 2013? - Risk Profile document shows that Mr. Sadafule wanted to invest Rs. 6-10 lakhs, but he was charged Rs. 25 lakh as advisory fee, which is unreasonably high even if it is for a period of two and half years as claimed by the appellant. No prudent client would make an advance payment for two and half year, which is much more than the amount of investment made. The appellant’s contention that Mr. Sadafule actually wanted to invest more than Rs. 6-10 lakhs, is not supported by any evidence.
Appellant was bound by the Clause 6 of the COC of the IA Regulations to charge fair and reasonable fee from its client. In view of undisputed fact that appellant has charged Rs. 25 Lakhs as fee and seeks to justify without any material that it was for two and half years, we hold this appoint also in the affirmative.
Violation-10 - Whether appellant is guilty of soliciting of clients through different websites, in violation of Clause 5 of COC under Schedule III of IA Regulations? - Records do not disclose any evidence to substantiate the allegation that the appellant was using various websites to solicit clients. We find merit in appellant’s contention that various websites, some of which had the domain name capitalvia.com, were for lead generation and no business is done through them and these are only landing pages. These websites were used to track any prospective client. Hence, in our view, in the absence of any material against the appellant, the allegation is baseless. Accordingly, we answer this point in the negative.
Violation-11- Whether appellant has violated Regulation 7(2) of IA Regulations relating to Qualification of IA? - We find that no findings were recorded by the SEBI with regard to dates of joining of individual employees, in order to prove the charge. Further, appellant’s submission that the notification dated June 19, 2013 and January 27, 2014 have to be read with Regulation 3(1) and 3(2) of the SEBI (Certification of Associated Persons in the Securities Market) Regulations, 2007 is not refuted. Therefore, in our view, this allegation is not substantiated. Accordingly, we hold this point in the negative.
Violation-12 - Whether appellant has violated Regulation 13(c)? - As submitted that the compliance of the regulation post- inspection will not absolve the appellants for the violation committed during the inspection period. Our attention was drawn to the decision of Chairman, SEBI vs. Shriram Mutual Fund [2006 (5) TMI 191 - SUPREME COURT] in which it was held that penalty is attracted as soon as the contravention of the statutory obligation as contemplated by the Act and Regulation is established.
Appellant’s contention that the words were added after inspection do not merit any consideration in the light of settled position of law laid down in Shriram Mutual Fund (supra). Accordingly, we answer this point in the affirmative.
Violation-13 - Whether appellant has failed to make disclosure in terms of Clause 1 of COC? - We note that the appellant has admitted that it had construed all the staff as under the category of ‘Investment Advisor’. Incorrect disclosure on the website is misleading to any one and particularly the potential clients. We find no substance in appellant’s contention and accordingly hold this point in the affirmative.
Determination of quantum of the penalty - We note that there were repeated violations of multiple nature. Further, large number of complaints were received by the respondent against the appellant investment advisory firm which could have had serious impact on the integrity of the securities market and adversely affected the interest of the investors. In view of this, keeping in view the criteria indicated in Section 15-J, levy of penalty is justified.
However, since we found merit in the plea of the appellant on some of the grounds, and we have answered 4 out of 13 violations in the negative. Therefore, levying maximum amount of penalty of Rs. 1 Crore is unsustainable. In our view, ends of justice would be met by reducing the penalty to Rs. 70 lakhs.
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